Professional Documents
Culture Documents
The
facts
of
this
case
show
that
the
petitioners,
by
virtue
of
the
thereby
be
deemed
cancelled
and
new
certificates
of
stock
voting
trust
agreement
executed
in
1981
disposed
of
all
their
shall
be
reissued
in
the
name
of
the
transferors."
shares
through
assignment
and
delivery
in
favor
of
the
DBP,
as
On
the
contrary,
it
is
manifestly
clear
from
the
terms
of
the
trustee.
Consequently,
the
petitioners
ceased
to
own
at
least
voting
trust
agreement
between
ALFA
and
the
DBP
that
the
one
share
standing
in
their
names
on
the
books
of
ALFA
as
duration
of
the
agreement
is
contingent
upon
the
fulfillment
of
required
under
Section
23
of
the
new
Corporation
Code.
They
certain
obligations
of
ALFA
with
the
DBP.
also
ceased
to
have
anything
to
do
with
the
management
of
the
enterprise.
The
petitioners
ceased
to
be
directors.
Hence,
the
In
view
of
the
foregoing,
the
ultimate
issue
of
whether
or
not
transfer
of
the
petitioners'
shares
to
the
DBP
created
vacancies
there
was
proper
service
of
summons
on
ALFA
through
the
in
their
respective
positions
as
directors
of
ALFA.
petitioners
is
readily
answered
in
the
negative.
Under
section
13,
Rule
14
of
the
Revised
Rules
of
Court,
it
is
Considering
that
the
voting
trust
agreement
between
ALFA
and
provided
that:
the
DBP
transferred
legal
ownership
of
the
stocks
covered
by
the
agreement
to
the
DBP
as
trustee,
the
latter
became
the
"Sec.
13.Service
upon
private
domestic
corporation
or
stockholder
of
record
with
respect
to
the
said
shares
of
stocks.
partnership.
—
If
the
defendant
is
a
corporation
organized
In
the
absence
of
a
showing
that
the
DBP
had
caused
to
be
under
the
laws
of
the
Philippines
or
a
partnership
duly
transferred
in
their
names
one
share
of
stock
for
the
purpose
registered,
service
may
be
made
on
the
president,
manager,
of
qualifying
as
directors
of
ALFA,
the
petitioners
can
no
longer
secretary,
cashier,
agent
or
any
of
its
directors."
be
deemed
to
have
retained
their
status
as
officers
of
ALFA
which
was
the
case
before
the
execution
of
the
subject
voting
In
view
of
the
foregoing,
the
ultimate
issue
of
whether
or
not
trust
agreement.
There
appears
to
be
no
dispute
from
the
there
was
proper
service
of
summons
on
ALFA
through
the
records
that
DBP
has
taken
over
full
control
and
management
petitioners
is
readily
answered
in
the
negative.
Under
section
of
the
firm.
13,
Rule
14
of
the
Revised
Rules
of
Court,
it
is
provided
that:
There
can
be
no
reliance
on
the
inference
that
the
five-‐year
"Sec.
13.Service
upon
private
domestic
corporation
or
period
of
the
voting
trust
agreement
in
question
had
lapsed
in
partnership.
—
If
the
defendant
is
a
corporation
organized
1986
so
that
the
legal
title
to
the
stocks
covered
by
the
said
under
the
laws
of
the
Philippines
or
a
partnership
duly
voting
trust
agreement
ipso
facto
reverted
to
the
petitioners
as
registered,
service
may
be
made
on
the
president,
manager,
beneficial
owners
pursuant
to
the
6th
paragraph
of
section
59
secretary,
cashier,
agent
or
any
of
its
directors."
of
the
new
Corporation
Code
which
reads:
ONG
YONG
vs.
TIU
"Unless
expressly
renewed,
all
rights
granted
in
a
voting
trust
G.R.
No.
144476
–
February
1,
2002
agreement
shall
automatically
expire
at
the
end
of
the
agreed
period,
and
the
voting
trust
certificates
as
well
as
the
FACTS:
certificates
of
stock
in
the
name
of
the
trustee
or
trustees
shall
The
First
Landlink
Asia
Development
Corporation
(FLADC)
was
fully
owned
by
the
Tius.
