GAMBOA vs. TEVES (Conflict of Laws)

G.R. No. 176579               October 9, 2012

HEIRS OF WILSON P. GAMBOA,* Petitioners,

vs.

FINANCE SECRETARYMARGARITO B. TEVES, FINANCE UNDERSECRETARYJOHN P. SEVILLA, AND COMMISSIONER RICARDO ABCEDE OF THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT(PCGG) IN THEIR CAPACITIES AS CHAIR AND MEMBERS, RESPECTIVELY, OF THE PRIVATIZATION COUNCIL, CHAIRMAN ANTHONI SALIM OF FIRST PACIFIC CO., LTD. IN HIS CAPACITY AS DIRECTOR OF METRO PACIFIC ASSET HOLDINGS INC., CHAIRMAN MANUEL V. PANGILINAN OF PHILIPPINE LONG DISTANCE TELEPHONE COMPANY (PLDT) IN HIS CAPACITY AS MANAGING DIRECTOR OF FIRST PACIFIC CO., LTD., PRESIDENT NAPOLEON L. NAZARENO OF PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, CHAIR FE BARIN OF THE SECURITIES AND EXCHANGE COMMISSION, and PRESIDENT FRANCIS LIM OF THE PHILIPPINE STOCK EXCHANGE, Respondents.

FACTS:

-Gamboa is stockholder of PLDT.

-PTIC became a stockholder of PLDT because it acquired the shares of GTE in PLDT.

-PHI acquired shares in PTIC and those shares number to 111kplus. Therefore PHI became stockholder of PTIC.

-And the stockholding of PHI number to 111kplus was sequestered by government through PCGG.

-The government of the republic of the Philippines is now the holder of such shares.

-The government wanted to sell the 111k shares. The winning bidder is certain company.

-However the government notified First Pacific because the First Pacific is another stockholder of PLDT. First pacific failed to exercise its right of first refusal. Therefore its affiliate Metropacific was the one who bought the shares. 

-Gamboa together with other stockholder of PLDT question the sale and pray for its nullity on the ground that the effect of the sale of government of shares in PTIC will operate as indirect sale of approximately 6% of PLDT shares to First Pacific which is a foreign corporation that owned as well another shares with PLDT of approximately 30.7%plus. If it will acquire those shares being sold by the government its shares will increase to approximately 37% plus shares.

-That having been said,

The first pacific will now 37.plus %

While other foreign corp owned shares as well with PLDT aside from First Pacific, below are the approximate computation:

37% fist pacific

20+% other stockholder

30+% japanese entity

Which is violative to constitutional prohibition that foreign corporation should not own more than 40% of shares.

ISSUE:

(1) Definition of word capital, whether it shall include only commom shares or the combination of preferred and common shares.

RULING:

Common shares only.

The Articles of incorporation of PLDT provides that preferred shares does not have voting right (in all meeting) while common shares has.

It is violative to Corporation Law. Par 6 Sec 6. which providees that common share has complete voting right on election of directors while preferred shares does not have right to vote for such. That preferred shares are entitled to vote par 6 sec 6 on those cases enumerated under par 6 sec 6 of Corporation Law.

AASIMID

The constitution provides under sec 11 art 12 that 60% of capital shall be owned by filipino and no foreigner shall own more than 40%.

Morever, the SC ruled that the term cap sec 11 art 12 refers only to common shares.

Dissenting opinion:

According to Justice Velasco. 

Preferred share has no complete voting right not totally no voting rights.

Par 6 sec 6 Corporation Law

Enumerste instances where preferred share are entitled to vote:

Amendment of art of inco

Adoption and amendment of by laws

Consolidation

Increase / decrease of capital stocks

Bonded indebtedness

Merger

Investment of own or substantially own corporate assets

Dissolution

Those are not negligable in fact it holds salient matters. Therefore they should be determine in compliance with 60/40 rule.

STATE INVESTMENT HOUSE, INC. vs. CITIBANK (Conflict of Laws)

G.R. Nos. 79926-27 October 17, 1991

STATE INVESTMENT HOUSE, INC. and STATE FINANCING CENTER, INC., petitioners,

vs.

