THIRD DIVISION

Respondent filed a motion to dismiss on the ground that petitioner did not have the legal
JOSELITO MUSNI PUNO G.R. No. 177066
(as heir of the late Carlos Puno), personality to sue because his birth certificate names him as Joselito Musni Muno. Apropos, there was yet
Petitioner, Present:
a need for a judicial declaration that Joselito Musni Puno and Joselito Musni Muno were one and the same.
YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
- versus - VELASCO, JR., The court ordered that the proceedings be held in abeyance, ratiocinating that petitioners
NACHURA, and
PERALTA, JJ. certificate of live birth was no proof of his paternity and relation to Carlos L. Puno.

PUNO ENTERPRISES, INC., represented by JESUSA PUNO, Promulgated: Petitioner submitted the corrected birth certificate with the name Joselito M. Puno, certified by
Respondent.
September 11, 2009 the Civil Registrar of the City of Manila, and the Certificate of Finality thereof. To hasten the disposition of
x------------------------------------------------------------------------------------x the case, the court conditionally admitted the corrected birth certificate as genuine and authentic and

ordered respondent to file its answer within fifteen days from the order and set the case for pretrial. [3]
DECISION

NACHURA, J.:
On October 11, 2005, the court rendered a Decision, the dispositive portion of which reads:

Upon the death of a stockholder, the heirs do not automatically become stockholders of the
corporation; neither are they mandatorily entitled to the rights and privileges of a stockholder. This, we
declare in this petition for review on certiorari of the Court of Appeals (CA) Decision[1] dated October 11,
2006 and Resolution dated March 6, 2007 in CA-G.R. CV No. 86137.
WHEREFORE, judgment is hereby rendered ordering Jesusa Puno and/or
Felicidad Fermin to allow the plaintiff to inspect the corporate books and records of the
company from 1962 up to the present including the financial statements of the
corporation.
The costs of copying shall be shouldered by the plaintiff. Any expenses to be
incurred by the defendant to be able to comply with this order shall be the subject of a
bill of costs.

SO ORDERED.[4]
The facts of the case follow:

On appeal, the CA ordered the dismissal of the complaint in its Decision dated October 11, 2006. According
Carlos L. Puno, who died on June 25, 1963, was an incorporator of respondent Puno Enterprises,
to the CA, petitioner was not able to establish the paternity of and his filiation to Carlos L. Puno since his
Inc. On March 14, 2003, petitioner Joselito Musni Puno, claiming to be an heir of Carlos L. Puno, initiated
birth certificate was prepared without the intervention of and the participatory acknowledgment of
a complaint for specific performance against respondent. Petitioner averred that he is the son of the
paternity by Carlos L. Puno. Accordingly, the CA said that petitioner had no right to demand that he be
deceased with the latters common-law wife, Amelia Puno. As surviving heir, he claimed entitlement to the
allowed to examine respondents books. Moreover, petitioner was not a stockholder of the corporation but
rights and privileges of his late father as stockholder of respondent. The complaint thus prayed that
was merely claiming rights as an heir of Carlos L. Puno, an incorporator of the corporation. His action for
respondent allow petitioner to inspect its corporate book, render an accounting of all the transactions it
specific performance therefore appeared to be premature; the proper action to be taken was to prove the
entered into from 1962, and give petitioner all the profits, earnings, dividends, or income pertaining to the
paternity of and his filiation to Carlos L. Puno in a petition for the settlement of the estate of the latter. [5]
shares of Carlos L. Puno.[2]

Petitioners motion for reconsideration was denied by the CA in its Resolution[6] dated March 6, 2007.
In this petition, petitioner raises the following issues:
I. THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT
THE JOSELITO PUNO IS ENTITLED TO THE RELIEFS DEMANDED HE BEING
THE HEIR OF THE LATE CARLOS PUNO, ONE OF THE INCORPORATORS [OF]
RESPONDENT CORPORATION.
II. HONORABLE COURT OF APPEALS ERRED IN RULING THAT FILIATION OF
JOSELITO PUNO, THE PETITIONER[,] IS NOT DULY PROVEN OR
ESTABLISHED.
III. THE HONORABLE COURT ERRED IN NOT RULING THAT JOSELITO MUNO
AND JOSELITO PUNO REFERS TO THE ONE AND THE SAME PERSON.
IV. THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT
WHAT RESPONDENT MERELY DISPUTES IS THE SURNAME OF THE
PETITIONER WHICH WAS MISSPELLED AND THE FACTUAL ALLEGATION
E.G. RIGHTS OF PETITIONER AS HEIR OF CARLOS PUNO ARE DEEMED
ADMITTED HYPOTHETICALLY IN THE RESPONDENT[S] MOTION TO
DISMISS.
V. THE HONORABLE COURT OF APPEALS THEREFORE ERRED I[N]
DECREEING THAT PETITIONER IS NOT ENTITLED TO INSPECT THE
CORPORATE BOOKS OF DEFENDANT CORPORATION.[7]
The petition is without merit. Petitioner failed to establish the right to inspect respondent
corporations books and receive dividends on the stocks owned by Carlos L. Puno.
Petitioner anchors his claim on his being an heir of the deceased stockholder. However, we agree
with the appellate court that petitioner was not able to prove satisfactorily his filiation to the deceased
stockholder; thus, the former cannot claim to be an heir of the latter.
Incessantly, we have declared that factual findings of the CA supported by substantial evidence,
are conclusive and binding.[8] In an appeal via certiorari, the Court may not review the factual findings of
the CA. It is not the Courts function under Rule 45 of the Rules of Court to review, examine, and evaluate
or weigh the probative value of the evidence presented.[9]
A certificate of live birth purportedly identifying the putative father is not competent evidence of
paternity when there is no showing that the putative father had a hand in the preparation of the certificate.
The local civil registrar has no authority to record the paternity of an illegitimate child on the information
of a third person.[10] As correctly observed by the CA, only petitioners mother supplied the data in the birth
certificate and signed the same. There was no evidence that Carlos L. Puno acknowledged petitioner as his
son.
As for the baptismal certificate, we have already decreed that it can only serve as evidence of the
administration of the sacrament on the date specified but not of the veracity of the entries with respect to
the childs paternity.[11]
In any case, Sections 74 and 75 of the Corporation Code enumerate the persons who are entitled
to the inspection of corporate books, thus
Sec. 74. Books to be kept; stock transfer agent. x x x.
The records of all business transactions of the corporation and the minutes of
any meeting shall be open to the inspection of any director, trustee, stockholder or
member of the corporation at reasonable hours on business days and he may demand,
in writing, for a copy of excerpts from said records or minutes, at his expense.
xxxx
Sec. 75. Right to financial statements. Within ten (10) days from receipt of a
written request of any stockholder or member, the corporation shall furnish to him its
most recent financial statement, which shall include a balance sheet as of the end of the
last taxable year and a profit or loss of statement for said taxable year, showing in
reasonable detail its assets and liabilities and the result of its operations.[12]
The stockholders right of inspection of the corporations books and records is based upon his
ownership of shares in the corporation and the necessity for self-protection. After all, a shareholder has
the right to be intelligently informed about corporate affairs.[13] Such right rests upon the stockholders
underlying ownership of the corporations assets and property.[14]
Similarly, only stockholders of record are entitled to receive dividends declared by the corporation,
a right inherent in the ownership of the shares.[15]
 Upon the death of a shareholder, the heirs do not automatically become stockholders of the

corporation and acquire the rights and privileges of the deceased as shareholder of the corporation. The

stocks must be distributed first to the heirs in estate proceedings, and the transfer of the stocks must be

recorded in the books of the corporation. Section 63 of the Corporation Code provides that no transfer shall

be valid, except as between the parties, until the transfer is recorded in the books of the

corporation.[16] During such interim period, the heirs stand as the equitable owners of the stocks, the

executor or administrator duly appointed by the court being vested with the legal title to the stock.[17]Until

a settlement and division of the estate is effected, the stocks of the decedent are held by the administrator

or executor.[18] Consequently, during such time, it is the administrator or executor who is entitled to

exercise the rights of the deceased as stockholder.

Thus, even if petitioner presents sufficient evidence in this case to establish that he is the son of

Carlos L. Puno, he would still not be allowed to inspect respondents books and be entitled to receive

dividends from respondent, absent any showing in its transfer book that some of the shares owned by

Carlos L. Puno were transferred to him. This would only be possible if petitioner has been recognized as an
EN BANC
heir and has participated in the settlement of the estate of the deceased.

Corollary to this is the doctrine that a determination of whether a person, claiming proprietary [G.R. No. 141735. June 8, 2005]

rights over the estate of a deceased person, is an heir of the deceased must be ventilated in a special

proceeding instituted precisely for the purpose of settling the estate of the latter. The status of an
SAPPARI K. SAWADJAAN, petitioner, vs. THE HONORABLE COURT OF APPEALS, THE CIVIL
illegitimate child who claims to be an heir to a decedents estate cannot be adjudicated in an ordinary civil SERVICE COMMISSION and AL-AMANAH INVESTMENT BANK OF THE
PHILIPPINES, respondents.
action, as in a case for the recovery of property.[19] The doctrine applies to the instant case, which is one
DECISION
for specific performance to direct respondent corporation to allow petitioner to exercise rights that pertain
CHICO-NAZARIO, J.:
only to the deceased and his representatives.

WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated
October 11, 2006 and Resolution dated March 6, 2007 are AFFIRMED.
SO ORDERED.
This is a petition for certiorari under Rule 65 of the Rules of Court of the Decision[1] of the Court of
Appeals of 30 March 1999 affirming Resolutions No. 94-4483 and No. 95-2754 of the Civil Service
Commission (CSC) dated 11 August 1994 and 11 April 1995, respectively, which in turn affirmed
Resolution No. 2309 of the Board of Directors of the Al-Amanah Islamic Investment Bank of the Philippines
(AIIBP) dated 13 December 1993, finding petitioner guilty of Dishonesty in the Performance of Official
Duties and/or Conduct Prejudicial to the Best Interest of the Service and dismissing him from the service,
and its Resolution[2] of 15 December 1999 dismissing petitioners Motion for Reconsideration.
 The records show that petitioner Sappari K. Sawadjaan was among the first employees of the
Philippine Amanah Bank (PAB) when it was created by virtue of Presidential Decree No. 264 on 02 August
1973. He rose through the ranks, working his way up from his initial designation as security guard, to
settling clerk, bookkeeper, credit investigator, project analyst, appraiser/ inspector, and eventually, loans
analyst.[3]
In February 1988, while still designated as appraiser/investigator, Sawadjaan was assigned to inspect
the properties offered as collaterals by Compressed Air Machineries and Equipment Corporation (CAMEC)
for a credit line of Five Million Pesos (P5,000,000.00). The properties consisted of two parcels of land covered
by Transfer Certificates of Title (TCTs) No. N-130671 and No. C-52576. On the basis of his Inspection and
Appraisal Report,[4] the PAB granted the loan application. When the loan matured on 17 May 1989, CAMEC
requested an extension of 180 days, but was granted only 120 days to repay the loan.[5]
In the meantime, Sawadjaan was promoted to Loans Analyst I on 01 July 1989.[6]
In January 1990, Congress passed Republic Act 6848 creating the AIIBP and repealing P.D. No. 264
(which created the PAB). All assets, liabilities and capital accounts of the PAB were transferred to the
AIIBP,[7] and the existing personnel of the PAB were to continue to discharge their functions unless
discharged.[8] In the ensuing reorganization, Sawadjaan was among the personnel retained by the AIIBP.
When CAMEC failed to pay despite the given extension, the bank, now referred to as the AIIBP,
discovered that TCT No. N-130671 was spurious, the property described therein non-existent, and that the
property covered by TCT No. C-52576 had a prior existing mortgage in favor of one Divina Pablico.
On 08 June 1993, the Board of Directors of the AIIBP created an Investigating Committee to look into
the CAMEC transaction, which had cost the bank Six Million Pesos (P6,000,000.00) in losses. [9] The
subsequent events, as found and decided upon by the Court of Appeals,[10] are as follows:
On 18 June 1993, petitioner received a memorandum from Islamic Bank [AIIBP] Chairman Roberto F. De
Ocampo charging him with Dishonesty in the Performance of Official Duties and/or Conduct Prejudicial
to the Best Interest of the Service and preventively suspending him.
In his memorandum dated 8 September 1993, petitioner informed the Investigating Committee that he
could not submit himself to the jurisdiction of the Committee because of its alleged partiality. For his
failure to appear before the hearing set on 17 September 1993, after the hearing of 13 September 1993
was postponed due to the Manifestation of even date filed by petitioner, the Investigating Committee
declared petitioner in default and the prosecution was allowed to present its evidence ex parte.
On 08 December 1993, the Investigating Committee rendered a decision, the pertinent portions of which
reads as follows:
In view of respondent SAWADJAANS abject failure to perform his duties and assigned tasks as
appraiser/inspector, which resulted to the prejudice and substantial damage to the Bank, respondent
should be held liable therefore. At this juncture, however, the Investigating Committee is of the
considered opinion that he could not be held liable for the administrative offense of dishonesty
considering the fact that no evidence was adduced to show that he profited or benefited from being
remiss in the performance of his duties. The record is bereft of any evidence which would show that he
received any amount in consideration for his non-performance of his official duties.
This notwithstanding, respondent cannot escape liability. As adverted to earlier, his failure to perform his
official duties resulted to the prejudice and substantial damage to the Islamic Bank for which he should
be held liable for the administrative offense of CONDUCT PREJUDICIAL TO THE BEST INTEREST OF
THE SERVICE.
Premises considered, the Investigating Committee recommends that respondent SAPPARI SAWADJAAN
be meted the penalty of SIX (6) MONTHS and ONE (1) DAY SUSPENSION from office in accordance with
the Civil Service Commissions Memorandum Circular No. 30, Series of 1989.
On 13 December 1993, the Board of Directors of the Islamic Bank [AIIBP] adopted Resolution No. 2309
finding petitioner guilty of Dishonesty in the Performance of Official Duties and/or Conduct Prejudicial to
the Best Interest of the Service and imposing the penalty of Dismissal from the Service.
On reconsideration, the Board of Directors of the Islamic Bank [AIIBP] adopted the Resolution No. 2332
on 20 February 1994 reducing the penalty imposed on petitioner from dismissal to suspension for a
period of six (6) months and one (1) day.
On 29 March 1994, petitioner filed a notice of appeal to the Merit System Protection Board (MSPB).
On 11 August 1994, the CSC adopted Resolution No. 94-4483 dismissing the appeal for lack of merit and
affirming Resolution No. 2309 dated 13 December 1993 of the Board of Directors of Islamic Bank.
On 11 April 1995, the CSC adopted Resolution No. 95-2574 denying petitioners Motion for
Reconsideration.
On 16 June 1995, the instant petition was filed with the Honorable Supreme Court on the following
assignment of errors:
I. Public respondent Al-Amanah Islamic Investment Bank of the Philippines has committed a
grave abuse of discretion amounting to excess or lack of jurisdiction when it initiated and conducted
administrative investigation without a validly promulgated rules of procedure in the adjudication of
administrative cases at the Islamic Bank.
II. Public respondent Civil Service Commission has committed a grave abuse of discretion
amounting to lack of jurisdiction when it prematurely and falsely assumed jurisdiction of the case not
appealed to it, but to the Merit System Protection Board.
III. Both the Islamic Bank and the Civil Service Commission erred in finding petitioner Sawadjaan
of having deliberately reporting false information and therefore guilty of Dishonesty and Conduct
Prejudicial to the Best Interest of the Service and penalized with dismissal from the service.
On 04 July 1995, the Honorable Supreme Court En Banc referred this petition to this Honorable Court
pursuant to Revised Administrative Circular No. 1-95, which took effect on 01 June 1995.
We do not find merit [in] the petition.
Anent the first assignment of error, a reading of the records would reveal that petitioner raises for the
first time the alleged failure of the Islamic Bank [AIIBP] to promulgate rules of procedure governing the
adjudication and disposition of administrative cases involving its personnel. It is a rule that issues not
properly brought and ventilated below may not be raised for the first time on appeal, save in exceptional
circumstances (Casolita, Sr. v. Court of Appeals, 275 SCRA 257) none of which, however, obtain in this
case. Granting arguendo that the issue is of such exceptional character that the Court may take
cognizance of the same, still, it must fail. Section 26 of Republic Act No. 6848 (1990) provides:
Section 26. Powers of the Board. The Board of Directors shall have the broadest powers to manage the
Islamic Bank, x x x The Board shall adopt policy guidelines necessary to carry out effectively the
provisions of this Charter as well as internal rules and regulations necessary for the conduct of its Islamic
banking business and all matters related to personnel organization, office functions and salary
administration. (Italics ours)
On the other hand, Item No. 2 of Executive Order No. 26 (1992) entitled Prescribing Procedure and
Sanctions to Ensure Speedy Disposition of Administrative Cases directs, all administrative agencies to
adopt and include in their respective Rules of Procedure provisions designed to abbreviate administrative
proceedings.
The above two (2) provisions relied upon by petitioner does not require the Islamic Bank [AIIBP] to
promulgate rules of procedure before administrative discipline may be imposed upon its employees. The
internal rules of procedures ordained to be adopted by the Board refers to that necessary for the conduct
of its Islamic banking business and all matters related to personnel organization, office functions and
salary administration. On the contrary, Section 26 of RA 6848 gives the Board of Directors of the Islamic
Bank the broadest powers to manage the Islamic Bank. This grant of broad powers would be an idle
ceremony if it would be powerless to discipline its employees.
The second assignment of error must likewise fail. The issue is raised for the first time via this petition
for certiorari. Petitioner submitted himself to the jurisdiction of the CSC. Although he could have raised
the alleged lack of jurisdiction in his Motion for Reconsideration of Resolution No. 94-4483 of the CSC,
he did not do so. By filing the Motion for Reconsideration, he is estopped from denying the CSCs
jurisdiction over him, as it is settled rule that a party who asks for an affirmative relief cannot later on
impugn the action of the tribunal as without jurisdiction after an adverse result was meted to him.
Although jurisdiction over the subject matter of a case may be objected to at any stage of the proceedings
even on appeal, this particular rule, however, means that jurisdictional issues in a case can be raised
only during the proceedings in said case and during the appeal of said case (Aragon v. Court of Appeals,
270 SCRA 603). The case at bar is a petition [for] certiorari and not an appeal.
But even on the merits the argument must falter. Item No. 1 of CSC Resolution No. 93-2387 dated 29
June 1993, provides:
Decisions in administrative cases involving officials and employees of the civil service appealable to the
Commission pursuant to Section 47 of Book V of the Code (i.e., Administrative Code of 1987) including
personnel actions such as contested appointments shall now be appealed directly to the Commission and
not to the MSPB.
In Rubenecia v. Civil Service Commission, 244 SCRA 640, 651, it was categorically held:
. . . The functions of the MSPB relating to the determination of administrative disciplinary cases were, in
other words, re-allocated to the Commission itself.
Be that as it may, (i)t is hornbook doctrine that in order `(t)o ascertain whether a court (in this case,
administrative agency) has jurisdiction or not, the provisions of the law should be inquired into.
Furthermore, `the jurisdiction of the court must appear clearly from the statute law or it will not be held
to exist.(Azarcon v. Sandiganbayan, 268 SCRA 747, 757) From the provision of law abovecited, the Civil
Service Commission clearly has jurisdiction over the Administrative Case against petitioner.
Anent the third assignment of error, we likewise do not find merit in petitioners proposition that he
should not be liable, as in the first place, he was not qualified to perform the functions of
appraiser/investigator because he lacked the necessary training and expertise, and therefore, should not
have been found dishonest by the Board of Directors of Islamic Bank [AIIBP] and the CSC. Petitioner
himself admits that the position of appraiser/inspector is one of the most serious [and] sensitive job in
the banking operations. He should have been aware that accepting such a designation, he is obliged to
perform the task at hand by the exercise of more than ordinary prudence. As appraiser/investigator, he
is expected, among others, to check the authenticity of the documents presented by the borrower by
comparing them with the originals on file with the proper government office. He should have made it sure
that the technical descriptions in the location plan on file with the Bureau of Lands of Marikina, jibe with
that indicated in the TCT of the collateral offered by CAMEC, and that the mortgage in favor of the
Islamic Bank was duly annotated at the back of the copy of the TCT kept by the Register of Deeds of
Marikina. This, petitioner failed to do, for which he must be held liable. That he did not profit from his
false report is of no moment. Neither the fact that it was not deliberate or willful, detracts from the nature
of the act as dishonest. What is apparent is he stated something to be a fact, when he really was not sure
that it was so.
WHEREFORE, above premises considered, the instant Petition is DISMISSED, and the assailed
Resolutions of the Civil Service Commission are hereby AFFIRMED.
On 24 March 1999, Sawadjaans counsel notified the court a quo of his change of address,[11] but
apparently neglected to notify his client of this fact. Thus, on 23 July 1999, Sawadjaan, by himself, filed a
Motion for New Trial[12] in the Court of Appeals based on the following grounds: fraud, accident, mistake or
excusable negligence and newly discovered evidence. He claimed that he had recently discovered that at
the time his employment was terminated, the AIIBP had not yet adopted its corporate by-laws. He attached
a Certification[13] by the Securities and Exchange Commission (SEC) that it was only on 27 May 1992 that
the AIIBP submitted its draft by-laws to the SEC, and that its registration was being held in abeyance
pending certain corrections being made thereon. Sawadjaan argued that since the AIIBP failed to file its
by-laws within 60 days from the passage of Rep. Act No. 6848, as required by Sec. 51 of the said law, the
bank and its stockholders had already forfeited its franchise or charter, including its license to exist and
operate as a corporation,[14] and thus no longer have the legal standing and personality to initiate an
administrative case.
Sawadjaans counsel subsequently adopted his motion, but requested that it be treated as a motion
for reconsideration.[15] This motion was denied by the court a quo in its Resolution of 15 December 1999.[16]
Still disheartened, Sawadjaan filed the present petition for certiorari under Rule 65 of the Rules of
Court challenging the above Decision and Resolution of the Court of Appeals on the ground that the court a
quo erred: i) in ignoring the facts and evidences that the alleged Islamic Bank has no valid by-laws; ii) in
ignoring the facts and evidences that the Islamic Bank lost its juridical personality as a corporation on 16
April 1990; iii) in ignoring the facts and evidences that the alleged Islamic Bank and its alleged Board of
Directors have no jurisdiction to act in the manner they did in the absence of a valid by-laws; iv) in not
correcting the acts of the Civil Service Commission who erroneously rendered the assailed Resolutions No.
94-4483 and No. 95-2754 as a result of fraud, falsification and/or misrepresentations committed by
Farouk A. Carpizo and his group, including Roberto F. de Ocampo; v) in affirming an unconscionably harsh
and/or excessive penalty; and vi) in failing to consider newly discovered evidence and reverse its decision
accordingly.
Subsequently, petitioner Sawadjaan filed an Ex-parte Urgent Motion for Additional Extension of Time
to File a Reply (to the Comments of Respondent Al-Amanah Investment Bank of the Philippines),[17] Reply
(to Respondents Consolidated Comment,)[18] and Reply (to the Alleged Comments of Respondent Al-Amanah
Islamic Bank of the Philippines).[19] On 13 October 2000, he informed this Court that he had terminated
his lawyers services, and, by himself, prepared and filed the following: 1) Motion for New Trial;[20] 2) Motion
to Declare Respondents in Default and/or Having Waived their Rights to Interpose Objection to Petitioners
Motion for New Trial;[21] 3) Ex-Parte Urgent Motions to Punish Attorneys Amado D. Valdez, Elpidio J. Vega,
Alda G. Reyes, Dominador R. Isidoro, Jr., and Odilon A. Diaz for Being in Contempt of Court & to Inhibit
them from Appearing in this Case Until they Can Present Valid Evidence of Legal Authority;[22] 4)
Opposition/Reply (to Respondent AIIBPs Alleged Comment);[23] 5) Ex-Parte Urgent Motion to Punish Atty.
Reynaldo A. Pineda for Contempt of Court and the Issuance of a Commitment Order/Warrant for His
Arrest;[24] 6) Reply/Opposition (To the Formal Notice of Withdrawal of Undersigned Counsel as Legal
Counsel for the Respondent Islamic Bank with Opposition to Petitioners Motion to Punish Undersigned
Counsel for Contempt of Court for the Issuance of a Warrant of Arrest); [25] 7) Memorandum for
Petitioner;[26] 8) Opposition to SolGens Motion for Clarification with Motion for Default and/or Waiver of
Respondents to File their Memorandum;[27] 9) Motion for Contempt of Court and Inhibition/Disqualification
with Opposition to OGCCs Motion for Extension of Time to File Memorandum; [28] 10) Motion for
Enforcement (In Defense of the Rule of Law);[29] 11) Motion and Opposition (Motion to Punish OGCCs
Attorneys Amado D. Valdez, Efren B. Gonzales, Alda G. Reyes, Odilon A. Diaz and Dominador R. Isidoro,
Jr., for Contempt of Court and the Issuance of a Warrant for their Arrest; and Opposition to their Alleged
Manifestation and Motion Dated February 5, 2002);[30] 12) Motion for Reconsideration of Item (a) of
Resolution dated 5 February 2002 with Supplemental Motion for Contempt of Court; [31] 13) Motion for
Reconsideration of Portion of Resolution Dated 12 March 2002;[32] 14) Ex-Parte Urgent Motion for Extension
of Time to File Reply Memorandum (To: CSC and AIIBPs Memorandum);[33] 15) Reply Memorandum (To:
CSCs Memorandum) With Ex-Parte Urgent Motion for Additional Extension of time to File Reply
Memorandum (To: AIIBPs Memorandum);[34] and 16) Reply Memorandum (To: OGCCs Memorandum for
Respondent AIIBP).[35]
Petitioners efforts are unavailing, and we deny his petition for its procedural and substantive flaws.
The general rule is that the remedy to obtain reversal or modification of the judgment on the merits
is appeal. This is true even if the error, or one of the errors, ascribed to the court rendering the judgment
is its lack of jurisdiction over the subject matter, or the exercise of power in excess thereof, or grave abuse
of discretion in the findings of fact or of law set out in the decision.[36]
The records show that petitioners counsel received the Resolution of the Court of Appeals denying
his motion for reconsideration on 27 December 1999. The fifteen day reglamentary period to appeal under
Rule 45 of the Rules of Court therefore lapsed on 11 January 2000. On 23 February 2000, over a month
after receipt of the resolution denying his motion for reconsideration, the petitioner filed his petition
for certiorari under Rule 65.
It is settled that a special civil action for certiorari will not lie as a substitute for the lost remedy of
appeal,[37] and though there are instances[38] where the extraordinary remedy of certiorari may be resorted
to despite the availability of an appeal,[39] we find no special reasons for making out an exception in this
case.
Even if we were to overlook this fact in the broader interests of justice and treat this as a special civil
action for certiorari under Rule 65,[40] the petition would nevertheless be dismissed for failure of the
petitioner to show grave abuse of discretion. Petitioners recurrent argument, tenuous at its very best, is
premised on the fact that since respondent AIIBP failed to file its by-laws within the designated 60 days
from the effectivity of Rep. Act No. 6848, all proceedings initiated by AIIBP and all actions resulting
therefrom are a patent nullity. Or, in his words, the AIIBP and its officers and Board of Directors,
. . . [H]ave no legal authority nor jurisdiction to manage much less operate the Islamic Bank, file
administrative charges and investigate petitioner in the manner they did and allegedly passed Board
Resolution No. 2309 on December 13, 1993 which is null and void for lack of an (sic) authorized and
valid by-laws. The CIVIL SERVICE COMMISSION was therefore affirming, erroneously, a null and void
Resolution No. 2309 dated December 13, 1993 of the Board of Directors of Al-Amanah Islamic
Investment Bank of the Philippines in CSC Resolution No. 94-4483 dated August 11, 1994. A motion for
reconsideration thereof was denied by the CSC in its Resolution No. 95-2754 dated April 11, 1995. Both
acts/resolutions of the CSC are erroneous, resulting from fraud, falsifications and misrepresentations of
the alleged Chairman and CEO Roberto F. de Ocampo and the alleged Director Farouk A. Carpizo and his
group at the alleged Islamic Bank.[41]
Nowhere in petitioners voluminous pleadings is there a showing that the court a quo committed grave
abuse of discretion amounting to lack or excess of jurisdiction reversible by a petition for certiorari.
Petitioner already raised the question of AIIBPs corporate existence and lack of jurisdiction in his Motion
for New Trial/Motion for Reconsideration of 27 May 1997 and was denied by the Court of Appeals. Despite
the volume of pleadings he has submitted thus far, he has added nothing substantial to his arguments.
The AIIBP was created by Rep. Act No. 6848. It has a main office where it conducts business, has
shareholders, corporate officers, a board of directors, assets, and personnel. It is, in fact, here represented
by the Office of the Government Corporate Counsel, the principal law office of government-owned
corporations, one of which is respondent bank.[42] At the very least, by its failure to submit its by-laws on
time, the AIIBP may be considered a de facto corporation[43] whose right to exercise corporate powers may
not be inquired into collaterally in any private suit to which such corporations may be a party.[44]
Moreover, a corporation which has failed to file its by-laws within the prescribed period does not ipso
facto lose its powers as such. The SEC Rules on Suspension/Revocation of the Certificate of Registration
of Corporations,[45] details the procedures and remedies that may be availed of before an order of revocation
can be issued. There is no showing that such a procedure has been initiated in this case.
In any case, petitioners argument is irrelevant because this case is not a corporate controversy, but
a labor dispute; and it is an employers basic right to freely select or discharge its employees, if only as a
measure of self-protection against acts inimical to its interest.[46] Regardless of whether AIIBP is a
corporation, a partnership, a sole proprietorship, or a sari-saristore, it is an undisputed fact that AIIBP is
the petitioners employer. AIIBP chose to retain his services during its reorganization, controlled the means
and methods by which his work was to be performed, paid his wages, and, eventually, terminated his
services.[47]
And though he has had ample opportunity to do so, the petitioner has not alleged that he is anything
other than an employee of AIIBP. He has neither claimed, nor shown, that he is a stockholder or an officer
of the corporation. Having accepted employment from AIIBP, and rendered his services to the said bank,
received his salary, and accepted the promotion given him, it is now too late in the day for petitioner to
question its existence and its power to terminate his services. One who assumes an obligation to an
ostensible corporation as such, cannot resist performance thereof on the ground that there was in fact no
corporation.[48]
Even if we were to consider the facts behind petitioner Sawadjaans dismissal from service, we would
be hard pressed to find error in the decision of the AIIBP.
As appraiser/investigator, the petitioner was expected to conduct an ocular inspection of the
properties offered by CAMEC as collaterals and check the copies of the certificates of title against those on
file with the Registry of Deeds. Not only did he fail to conduct these routine checks, but he also deliberately
misrepresented in his appraisal report that after reviewing the documents and conducting a site inspection,
he found the CAMEC loan application to be in order. Despite the number of pleadings he has filed, he has
failed to offer an alternative explanation for his actions.
When he was informed of the charges against him and directed to appear and present his side on the
matter, the petitioner sent instead a memorandum questioning the fairness and impartiality of the
members of the investigating committee and refusing to recognize their jurisdiction over him. Nevertheless,
the investigating committee rescheduled the hearing to give the petitioner another chance, but he still
refused to appear before it.
Thereafter, witnesses were presented, and a decision was rendered finding him guilty of dishonesty
and dismissing him from service. He sought a reconsideration of this decision and the same committee
whose impartiality he questioned reduced their recommended penalty to suspension for six months and
one day. The board of directors, however, opted to dismiss him from service.
On appeal to the CSC, the Commission found that Sawadjaans failure to perform his official duties
greatly prejudiced the AIIBP, for which he should be held accountable. It held that:
. . . (I)t is crystal clear that respondent SAPPARI SAWADJAAN was remiss in the performance of his
duties as appraiser/inspector. Had respondent performed his duties as appraiser/inspector, he could
have easily noticed that the property located at Balintawak, Caloocan City covered by TCT No. C-52576
and which is one of the properties offered as collateral by CAMEC is encumbered to Divina Pablico. Had
respondent reflected such fact in his appraisal/inspection report on said property the ISLAMIC BANK
would not have approved CAMECs loan of P500,000.00 in 1987 and CAMECs P5 Million loan in 1988,
respondent knowing fully well the Banks policy of not accepting encumbered properties as collateral.
Respondent SAWADJAANs reprehensible act is further aggravated when he failed to check and verify
from the Registry of Deeds of Marikina the authenticity of the property located at Mayamot, Antipolo,
Rizal covered by TCT No. N-130671 and which is one of the properties offered as collateral by CAMEC for
its P5 Million loan in 1988. If he only visited and verified with the Register of Deeds of Marikina the
authenticity of TCT No. N-130671 he could have easily discovered that TCT No. N-130671 is fake and the
property described therein non-existent.