This
commercial
complex,
then
unfinished,
was
threatened
with
incompletion
when
its
owner
found
it
in
financial
property
contribution;
and
when
David
S.
Tiu
and
Cely
Y.
Tiu
were
distress
in
the
amount
of
P190,000,000.00
for
being
indebted
to
the
proscribed
from
assuming
and
performing
their
duties
as
Vice-‐
Philippine
National
Bank.
The
Ongs
were
invited
by
the
Tius
to
invest
in
President
and
Treasurer,
respectively
of
FLADC.
These
became
the
FLADC
and
the
corresponding
Pre-‐Subscription
Agreement
was
basis
of
the
Tius'
unilateral
rescission
of
the
Pre-‐Subscription
executed
whereby
both
parties
agreed
to
maintain
equal
shareholdings
Agreement
on
February
23,
1996.
in
FLADC
with
the
Ongs
investing
cash
while
the
Tius
contributing
property,
which
included
a
parcel
of
land
in
the
name
of
Masagana
On
February
27,
1996,
the
Tius
sought
the
Securities
and
Telemart,
Inc.
Exchange
Commission
(SEC)
confirmation
of
their
rescission
of
the
Pre-‐Subscription
Agreement.
The
Ongs:
subscription
of
1
million
shares
of
FLADC
at
a
par
value
of
P100.00
per
share.
P100
Million
is
payable
in
SEC
Hearing
Officer
Rolando
G.
Andaya,
Jr.
rendered
a
decision
cash.
confirming
the
rescission:
The
Tius:
subscribe
to
549,800
shares
more
of
FLADC
at
a
par
(a)The
cancellation
of
the
1,000,000
shares
subscription
of
the
value
of
P100.00
per
share
over
and
above
their
individual
defendants
in
FLADC
previous
subscription
of
450,200
shares
in
order
to
complete
a
subscription
of
1
million
shares.
Masagana
(b)FLADC
to
pay
the
amount
of
P170,000,000.00
to
the
Telamart,
Inc.
executed
a
Deed
of
Assignment
over
the
individual
defendants
representing
the
return
of
their
1,902.30
square
meter
property
in
favor
of
FLADC
and
contribution
for
1,000,000
shares
of
FLADC
delivered
the
owner's
copy
of
the
transfer
certificate
of
title
of
the
same
as
well
as
the
possession
thereof
to
(f)The
individual
defendants,
individually
and
collectively,
the
latter
(pp.
221-‐226,
Rollo).
Title
over
the
151
their
agents
and
representatives,
to
desist
from
exercising
or
square
meter
property
was
also
transferred
in
the
performing
any
and
all
acts
pertaining
to
stockholder,
director
name
of
FLADC.
or
officer
of
FLADC
or
in
any
manner
intervene
in
the
management
and
affairs
of
FLADC
The
P190,000,000.00
loan
from
the
PNB
was
also
settled,
but
not
quite
in
accord
with
the
provisions
of
the
Pre-‐Subscription
(g)The
individual
defendants,
jointly
and
severally,
to
return
to
Agreement.
The
Ongs
had
to
pay
P70,000,000.00
more
aside
from
their
FLADC
interest
payment
in
the
amount
of
P8,866,669.00
and
P100,000,000.00
subscription
payment,
and
the
Tius
had
to
advance
all
interest
payments
as
well
as
any
payments
on
principal
P20,000,000.00
in
cash,
which
amount
was
loaned
to
them
by
the
received
from
the
P70,000,000.00
inexistent
loan,
plus
the
former.
legal
rate
of
interest
thereon
from
the
date
of
their
receipt
of
The
controversy
between
the
two
parties
arose
when
the
Ongs
such
payment,
until
fully
paid.
refused
to
credit
the
number
of
FLADC
shares
in
the
name
of
Masagana
Telamart,
Inc.
commensurate
to
its
1,902.30
square
meter
property
SEC
Hearing
Officer
Manolito
S.
