G.R. No.

L-6776 May 21, 1955

THE REGISTER OF DEEDS OF RIZAL, petitioner-appellee,

vs.
UNG SIU SI TEMPLE, respondent-appellant.

Facts: Jesus Dy, a Filipino citizen, donated a parcel of residential land in Caloocan in favor of the
unregistered religious organization Ung Sui Si Temple operating through three trustees all of Chinese
nationality. The donation was duly accepted by Yu Juan, of Chinese nationality, founder and deaconess
of the temple, acting representation and in behalf of the latter and its trustees. The Register of Deeds
refused to record such donation.

Issue: w/n the refusal of the Register of Deeds to record such donation is proper.

Ruling: The act of Register of Deeds is proper.

The Constitution makes no exception in favor of religious associations. Neither is there any such saving
found in sections 1 and 2 of Art. 13, restricting the acquisition of public agricultural lands and other
natural resources to corporations or associations at least sixty per centum of the capital of which is
owned by the citizen of the Philippines.

The fact that the appellant religious organization has no capital stock does not suffice to escape the
constitutional inhibition, since it is admitted that its members are of foreign nationality. The purpose of
the sixty per centum requirement is to ensure that corporations or associations allowed to acquire
agricultural land or exploit natural resources shall be controlled by Filipinos, and the spirit of the
Constitution demands that in the absence of capital stock, the controlling membership should be
composed of Filipino citizens.

G.R. No. L-6055 June 12, 1953

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
WILLIAM H. QUASHA, defendant-appellant.

Facts: William H. Quasha, a member of the Philippine bar, was charged in the Court of First Instance of
Manila with the crime of falsification of a public and commercial document in that, having been
entrusted with the preparation and registration of the article of incorporation of the Pacific Airways
Corporation, a domestic corporation organized for the purpose of engaging in business as a common
carrier, he caused it to appear in said article of incorporation that one Arsenio Baylon, a Filipino citizen,
had subscribed to and was the owner of 60.005 per cent of the subscribed capital stock of the
corporation when in reality, as the accused well knew, such was not the case, the truth being that the
owner of the portion of the capital stock subscribed to by Baylon and the money paid thereon were
American citizen whose name did not appear in the article of incorporation, and that the purpose for
making this false statement was to circumvent the constitutional mandate that no corporation shall be
authorize to operate as a public utility in the Philippines unless 60 per cent of its capital stock is owned
by Filipinos.

Found guilty after trial and sentenced to a term of imprisonment and a fine, the accused has appealed
to this Court.

ART. 171. Falsification by public officer, employee, or notary or ecclesiastic minister. — The
penalty ofprision mayor and a fine not to exceed 5,000 pesos shall be imposed upon any public
officer, employee, or notary who, taking advantage of his official position, shall falsify a
document by committing any of the following acts:

xxx xxx xxx

4. Making untruthful statements in a narration of facts.

ART. 172. Falsification by private individuals and use of falsified documents. — The penalty
of prision correccional in its medium and maximum period and a fine of not more than 5,000
pesos shall be imposed upon:

xxx xxx xxx

1. Any private individual who shall commit any of the falsifications enumerated in the next
preceding article in any public or official document or letter of exchange or any other kind of
commercial document.

Issue: w/n Quasha should be criminally liable.

Ruling: No. Quasha is acquitted.

Falsification consists in not disclosing in the articles of incorporation that Baylon was a mere trusteeof
his American co-incorporators, thus giving the impression that Baylon was the owner of the shares
subscribed to by him. For the mere formation of the corporation, such revelation was not essential and
the Corporation law does not require it.

The moment for determining whether a corporation is entitled to operate as a public utility is when it
applies for a franchise, certificate or any other form of authorization for that purpose. That can be done
after the corporation has already come into being and not while it is still being formed.