CITIBANK, N.A., BANK OF AMERICA, NT & SA, HONGKONG & SHANGHAI BANKING CORPORATION, and the COURT OF APPEALS, respondents.

FACTS:

The foreign banks involved in the controversy are Bank of America NT and SA, Citibank N.A. and Hongkong and Shanghai Banking Corporation.  They jointly filed with the Court of First Instance of Rizal a petition for involuntary insolvency of Consolidated Mines, Inc. (CMI), said CMI had obtained loans from the three petitioning bank. 

The petition was opposed om the ground that the Court had no jurisdiction to take cognizance of the petition for insolvency because petitioners are not resident creditors of CMI in contemplation of the Insolvency Law.

ISSUE:

Whether foreign banks licensed to do business in the Philippines, may be considered "residents of the Philippine Islands" within the meaning of Section 20 of the Insolvency Law (Act No. 1956, as amended, eff. May 20, 1909)

RULING:

There is no question that the three banks are foreign corporations in this sense, with principal offices situated outside of the Philippines. There is no question either that said banks have been licensed to do business in this country and have in fact been doing business here for many years, through branch offices or agencies, including "foreign currency deposit units;" 

The issue is whether these Philippine branches or units may be considered "residents of the Philippine Islands" as that term is used in Section 20 of the Insolvency Law, or residents of the state under the laws of which they were respectively incorporated. The answer cannot be found in the Insolvency Law itself, which contains no definition of the term, resident, or any clear indication of its meaning. There are however other statutes, albeit of subsequent enactment and effectivity, from which enlightening notions of the term may be derived. (NIRC and Corporation Law)

It is imperative to know the following:

DOMESTIC CORPORATION

The principal place of business is considered as the residence of domestic corporation. (Under remedial law, it is where summon must be served through the enumerated persons provided therein)

Corporation Law

FOREIGN CORPORATION

If entity is incorporated pursuant to laws other than those of the Philippines it is foreign entity.

But under Philippine jurisdiction

For as long as there is observance of the rule of RECIPROCITY wherein a Philippine corporation should also be allowed in another jurisdiction to do business therein then any corporation incorporated pursuant to laws of that foreign jurisdiction would be considered here as foreign corporation. 

In other words, an entity incorporated pursuant to laws other than those of the Philippines will be  considered as foreign corporation provided there is compliance with rule on reciprocity.

RECIPROCITY - meaning that other country under those whose laws the foreign entity was incorporated must also be affording the same privilege and benefits to Filipino citizens.

It will only be a foreign corporation if it is incorporated pursuant to laws of another jurisdiction subject to the rule on reciprocity.

If there is no reciprocity it is not a foreign corporation here it is nothing but foreign entity. Only foreign corporation is licensed to do business in the Philippines.

----

Domestic corporation is considered as domicile and resident in the Philippines. Whereas the domicile of foreign corporation is the place of incorporation.

Foreign corporation if it is domiciled in the place of incorporation may it considered as resident of the Philippines as far as the branches are concern?

The SC ruled in affirmative, on the ground that because foreign corporation is license to do business in the Philippines. And that foreign corporation does not only have principal place of business in that other jurisdiction but also it has branches or places of operations in different parts of the world. For that purpose therefore there becomes a distinction between domicile and residence as far as foreign corporation is concern.

Thus, if foreign corporation is deemed to be domicile in place of incorporation.

But if it is license to do business in Philippines. It has branch or branches or has operation as foreign corporation license to do business in Philippine. It shall be considered as resident foreign corporation.

How to serve summon to resident foreign corporation?

Answer: Through designated officer, the resident agent, he is fully authorized to receive summon. Service upon that resident agent is deemed as service upon the foreign corporation. Absence of which it may be served to designated government agencies. Like, Foreign bank to BSP; Insurance Corporation to Insurance Commission; any other corporation to SEC.

NORTHWEST ORIENT AIRLINES, INC. vs. CA and C.F. SHARP & COMPANY INC. (Conflict of Laws)

G.R. No. 112573 February 9, 1995

NORTHWEST ORIENT AIRLINES, INC. petitioner,

vs.

COURT OF APPEALS and C.F. SHARP & COMPANY INC., respondents.