Soller
issued
an
omnibus
order
contribution;
also
when
they
refused
to
credit
the
number
of
FLADC
and
partially
reconsidered
the
decision:
shares
in
favor
of
the
Tius
commensurate
to
their
151
square
meter
…partially
reconsidered
only
insofar
as
(d) The
Tius
are
hereby
ordered
to
pay
the
amount
of
the
investment
amounting
to
P70
P20,000,000.00
loaned
them
by
the
Ongs
upon
the
million
which
is
hereby
declared
not
finality
of
this
decision.
as
premium
on
capital
stock
but
a
liability
of
FLADC
or
advances
of
the
1st
ISSUE:
WON
rescission
is
not
applicable
when
"rights"
over
defendants
made
in
favor
of
FLADC,
the
subject
matter
of
the
rescission
have
been
and
that
the
interest
paid
on
account
acquired
by
third
persons.
thereof
is
hereby
declared
legal
and
valid.
The
Ongs
argue
that
the
payment
on
subscription
of
P100
million
by
the
Ongs
is
not
to
the
Tius
and
the
SEC
en
banc:
payment
of
P54.98
million
by
the
Tius
is
not
to
the
Ongs,
…Confirms
the
rescission
of
the
Pre-‐ but
to
FLADC,
the
corporation,
which
is
distinct
and
Subscription
Agreement
and
separate
from
the
Ongs
and
the
Tius
notwithstanding
REVERSING
the
same
insofar
as
it
held
the
fact
that
they
may
be
the
only
stockholders.
that
the
seventy
million
(P70
M)
paid
by
the
Ong
Group
over
and
above
the
RULING:
Applicable.
FLADC
is
not
a
third
person
in
relation
to
par
value
of
the
one
million
the
Pre-‐Subscription
Agreement
though
not
named
as
(1,000,000)
shares
of
stocks
of
FLADC
a
party.
FLADC
is
deemed
a
party
to
the
agreement
by
which
they
had
subscribed
as
loan
virtue
of
stipulations
pour
autrui
clearly
and
and
not
premium.
deliberately
conferring
on
it
a
favor
or
benefit
which
it
subsequently
accepted.
(Art.
1311,
Civil
Code)
12
Such
Court
of
Appeals:
Affirmed
with
modification
the
appealed
decision.
benefit
was
in
the
form
of
the
payments
made
by
the
parties
for
their
subscription
to
shares
of
stock
in
(a) The
Ong
and
Tiu
Groups
are
ordered
to
liquidate
FLADC,
which
FLADC
accepted.
First
Landlink
Asia
Development
Corporation
in
accordance
with
the
following
cash
and
property
2nd
ISSUE:
WON
the
Ongs
violated
the
"Pre-‐Subscription
contributions
of
the
parties
therein.
Agreement"
when
it
prevented
the
Tius
from
(b) The
remaining
assets
of
First
Landlink
Asia
assuming
the
duties
and
responsibilities
of
the
Vice-‐
Development
Corporation
shall
be
transferred
to
President
and
Treasurer
of
FLADC
by
not
providing
the
Tius.
them
with
adequate
offices.
(c) First
Landlink
Asia
Development
Corporation
is
hereby
ordered
to
pay
the
amount
of
RULING:
YES.
The
Pre-‐Subscription
Agreement
provides
that
P70,000,000.00
that
was
advanced
to
it
by
the
Ong
the
position
of
Vice-‐President
and
Treasurer
of
FLADC
Group
upon
the
finality
of
this
decision.
shall
be
nominated
from
the
Tiu
Group.
Despite
the
provision
in
the
agreement
turning
over
the
management
and
administration
of
FLADC
to
the
Ong
Group,
there
is
nothing
in
the
agreement
which
states
assets
of
FLADC
and
the
management
thereof,
the
that
the
elected
Vice-‐President
and
Treasurer
of
same
is
but
an
inevitable
consequence
of
the
FLADC
cannot
or
must
not
be
allowed
to
assume
the
rescission
of
the
Pre-‐Subscription
Agreement.
responsibilities
of
their
respective
office.