So far as American citizens are concerned, the said act has ceased to be an offense within the meaning
of the law, so that defendant can no longer be held criminally liable therefor.
G.R. No. L-19891 July 31, 1964

J.R.S. BUSINESS CORPORATION, J.R. DA SILVA and A.J. BELTRAN, petitioners,

vs.
IMPERIAL INSURANCE, INC., MACARIO M. OFILADA, Sheriff of Manila and
HON. AGUSTIN MONTESA, Judge of the Court of First Instance of Manila, respondents.

Facts: Petitioner J. R. Da Silva, is the President of the J.R.S. Business Corporation, an establishment duly
franchised by the Congress of the Philippines, to conduct a messenger and delivery express service. On
July 12, 1961, the respondent Imperial Insurance, Inc., presented with the CFI of Manila a complaint (Civ.
Case No. 47520), for sum of money against the petitioner corporation. After the defendants therein
have submitted their Answer, the parties entered into a Compromise Agreement, assisted by their
respective counsels.

On March 17, 1962, the lower court rendered judgment embodying the contents of the said
compromise agreement.

On May 15, 1962, respondent Imperial Insurance Inc., filed a "Motion for the Insurance of a Writ of
Execution". Notices of Sale were sent out for the auction of the personal properties of the petitioner
J.R.S. Business Corporation. Also, a Notice of Sale of the "whole capital stocks of the defendants JRS
Business Corporation, the business name, right of operation, the whole assets, furnitures and
equipments, the total liabilities, and Net Worth, books of accounts, etc., etc." of the petitioner
corporation was, handed down.

Petitioner, thru counsel, presented an "Urgent Petition for Postponement of Auction Sale and for
Release of Levy on the Business Name and Right to Operate of Defendant JRS Business Corporation",
stating that petitioners were busy negotiating for a loan with which to pay the judgment debt; that the
judgment was for money only and, therefore, plaintiff (respondent Insurance Company) was not
authorized to take over and appropriate for its own use, the business name of the defendants; that the
right to operate under the franchise, was not transferable and could not be considered a personal or
immovable, property, subject to levy and sale.

On June 10, 1962, a Supplemental Motion for Release of Execution, was filed by counsel of petitioner
JRS Business Corporation, claiming that the capital stocks thereof, could not be levied upon and sold
under execution. In said motion, petitioners alleged that the loan they had applied for, was to be
secured within the next ten (10) days, and they would be able to discharge the judgment debt.
Respondents opposed the said motion and on June 21, 1962, the lower court denied the motion for
postponement of the auction sale.

In the sale which was conducted in the premises of the JRS Business Corporation at 1341 Perez St., Paco,
Manila, all the properties of said corporation contained in the Notices of Sale dated May 26, 1962, and
June 2, 1962, were bought by respondent Imperial Insurance, Inc., for P10,000.00, which was the
highest bid offered. Immediately after the sale, respondent Insurance Company took possession of the
proper ties and started running the affairs and operating the business of the JRS Business Corporation.
Hence, the present appeal.
Issue: w/n the business name or trade name, franchise (right to operate) and capital stocks of the
petitioner are properties or property rights which could be the subject of levy, execution and sale.

Ruling: No. It cannot be the subject of levy, execution and sale.

The right to operate a messenger and express delivery service, by virtue of a legislative enactment, is
admittedly a secondary franchise (R.A. No. 3260, entitled "An Act granting the JRS Business Corporation
a franchise to conduct a messenger and express service)".

Under our corporation law, is subject to levy and sale on execution together and including all the
property necessary for the enjoyment thereof. The law, however, indicates the procedure under which
the same (secondary franchise and the properties necessary for its enjoyment) may be sold under
execution. Said franchise can be sold under execution, when such sale is especially decreed and ordered
in the judgment and it becomes effective only when the sale is confirmed by the Court after due notice
(Sec. 56, Corp. Law).

The compromise agreement and the judgment based thereon, do not contain any special decree or
order making the franchise answerable for the judgment debt.