FACTS:

Northwest Airlines and defendant C.F. Sharp & Company, through its Japan branch, entered into an International Passenger Sales Agency Agreement, whereby the former authorized the latter to sell its air transportation tickets. Unable to remit the proceeds of the ticket sales made by defendant on behalf of the plaintiff under the said agreement, plaintiff sued defendant in Tokyo, Japan, for collection of the unremitted proceeds of the ticket sales, with claim for damages.

A writ of summons was issued by the Civil Department, Tokyo District Court of Japan against defendant at its office at the Yokohoma, Kanagawa Prefecture. The attempt to serve the summons was unsuccessful. After the two attempts of service were unsuccessful, the judge of the Tokyo District Court decided to have the complaint and the writs of summons served at the head office of the defendant in Manila. Director of the Tokyo District Court requested the Supreme Court of Japan to serve the summons through diplomatic channels upon the defendant's head office in Manila.

The defendant received from Deputy Sheriff Rolando Balingit the writ of summons. Despite receipt of the same, defendant failed to appear at the scheduled hearing. Thus, the Tokyo Court proceeded to hear the plaintiff's complaint and on rendered judgment ordering the defendant to pay the plaintiff the sum of 83,158,195 Yen and damages for delay. 

Then, the defendant received from Deputy Sheriff Balingit copy of the judgment. Defendant not having appealed the judgment, the same became final and executory.

The defendant assailed the validity of service of summon.

ISSUE:

Whether service of summon to a resident corporation conferring to philippine jurisdiction may be made through diplomatic channels.

RULING:

YES, SC held that summon may be done by preference through personal service but substituted service of summon must be recognized as well. Resident corporation must have authorized representative here, duly authorized by that foreign corporation license to do business in the philippines to receive or accept summon on behalf of foreign entity. SC said that the service of summon being done properly by diplomatic channel then the service is valid therefore any judgment rendered pursuant to that valid service of summon is a valid judgment hence can enforce in its jurisdiction.

NEPOMUCENO vs. CA (Succession)

G.R. No. L-62952 October 9, 1985

SOFIA J. NEPOMUCENO, petitioner,

vs.

THE HONORABLE COURT OF APPEALS, RUFINA GOMEZ, OSCAR JUGO ANG, CARMELITA JUGO, respondents.

FACTS:

Martin Jugo died on July 16, 1974 in Malabon, Rizal. He left a last Will and Testament. In the said Will, the testator named and appointed herein petitioner Sofia J. Nepomuceno as his sole and only executor of his estate. It is clearly stated in the Will that the testator was legally married to a certain Rufina Gomez by whom he had two legitimate children, Oscar and Carmelita, but since 1952, he had been estranged from his lawfully wedded wife and had been living with petitioner as husband and wife. In fact, on December 5, 1952, the testator Martin Jugo and the petitioner herein, Sofia J. Nepomuceno were married in Victoria, Tarlac before the Justice of the Peace. The testator devised to his forced heirs, namely, his legal wife Rufina Gomez and his children Oscar and Carmelita his entire estate and the free portion thereof to herein petitioner.

The petitioner filed a petition for the probate of the last Will and Testament of the deceased Martin Jugo in the Court of First Instance.

Legal wife of the testator, Rufina Gomez and her children filed an opposition alleging inter alia that the execution of the Will was procured by undue and improper influence on the part of the petitioner.

The respondent court set aside the decision of the Court of First Instance of Rizal denying the probate of the will. The respondent court declared the Will to be valid except that the devise in favor of the petitioner is null and void pursuant to Article 739 in relation with Article 1028 of the Civil Code of the Philippines. 

The petitioner filed a motion for reconsideration. This was denied by the respondent court.

ISSUE:

(1)Whether the devise in favor of concubine is valid.

(2)Whether the respondent court acted in excess of its jurisdiction when after declaring the last Will and Testament of the deceased Martin Jugo validly drawn, it went on to pass upon the intrinsic validity of the testamentary provision in favor of herein petitioner.

RULING:

(1) No. It is prohibited under Article 739 of the Civil Code, such is against the making of a donation between persons who are living in adultery or concubinage. It is the donation which becomes void. The giver cannot give even assuming that the recipient may receive. The very wordings of the Will invalidate the legacy because the testator admitted he was disposing the properties to a person with whom he had been living in concubinage.