...

This notwithstanding, respondent cannot escape liability. As adverted to earlier, his failure to perform his
official duties resulted to the prejudice and substantial damage to the ISLAMIC BANK for which he
should be held liable for the administrative offense of CONDUCT PREJUDICIAL TO THE BEST INTEREST
OF THE SERVICE.[49]

From the foregoing, we find that the CSC and the court a quo committed no grave abuse of discretion
when they sustained Sawadjaans dismissal from service. Grave abuse of discretion implies such capricious
and whimsical exercise of judgment as equivalent to lack of jurisdiction, or, in other words, where the
power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it
must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform
the duty enjoined or to act at all in contemplation of law.[50] The records show that the respondents did
none of these; they acted in accordance with the law.

WHEREFORE, the petition is DISMISSED. The Decision of the Court of Appeals of 30 March 1999
affirming Resolutions No. 94-4483 and No. 95-2754 of the Civil Service Commission, and its Resolution of
15 December 1999 are hereby AFFIRMED. Costs against the petitioner.

SO ORDERED.

Davide, Jr., C.J., Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-

Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, Tinga, and Garcia, JJ., concur.
Puno, J., on official leave.
EN BANC

WILSON P. GAMBOA, G.R. No. 176579

Petitioner,
Present:
- versus -

CORONA, C.J.,

FINANCE SECRETARY MARGARITO B. TEVES, CARPIO,

FINANCE UNDERSECRETARY JOHN P. SEVILLA,
AND COMMISSIONER RICARDO ABCEDE OF THE
VELASCO, JR.,
PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT (PCGG) IN THEIR CAPACITIES AS
CHAIR AND MEMBERS, RESPECTIVELY, OF THE LEONARDO-DE CASTRO,
PRIVATIZATION COUNCIL,
CHAIRMAN ANTHONI SALIM OF FIRST PACIFIC BRION,
CO., LTD. IN HIS CAPACITY AS DIRECTOR OF
METRO PACIFIC ASSET HOLDINGS INC.,
PERALTA,
CHAIRMAN MANUEL V. PANGILINAN OF
PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY (PLDT) IN HIS CAPACITY AS MANAGING BERSAMIN,
DIRECTOR OF FIRST PACIFIC CO., LTD.,
PRESIDENT NAPOLEON L. NAZARENO OF
DEL CASTILLO,
PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY, CHAIR FE BARIN OF THE SECURITIES PABLITO V. SANIDAD and Promulgated:
EXCHANGE COMMISSION, and PRESIDENT ABAD,
FRANCIS LIM OF THE PHILIPPINE STOCK
EXCHANGE, ARNO V. SANIDAD,
VILLARAMA, JR.,

Respondents. Petitioners-in-Intervention. June 28, 2011

PEREZ,

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
MENDOZA, and

SERENO, JJ.

DECISION

CARPIO, J.:

The Case

This is an original petition for prohibition, injunction, declaratory relief and declaration of nullity of the
sale of shares of stock of Philippine Telecommunications Investment Corporation (PTIC) by the
government of the Republic of the Philippines to Metro Pacific Assets Holdings, Inc. (MPAH), an affiliate of
First Pacific Company Limited (First Pacific).

The Antecedents
The facts, according to petitioner Wilson P. Gamboa, a stockholder of Philippine Long Distance Telephone
Company (PLDT), are as follows:1
On 28 November 1928, the Philippine Legislature enacted Act No. 3436 which granted PLDT a franchise
and the right to engage in telecommunications business. In 1969, General Telephone and Electronics
Corporation (GTE), an American company and a major PLDT stockholder, sold 26 percent of the
outstanding common shares of PLDT to PTIC. In 1977, Prime Holdings, Inc. (PHI) was incorporated by
several persons, including Roland Gapud and Jose Campos, Jr. Subsequently, PHI became the owner of
111,415 shares of stock of PTIC by virtue of three Deeds of Assignment executed by PTIC stockholders
Ramon Cojuangco and Luis Tirso Rivilla. In 1986, the 111,415 shares of stock of PTIC held by PHI were
sequestered by the Presidential Commission on Good Government (PCGG). The 111,415 PTIC shares,
which represent about 46.125 percent of the outstanding capital stock of PTIC, were later declared by
this Court to be owned by the Republic of the Philippines.2
On 9 November 1967, PTIC was incorporated and had since engaged in the business of investment
holdings. PTIC held 26,034,263 PLDT common shares, or 13.847 percent of the total PLDT outstanding
common shares. PHI, on the other hand, was incorporated in 1977, and became the owner of 111,415
PTIC shares or 46.125 percent of the outstanding capital stock of PTIC by virtue of three Deeds of
Assignment executed by Ramon Cojuangco and Luis Tirso Rivilla. In 1986, the 111,415 PTIC shares held
by PHI were sequestered by the PCGG, and subsequently declared by this Court as part of the ill-gotten
wealth of former President Ferdinand Marcos. The sequestered PTIC shares were reconveyed to the
Republic of the Philippines in accordance with this Courts decision4 which became final and executory on
8 August 2006.
The Philippine Government decided to sell the 111,415 PTIC shares, which represent 6.4 percent of the
outstanding common shares of stock of PLDT, and designated the Inter-Agency Privatization Council
(IPC), composed of the Department of Finance and the PCGG, as the disposing entity. An invitation to bid
was published in seven different newspapers from 13 to 24 November 2006. On 20 November 2006, a
pre-bid conference was held, and the original deadline for bidding scheduled on 4 December 2006 was
reset to 8 December 2006. The extension was published in nine different newspapers.

In 1999, First Pacific, a Bermuda-registered, Hong Kong-based investment firm, acquired the remaining
During the 8 December 2006 bidding, Parallax Capital Management LP emerged as the highest bidder
54 percent of the outstanding capital stock of PTIC. On 20 November 2006, the Inter-Agency Privatization
with a bid of P25,217,556,000. The government notified First Pacific, the majority owner of PTIC shares,
Council (IPC) of the Philippine Government announced that it would sell the 111,415 PTIC shares, or
of the bidding results and gave First Pacific until 1 February 2007 to exercise its right of first refusal in
46.125 percent of the outstanding capital stock of PTIC, through a public bidding to be conducted on 4
accordance with PTICs Articles of Incorporation. First Pacific announced its intention to match Parallaxs
December 2006. Subsequently, the public bidding was reset to 8 December 2006, and only two bidders,
bid.
Parallax Venture Fund XXVII (Parallax) and Pan-Asia Presidio Capital, submitted their bids. Parallax won
with a bid of P25.6 billion or US$510 million.

On 31 January 2007, the House of Representatives (HR) Committee on Good Government conducted a
public hearing on the particulars of the then impending sale of the 111,415 PTIC shares.
Thereafter, First Pacific announced that it would exercise its right of first refusal as a PTIC stockholder
Respondents Teves and Sevilla were among those who attended the public hearing. The HR Committee
and buy the 111,415 PTIC shares by matching the bid price of Parallax. However, First Pacific failed to do
Report No. 2270 concluded that: (a) the auction of the governments 111,415 PTIC shares bore due
so by the 1 February 2007 deadline set by IPC and instead, yielded its right to PTIC itself which was then
diligence, transparency and conformity with existing legal procedures; and (b) First Pacifics intended
given by IPC until 2 March 2007 to buy the PTIC shares. On 14 February 2007, First Pacific, through its
acquisition of the governments 111,415 PTIC shares resulting in First Pacifics 100% ownership of
subsidiary, MPAH, entered into a Conditional Sale and Purchase Agreement of the 111,415 PTIC shares,
PTIC will not violate the 40 percent constitutional limit on foreign ownership of a public utility
or 46.125 percent of the outstanding capital stock of PTIC, with the Philippine Government for the price
since PTIC holds only 13.847 percent of the total outstanding common shares of PLDT. 5 On 28
of P25,217,556,000 or US$510,580,189. The sale was completed on 28 February 2007.
February 2007, First Pacific completed the acquisition of the 111,415 shares of stock of PTIC.

Since PTIC is a stockholder of PLDT, the sale by the Philippine Government of 46.125 percent of PTIC
Respondent Manuel V. Pangilinan admits the following facts: (a) the IPC conducted a public bidding for
shares is actually an indirect sale of 12 million shares or about 6.3 percent of the outstanding common
the sale of 111,415 PTIC shares or 46 percent of the outstanding capital stock of PTIC (the remaining 54
shares of PLDT. With the sale, First Pacifics common shareholdings in PLDT increased from 30.7
percent of PTIC shares was already owned by First Pacific and its affiliates); (b) Parallax offered the
percent to 37 percent, thereby increasing the common shareholdings of foreigners in PLDT to
highest bid amounting to P25,217,556,000; (c) pursuant to the right of first refusal in favor of PTIC and
about 81.47 percent. This violates Section 11, Article XII of the 1987 Philippine Constitution which
its shareholders granted in PTICs Articles of Incorporation, MPAH, a First Pacific affiliate, exercised its
limits foreign ownership of the capital of a public utility to not more than 40 percent.3
right of first refusal by matching the highest bid offered for PTIC shares on 13 February 2007; and (d) on
28 February 2007, the sale was consummated when MPAH paid IPC P25,217,556,000 and the
government delivered the certificates for the 111,415 PTIC shares. Respondent Pangilinan denies the
other allegations of facts of petitioner.
On the other hand, public respondents Finance Secretary Margarito B. Teves, Undersecretary John
P. Sevilla, and PCGG Commissioner Ricardo Abcede allege the following relevant facts:

On 28 February 2007, petitioner filed the instant petition for prohibition, injunction, declaratory relief,
and declaration of nullity of sale of the 111,415 PTIC shares. Petitioner claims, among others, that the
sale of the 111,415 PTIC shares would result in an increase in First Pacifics common shareholdings in
PLDT from 30.7 percent to 37 percent, and this, combined with Japanese NTT DoCoMos common
shareholdings in PLDT, would result to a total foreign common shareholdings in PLDT of 51.56 percent
which is over the 40 percent constitutional limit.6 Petitioner asserts:

This Court is not a trier of facts. Factual questions such as those raised by petitioner,9 which
indisputably demand a thorough examination of the evidence of the parties, are generally beyond this
Courts jurisdiction. Adhering to this well-settled principle, the Court shall confine the resolution of the
If and when the sale is completed, First Pacifics equity in PLDT will go up from 30.7 percent to instant controversy solely on the threshold and purely legal issue of whether the term capital in Section
37.0 percent of its common or voting- stockholdings, x x x. Hence, the consummation of the sale 11, Article XII of the Constitution refers to the total common shares only or to the total outstanding
will put the two largest foreign investors in PLDT First Pacific and Japans NTT DoCoMo, which capital stock (combined total of common and non-voting preferred shares) of PLDT, a public utility.
is the worlds largest wireless telecommunications firm, owning 51.56 percent of PLDT common
equity. x x x With the completion of the sale, data culled from the official website of the New
York Stock Exchange (www.nyse.com) showed that those foreign entities, which own at least five
percent of common equity, will collectively own 81.47 percent of PLDTs common equity. x x x
The Ruling of the Court
x x x as the annual disclosure reports, also referred to as Form 20-K reports
x x x which PLDT submitted to the New York Stock Exchange for the period
2003-2005, revealed that First Pacific and several other foreign entities
breached the constitutional limit of 40 percent ownership as early as 2003.
The petition is partly meritorious.
x x x7

Petition for declaratory relief treated as petition for mandamus

Petitioner raises the following issues: (1) whether the consummation of the then impending sale of
111,415 PTIC shares to First Pacific violates the constitutional limit on foreign ownership of a public
utility; (2) whether public respondents committed grave abuse of discretion in allowing the sale of the
111,415 PTIC shares to First Pacific; and (3) whether the sale of common shares to foreigners in excess of
40 percent of the entire subscribed common capital stock violates the constitutional limit on foreign
At the outset, petitioner is faced with a procedural barrier. Among the remedies petitioner seeks, only the
ownership of a public utility.8
petition for prohibition is within the original jurisdiction of this court, which however is not exclusive but
is concurrent with the Regional Trial Court and the Court of Appeals. The actions for declaratory
relief,10 injunction, and annulment of sale are not embraced within the original jurisdiction of the
Supreme Court. On this ground alone, the petition could have been dismissed outright.
On 13 August 2007, Pablito V. Sanidad and Arno V. Sanidad filed a Motion for Leave to Intervene and
Admit Attached Petition-in-Intervention. In the Resolution of 28 August 2007, the Court granted the
motion and noted the Petition-in-Intervention.
While direct resort to this Court may be justified in a petition for prohibition,11 the Court shall
nevertheless refrain from discussing the grounds in support of the petition for prohibition since on 28
February 2007, the questioned sale was consummated when MPAH paid IPC P25,217,556,000 and the
government delivered the certificates for the 111,415 PTIC shares.
Petitioners-in-intervention join petitioner Wilson Gamboa x x x in seeking, among others, to enjoin
and/or nullify the sale by respondents of the 111,415 PTIC shares to First Pacific or assignee.
Petitioners-in-intervention claim that, as PLDT subscribers, they have a stake in the outcome of the
controversy x x x where the Philippine Government is completing the sale of government owned assets in
[PLDT], unquestionably a public utility, in violation of the nationality restrictions of the Philippine
However, since the threshold and purely legal issue on the definition of the term capital in Section 11,
Constitution.
Article XII of the Constitution has far-reaching implications to the national economy, the Court treats the
petition for declaratory relief as one for mandamus.12

In Salvacion v. Central Bank of the Philippines,13 the Court treated the petition for declaratory relief as one
The Issue for mandamus considering the grave injustice that would result in the interpretation of a banking law. In
that case, which involved the crime of rape committed by a foreign tourist against a Filipino minor and
the execution of the final judgment in the civil case for damages on the tourists dollar deposit with a local has far-reaching implications to the entire nation, and to future generations of Filipinos, it is
bank, the Court declared Section 113 of Central Bank Circular No. 960, exempting foreign currency the threshhold legal issue presented in this case.
deposits from attachment, garnishment or any other order or process of any court, inapplicable due to
the peculiar circumstances of the case. The Court held that injustice would result especially to a citizen
aggrieved by a foreign guest like accused x x x that would negate Article 10 of the Civil Code which
provides that in case of doubt in the interpretation or application of laws, it is presumed that the
lawmaking body intended right and justice to prevail. The Court therefore required respondents Central The Court first encountered the issue on the definition of the term capital in Section 11, Article XII of the
Bank of the Philippines, the local bank, and the accused to comply with the writ of execution issued in Constitution in the case of Fernandez v. Cojuangco, docketed as G.R. No. 157360.16 That case involved
the civil case for damages and to release the dollar deposit of the accused to satisfy the judgment. the same public utility (PLDT) and substantially the same private respondents. Despite the importance
and novelty of the constitutional issue raised therein and despite the fact that the petition involved a
purely legal question, the Court declined to resolve the case on the merits, and instead denied the same
for disregarding the hierarchy of courts.17 There, petitioner Fernandez assailed on a pure question of law
the Regional Trial Courts Decision of 21 February 2003 via a petition for review under Rule 45. The
In Alliance of Government Workers v. Minister of Labor,14 the Court similarly brushed aside the procedural Courts Resolution, denying the petition, became final on 21 December 2004.
infirmity of the petition for declaratory relief and treated the same as one for mandamus. In Alliance, the
issue was whether the government unlawfully excluded petitioners, who were government employees,
The instant petition therefore presents the Court with another opportunity to finally settle this purely
from the enjoyment of rights to which they were entitled under the law. Specifically, the question was:
legal issue which is of transcendental importance to the national economy and a fundamental
Are the branches, agencies, subdivisions, and instrumentalities of the Government, including
requirement to a faithful adherence to our Constitution. The Court must forthwith seize such
government owned or controlled corporations included among the four employers under Presidential
opportunity, not only for the benefit of the litigants, but more significantly for the benefit of the entire
Decree No. 851 which are required to pay their employees x x x a thirteenth (13th) month pay x x x ? The
Filipino people, to ensure, in the words of the Constitution, a self-reliant and independent national
Constitutional principle involved therein affected all government employees, clearly justifying a relaxation
economy effectively controlled by Filipinos.18 Besides, in the light of vague and confusing positions
of the technical rules of procedure, and certainly requiring the interpretation of the assailed presidential
taken by government agencies on this purely legal issue, present and future foreign investors in this
decree.
country deserve, as a matter of basic fairness, a categorical ruling from this Court on the extent of their
participation in the capital of public utilities and other nationalized businesses.