The same thing may be stated with respect to petitioner's trade name or business name and its capital
stock. Like that of a franchise, the law mandates, that property necessary for the enjoyment of said
franchise, can only be sold to satisfy a judgment debt if the decision especially so provides. As We have
stated heretofore, no such directive appears in the decision. Moreover, a trade name or business name
cannot be sold separately from the franchise, and the capital stock of the petitioner corporation or any
other corporation, for the matter, represents the interest and is the property of stockholders in the
corporation, who can only be deprived thereof in the manner provided by law.

It, therefore, results that the inclusion of the franchise, the trade name and/or business name and the
capital stock of the petitioner corporation, in the sale of the properties of the JRS Business Corporation,
has no justification.

G.R. No. 114222 April 6, 1995

FRANCISCO S. TATAD, JOHN H. OSMENA and RODOLFO G. BIAZON, petitioners,

vs.
HON. JESUS B. GARCIA, JR., in his capacity as the Secretary of the Department of Transportation and
Communications, and EDSA LRT CORPORATION, LTD., respondents.

Facts: In 1989, the government planned to build a railway transit line along EDSA. No bidding was made
but certain corporations were invited to prequalify. The only corporation to qualify was the EDSA LRT
Consortium which was obviously formed for this particular undertaking.

An agreement was then made between the government, through the DOTC and the EDSA LRT
Consortium. The agreement was based on the Build-Operate-Transfer scheme provided for by law. (RA
6957, amended by RA 7718). Under the agreement, EDSA LRT Consortium shall build the facilities and
shall supply the train cabs. Every phase that is completed shall be turned over to the DOTC and the
latter shall pay the rent for the same for 25 years. By the end of 25 years, it was projected that the
government shall have fully paid EDSA LRT Consortium. Thereafter, EDSA LRT Consortium shall sell the
facilities to the government for $1.00.

However, Senators Francisco Tatad, John Osmena, and Rodolfo Biazon opposed the implementation of
said agreement as they averred that EDSA LRT Consortium is a foreign corporation as it was organized
under Hongkong laws, that as such, it cannot own a public utility such as the EDSA railway transit
because this falls under the nationalized areas of activities. The petition was filed against Jesus Garcia,
Jr. in his capacity as DOTC Secretary.

Issue: w/n respondent EDSA LRT CORP. LTD., a foreign corporation own EDSA LRT III, a public utility.

Ruling: Private respondent owns the rail tracks, rolling stocks like the coaches, rail stations, terminals
and the power plant, not a public utility. While a franchise is needed to operate these facilities to serve
the public, the right to operate a public utility may exist independently and separately from the
ownership of the facilities thereof. One can own said facilities without operating them as a public utility,
or conversely, one may operate a public utility without owning the facilities used to serve the public. The
devotion of property to serve the public may be done by the owner or by the person in control thereof
who may not necessarily be the owner thereof.

G.R. No. L-2294 May 25, 1951

FILIPINAS COMPAÑIA DE SEGUROS, petitioner,

vs.
CHRISTERN, HUENEFELD and CO., INC., respondent.

Facts: Respondent corporation, Christern Huenefeld, & Co., Inc., after payment of corresponding
premium, obtained from the petitioner ,Filipinas Cia. de Seguros, fire policy No. 29333 in the sum of
P1000,000, covering merchandise contained in a building located at No. 711 Roman Street, Binondo
Manila.

During the Japanese military occupation, the building and insured merchandise were burned. In due
time the respondent submitted to the petitioner its claim under the policy. The salvage goods were sold
at public auction and, after deducting their value, the total loss suffered by the respondent was fixed at
P92,650. The petitioner refused to pay the claim on the ground that the policy in favor of the
respondent had ceased to be in force on the date the United States declared war against Germany, the
respondent Corporation (though organized under and by virtue of the laws of the Philippines) being
controlled by the German subjects and the petitioner being a company under American jurisdiction
when said policy was issued on October 1, 1941. The petitioner, however, in pursuance of the order of
the Director of Bureau of Financing, Philippine Executive Commission, dated April 9, 1943, paid to the
respondent the sum of P92,650 on April 19, 1943.