(2) No. While it is true that the general rule is that in probate proceedings, the court's area of inquiry is limited to an examination and resolution of the extrinsic validity of the Will, such are the testators testamentary capacity and the compliance with the formal requisites or solemnities prescribed by law are the only questions presented for the resolution of the court. 

The rule, however, is not inflexible and absolute. Given exceptional circumstances, the probate court is not powerless to do what the situation constrains it to do and pass upon certain provisions of the Will.

WHEREFORE, the petition is DISMISSED for lack of merit. The decision of the Court of Appeals, now Intermediate Appellate Court, is AFFIRMED. No costs.

IBP vs. ZAMORA (Constitutional Law Review)

G.R. No. 141284               August 15, 2000

INTEGRATED BAR OF THE PHILIPPINES, petitioner,

vs.

HON. RONALDO B. ZAMORA, GEN. PANFILO M. LACSON, GEN. EDGAR B. AGLIPAY, and GEN. ANGELO REYES, respondents.

FACTS:

Invoking his powers as Commander-in-Chief under Section 18, Article VII of the Constitution, President Estrada directed the AFP Chief of Staff and PNP Chief to coordinate with each other for the proper deployment and utilization of the Marines to assist the PNP in preventing or suppressing criminal or lawless violence.

In compliance with the presidential mandate, the PNP Chief formulated Letter of Instruction 02/20001 (the "LOI") which detailed the manner by which the joint visibility patrols, called Task Force Tulungan, would be conducted.

The Integrated Bar of the Philippines (the "IBP") filed the instant petition to annul LOI 02/2000 and to declare the deployment of the Philippine Marines, null and void and unconstitutional on the ground that no emergency exists that would justify the need for the calling of the military to assist the police force.

Asserting itself as the official organization of Filipino lawyers tasked with the bounden duty to uphold the rule of law and the Constitution, the IBP questions the validity of the deployment and utilization of the Marines to assist the PNP in law enforcement.

ISSUE:

Whether or not the President’s factual determination of the necessity of calling the armed forces is subject to judicial review.

RULING:

NO. The President did not commit grave abuse of discretion amounting to lack or excess of jurisdiction.

The power of judicial review is set forth in Section 1, Article VIII of the Constitution, to wit:

Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law.

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.

When questions of constitutional significance are raised, the Court can exercise its power of judicial review only if the following requisites are complied with, namely: (1) the existence of an actual and appropriate case; (2) a personal and substantial interest of the party raising the constitutional question; (3) the exercise of judicial review is pleaded at the earliest opportunity; and (4) the constitutional question is the lis mota of the case.

The IBP has not sufficiently complied with the requisites of standing in this case. The IBP asserts no other basis in support of its locus standi. The mere invocation by the IBP of its duty to preserve the rule of law and nothing more, while undoubtedly true, is not sufficient to clothe it with standing in this case. This is too general an interest which is shared by other groups and the whole citizenry.

The President did not commit grave abuse of discretion in calling out the Marines.

The present petition fails to discharge such heavy burden as there is no evidence to support the assertion that there exist no justification for calling out the armed forces. There is, likewise, no evidence to support the proposition that grave abuse was committed because the power to call was exercised in such a manner as to violate the constitutional provision on civilian supremacy over the military. In the performance of this Court’s duty of "purposeful hesitation" before declaring an act of another branch as unconstitutional, only where such grave abuse of discretion is clearly shown shall the Court interfere with the President’s judgment. To doubt is to sustain.

The President is not only clothed with extraordinary powers in times of emergency, but is also tasked with attending to the day-to-day problems of maintaining peace and order and ensuring domestic tranquility in times when no foreign foe appears on the horizon. 

Hence, petition is dismissed.

LIBAN vs. GORDON (Constitutional Law Review)

[G.R. NO. 175352 : July 15, 2009]

DANTE V. LIBAN, REYNALDO M. BERNARDO, and SALVADOR M. VIARI, Petitioners, v. RICHARD J. GORDON, Respondent.

FACTS:

Petitioners Dante V. Liban among others are officers of the Board of Directors of the Quezon City Red Cross Chapter. They filed a Petition to Declare Richard J. Gordon who is a Chairman of the Philippine National Red Cross (PNRC) Board of Governors as Having Forfeited His Seat in the Senate. 