In short, it is well-settled that this Court may treat a petition for declaratory relief as one for mandamus
if the issue involved has far-reaching implications. As this Court held in Salvacion:
Despite its far-reaching implications to the national economy, this purely legal issue has remained
unresolved for over 75 years since the 1935 Constitution. There is no reason for this Court to evade this
ever recurring fundamental issue and delay again defining the term capital, which appears not only in
Section 11, Article XII of the Constitution, but also in Section 2, Article XII on co-production and joint
venture agreements for the development of our natural resources,19 in Section 7, Article XII on ownership
The Court has no original and exclusive jurisdiction over a petition for declaratory
of private lands,20 in Section 10, Article XII on the reservation of certain investments to Filipino
relief. However, exceptions to this rule have been recognized. Thus, where the petition has
citizens,21 in Section 4(2), Article XIV on the ownership of educational institutions,22 and in Section 11(2),
far-reaching implications and raises questions that should be resolved, it may be treated
Article XVI on the ownership of advertising companies.23
as one for mandamus.15 (Emphasis supplied)

Petitioner has locus standi

In the present case, petitioner seeks primarily the interpretation of the term capital in Section 11, Article
XII of the Constitution. He prays that this Court declare that the term capital refers to common shares
only, and that such shares constitute the sole basis in determining foreign equity in a public utility.
Petitioner further asks this Court to declare any ruling inconsistent with such interpretation
unconstitutional.
There is no dispute that petitioner is a stockholder of PLDT. As such, he has the right to question the
subject sale, which he claims to violate the nationality requirement prescribed in Section 11, Article XII of
the Constitution. If the sale indeed violates the Constitution, then there is a possibility that PLDTs
franchise could be revoked, a dire consequence directly affecting petitioners interest as a stockholder.
The interpretation of the term capital in Section 11, Article XII of the Constitution has far-reaching
implications to the national economy. In fact, a resolution of this issue will determine whether Filipinos
are masters, or second class citizens, in their own country. What is at stake here is whether Filipinos or
foreigners will have effective control of the national economy. Indeed, if ever there is a legal issue that
More importantly, there is no question that the instant petition raises matters of transcendental
importance to the public. The fundamental and threshold legal issue in this case, involving the national
economy and the economic welfare of the Filipino people, far outweighs any perceived impediment in the
legal personality of the petitioner to bring this action.

Section 11. No franchise, certificate, or any other form of authorization for the operation
of a public utility shall be granted except to citizens of the Philippines or to corporations
or associations organized under the laws of the Philippines, at least sixty per centum of
In Chavez v. PCGG,24 the Court upheld the right of a citizen to bring a suit on matters of transcendental whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization
importance to the public, thus: be exclusive in character or for a longer period than fifty years. Neither shall any such franchise
or right be granted except under the condition that it shall be subject to amendment, alteration,
or repeal by the Congress when the common good so requires. The State shall encourage equity
participation in public utilities by the general public. The participation of foreign investors in the
governing body of any public utility enterprise shall be limited to their proportionate share in its
In Taada v. Tuvera, the Court asserted that when the issue concerns a public right and the object of capital, and all the executive and managing officers of such corporation or association must be
mandamus is to obtain the enforcement of a public duty, the people are regarded as the real citizens of the Philippines. (Emphasis supplied)
parties in interest; and because it is sufficient that petitioner is a citizen and as such is interested
in the execution of the laws, he need not show that he has any legal or special interest in the
result of the action. In the aforesaid case, the petitioners sought to enforce their right to be informed on
matters of public concern, a right then recognized in Section 6, Article IV of the 1973 Constitution, in
connection with the rule that laws in order to be valid and enforceable must be published in the Official
Gazette or otherwise effectively promulgated. In ruling for the petitioners legal standing, the Court
declared that the right they sought to be enforced is a public right recognized by no less than the
The above provision substantially reiterates Section 5, Article XIV of the 1973 Constitution, thus:
fundamental law of the land.

Legaspi v. Civil Service Commission, while reiterating Taada, further declared that when a mandamus
proceeding involves the assertion of a public right, the requirement of personal interest is
satisfied by the mere fact that petitioner is a citizen and, therefore, part of the general public Section 5. No franchise, certificate, or any other form of authorization for the operation
which possesses the right. of a public utility shall be granted except to citizens of the Philippines or to corporations
or associations organized under the laws of the Philippines at least sixty per centum of
the capital of which is owned by such citizens, nor shall such franchise, certificate, or
Further, in Albano v. Reyes, we said that while expenditure of public funds may not have been involved
authorization be exclusive in character or for a longer period than fifty years. Neither shall any
under the questioned contract for the development, management and operation of the Manila
such franchise or right be granted except under the condition that it shall be subject to
International Container Terminal, public interest [was] definitely involved considering the important
amendment, alteration, or repeal by the National Assembly when the public interest so requires.
role [of the subject contract] . . . in the economic development of the country and the magnitude
The State shall encourage equity participation in public utilities by the general public. The
of the financial consideration involved. We concluded that, as a consequence, the disclosure provision
participation of foreign investors in the governing body of any public utility enterprise shall be
in the Constitution would constitute sufficient authority for upholding the petitioners standing.
limited to their proportionate share in the capital thereof. (Emphasis supplied)
(Emphasis supplied)

Clearly, since the instant petition, brought by a citizen, involves matters of transcendental public
importance, the petitioner has the requisite locus standi.

The foregoing provision in the 1973 Constitution reproduced Section 8, Article XIV of the 1935
Constitution, viz:
Definition of the Term Capital in

Section 11, Article XII of the 1987 Constitution

Section 11, Article XII (National Economy and Patrimony) of the 1987 Constitution mandates
the Filipinization of public utilities, to wit:
Section 8. No franchise, certificate, or any other form of authorization for the operation
of a public utility shall be granted except to citizens of the Philippines or to corporations
or other entities organized under the laws of the Philippines sixty per centum of the
capital of which is owned by citizens of the Philippines, nor shall such franchise, certificate,
or authorization be exclusive in character or for a longer period than fifty years. No franchise or
 right shall be granted to any individual, firm, or corporation, except under the condition that it which means that foreigners exercise significant control over PLDT, patently violating the 40 percent
shall be subject to amendment, alteration, or repeal by the Congress when the public interest so foreign equity limitation in public utilities prescribed by the Constitution.
requires. (Emphasis supplied)

Respondents, on the other hand, do not offer any definition of the term capital in Section 11, Article XII
of the Constitution. More importantly, private respondents Nazareno and Pangilinan of PLDT do not
dispute that more than 40 percent of the common shares of PLDT are held by foreigners.
Father Joaquin G. Bernas, S.J., a leading member of the 1986 Constitutional Commission, reminds us
that the Filipinization provision in the 1987 Constitution is one of the products of the spirit of
nationalism which gripped the 1935 Constitutional Convention.25 The 1987 Constitution provides for
the Filipinization of public utilities by requiring that any form of authorization for the operation of public
In particular, respondent Nazarenos Memorandum, consisting of 73 pages, harps mainly on the
utilities should be granted only to citizens of the Philippines or to corporations or associations organized
procedural infirmities of the petition and the supposed violation of the due process rights of the affected
under the laws of the Philippines at least sixty per centum of whose capital is owned by such
foreign common shareholders. Respondent Nazareno does not deny petitioners allegation of foreigners
citizens. The provision is [an express] recognition of the sensitive and vital position of public
dominating the common shareholdings of PLDT. Nazarenostressed mainly that the petition seeks to
utilities both in the national economy and for national security.26 The evident purpose of the
divest foreign common shareholders purportedly exceeding 40% of the total common
citizenship requirement is to prevent aliens from assuming control of public utilities, which may be
shareholdings in PLDT of their ownership over their shares. Thus, the foreign natural and juridical
inimical to the national interest.27 This specific provision explicitly reserves to Filipino citizens control of
PLDT shareholders must be impleaded in this suit so that they can be
public utilities, pursuant to an overriding economic goal of the 1987 Constitution: to conserve and
heard.34 Essentially, Nazareno invokes denial of due process on behalf of the foreign common
develop our patrimony28 and ensure a self-reliant and independent national
shareholders.
economy effectively controlled by Filipinos.29

While Nazareno does not introduce any definition of the term capital, he states that among the factual
Any citizen or juridical entity desiring to operate a public utility must therefore meet the minimum
assertions that need to be established to counter petitioners allegations is the uniform
nationality requirement prescribed in Section 11, Article XII of the Constitution. Hence, for a corporation
interpretation by government agencies (such as the SEC), institutions and corporations (such as
to be granted authority to operate a public utility, at least 60 percent of its capital must be owned by
the Philippine National Oil Company-Energy Development Corporation or PNOC-EDC) of including
Filipino citizens.
both preferred shares and common shares in controlling interest in view of testing compliance
with the 40% constitutional limitation on foreign ownership in public utilities.35

The crux of the controversy is the definition of the term capital. Does the term capital in Section 11,
Article XII of the Constitution refer to common shares or to the total outstanding capital stock (combined
Similarly, respondent Manuel V. Pangilinan does not define the term capital in Section 11, Article XII of
total of common and non-voting preferred shares)?
the Constitution. Neither does he refute petitioners claim of foreigners holding more than 40 percent of
PLDTs common shares. Instead, respondent Pangilinan focuses on the procedural flaws of the petition
and the alleged violation of the due process rights of foreigners. Respondent Pangilinan emphasizes in his
Memorandum (1) the absence of this Courts jurisdiction over the petition; (2) petitioners lack of standing;
(3) mootness of the petition; (4) non-availability of declaratory relief; and (5) the denial of due process
Petitioner submits that the 40 percent foreign equity limitation in domestic public utilities refers only to
rights. Moreover, respondent Pangilinan alleges that the issue should be whether owners of shares in
common shares because such shares are entitled to vote and it is through voting that control over a
PLDT as well as owners of shares in companies holding shares in PLDT may be required to relinquish
corporation is exercised. Petitioner posits that the term capital in Section 11, Article XII of the
their shares in PLDT and in those companies without any law requiring them to surrender their shares
Constitution refers to the ownership of common capital stock subscribed and outstanding, which class of
and also without notice and trial.
shares alone, under the corporate set-up of PLDT, can vote and elect members of the board of directors.
It is undisputed that PLDTs non-voting preferred shares are held mostly by Filipino citizens.30 This arose
from Presidential Decree No. 217,31 issued on 16 June 1973 by then President Ferdinand Marcos,
requiring every applicant of a PLDT telephone line to subscribe to non-voting preferred shares to pay for
the investment cost of installing the telephone line.32
Respondent Pangilinan further asserts that Section 11, [Article XII of the Constitution] imposes no
nationality requirement on the shareholders of the utility company as a condition for keeping
their shares in the utility company. According to him, Section 11 does not authorize taking one
persons property (the shareholders stock in the utility company) on the basis of another partys alleged
failure to satisfy a requirement that is a condition only for that other partys retention of another piece of
Petitioners-in-intervention basically reiterate petitioners arguments and adopt petitioners definition of the
property (the utility company being at least 60% Filipino-owned to keep its franchise).36
term capital.33 Petitioners-in-intervention allege that the approximate foreign ownership of common
capital stock of PLDT x x x already amounts to at least 63.54% of the total outstanding common stock,
The OSG, representing public respondents Secretary Margarito Teves, Undersecretary John P. Sevilla,
Commissioner Ricardo Abcede, and Chairman Fe Barin, is likewise silent on the definition of the term
capital. In its Memorandum37 dated 24 September 2007, the OSG also limits its discussion on the
supposed procedural defects of the petition, i.e. lack of standing, lack of jurisdiction, non-inclusion of
interested parties, and lack of basis for injunction. The OSG does not present any definition or
interpretation of the term capital in Section 11, Article XII of the Constitution. The OSG contends that
the petition actually partakes of a collateral attack on PLDTs franchise as a public utility, which in effect
requires a full-blown trial where all the parties in interest are given their day in court.38
Respondent Francisco Ed Lim, impleaded as President and Chief Executive Officer of the Philippine Stock
Exchange (PSE), does not also define the term capital and seeks the dismissal of the petition on the
following grounds: (1) failure to state a cause of action against Lim; (2) the PSE allegedly implemented its
rules and required all listed companies, including PLDT, to make proper and timely disclosures; and (3)
the reliefs prayed for in the petition would adversely impact the stock market.
In the earlier case of Fernandez v. Cojuangco, petitioner Fernandez who claimed to be a stockholder of
record of PLDT, contended that the term capital in the 1987 Constitution refers to shares entitled to vote
or the common shares. Fernandez explained thus:
The forty percent (40%) foreign equity limitation in public utilities prescribed by the
Constitution refers to ownership of shares of stock entitled to vote, i.e., common shares,
considering that it is through voting that control is being exercised. x x x
Obviously, the intent of the framers of the Constitution in imposing limitations and restrictions
on fully nationalized and partially nationalized activities is for Filipino nationals to be always in
control of the corporation undertaking said activities. Otherwise, if the Trial Courts ruling
upholding respondents arguments were to be given credence, it would be possible for the
ownership structure of a public utility corporation to be divided into one percent (1%) common
stocks and ninety-nine percent (99%) preferred stocks. Following the Trial Courts ruling
adopting respondents arguments, the common shares can be owned entirely by foreigners thus
creating an absurd situation wherein foreigners, who are supposed to be minority shareholders,
control the public utility corporation.
xxxx
Thus, the 40% foreign ownership limitation should be interpreted to apply to both the beneficial
ownership and the controlling interest.
xxxx
Clearly, therefore, the forty percent (40%) foreign equity limitation in public utilities prescribed
by the Constitution refers to ownership of shares of stock entitled to vote, i.e., common shares.
Furthermore, ownership of record of shares will not suffice but it must be shown that the legal
and beneficial ownership rests in the hands of Filipino citizens. Consequently, in the case of
petitioner PLDT, since it is already admitted that the voting interests of foreigners which would
gain entry to petitioner PLDT by the acquisition of SMART shares through the Questioned
Transactions is equivalent to 82.99%, and the nominee arrangements between the foreign
principals and the Filipino owners is likewise admitted, there is, therefore, a violation of Section
11, Article XII of the Constitution.
Parenthetically, the Opinions dated February 15, 1988 and April 14, 1987 cited by the Trial
Court to support the proposition that the meaning of the word capital as used in Section 11,
Article XII of the Constitution allegedly refers to the sum total of the shares subscribed and
paid-in by the shareholder and it allegedly is immaterial how the stock is classified, whether as
common or preferred, cannot stand in the face of a clear legislative policy as stated in the FIA
which took effect in 1991 or way after said opinions were rendered, and as clarified by the
above-quoted Amendments. In this regard, suffice it to state that as between the law and an
opinion rendered by an administrative agency, the law indubitably prevails. Moreover, said
Opinions are merely advisory and cannot prevail over the clear intent of the framers of the
Constitution.
In the same vein, the SECs construction of Section 11, Article XII of the Constitution is at best
merely advisory for it is the courts that finally determine what a law means.39
On the other hand, respondents therein, Antonio O. Cojuangco, Manuel V. Pangilinan, Carlos A.
Arellano, Helen Y. Dee, Magdangal B. Elma, Mariles Cacho-Romulo, Fr. Bienvenido F. Nebres, Ray C.
Espinosa, Napoleon L. Nazareno, Albert F. Del Rosario, and Orlando B. Vea, argued that the term capital
in Section 11, Article XII of the Constitution includes preferred shares since the Constitution does not
distinguish among classes of stock, thus:
16. The Constitution applies its foreign ownership limitation on the corporations capital, without
distinction as to classes of shares. x x x
In this connection, the Corporation Code which was already in force at the time the present
(1987) Constitution was drafted defined outstanding capital stock as follows:

Section 137. Outstanding capital stock defined. The term outstanding capital stock, as used in
this Code, means the total shares of stock issued under binding subscription agreements to
subscribers or stockholders, whether or not fully or partially paid, except treasury shares.
Section 137 of the Corporation Code also does not distinguish between common and preferred
shares, nor exclude either class of shares, in determining the outstanding capital stock (the
capital) of a corporation. Consequently, petitioners suggestion to reckon PLDTs foreign equity
only on the basis of PLDTs outstanding common shares is without legal basis. The language of
the Constitution should be understood in the sense it has in common use.
xxxx
17. But even assuming that resort to the proceedings of the Constitutional Commission is
necessary, there is nothing in the Record of the Constitutional Commission (Vol. III) which
petitioner misleadingly cited in the Petition x x x which supports petitioners view that only
common shares should form the basis for computing a public utilitys foreign equity.
xxxx
18. In addition, the SEC the government agency primarily responsible for implementing the
Corporation Code, and which also has the responsibility of ensuring compliance with the
Constitutions foreign equity restrictions as regards nationalized activities x x x has categorically
ruled that both common and preferred shares are properly considered in determining
outstanding capital stock and the nationality composition thereof.40
We agree with petitioner and petitioners-in-intervention. The term capital in Section 11, Article XII of the
Constitution refers only to shares of stock entitled to vote in the election of directors, and thus in the
present case only to common shares,41 and not to the total outstanding capital stock comprising both
common and non-voting preferred shares.
The Corporation Code of the Philippines42 classifies shares as common or preferred, thus:
Sec. 6. Classification of shares. - The shares of stock of stock corporations may be divided into
classes or series of shares, or both, any of which classes or series of shares may have such
rights, privileges or restrictions as may be stated in the articles of incorporation: Provided, That
no share may be deprived of voting rights except those classified and issued as preferred
or redeemable shares, unless otherwise provided in this Code: Provided, further, That there
shall always be a class or series of shares which have complete voting rights. Any or all of the
shares or series of shares may have a par value or have no par value as may be provided for in
the articles of incorporation: Provided, however, That banks, trust companies, insurance
companies, public utilities, and building and loan associations shall not be permitted to issue
no-par value shares of stock.
Preferred shares of stock issued by any corporation may be given preference in the distribution
of the assets of the corporation in case of liquidation and in the distribution of dividends, or
such other preferences as may be stated in the articles of incorporation which are
not violative of the provisions of this Code: Provided, That preferred shares of stock may be
issued only with a stated par value. The Board of Directors, where authorized in the articles of
incorporation, may fix the terms and conditions of preferred shares of stock or any series
thereof: Provided, That such terms and conditions shall be effective upon the filing of a
certificate thereof with the Securities and Exchange Commission.
Shares of capital stock issued without par value shall be deemed fully paid and non-assessable
and the holder of such shares shall not be liable to the corporation or to its creditors in respect
thereto: Provided; That shares without par value may not be issued for a consideration less than
the value of five (P5.00) pesos per share: Provided, further, That the entire consideration
received by the corporation for its no-par value shares shall be treated as capital and shall not
be available for distribution as dividends.
A corporation may, furthermore, classify its shares for the purpose of insuring compliance with
constitutional or legal requirements.
Except as otherwise provided in the articles of incorporation and stated in the certificate of
stock, each share shall be equal in all respects to every other share.
Where the articles of incorporation provide for non-voting shares in the cases allowed by this
Code, the holders of such shares shall nevertheless be entitled to vote on the following matters:
1. Amendment of the articles of incorporation;
2. Adoption and amendment of by-laws;
3. Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all
of the corporate property;
4. Incurring, creating or increasing bonded indebtedness;
5. Increase or decrease of capital stock;
6. Merger or consolidation of the corporation with another corporation or other
corporations;
7. Investment of corporate funds in another corporation or business in accordance
with this Code; and
8. Dissolution of the corporation.
 Except as provided in the immediately preceding paragraph, the vote necessary to approve a
particular corporate act as provided in this Code shall be deemed to refer only to stocks with
voting rights.
MR. VILLEGAS. We have just had a long discussion with the members of the team from the UP
Law Center who provided us a draft. The phrase that is contained here which we adopted
from the UP draft is 60 percent of voting stock.

Indisputably, one of the rights of a stockholder is the right to participate in the control or management of MR. NOLLEDO. That must be based on the subscribed capital stock, because unless declared
the corporation.43 This is exercised through his vote in the election of directors because it is the board of delinquent, unpaid capital stock shall be entitled to vote.
directors that controls or manages the corporation.44 In the absence of provisions in the articles of
incorporation denying voting rights to preferred shares, preferred shares have the same voting rights as
common shares. However, preferred shareholders are often excluded from any control, that is, deprived of
the right to vote in the election of directors and on other matters, on the theory that the preferred
shareholders are merely investors in the corporation for income in the same manner as bondholders.45 In MR. VILLEGAS. That is right.
fact, under the Corporation Code only preferred or redeemable shares can be deprived of the right to
vote.46 Common shares cannot be deprived of the right to vote in any corporate meeting, and any
provision in the articles of incorporation restricting the right of common shareholders to vote is invalid.47

MR. NOLLEDO. Thank you.

Considering that common shares have voting rights which translate to control, as opposed to preferred
shares which usually have no voting rights, the term capital in Section 11, Article XII of the Constitution
refers only to common shares. However, if the preferred shares also have the right to vote in the election With respect to an investment by one corporation in another corporation, say, a corporation
of directors, then the term capital shall include such preferred shares because the right to participate in with 60-40 percent equity invests in another corporation which is permitted by the
the control or management of the corporation is exercised through the right to vote in the election of Corporation Code, does the Committee adopt the grandfather rule?
directors. In short, the term capital in Section 11, Article XII of the Constitution refers only to
shares of stock that can vote in the election of directors.

MR. VILLEGAS. Yes, that is the understanding of the Committee.

This interpretation is consistent with the intent of the framers of the Constitution to place in the hands of
Filipino citizens the control and management of public utilities. As revealed in the deliberations of the
Constitutional Commission, capital refers to the voting stock or controlling interest of a corporation, to
wit: MR. NOLLEDO. Therefore, we need additional Filipino capital?

MR. NOLLEDO. In Sections 3, 9 and 15, the Committee stated local or Filipino equity and MR. VILLEGAS. Yes.48
foreign equity; namely, 60-40 in Section 3, 60-40 in Section 9 and 2/3-1/3 in Section 15.

xxxx
MR. VILLEGAS. That is right.
MR. AZCUNA. May I be clarified as to that portion that was accepted by the Committee.

MR. NOLLEDO. In teaching law, we are always faced with this question: Where do we base the
equity requirement, is it on the authorized capital stock, on the subscribed capital stock, or on
MR. VILLEGAS. The portion accepted by the Committee is the deletion of the phrase voting
the paid-up capital stock of a corporation? Will the Committee please enlighten me on this?
stock or controlling interest.
 MR. AZCUNA. Hence, without the Davide amendment, the committee report would read:
corporations or associations at least sixty percent of whose CAPITAL is owned by such citizens.
MR. VILLEGAS. Yes.
MR. AZCUNA. So if the Davide amendment is lost, we are stuck with 60 percent of the capital to
be owned by citizens.
MR. VILLEGAS. That is right.
MR. AZCUNA. But the control can be with the foreigners even if they are the minority. Let
us say 40 percent of the capital is owned by them, but it is the voting capital, whereas,
the Filipinos own the nonvoting shares. So we can have a situation where the corporation
is controlled by foreigners despite being the minority because they have the voting
capital. That is the anomaly that would result here.
MR. BENGZON. No, the reason we eliminated the word stock as stated in the 1973 and
1935 Constitutions is that according to Commissioner Rodrigo, there are associations
that do not have stocks. That is why we say CAPITAL.
MR. AZCUNA. We should not eliminate the phrase controlling interest.
MR. BENGZON. In the case of stock corporations, it is assumed. 49 (Emphasis supplied)
Thus, 60 percent of the capital assumes, or should result in, controlling interest in the corporation.
Reinforcing this interpretation of the term capital, as referring to controlling interest or shares entitled to
vote, is the definition of a Philippine national in the Foreign Investments Act of 1991,50 to wit:
SEC. 3. Definitions. - As used in this Act:
a. The term Philippine national shall mean a citizen of the Philippines; or a domestic
partnership or association wholly owned by citizens of the Philippines; or a corporation
organized under the laws of the Philippines of which at least sixty percent (60%) of the
capital stock outstanding and entitled to vote is owned and held by citizens of the
Philippines; or a corporation organized abroad and registered as doing business in the
Philippines under the Corporation Code of which one hundred percent (100%) of the capital
stock outstanding and entitled to vote is wholly owned by Filipinos or a trustee of funds for
pension or other employee retirement or separation benefits, where the trustee is a Philippine
national and at least sixty percent (60%) of the fund will accrue to the benefit of Philippine
nationals: Provided, That where a corporation and its non-Filipino stockholders own stocks in a
Securities and Exchange Commission (SEC) registered enterprise, at least sixty percent (60%) of
the capital stock outstanding and entitled to vote of each of both corporations must be owned
and held by citizens of the Philippines and at least sixty percent (60%) of the members of the
Board of Directors of each of both corporations must be citizens of the Philippines, in order that
the corporation, shall be considered a Philippine national. (Emphasis supplied)
In explaining the definition of a Philippine national, the Implementing Rules and Regulations of the
Foreign Investments Act of 1991 provide:
b. Philippine national shall mean a citizen of the Philippines or a domestic partnership or
association wholly owned by the citizens of the Philippines; or a corporation organized under
the laws of the Philippines of which at least sixty percent [60%] of the capital stock
outstanding and entitled to vote is owned and held by citizens of the Philippines; or a
trustee of funds for pension or other employee retirement or separation benefits, where the
trustee is a Philippine national and at least sixty percent [60%] of the fund will accrue to the
benefit of the Philippine nationals; Provided,that where a corporation its non-Filipino
stockholders own stocks in a Securities and Exchange Commission [SEC] registered enterprise,
at least sixty percent [60%] of the capital stock outstanding and entitled to vote of both
corporations must be owned and held by citizens of the Philippines and at least sixty percent
[60%] of the members of the Board of Directors of each of both corporation must be citizens of
the Philippines, in order that the corporation shall be considered a Philippine national. The
control test shall be applied for this purpose.
Compliance with the required Filipino ownership of a corporation shall be determined on
the basis of outstanding capital stock whether fully paid or not, but only such stocks
which are generally entitled to vote are considered.
 For stocks to be deemed owned and held by Philippine citizens or Philippine nationals,
mere legal title is not enough to meet the required Filipino equity. Full beneficial
ownership of the stocks, coupled with appropriate voting rights is essential. Thus, stocks,
In the example given, only the foreigners holding the common shares have voting rights in the election of
the voting rights of which have been assigned or transferred to aliens cannot be
directors, even if they hold only 100 shares. The foreigners, with a minuscule equity of less than 0.001
considered held by Philippine citizens or Philippine nationals.
percent, exercise control over the public utility. On the other hand, the Filipinos, holding more than
99.999 percent of the equity, cannot vote in the election of directors and hence, have no control over the
public utility. This starkly circumvents the intent of the framers of the Constitution, as well as the clear
language of the Constitution, to place the control of public utilities in the hands of Filipinos. It also
renders illusory the State policy of an independent national economy effectively controlled by Filipinos.
Individuals or juridical entities not meeting the aforementioned qualifications are
considered as non-Philippine nationals. (Emphasis supplied)

The example given is not theoretical but can be found in the real world, and in fact exists in the
present case.

Mere legal title is insufficient to meet the 60 percent Filipino-owned capital required in the Constitution.
Full beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent of the
voting rights, is required. The legal and beneficial ownership of 60 percent of the outstanding capital
stock must rest in the hands of Filipino nationals in accordance with the constitutional mandate.
Otherwise, the corporation is considered as non-Philippine national[s].
Holders of PLDT preferred shares are explicitly denied of the right to vote in the election of directors.
PLDTs Articles of Incorporation expressly state that the holders of Serial Preferred Stock shall not be
entitled to vote at any meeting of the stockholders for the election of directors or for any other
purpose or otherwise participate in any action taken by the corporation or its stockholders, or to receive
notice of any meeting of stockholders.51

Under Section 10, Article XII of the Constitution, Congress may reserve to citizens of the Philippines or to
corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such
higher percentage as Congress may prescribe, certain areas of investments. Thus, in numerous laws On the other hand, holders of common shares are granted the exclusive right to vote in the election of
Congress has reserved certain areas of investments to Filipino citizens or to corporations at least sixty directors. PLDTs Articles of Incorporation52 state that each holder of Common Capital Stock shall have
percent of the capital of which is owned by Filipino citizens. Some of these laws are: (1) Regulation of one vote in respect of each share of such stock held by him on all matters voted upon by the
Award of Government Contracts or R.A. No. 5183; (2) Philippine Inventors Incentives Act or R.A. No. stockholders, and the holders of Common Capital Stock shall have the exclusive right to vote for
3850; (3) Magna Carta for Micro, Small and Medium Enterprises or R.A. No. 6977; (4) Philippine the election of directors and for all other purposes.53
Overseas Shipping Development Act or R.A. No. 7471; (5) Domestic Shipping Development Act of 2004 or
R.A. No. 9295; (6) Philippine Technology Transfer Act of 2009 or R.A. No. 10055; and (7) Ship Mortgage
Decree or P.D. No. 1521. Hence, the term capital in Section 11, Article XII of the Constitution is also
used in the same context in numerous lawsreserving certain areas of investments to Filipino citizens.
In short, only holders of common shares can vote in the election of directors, meaning only common
shareholders exercise control over PLDT. Conversely, holders of preferred shares, who have no voting
rights in the election of directors, do not have any control over PLDT. In fact, under PLDTs Articles of
Incorporation, holders of common shares have voting rights for all purposes, while holders of preferred
To construe broadly the term capital as the total outstanding capital stock, including both common shares have no voting right for any purpose whatsoever.
and non-voting preferred shares, grossly contravenes the intent and letter of the Constitution that the
State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.
A broad definition unjustifiably disregards who owns the all-important voting stock, which necessarily
equates to control of the public utility.
It must be stressed, and respondents do not dispute, that foreigners hold a majority of the common
shares of PLDT. In fact, based on PLDTs 2010 General Information Sheet (GIS),54which is a document
required to be submitted annually to the Securities and Exchange Commission,55 foreigners hold
120,046,690 common shares of PLDT whereas Filipinos hold only 66,750,622 common shares.56 In other
We shall illustrate the glaring anomaly in giving a broad definition to the term capital. Let us assume words, foreigners hold 64.27% of the total number of PLDTs common shares, while Filipinos hold only
that a corporation has 100 common shares owned by foreigners and 1,000,000 non-voting preferred 35.73%. Since holding a majority of the common shares equates to control, it is clear that foreigners
shares owned by Filipinos, with both classes of share having a par value of one peso (P1.00) per share. exercise control over PLDT. Such amount of control unmistakably exceeds the allowable 40 percent limit
Under the broad definition of the term capital, such corporation would be considered compliant with the on foreign ownership of public utilities expressly mandated in Section 11, Article XII of the Constitution.
40 percent constitutional limit on foreign equity of public utilities since the overwhelming majority, or
more than 99.999 percent, of the total outstanding capital stock is Filipino owned. This is obviously
absurd.
Moreover, the Dividend Declarations of PLDT for 2009,57 as submitted to the SEC, shows that per share
the SIP58 preferred shares earn a pittance in dividends compared to the common shares. PLDT declared
dividends for the common shares at P70.00 per share, while the declared dividends for the preferred
Indisputably, construing the term capital in Section 11, Article XII of the Constitution to include both
shares amounted to a measly P1.00 per share.59 So the preferred shares not only cannot vote in the
voting and non-voting shares will result in the abject surrender of our telecommunications industry to
election of directors, they also have very little and obviously negligible dividend earning capacity
foreigners, amounting to a clear abdication of the States constitutional duty to limit control of public
compared to common shares.
utilities to Filipino citizens. Such an interpretation certainly runs counter to the constitutional provision
reserving certain areas of investment to Filipino citizens, such as the exploitation of natural resources as
well as the ownership of land, educational institutions and advertising businesses. The Court should
never open to foreign control what the Constitution has expressly reserved to Filipinos for that would be
a betrayal of the Constitution and of the national interest. The Court must perform its solemn duty to
As shown in PLDTs 2010 GIS,60 as submitted to the SEC, the par value of PLDT common shares is P5.00
defend and uphold the intent and letter of the Constitution to ensure, in the words of the Constitution, a
per share, whereas the par value of preferred shares is P10.00 per share. In other words, preferred
self-reliant and independent national economy effectively controlled by Filipinos.
shares have twice the par value of common shares but cannot elect directors and have only 1/70 of the
dividends of common shares. Moreover, 99.44% of the preferred shares are owned by Filipinos while
foreigners own only a minuscule 0.56% of the preferred shares.61 Worse, preferred shares constitute
77.85% of the authorized capital stock of PLDT while common shares constitute only 22.15%.62 This
undeniably shows that beneficial interest in PLDT is not with the non-voting preferred shares but with
Section 11, Article XII of the Constitution, like other provisions of the Constitution expressly reserving to
the common shares, blatantly violating the constitutional requirement of 60 percent Filipino control and
Filipinos specific areas of investment, such as the development of natural resources and ownership of
Filipino beneficial ownership in a public utility.
land, educational institutions and advertising business, is self-executing. There is no need for legislation
to implement these self-executing provisions of the Constitution. The rationale why these constitutional
provisions are self-executing was explained in Manila Prince Hotel v. GSIS,66 thus:

The legal and beneficial ownership of 60 percent of the outstanding capital stock must rest in the hands
of Filipinos in accordance with the constitutional mandate. Full beneficial ownership of 60 percent of the
outstanding capital stock, coupled with 60 percent of the voting rights, is constitutionally required for the
States grant of authority to operate a public utility. The undisputed fact that the PLDT preferred shares,
99.44% owned by Filipinos, are non-voting and earn only 1/70 of the dividends that PLDT common
shares earn, grossly violates the constitutional requirement of 60 percent Filipino control and Filipino
beneficial ownership of a public utility.
x x x Hence, unless it is expressly provided that a legislative act is necessary to enforce a
constitutional mandate, the presumption now is that all provisions of the constitution are self-
executing. If the constitutional provisions are treated as requiring legislation instead of self-
executing, the legislature would have the power to ignore and practically nullify the mandate of
the fundamental law. This can be cataclysmic. That is why the prevailing view is, as it has
always been, that

In short, Filipinos hold less than 60 percent of the voting stock, and earn less than 60 percent of
the dividends, of PLDT. This directly contravenes the express command in Section 11, Article XII of the
. . . in case of doubt, the Constitution should be considered self-executing rather than non-self-
Constitution that [n]o franchise, certificate, or any other form of authorization for the operation of a
executing. . . . Unless the contrary is clearly intended, the provisions of the Constitution
public utility shall be granted except to x x xcorporations x x x organized under the laws of the
should be considered self-executing, as a contrary rule would give the legislature
Philippines, at least sixty per centum of whose capital is owned by such citizens x x x.
discretion to determine when, or whether, they shall be effective. These provisions would
be subordinated to the will of the lawmaking body, which could make them entirely meaningless
by simply refusing to pass the needed implementing statute. (Emphasis supplied)

To repeat, (1) foreigners own 64.27% of the common shares of PLDT, which class of shares exercises In Manila Prince Hotel, even the Dissenting Opinion of then Associate Justice Reynato S. Puno, later Chief
the sole right to vote in the election of directors, and thus exercise control over PLDT; (2) Filipinos own Justice, agreed that constitutional provisions are presumed to be self-executing. Justice Puno stated:
only 35.73% of PLDTs common shares, constituting a minority of the voting stock, and thus do not
exercise control over PLDT; (3) preferred shares, 99.44% owned by Filipinos, have no voting rights; (4)
preferred shares earn only 1/70 of the dividends that common shares earn;63 (5) preferred shares have
twice the par value of common shares; and (6) preferred shares constitute 77.85% of the authorized
capital stock of PLDT and common shares only 22.15%. This kind of ownership and control of a public Courts as a rule consider the provisions of the Constitution as self-executing, rather than as
utility is a mockery of the Constitution. requiring future legislation for their enforcement. The reason is not difficult to discern. For if
they are not treated as self-executing, the mandate of the fundamental law ratified by the
sovereign people can be easily ignored and nullified by Congress. Suffused with wisdom of
the ages is the unyielding rule that legislative actions may give breath to constitutional
rights but congressional inaction should not suffocate them.
Incidentally, the fact that PLDT common shares with a par value of P5.00 have a current stock market
value of P2,328.00 per share,64 while PLDT preferred shares with a par value of P10.00 per share have a
current stock market value ranging from only P10.92 to P11.06 per share,65 is a glaring confirmation by
the market that control and beneficial ownership of PLDT rest with the common shares, not with the
preferred shares.
 Thus, we have treated as self-executing the provisions in the Bill of Rights on arrests, searches
and seizures, the rights of a person under custodial investigation, the rights of an accused, and
the privilege against self-incrimination. It is recognized that legislation is unnecessary to enable
Under Section 17(4)70 of the Corporation Code, the SEC has the regulatory function to reject or
courts to effectuate constitutional provisions guaranteeing the fundamental rights of life, liberty
disapprove the Articles of Incorporation of any corporation where the required percentage of ownership
and the protection of property. The same treatment is accorded to constitutional provisions
of the capital stock to be owned by citizens of the Philippines has not been complied with as
forbidding the taking or damaging of property for public use without just compensation.
required by existing laws or the Constitution. Thus, the SEC is the government agency tasked with
(Emphasis supplied)
the statutory duty to enforce the nationality requirement prescribed in Section 11, Article XII of the
Constitution on the ownership of public utilities. This Court, in a petition for declaratory relief that is
treated as a petition for mandamus as in the present case, can direct the SEC to perform its statutory
duty under the law, a duty that the SEC has apparently unlawfully neglected to do based on the 2010
GIS that respondent PLDT submitted to the SEC.

Under Section 5(m) of the Securities Regulation Code,71 the SEC is vested with the power and function
Thus, in numerous cases,67 this Court, even in the absence of implementing legislation, applied directly
to suspend or revoke, after proper notice and hearing, the franchise or certificate of registration of
the provisions of the 1935, 1973 and 1987 Constitutions limiting land ownership to Filipinos. In Soriano
corporations, partnerships or associations, upon any of the grounds provided by law. The SEC is
v. Ong Hoo,68 this Court ruled:
mandated under Section 5(d) of the same Code with the power and function to investigate x x x the
activities of persons to ensure compliance with the laws and regulations that SEC administers or
enforces. The GIS that all corporations are required to submit to SEC annually should put the SEC on
guard against violations of the nationality requirement prescribed in the Constitution and existing laws.
This Court can compel the SEC, in a petition for declaratory relief that is treated as a petition for
x x x As the Constitution is silent as to the effects or consequences of a sale by a citizen of his
mandamus as in the present case, to hear and decide a possible violation of Section 11, Article XII of the
land to an alien, and as both the citizen and the alien have violated the law, none of them
Constitution in view of the ownership structure of PLDTs voting shares, as admitted by respondents and
should have a recourse against the other, and it should only be the State that should be allowed
as stated in PLDTs 2010 GIS that PLDT submitted to SEC.
to intervene and determine what is to be done with the property subject of the violation. We
have said that what the State should do or could do in such matters is a matter of public policy,
entirely beyond the scope of judicial authority. (Dinglasan, et al. vs. Lee Bun Ting, et al., 6 G. R.
No. L-5996, June 27, 1956.) While the legislature has not definitely decided what policy
should be followed in cases of violations against the constitutional prohibition, courts of
WHEREFORE, we PARTLY GRANT the petition and rule that the term capital in Section 11, Article XII of
justice cannot go beyond by declaring the disposition to be null and void as violative of
the 1987 Constitution refers only to shares of stock entitled to vote in the election of directors, and thus
the Constitution. x x x (Emphasis supplied)
in the present case only to common shares, and not to the total outstanding capital stock (common and
non-voting preferred shares). Respondent Chairperson of the Securities and Exchange Commission
is DIRECTED to apply this definition of the term capital in determining the extent of allowable foreign
ownership in respondent Philippine Long Distance Telephone Company, and if there is a violation of
Section 11, Article XII of the Constitution, to impose the appropriate sanctions under the law.

To treat Section 11, Article XII of the Constitution as not self-executing would mean that since the 1935
Constitution, or over the last 75 years, not one of the constitutional provisions expressly reserving
specific areas of investments to corporations, at least 60 percent of the capital of which is owned by SO ORDERED.
Filipinos, was enforceable. In short, the framers of the 1935, 1973 and 1987 Constitutions miserably
failed to effectively reserve to Filipinos specific areas of investment, like the operation by corporations of
public utilities, the exploitation by corporations of mineral resources, the ownership by corporations of
real estate, and the ownership of educational institutions. All the legislatures that convened since 1935
also miserably failed to enact legislations to implement these vital constitutional provisions that
determine who will effectively control the national economy, Filipinos or foreigners. This Court cannot
allow such an absurd interpretation of the Constitution.

This Court has held that the SEC has both regulatory and adjudicative functions.69 Under its regulatory
functions, the SEC can be compelled by mandamus to perform its statutory duty when it unlawfully
neglects to perform the same. Under its adjudicative or quasi-judicial functions, the SEC can be also be
compelled by mandamus to hear and decide a possible violation of any law it administers or enforces
when it is mandated by law to investigate such violation.
 SECOND DIVISION

VIVIAN T. RAMIREZ, ALBERTO B. DIGNO, DANILO M. G.R. No. 168208

CASQUITE, JUMADIYA A. KADIL, FAUJIA SALIH, ANTONIO
FABIAN, ROMEL DANAG, GINA PANTASAN, ARTHUR Present:
MATUGAS, VIRGILIA OSARIO, ORLANDO EBRADA, ROSANA
CABATO, WILFREDO LUNA, LILIA BARREDO, ISABEL
ALBERTO, NORA BONIAO, PILAR OSARIO, LYDIA ESLIT, CARPIO, J., Chairperson,
AMMAN SALI, AKMAD AKIL, ROGELIO LAZARO, ISABEL BRION,
CONCILLADO, MARLON ABIAL, HERMOCILLO NAPALCRUZ, PEREZ,
WALTER BUHIAN, ELISEO AMATORIO, JOSE CASTRO, JAMIL SERENO, and
LAGBAY, MA. EVELYN SANTOS, LEDENIA T. BARON, ELSA REYES, JJ.
AMATORIO, SARAH F. BUCOY, EXPEDITO L. RELUYA,
ARNULFO ALFARO, EDGARDO F. BORGONIA, DANILO R.
MANINGO, ABDUSAID H. DAMBONG, LORINDA M. MUTIA, Promulgated:
DOMINADOR DEL ROSARIO, JOEL E. TRONO, HUSSIN A.
JAWAJI, JUL-ASNAM JAKARIA, LUZVIMINDA A. NOLASCO, June 13, 2012
VILMA G. GASCO, MORITA S. MARMETO, PROCESA
JUANICO, ANTONIO A. MONDRAGON, JR., JESSICA F.
QUIACHON, PACITA G. MEDINA, ARNEL S. SANTOS, ANECITA
T. TARAS, TOMINDAO T. TARAS, NULCA C. SABDANI, AKMAD
A. SABDANI, ROWENA J. GARCIA, LINA P. CASAS, MARLYN G.
FRANCISCO, MERCEDITA MAQUINANO, NICOLAS T. RIO,
TERESITA A. CASINAS, VIRGILIO F. IB-IB, PANTALEON S.
ROJAS, JR., EVELYN V. BEATINGO, MATILDE G. HUSSIN,
ESPERANZA I. LLEDO, ADOLFINA DELA MERCED, LAURA E.
SANTOS, ROGACIANA MAQUILING, ALELIE D. SAMSON,
SHIRLEY L. ALVAREZ, MAGDALENA A. MARCOS, VIRGINIA S.
ESPINOSA, ANTONIO C. GUEVARA, AUGUSTA S. DE JESUS,
SERVILLA A. BANCALE, PROSERFINA GATINAO, RASMA A.
FABRIGA, ROLANDO D. GATINAO, ANALISA G. MEA, SARAH
A. SALCEDO, ALICIA M. JAYAG, FERNANDO G. CABEROY,
ROMEO R. PONCE, EDNA S. PONCE, TEODORA T. LUY,
WALDERICO F. ARIO, MELCHOR S. BUCOY, EDITA H. CINCO,
RUDY I. LIMBAROC, PETER MONTOJO, MARLYN S. ATILANO,
REGIDOR MEDALLO, EDWIN O. DEMASUAY, DENNIS M.
SUICANO, ROSALINA Q. ATILANO, ESTRELLA FELICIANO,
IMELDA T. DAGALEA, MARILYN RUFINO, JOSE AGUSTIN,
EFREN RIVERA, CRISALDO VALERO, SAFIA HANDANG,
LUCENA R. MEDINA, DANNY BOY B. PANGASIAN, ABDURASA
HASIL, ROEL ALTA, JOBERT BELTRAN, EDNA FAUSTO,
TAJMAHAR HADJULA, ELENA MAGHANOY, ERIC B. QUITIOL,
JESSE D. FLORES, GEMMA CANILLAS, ERNITO CANILLAS,
MARILOU JAVIER, MARGANI MADDIN, RICHARD SENA, FE D.
CANOY, GEORGE SALUD, EDGARDO BORGONIA, JR.,
ANTONIO ATILANO, JOSE CASTRO, and LIBERATO
BAGALANON,
Petitioners,

- versus -

Republic of the Philippines MAR FISHING CO., INC., MIRAMAR FISHING CO., INC.,
Supreme Court ROBERT BUEHS AND JEROME SPITZ.
Manila Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
closure, petitioners were legally dismissed for authorized cause.[9] In addition, even if Mar Fishing reneged
DECISION
on notifying the DOLE within 30 days prior to its closure, that failure did not make the dismissals void.

SERENO, J.: Consequently, the LA ordered Mar Fishing to give separation pay to its workers.[10]

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of The LA held thus:[11]

Court, seeking a review of the Court of Appeals (CA) 19 March 2004 and 12 May 2005 Resolutions in CA-
WHEREFORE, in view of the foregoing considerations, judgment is hereby
G.R. SP NO. 82651. The appellate court had dismissed the Petition for Review on the ground that it lacked rendered in these cases:
a Verification and Certification against forum shopping. 1. Ordering Mar Fishing Company, Inc., through its
president, treasurer, manager or other proper officer or
representative, to pay the complainants their respective separation
The pertinent facts are as follows: pay, as computed in page 12 to 33 hereof, all totaling SIX MILLION
THREE HUNDRED THIRTY SIX THOUSAND FIVE HUNDRED
EIGHTY SEVEN & 77/100 PESOS (₱6,336,587.77);

On 28 June 2001, respondent Mar Fishing Co., Inc. (Mar Fishing), engaged in the business of 2. Dismissing these case [sic] as against Miramar Fishing
Company, Inc., as well as against Robert Buehs and Jerome Spitz, for
fishing and canning of tuna, sold its principal assets to co-respondent Miramar Fishing Co., Inc. (Miramar) lack of cause of action;
through public bidding.[1] The proceeds of the sale were paid to the Trade and Investment Corporation of
3. Dismissing all other charges and claims of the
the Philippines (TIDCORP) to cover Mar Fishings outstanding obligation in the amount of complainants, for lack of merit.