The present action was filed on August 6, 1946, in the Court of First Instance of Manila for the purpose
of recovering from the respondent the sum of P92,650 above mentioned. The theory of the petitioner is
that the insured merchandise were burned up after the policy issued in 1941 in favor of the respondent
corporation has ceased to be effective because of the outbreak of the war between the United States
and Germany on December 10, 1941, and that the payment made by the petitioner to the respondent
corporation during the Japanese military occupation was under pressure.
After trial, the Court of First Instance of Manila dismissed the action without pronouncement as to costs.
Upon appeal to the Court of Appeals, the judgment of the Court of First Instance of Manila was affirmed,
with costs. The case is now before us on appeal by certiorari from the decision of the Court of Appeals.

Issue: w/n the policy in question became null and void upon the declaration of war between the United
States and Germany.

Ruling: The Philippine Insurance Law (Act No. 2427, as amended,) in section 8, provides that "anyone
except a public enemy may be insured." It stands to reason that an insurance policy ceases to be
allowable as soon as an insured becomes a public enemy.

The respondent having become an enemy corporation on December 10, 1941, the insurance policy
issued in its favor on October 1, 1941, by the petitioner (a Philippine corporation) had ceased to be valid
and enforceable, and since the insured goods were burned after December 10, 1941, and during the
war, the respondent was not entitled to any indemnity under said policy from the petitioner. However,
elementary rules of justice (in the absence of specific provision in the Insurance Law) require that the
premium paid by the respondent for the period covered by its policy from December 11, 1941, should
be returned by the petitioner.

It results that the petitioner is entitled to recover what paid to the respondent under the circumstances
on this case. However, the petitioner will be entitled to recover only the equivalent, in actual Philippines
currency of P92,650 paid on April 19, 1943, in accordance with the rate fixed in the Ballantyne scale.

The appealed decision is hereby reversed and the respondent corporation is ordered to pay to the
petitioner the sum of P77,208.33, Philippine currency, less the amount of the premium, in Philippine
currency, that should be returned by the petitioner for the unexpired term of the policy in question,
beginning December 11, 1941.

G.R. No. L-3869 January 31, 1952

S. DAVIS WINSHIP, plaintiff-appellant,

vs.
PHILIPPINE TRUST COMPANY, defendant-appellee.

Facts: Prior to December, 1941, the Eastern Isles Import corporation organized under and existing by
virtue of the laws of the Philippines, all of the capital stock of which was and has been owned by
American citizens, except one share with a par value of P100 in the name of Antonia Sevilla and one
share with a par value of P100 in the name of Edmund A. Schwesinger, had a current account deposit
with the Philippine Trust Company, and as of December 29, 1941, the balance in favor of said depositor
was P51,410.91.

Prior to December, 1941, the Eastern Isles, Inc., a corporation organized under and existing by virtue of
the laws of the Philippines, all of the capital stock of which was and has been owned by American
citizens, except one share with a par value of P100 in the name of F. Capistrano, had a current account
deposit with the Philippine Trust Company, and as of December 29, 1941, the balance in favor of said
depositor was P34,827.74. The Eastern Isles, Incorporated made a withdrawal of P204.37 which was
debited to said account on June 10, 1942.
On October 4, 1943, the Japanese Military Administration in the Philippines issued an order requiring all
deposit accounts of the hostile people (including corporations) to be transferred to the Bank of Taiwan,
as the depository of the Japanese Military Administration, which order the Philippine Trust Company
was specifically directed to comply with. On September 29, 1944, in compliance with said order, the
Philippine Trust Company transferred and paid the credit balances of the current account deposits of
the Eastern Isles Import Corporation and of the Eastern Isles, Inc. to the Bank of Taiwan.