The
Ongs
Restoration
of
the
parties
to
status
quo
ante
dictates
have
reduced
the
positions
of
Vice-‐President
and
that
the
building
constructed
on
the
two
(2)
existing
Treasurer
of
FLADC
to
mere
figure
heads.
lots
of
FLADC,
the
remaining
asset
of
FLADC,
be
transferred
to
the
Tiu
Group.
The
status
quo
ante
3rd
ISSUE:
WON
the
Court
of
Appeals
erred
in
ordering
the
immediately
prior
to
the
execution
of
the
Pre-‐
transfer
to
the
Tiu
Group
whatever
remains
of
the
Subscription
Agreement
was
that
the
Tius,
then
wholly
assets
of
the
FLADC
and
the
management
thereof,
owning
FLADC,
had
control
and
custody
over
this
upon
the
return
to
each
group
of
their
respective
cash
remaining
asset.
and
property
contribution.
G.R.
No.
144629
-‐
Petition
of
the
Tius
The
Ongs
further
cite
Sec.
122
of
the
Corporation
Code
1st
ISSUE:
WON
the
Court
of
Appeals
erred
in
ordering
the
to
support
their
claim
that
the
order
of
the
Court
of
liquidation
of
FLADC
instead
of
merely
ordering
the
Appeals
for
the
return
of
the
parties'
contribution
restitution
of
the
parties'
respective
investments.
(distribution
of
FLADC
assets,
in
the
words
of
the
Ongs)
is
prohibited,
thus:
RULING:
NO.
Restoration
of
the
parties
to
their
relative
position
which
they
would
have
occupied
had
no
contract
ever
"Sec.
122.Corporate
Liquidation.
—
.
.
."Except
by
been
made
is
not
practicable
nor
possible
because
we
decrease
of
capital
stock
and
as
otherwise
allowed
by
cannot
turn
back
the
hands
of
time
when
the
mall
was
this
Code,
no
corporation
shall
distribute
any
of
its
only
"nearing
completion"
in
1994,
when
the
mall
was
assets
or
property
except
upon
lawful
dissolution
and
not
fully
tenanted
yet
and
they
had
an
existing
loan
of
after
payment
of
all
its
debts
and
liabilities."
P190
million
with
PNB
with
an
interest
of
19%
per
annum.
But
the
Masagana
Citimall
is
now
completely
RULING:
NO.
As
a
legal
consequence
of
rescission,
the
order
of
constructed/finished,
the
P190
million
loan
fully
paid
the
Court
of
Appeals
to
return
the
cash
and
property
without
their
having
to
pay
enormous
interest,
and
the
contribution
of
the
parties
is
based
on
law,
hence,
Tius
cannot
deny
that
the
Ongs
are
partly
to
be
cannot
be
considered
an
act
of
misappropriation.
For
credited
for
the
success
of
the
venture.
What
the
Tius
how
can
the
rescission
of
the
Pre-‐Subscription
want
the
Court
to
order
would
have
been
fair
and
just
Agreement
be
implemented
without
returning
to
the
had
there
been
no
fault
on
their
part
and
had
they
two
groups
whatever
they
delivered
to
the
come
to
Court
with
clean
hands
because
he
who
comes
corporation
in
accordance
with
the
Agreement?
to
Court
must
come
with
clean
hands.
If,
as
the
Tius
espouse,
the
Court
would
simply
order
the
return
of
With
regard
to
the
order
of
the
Court
of
Appeals
the
P190
million
of
the
Ongs,
then,
the
Tius
would
be
transferring
to
the
Tiu
Group
whatever
remains
of
the
unjustly
enriched
at
the
expense
of
the
Ongs.
Under
the
law,
no
one
shall
unjustly
enrich
himself
at
the
with
the
commensurate
number
of
shares,
subject
expense
of
another.
"Niguno
non
deue
enriquecerse
only
to
the
Tius'
payment
of
the
expenses
for
the
tortizamente
condano
de
otro.