₱897,560,041.26.[2] In view of that transfer, Mar Fishing issued a Memorandum dated 23 October 2001
SO ORDERED.
informing all its workers that the company would cease to operate by the end of the month.[3] On 29 October

2001 or merely two days prior to the months end, it notified the Department of Labor and Employment

(DOLE) of the closure of its business operations.[4]

Aggrieved, petitioners pursued the action before the NLRC, which modified the LAs Decision.

Noting that Mar Fishing notified the DOLE only two days before the business closed, the labor court
Thereafter, Mar Fishings labor union, Mar Fishing Workers Union NFL and Miramar entered into
considered petitioners dismissal as ineffectual.[12] Hence, it awarded, apart from separation pay, full back
a Memorandum of Agreement.[5] The Agreement provided that the acquiring company, Miramar, shall
wages to petitioners from the time they were terminated on 31 October 2001 until the date when the LA
absorb Mar Fishings regular rank and file employees whose performance was satisfactory, without loss of
upheld the validity of their dismissal on 30 July 2002.[13]
seniority rights and privileges previously enjoyed.[6]

Additionally, the NLRC pierced the veil of corporate fiction and ruled that Mar Fishing and
Unfortunately, petitioners, who worked as rank and file employees, were not hired or given
Miramar were one and the same entity, since their officers were the same. [14]Hence, both companies were
separation pay by Miramar.[7] Thus, petitioners filed Complaints for illegal dismissal with money claims
ordered to solidarily pay the monetary claims.[15]
before the Arbitration Branch of the National Labor Relations Commission (NLRC).

On reconsideration, the NLRC modified its ruling by imposing liability only on Mar Fishing. The
In its 30 July 2002 Decision, the Labor Arbiter (LA) found that Mar Fishing had necessarily closed
labor court held that petitioners had no cause of action against Miramar, since labor contracts cannot be
its operations, considering that Miramar had already bought the tuna canning plant.[8] By reason of the
enforced against the transferee of an enterprise in the absence of a stipulation in the contract that the
transferee assumes the obligation of the transferor.[16] Hence, the dispositive portion reads:[17]
WHEREFORE, foregoing premises considered, the assailed resolution
is MODIFIED in that only Mar Fishing Company, Inc. through its responsible officers,
is ordered to pay complainants their separation pay, and full backwages from the date
they were terminated from employment until 30 July 2002, subject to computation
during execution stage of proceedings at the appropriate Regional Arbitration Branch.
SO ORDERED.
Despite the award of separation pay and back wages, petitioners filed a Rule 65 Petition before
the CA. This time, they argued that both Mar Fishing and Miramar should be made liable for their
separation pay, and that their back wages should be up to the time of their actual reinstatement. However,
finding that only 3 of the 228 petitioners[18]signed the Verification and Certification against forum shopping,
the CA instantly dismissed the action for certiorari against the 225 other petitioners without ruling on the
substantive aspects of the case.[19]
By means of a Manifestation with Omnibus Motion,[20] petitioners submitted a Verification and
Certification against forum shopping executed by 161 signatories. In the said pleading, petitioners asked
the CA to reconsider by invoking the rule that technical rules do not strictly apply to labor cases.[21] Still,
the CA denied petitioners contentions and held thus:[22]
Anent the liberality in application of the rules, as alleged by petitioners, the
same deserves scant consideration. x x x.
xxx. While litigation is not a game of technicalities, and that the rules of
procedure should not be enforced strictly at the cost of substantial justice, still it does
not follow that the Rules of Court may be ignored at will and at random to the prejudice
of the orderly presentation, assessment and just resolution of the issues. xxx.
Before this Court, 124 petitioners raise the issue of whether the CA gravely erred in dismissing
their Petition for Review on the ground that their pleading lacked a Verification and Certification against
forum shopping.[23]
The Rules of Court provide that a petition for certiorari must be verified and accompanied by a
sworn certification of non-forum shopping.[24] Failure to comply with these mandatory requirements shall
be sufficient ground for the dismissal of the petition.[25] Considering that only 3 of the 228 named
petitioners signed the requirement, the CA dismissed the case against them, as they did not execute a
Verification and Certification against forum shopping.
Petitioners invoke substantial compliance with procedural rules when their Manifestation already
contains a Verification and Certification against forum shopping executed by 161 signatories. They heavily
rely on Jaro v. Court of Appeals,[26] citing Piglas-Kamao v. National Labor Relations Commission and Cusi-
Hernandez v. Diaz, in which we discussed that the subsequent submission of the missing documentary
attachments with the Motion for Reconsideration amounted to substantial compliance.
However, this very case does not involve a failure to attach the Annexes. Rather, the procedural
infirmity consists of omission the failure to sign a Verification and Certification against forum shopping.
Addressing this defect squarely, we have already resolved that because of noncompliance with the
requirements governing the certification of non-forum shopping, no error could be validly attributed to the
CA when it ordered the dismissal of the special civil action for certiorari.[27] The lack of certification against
forum shopping is not curable by mere amendment of a complaint, but shall be a cause for the dismissal
of the case without prejudice.[28] Indeed, the general rule is that subsequent compliance with the
requirements will not excuse a party's failure to comply in the first instance.[29] Thus, on procedural
aspects, the appellate court correctly dismissed the case.
However, this Court has recognized that the merit of a case is a special circumstance or compelling
reason that justifies the relaxation of the rule requiring verification and certification of non-forum
shopping.[30] In order to fully resolve the issue, it is thus necessary to determine whether technical rules
were brushed aside at the expense of substantial justice.[31] This Court will then delve into the issue on (1)
the solidary liability of Mar Fishing and Miramar to pay petitioners monetary claims and (2) the reckoning
period for the award of back wages.
For a dismissal based on the closure of business to be valid, three (3) requirements must be
established. Firstly, the cessation of or withdrawal from business operations must be bona fide in
character. Secondly, there must be payment to the employees of termination pay amounting to at least
one-half (1/2) month pay for each year of service, or one (1) month pay, whichever is higher. Thirdly, the

company must serve a written notice on the employees and on the DOLE at least one (1) month before the
intended termination.[32]
In their Petition for Review on Certiorari, petitioners did not dispute the conclusion of the LA and
the NLRC that Mar Fishing had an authorized cause to dismiss its workers. Neither did petitioners
challenge the computation of their separation pay.
Rather, they questioned the holding that only Mar Fishing was liable for their monetary claims.[33]
Basing their conclusion on the Memorandum of Agreement and Supplemental Agreement between
Miramar and Mar Fishings labor union, as well as the General Information Sheets and Company Profiles
of the two companies, petitioners assert that Miramar simply took over the operations of Mar Fishing. In
addition, they assert that these companies are one and the same entity, given the commonality of their
directors and the similarity of their business venture in tuna canning plant operations.[34]
At the fore, the question of whether one corporation is merely an alter ego of another is purely
one of fact generally beyond the jurisdiction of this Court.[35] In any case, given only these bare reiterations,
this Court sustains the ruling of the LA as affirmed by the NLRC that Miramar and Mar Fishing are separate
and distinct entities, based on the marked differences in their stock ownership. [36] Also, the fact that Mar
Fishings officers remained as such in Miramar does not by itself warrant a conclusion that the two
companies are one and the same. As this Court held in Sesbreo v. Court of Appeals, the mere showing that
the corporations had a common director sitting in all the boards without more does not authorize
disregarding their separate juridical personalities.[37]
Neither can the veil of corporate fiction between the two companies be pierced by the rest of
petitioners submissions, namely, the alleged take-over by Miramar of Mar Fishings operations and the
evident similarity of their businesses. At this point, it bears emphasizing that since piercing the veil of
corporate fiction is frowned upon, those who seek to pierce the veil must clearly establish that the separate
and distinct personalities of the corporations are set up to justify a wrong, protect a fraud, or perpetrate a
deception.[38] This, unfortunately, petitioners have failed to do. In Indophil Textile Mill Workers Union vs.
Calica, we ruled thus:[39]
In the case at bar, petitioner seeks to pierce the veil of corporate entity of
Acrylic, alleging that the creation of the corporation is a devi[c]e to evade the application
of the CBA between petitioner Union and private respondent company. While we do not
discount the possibility of the similarities of the businesses of private respondent and
Acrylic, neither are we inclined to apply the doctrine invoked by petitioner in granting
the relief sought. The fact that the businesses of private respondent and Acrylic
are related, that some of the employees of the private respondent are the same
persons manning and providing for auxiliary services to the units of Acrylic, and
that the physical plants, offices and facilities are situated in the same compound,
it is our considered opinion that these facts are not sufficient to justify the
piercing of the corporate veil of Acrylic. (Emphasis supplied.)
Having been found by the trial courts to be a separate entity, Mar Fishing and not Miramar is
required to compensate petitioners. Indeed, the back wages and retirement pay earned from the former
employer cannot be filed against the new owners or operators of an enterprise.[40]
Evidently, the assertions of petitioners fail on both procedural and substantive aspects. Therefore,
no special reasons exist to reverse the CAs dismissal of the case due to their failure to abide by the
mandatory procedure for filing a petition for review on certiorari. Given the correctness of the appellate
courts ruling and the lack of appropriate remedies, this Court will no longer dwell on the exact computation
of petitioners claims for back wages, which have been sufficiently threshed out by the LA and the NLRC.
Judicial review of labor cases does not go beyond an evaluation of the sufficiency of the evidence upon
which labor officials' findings rest.[41]
While we sympathize with the situation of the workers in this case, we cannot disregard, absent
compelling reasons, the factual determinations and the legal doctrines that support the findings of the
courts a quo. Generally, the findings of fact and the conclusion of the labor courts are not only accorded
great weight and respect, but are even clothed with finality and deemed binding on this Court, as long as
they are supported by substantial evidence.[42]
On a final note, this Court reminds the parties seeking the ultimate relief of certiorari to observe
the rules, since nonobservance thereof cannot be brushed aside as a mere technicality.[43] Procedural rules
are not to be belittled or simply disregarded, for these prescribed procedures ensure an orderly and speedy
administration of justice.[44]
 IN VIEW THEREOF, the assailed 19 March 2004 and 12 May 2005 Resolutions of the Court of

Appeals in CA-GR SP NO. 82651 are AFFIRMED. Hence, the 04 July 2005 Petition for Review filed by

petitioners is hereby DENIED for lack of merit. SO ORDERED.

x-----------------------------------------------------------------------------------------x

Republic of the Philippines

DECISION
Supreme Court

Manila

PERALTA, J.:

SECOND DIVISION
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court praying for the

annulment of the Decision[1] and Resolution[2] of the Court of Appeals (CA) dated December 20,
PRINCE TRANSPORT, INC. and MR. RENATO CLAROS, G.R. No. 167291
2004 and February 24, 2005, respectively, in CA-G.R. SP No. 80953. The assailed Decision reversed and
Petitioners, set aside the Resolutions dated May 30, 2003[3] and September 26, 2003[4] of the National Labor Relations
Present: Commission (NLRC) in CA No. 029059-01, while the disputed Resolution denied petitioners' Motion for

Reconsideration.
CARPIO, J., Chairperson,

- versus -
DIOSDADO GARCIA, LUISITO GARCIA, RODANTE ROMERO,
REX BARTOLOME, FELICIANO GASCO, JR., DANILO ROJO,
EDGAR SANFUEGO, AMADO GALANTO, EUTIQUIO LUGTU,
JOEL GRAMATICA, MIEL CERVANTES, TERESITA CABANES,
ROE DELA CRUZ, RICHELO BALIDOY, VILMA PORRAS,
MIGUELITO SALCEDO, CRISTINA GARCIA, MARIO NAZARENO,
DINDO TORRES, ESMAEL RAMBOYONG, ROBETO*MANO,
ROGELIO BAGAWISAN, ARIEL SNACHEZ, ESTAQULO
VILLAREAL, NELSON MONTERO, GLORIA ORANTE, HARRY
TOCA, PABLITO MACASAET and RONALD GARCITA
NACHURA, The present petition arose from various complaints filed by herein respondents charging petitioners with
PERALTA, illegal dismissal, unfair labor practice and illegal deductions and praying for the award of premium pay for
ABAD, and holiday and rest day, holiday pay, service leave pay, 13th month pay, moral and exemplary damages and
_____________,** JJ. attorney's fees.
Respondents alleged in their respective position papers and other related pleadings that they were
Promulgated: employees of Prince Transport, Inc. (PTI), a company engaged in the business of transporting passengers
by land; respondents were hired either as drivers, conductors, mechanics or inspectors, except for
respondent Diosdado Garcia (Garcia), who was assigned as Operations Manager; in addition to their regular
monthly income, respondents also received commissions equivalent to 8 to 10% of their wages; sometime

Respondents. January 12, 2011 in October 1997, the said commissions were reduced to 7 to 9%; this led respondents and other employees

of PTI to hold a series of meetings to discuss the protection of their interests as employees; these meetings
led petitioner Renato Claros, who is the president of PTI, to suspect that respondents are about to form a 1. Dismissing the complaints for Unfair Labor Practice, non-payment of

union; he made known to Garcia his objection to the formation of a union; in December 1997, PTI holiday pay and holiday premium, service incentive leave pay and 13 th month pay;

employees requested for a cash advance, but the same was denied by management which resulted in
Dismissing the complaint of Edgardo Belda for refund of boundary-hulog;
demoralization on the employees' ranks; later, PTI acceded to the request of some, but not all, of the 2. Dismissing the complaint for illegal dismissal against the respondents
Prince Transport, Inc. and/or Prince Transport Phils. Corporation, Roberto
employees; the foregoing circumstances led respondents to form a union for their mutual aid and
Buenaventura, Rory Bayona, Ailee Avenue, Nerissa Uy, Mario Feranil and Peter
Buentiempo;
protection; in order to block the continued formation of the union, PTI caused the transfer of all union

members and sympathizers to one of its sub-companies, Lubas Transport (Lubas); despite such transfer, 3. Declaring that the complainants named below are illegally dismissed by
Lubas Transport; ordering said Lubas Transport to pay backwages and separation pay
the schedule of drivers and conductors, as well as their company identification cards, were issued by in lieu of reinstatement in the following amount:

PTI; the daily time records, tickets and reports of the respondents were also filed at the PTI office; and, all Complainants Backwages Separation Pay
(1) Diosdado Garcia P222,348.70 P79,456.00
claims for salaries were transacted at the same office; later, the business of Lubas deteriorated because of (2) Feliciano Gasco, Jr. 203,350.00 54,600.00
(3) Pablito Macasaet 145,250.00 13,000.00
the refusal of PTI to maintain and repair the units being used therein, which resulted in the virtual stoppage (4) Esmael Ramboyong 221,500.00 30,000.00
(5) Joel Gramatica 221,500.00 60,000.00
of its operations and respondents' loss of employment. (6) Amado Galanto 130,725.00 29,250.00
(7) Miel Cervantes 265,800.00 60,000.00
Petitioners, on the other hand, denied the material allegations of the complaints contending that herein (8) Roberto Mano 221,500.00 50,000.00
(9) Roe dela Cruz 265,800.00 60,000.00
respondents were no longer their employees, since they all transferred to Lubas at their own (10) Richelo Balidoy 130,725.00 29,250.00
(11) Vilma Porras 221,500.00 70,000.00
request; petitioners have nothing to do with the management and operations of Lubas as well as the control (12) Miguelito Salcedo 265,800.00 60,000.00
(13) Cristina Garcia 130,725.00 35,100.00
and supervision of the latter's employees;petitioners were not aware of the existence of any union in their (14) Luisito Garcia 145,250.00 19,500.00
(15) Rogelio Bagawisan 265,800.00 60,000.00
company and came to know of the same only in June 1998 when they were served a copy of the summons
(16) Rodante H. Romero 221,500.00 60,000.00
(17) Dindo Torres 265,800.00 50,000.00
in the petition for certification election filed by the union; that before the union was registered on April 15,
(18) Edgar Sanfuego 221,500.00 40,000.00
1998, the complaint subject of the present petition was already filed; that the real motive in the filing of (19) Ronald Gacita 221,500.00 40,000.00
(20) Harry Toca 174,300.00 23,400.00
the complaints was because PTI asked respondents to vacate the bunkhouse where they (respondents) and (21) Amado Galanto 130,725.00 17,550.00
(22) Teresita Cabaes 130,725.00 17,550.00
their respective families were staying because PTI wanted to renovate the same. (23) Rex Bartolome 301,500.00 30,000.00
(24) Mario Nazareno 221,500.00 30,000.00
(25) Eustaquio Villareal 145,250.00 19,500.00
(26) Ariel Sanchez 265,800.00 60,000.00
Subsequently, the complaints filed by respondents were consolidated. (27) Gloria Orante 263,100.00 60,000.00
(28) Nelson Montero 264,600.00 60,000.00
(29) Rizal Beato 295,000.00 40,000.00
(30) Eutiquio Lugtu 354,000.00 48,000.00
On October 25, 2000, the Labor Arbiter rendered a Decision,[5] the dispositive portion of which reads as (31) Warlito Dickensomn 295,000.00 40,000.00
(32) Edgardo Belda 354,000.00 84,000.00
follows: (33) Tita Go 295,000.00 70,000.00
(34) Alex Lodor 295,000.00 50,000.00
(35) Glenda Arguilles 295,000.00 40,000.00
WHEREFORE, judgment is hereby rendered: (36) Erwin Luces 354,000.00 48,000.00
(37) Jesse Celle 354,000.00 48,000.00
(38) Roy Adorable 295,000.00 40,000.00
(39) Marlon Bangcoro 295,000.00 40,000.00
(40)Edgardo Bangcoro 354,000.00 36,000.00
 4. Ordering Lubas Transport to pay attorney's fees equivalent to ten (10%) Respondents then filed a special civil action for certiorari with the CA assailing the Decision and Resolution
of the total monetary award; and
of the NLRC.
6. Ordering the dismissal of the claim for moral and exemplary damages for
lack merit.
SO ORDERED.[6]
On December 20, 2004, the CA rendered the herein assailed Decision which granted respondents' petition.