Petitioners allege that by accepting the chairmanship of the PNRC Board of Governors, respondent has ceased to be a member of the Senate as provided in Section 13, Article VI of the Constitution, which reads:

SEC. 13. No Senator or Member of the House of Representatives may hold any other office or employment in the Government, or any subdivision, agency, or instrumentality thereof, including government-owned or controlled corporations or their subsidiaries, during his term without forfeiting his seat. Neither shall he be appointed to any office which may have been created or the emoluments thereof increased during the term for which he was elected.

Petitioners cite Camporedondo v. NLRC, which held that the PNRC is a government-owned or controlled corporation. 

Respondent insists that the PNRC is not a government-owned or controlled corporation and that the prohibition under Section 13, Article VI of the Constitution does not apply in the present case since volunteer service to the PNRC is neither an office nor an employment.

In their Reply, petitioners claim that their petition is a taxpayer's suit questioning the unlawful disbursement of funds, considering that respondent has been drawing his salaries and other compensation as a Senator even if he is no longer entitled to his office. Petitioners point out that this Court has jurisdiction over this petition since it involves a legal or constitutional issue which is of transcendental importance.

ISSUE:

Whether the office of the PNRC Chairman is a government office or an office in a government-owned or controlled corporation for purposes of the prohibition in Section 13, Article VI of the Constitution.

RULING:

PNRC is a Private Organization Performing Public Functions.

President Manuel A. Roxas signed Republic Act No. 95, otherwise known as the PNRC Charter. The PNRC is a non-profit, donor-funded, voluntary, humanitarian organization, whose mission is to bring timely, effective, and compassionate humanitarian assistance for the most vulnerable without consideration of nationality, race, religion, gender, social status, or political affiliation.

The Republic of the Philippines, adhering to the Geneva Conventions, established the PNRC as a voluntary organization for the purpose contemplated in the Geneva Convention.

The PNRC is a member National Society of the International Red Cross and Red Crescent Movement (Movement). To ensure and maintain its autonomy, neutrality, and independence, the PNRC cannot be owned or controlled by the government. Indeed, the Philippine government does not own the PNRC. The PNRC does not have government assets and does not receive any appropriation from the Philippine Congress. The PNRC is financed primarily by contributions from private individuals and private entities obtained through solicitation campaigns organized by its Board of Governors. 

The President does not appoint the Chairman of the PNRC. Neither does the head of any department, agency, commission or board appoint the PNRC Chairman. Thus, the PNRC Chairman is not an official or employee of the Executive branch since his appointment does not fall under Section 16, Article VII of the Constitution. Certainly, the PNRC Chairman is not an official or employee of the Judiciary or Legislature. This leads us to the obvious conclusion that the PNRC Chairman is not an official or employee of the Philippine Government.

Just like the Local Water Districts, the PNRC was created through a special charter. However, unlike the Local Water Districts, the elements of government ownership and control are clearly lacking in the PNRC. Thus, although the PNRC is created by a special charter, it cannot be considered a government-owned or controlled corporation in the absence of the essential elements of ownership and control by the government.

In creating the PNRC as a corporate entity, Congress was in fact creating a private corporation. However, the constitutional prohibition against the creation of private corporations by special charters provides no exception even for non-profit or charitable corporations. Consequently, the PNRC Charter, insofar as it creates the PNRC as a private corporation and grants it corporate powers, is void for being unconstitutional. Thus, Sections 1,28 2,29 3,30 4(a),31 5,32 6,33 7,34 8,35 9,36 10,37 11,38 12,39 and 1340 of the PNRC Charter, as amended, are void.

In sum, SC held that the office of the PNRC Chairman is not a government office or an office in a government-owned or controlled corporation for purposes of the prohibition in Section 13, Article VI of the 1987 Constitution. However, since the PNRC Charter is void insofar as it creates the PNRC as a private corporation, the PNRC should incorporate under the Corporation Code and register with the Securities and Exchange Commission if it wants to be a private corporation.

WHEREFORE, it was declared that the office of the Chairman of the Philippine National Red Cross is not a government office or an office in a government-owned or controlled corporation for purposes of the prohibition in Section 13, Article VI of the 1987 Constitution.