The pre-war current deposit accounts of the Eastern Isles Import Corporation and of the Eastern Isles,
Inc. were subsequently transferred to S. Davis Winship who, on August 12, 1947, presented to the
Philippine Trust Company two checks covering the aforesaid deposits. The Philippine Trust Company,
however, refused to pay said checks, whereupon, on September 6, 1947, S. Davis Winship instituted the
present action against the Philippine Trust Company in the Court of First Instance of Manila, to recover
upon the first cause of action the sum of P51,410.91 and under the second cause of action the sum of
P34,827.74.

Defendant Philippine trust Company invoked the order of the Japanese Military Administration by virtue
of which it transferred the current deposit accounts in question to the Bank of Taiwan as the depository
of the Bureau of Enemy Property Custody of the Japanese Military Administration.

After trial, the Court of First Instance of Manila rendered a decision upholding the contention of the
defendant and accordingly dismissing the complaint. From this decision plaintiff appealed.

Issue: w/n Phil. Trust Company is liable to pay said checks.

Ruling: We affirm the appealed judgment.

As it has been stipulated by the parties that the defendant transferred the deposits in question to the
Bank of Taiwan in compliance with the order of the Japanese Military Administration, the defendant was
released from any obligation to the depositors or their transferee. Appellant's contention that there is
no positive showing that the transfer was made by the Philippine Trust Company in compliance with the
order of the Japanese Military Administration, and its logical effect is to make such act binding on said
company. At any rate, the defendant corporation has not impugned its validity.

We held that the nationality of a private corporation is determined by the character or citizenship of its
controlling stockholders; and this pronouncement is of course decisive as to the hostile character of the
Eastern Isles, Inc., as far as the Japanese Military Administration was concerned, it being conceded that
the controlling stockholders of said corporations were American citizens.

G.R. No. L-554 April 9, 1948

HAW PIA, plaintiff-appellant,

vs.
THE CHINA BANKING CORPORATION, defendant-appellee.

Facts: Plaintiff-appellant’s indebtedness to the defendant-appellee China Banking Corporation in the

sum of P5,103.35 by way of overdraft in current account payable on demand together with its interests,
has been completely paid, on different occasions to the defendant Bank China Banking Corporation
through the defendant Bank of Taiwan, Ltd., that was appointed by the Japanese Military authorities as
liquidator of the China Banking Corporation.

The trial court held that, as there was no evidence presented to show that the defendant Bank had
authorized the Bank of Taiwan, Ltd., to accept the payment of the plaintiff’s debt to the said defendant,
and said Bank of Taiwan, as an agency of the Japanese invading army, was not authorized under the
international law to liquidate the business of the China Banking Corporation, the payment has not
extinguished the indebtedness of the plaintiff to the said defendant under Article 1162 of the Civil Code.

Issues: w/n such payment by the plaintiff-appellant has extinguished her obligation to said defendant-
appellee.

Ruling: YES. It having been shown above that the Japanese Military Forces had power to sequestrate and
impound the assets or funds of the China Banking Corporation, and for that purpose to liquidate it by
collecting the debts due to said bank from its debtors, and paying its creditors, and therefore to appoint
the Bank of Taiwan as liquidator with the consequent authority to make the collection, it follows
evidently that the payments by the debtors to the Bank of Taiwan of their debts to the China Banking
Corporation have extinguished their obligation to the latter. Said payments were made to a person, the
Bank of Taiwan, authorized to receive them in the name of the bank creditor under article 1162, of the
Civil Code. Because it is evident the words “a person authorized to receive it,” as used therein, means
not only a person authorized by the same creditor, but also a person authorized by law to do so, such as
guardian, executor or administrator of estate of a deceased, and assignee or liquidator of a partnership
or corporation, as well as any other who may be authorized to do so by law.

The fact that the money with which that debts have been paid were Japanese war notes does not affect
the validity of the payments. The power of the military governments established in occupied enemy
territory to issue military currency in the exercise of their governmental power is based, not only on the
occupant’s general power to maintain law and order recognized in article 43 of the Hague Regulations,
but on military necessity as shown by the history of the use of money or currency in wars.