The CA ruled that petitioners are guilty of unfair labor practice; that Lubas is a mere instrumentality, agent
The Labor Arbiter ruled that petitioners are not guilty of unfair labor practice in the absence of evidence to
conduit or adjunct of PTI; and that petitioners act of transferring respondents employment to Lubas is
show that they violated respondents right to self-organization. The Labor Arbiter also held that Lubas is
indicative of their intent to frustrate the efforts of respondents to organize themselves into a union.
the respondents employer and that it (Lubas) is an entity which is separate, distinct and independent from
Accordingly, the CA disposed of the case as follows:
PTI. Nonetheless, the Labor Arbiter found that Lubas is guilty of illegally dismissing respondents from their

employment. WHEREFORE, the Petition for Certiorari is hereby GRANTED. Accordingly, the subject
decision is hereby REVERSED and SET ASIDE and another one ENTERED finding the
respondents guilty of unfair labor practice and ordering them to reinstate the petitioners
Respondents filed a Partial Appeal with the NLRC praying, among others, that PTI should also be held to their former positions without loss of seniority rights and with full backwages.

equally liable as Lubas. With respect to the portion ordering the inclusion of Danilo Rojo and Danilo Laurel in
the computation of petitioner's claim for backwages and with respect to the portion
ordering the refund of Edgardo Belda's boundary-hulog in the amount of P446,862.00,
the NLRC decision is affirmed and maintained.
In a Resolution dated May 30, 2003, the NLRC modified the Decision of the Labor Arbiter and disposed as
SO ORDERED.[9]
follows:

WHEREFORE, premises considered, the appeal is hereby PARTIALLY GRANTED. Petitioners filed a Motion for Reconsideration, but the CA denied it via its Resolution[10] dated February 24,
Accordingly, the Decision appealed from is SUSTAINED subject to the modification that
Complainant-Appellant Edgardo Belda deserves refund of his boundary-hulog in the 2005.
amount of P446,862.00; and that Complainants-Appellants Danilo Rojo and Danilo
Laurel should be included in the computation of Complainants-Appellants claim as
follows:
Hence, the instant petition for review on certiorari based on the following grounds:

Complainants Backwages Separation Pay

41. Danilo Rojo P355,560.00 P48,000.00 A
42. Danilo Laurel P357,960.00 P72,000.00 THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN GIVING
DUE COURSE TO THE RESPONDENTS' PETITION FOR CERTIORARI
As regards all other aspects, the Decision appealed from is SUSTAINED.
1. THE COURT OF APPEALS SHOULD HAVE RESPECTED THE FINDINGS OF
THE LABOR ARBITER AND AFFIRMED BY THE NLRC
SO ORDERED.[7]

2. ONLY ONE PETITIONER EXECUTED AND VERIFIED THE PETITION

3. THE COURT OF APPEALS SHOULD NOT HAVE GIVEN DUE COURSE TO
Respondents filed a Motion for Reconsideration, but the NLRC denied it in its Resolution[8] dated September
THE PETITION WITH RESPECT TO RESPONDENTS REX BARTOLOME,
26, 2003. FELICIANO GASCO, DANILO ROJO, EUTIQUIO LUGTU, AND NELSON
MONTERO AS THEY FAILED TO FILE AN APPEAL TO THE NLRC

B
 THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT PETITIONERS
PRINCE TRANSPORT, INC. AND MR. RENATO CLAROS AND LUBAS TRANSPORT ARE amended by Republic Act No. 7902, the CA pursuant to the exercise of its original jurisdiction over petitions
ONE AND THE SAME CORPORATION AND THUS, LIABLE IN SOLIDUM TO
RESPONDENTS. for certiorari is specifically given the power to pass upon the evidence, if and when necessary, to resolve

factual issues.[13] Section 9 clearly states:

C xxxx
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ORDERING
THE REINSTATEMENT OF RESPONDENTS TO THEIR PREVIOUS POSITION WHEN IT The Court of Appeals shall have the power to try cases and conduct hearings, receive
IS NOT ONE OF THE ISSUES RAISED IN RESPONDENTS' PETITION evidence and perform any and all acts necessary to resolve factual issues raised in cases
FOR CERTIORARI.[11] falling within its original and appellate jurisdiction, including the power to grant and
conduct new trials or further proceedings. x x x

Petitioners assert that factual findings of agencies exercising quasi-judicial functions like the NLRC are

accorded not only respect but even finality; that the CA should have outrightly dismissed the petition filed However, equally settled is the rule that factual findings of labor officials, who are deemed to have acquired

before it because in certiorari proceedings under Rule 65 of the Rules of Court it is not within the province expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by

of the CA to evaluate the sufficiency of evidence upon which the NLRC based its determination, the inquiry the courts when supported by substantial evidence, i.e., the amount of relevant evidence which a

being limited essentially to whether or not said tribunal has acted without or in excess of its jurisdiction reasonable mind might accept as adequate to justify a conclusion.[14] But these findings are not infallible.

or with grave abuse of discretion. Petitioners assert that the CA can only pass upon the factual findings of When there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they

the NLRC if they are not supported by evidence on record, or if the impugned judgment is based on may be examined by the courts.[15] The CA can grant the petition for certiorari if it finds that the NLRC, in

misapprehension of facts which circumstances are not present in this case. Petitioners also emphasize that its assailed decision or resolution, made a factual finding not supported by substantial evidence.[16] It is

the NLRC and the Labor Arbiter concurred in their factual findings which were based on substantial within the jurisdiction of the CA, whose jurisdiction over labor cases has been expanded to review the

evidence and, therefore, should have been accorded great weight and respect by the CA. findings of the NLRC.[17]

Respondents, on the other hand, aver that the CA neither exceeded its jurisdiction nor committed error in In this case, the NLRC sustained the factual findings of the Labor Arbiter. Thus, these findings are generally

re-evaluating the NLRCs factual findings since such findings are not in accord with the evidence on record binding on the appellate court, unless there was a showing that they were arrived at arbitrarily or in

and the applicable law or jurisprudence. disregard of the evidence on record. In respondents' petition for certiorari with the CA, these factual findings

were reexamined and reversed by the appellate court on the ground that they were not in accord with

The Court agrees with respondents. credible evidence presented in this case. To determine if the CA's reexamination of factual findings and

reversal of the NLRC decision are proper and with sufficient basis, it is incumbent upon this Court to make

The power of the CA to review NLRC decisions via a petition for certiorari under Rule 65 of the Rules of its own evaluation of the evidence on record.[18]

Court has been settled as early as this Courts decision in St. Martin Funeral Homes v. NLRC.[12] In said case,

the Court held that the proper vehicle for such review is a special civil action for certiorari under Rule 65 After a thorough review of the records at hand, the Court finds that the CA did not commit error in arriving

of the said Rules, and that the case should be filed with the CA in strict observance of the doctrine of at its own findings and conclusions for reasons to be discussed hereunder.

hierarchy of courts. Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as
Firstly, petitioners posit that the petition filed with the CA is fatally defective, because the attached With respect to the absence of some of the workers signatures in the verification, the verification

verification and certificate against forum shopping was signed only by respondent Garcia. requirement is deemed substantially complied with when some of the parties who undoubtedly have

sufficient knowledge and belief to swear to the truth of the allegations in the petition had signed the same.

The Court does not agree. Such verification is deemed a sufficient assurance that the matters alleged in the petition have been made

in good faith or are true and correct, and not merely speculative. Moreover, respondents' Partial Appeal

While the general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs in shows that the appeal stipulated as complainants-appellants Rizal Beato, et al., meaning that there were

a case and the signature of only one of them is insufficient, the Court has stressed that the rules on forum more than one appellant who were all workers of petitioners.

shopping, which were designed to promote and facilitate the orderly administration of justice, should not

be interpreted with such absolute literalness as to subvert its own ultimate and legitimate In any case, the settled rule is that a pleading which is required by the Rules of Court to be verified, may

objective.[19] Strict compliance with the provision regarding the certificate of non-forum shopping be given due course even without a verification if the circumstances warrant the suspension of the rules

underscores its mandatory nature in that the certification cannot be altogether dispensed with or its in the interest of justice.[24] Indeed, the absence of a verification is not jurisdictional, but only a formal

requirements completely disregarded.[20] It does not, however, prohibit substantial compliance therewith defect, which does not of itself justify a court in refusing to allow and act on a case.[25] Hence, the failure of

under justifiable circumstances, considering especially that although it is obligatory, it is not some of the respondents to sign the verification attached to their Memorandum of Appeal filed with the

jurisdictional.[21] NLRC is not fatal to their cause of action.

In a number of cases, the Court has consistently held that when all the petitioners share a common interest Petitioners also contend that the CA erred in applying the doctrine of piercing the corporate veil with respect

and invoke a common cause of action or defense, the signature of only one of them in the certification to Lubas, because the said doctrine is applicable only to corporations and Lubas is not a corporation but

against forum shopping substantially complies with the rules.[22] In the present case, there is no question a single proprietorship; that Lubas had been found by the Labor Arbiter and the NLRC to have a personality

that respondents share a common interest and invoke a common cause of action. Hence, the signature of which is separate and distinct from that of PTI; that PTI had no hand in the management and operation as

respondent Garcia is a sufficient compliance with the rule governing certificates of non-forum shopping. In well as control and supervision of the employees of Lubas.

the first place, some of the respondents actually executed a Special Power of Attorney authorizing Garcia

as their attorney-in-fact in filing a petition for certiorari with the CA.[23] The Court is not persuaded.

The Court, likewise, does not agree with petitioners' argument that the CA should not have given due On the contrary, the Court agrees with the CA that Lubas is a mere agent, conduit or adjunct of PTI. A

course to the petition filed before it with respect to some of the respondents, considering that these settled formulation of the doctrine of piercing the corporate veil is that when two business enterprises are

respondents did not sign the verification attached to the Memorandum of Partial Appeal earlier filed with owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect

the NLRC. Petitioners assert that the decision of the Labor Arbiter has become final and executory with the rights of third parties, disregard the legal fiction that these two entities are distinct and treat them as

respect to these respondents and, as a consequence, they are barred from filing a petition for certiorari with identical or as one and the same.[26] In the present case, it may be true that Lubas is a single proprietorship

the CA. and not a corporation. However, petitioners attempt to isolate themselves from and hide behind the
supposed separate and distinct personality of Lubas so as to evade their liabilities is precisely what the

classical doctrine of piercing the veil of corporate entity seeks to prevent and remedy. The Court is not persuaded.

Thus, the Court agrees with the observations of the CA, to wit: It is clear from the complaints filed by respondents that they are seeking reinstatement.[31]

As correctly pointed out by petitioners, if Lubas were truly a separate entity, how come
that it was Prince Transport who made the decision to transfer its employees to the In any case, Section 2 (c), Rule 7 of the Rules of Court provides that a pleading shall specify the relief
former? Besides, Prince Transport never regarded Lubas Transport as a separate entity.
In the aforesaid letter, it referred to said entity as Lubas operations. Moreover, in said sought, but may add a general prayer for such further or other reliefs as may be deemed just and equitable.
letter, it did not transfer the employees; it assigned them. Lastly, the existing funds and
201 file of the employees were turned over not to a new company but a new Under this rule, a court can grant the relief warranted by the allegation and the proof even if it is not
management.[27]
specifically sought by the injured party; the inclusion of a general prayer may justify the grant of a remedy

different from or together with the specific remedy sought, if the facts alleged in the complaint and the

The Court also agrees with respondents that if Lubas is indeed an entity separate and independent from evidence introduced so warrant.[32]

PTI why is it that the latter decides which employees shall work in the former?

Moreover, in BPI Family Bank v. Buenaventura,[33] this Court ruled that the general prayer is broad enough

What is telling is the fact that in a memorandum issued by PTI, dated January 22, 1998, petitioner to justify extension of a remedy different from or together with the specific remedy sought. Even without

company admitted that Lubas is one of its sub-companies.[28] In addition, PTI, in its letters to its employees the prayer for a specific remedy, proper relief may be granted by the court if the facts alleged in the

who were transferred to Lubas, referred to the latter as its New City Operations Bus.[29] complaint and the evidence introduced so warrant. The court shall grant relief warranted by the allegations

and the proof even if no such relief is prayed for. The prayer in the complaint for other reliefs equitable and

Moreover, petitioners failed to refute the contention of respondents that despite the latters transfer to Lubas just in the premises justifies the grant of a relief not otherwise specifically prayed for.[34] In the instant case,

of their daily time records, reports, daily income remittances of conductors, schedule of drivers and aside from their specific prayer for reinstatement, respondents, in their separate complaints, prayed for

conductors were all made, performed, filed and kept at the office of PTI. In fact, respondents identification such reliefs which are deemed just and equitable.

cards bear the name of PTI.

As to whether petitioners are guilty of unfair labor practice, the Court finds no cogent reason to depart

It may not be amiss to point out at this juncture that in two separate illegal dismissal cases involving from the findings of the CA that respondents transfer of work assignments to Lubas was designed by

different groups of employees transferred by PTI to other companies, the Labor Arbiter handling the cases petitioners as a subterfuge to foil the formers right to organize themselves into a union. Under Article 248

found that these companies and PTI are one and the same entity; thus, making them solidarily liable for (a) and (e) of the Labor Code, an employer is guilty of unfair labor practice if it interferes with, restrains or

the payment of backwages and other money claims awarded to the complainants therein.[30] coerces its employees in the exercise of their right to self-organization or if it discriminates in regard to

wages, hours of work and other terms and conditions of employment in order to encourage or discourage

Petitioners likewise aver that the CA erred and committed grave abuse of discretion when it ordered membership in any labor organization.

petitioners to reinstate respondents to their former positions, considering that the issue of reinstatement

was never brought up before it and respondents never questioned the award of separation pay to them.
Indeed, evidence of petitioners' unfair labor practice is shown by the established fact that, after

respondents' transfer to Lubas, petitioners left them high and dry insofar as the operations of Lubas was

concerned. The Court finds no error in the findings and conclusion of the CA that petitioners withheld the

necessary financial and logistic support such as spare parts, and repair and maintenance of the transferred

buses until only two units remained in running condition. This left respondents virtually jobless.

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of

Appeals, dated December 20, 2004 and February 24, 2005, respectively, in CA-G.R. SP No. 80953,

are AFFIRMED.

SO ORDERED.