(In
short,
transfer
of
the
title
in
the
name
of
FLADC.
So,
too,
in
magmumukhang
milking
cows
lang
yung
mga
Ongs
the
case
of
the
151
sq.
m.
property,
the
fact
that
the
kapag
ibabalik
lang
yung
investment
nila)
Deed
of
Assignment
between
the
Lichaucos
and
the
FLADC
was
executed
prior
to
the
execution
of
the
Pre-‐
2nd
ISSUE:
WON
the
Tiu
Group
cannot
be
credited
with
the
Subscription
Agreement
does
not
prejudice
the
Ongs.
number
of
shares
commensurate
to
the
value
of
said
Therefore,
the
Tius
should
be
credited
with
49,800
lot
(indicated
below).
shares
in
FLADC
for
this
property
contribution,
pursuant
to
the
Pre-‐Subscription
Agreement.
According
to
CA,
"Under
the
Pre-‐Subscription
Agreement,
the
Tius
were
obliged
to
execute
a
Deed
of
3rd
ISSUE:
WON
the
P70
million
paid
by
the
Ongs
in
excess
of
the
Assignment
over
a
151
square
meter
parcel
of
land
actual
par
value
of
one
million
shares
they
acquired
in
favor
of
FLADC
as
payment
of
49,800
shares
from
FLADC
was
a
premium
on
capital
and
not
an
thereof
at
a
par
value
of
P100.00
per
share.
While
advance.
there
is
on
record
a
Deed
of
Assignment
thereon
in
favor
of
FLADC,
said
Deed
of
Assignment
was
not
RULING:
NO,
it
is
an
advance.
"The
Pre-‐Subscription
Agreement
executed
by
the
Tius
in
favor
of
FLADC.
The
Deed
of
is
explicit
in
its
terms
—that
the
Ongs
agreed
to
pay
Assignment
was
executed
by
the
Lichaucos
in
favor
of
P100,000,000.00
only
for
1
million
shares
in
FLADC
at
FLADC.
If
ever
somebody
has
to
be
credited
with
the
a
par
value
of
P100.00
per
share.
FLADC's
application
number
of
shares
commensurate
to
the
value
of
the
151
for
an
increase
in
capital
stock
shows
that
the
par
square
meter
property,
it
will
not
be
the
Tius
but
the
value
of
each
of
its
shares
is
P100.00
only.
The
same
Lichaucos.
application
also
shows
that
the
Ongs
subscribed
to
1
million
shares
of
FLADC
at
a
par
value
of
P100.00
per
RULING:
NO,
They
must
be
credited.
The
Lichaucos
are
not
share
(Ibid).
There
is
nothing
in
the
application
which
parties
to
the
Pre-‐Subscription
Agreement
and
are
not
shows
that
FLADC's
shares
are
to
be
sold
at
a
premium
even
demanding
that
they
be
credited
with
such
or
at
an
amount
higher
than
the
stated
par
value
per
shares
in
exchange
for
the
said
property.
Just
like
this
share.
property,
the
1,902.30
sq.
m.
parcel
of
land
in
the
name
of
Masagana
Telamart,
Inc.
(also
a
corporation
"The
Tius
also
claim
that
the
P70,000,000.00
cannot
owned
by
the
Tius),
was
also
acquired
by
the
Tius
be
treated
as
an
advance
because
there
was
no
board
before
the
execution
of
the
Pre-‐Subscription
resolution
authorizing
FLADC
to
incur
such
an
Agreement.
The
fact
that
the
1,902.30
sq.
m.
property
obligation.
As
pointed
out
by
SEC
Hearing
Official
was
acquired
by
the
Tius
beforehand
does
not
Soller,
the
fact
that
no
board
resolution
was
passed
prejudice
the
Ongs,
as
shown
by
the
Ongs'
non-‐ allowing
FLADC
to
incur
such
an
obligation
is
objection
to
crediting
the
Masagana
Telamart,
Inc.
immaterial,
it
appearing
that
there
was
also
no
board