Pascual v. Pascual Bautista

G.R. No. 84240 March 25, 1992

OLIVIA S. PASCUAL and HERMES S. PASCUAL, petitioners, vs.ESPERANZA C. PASCUAL-BAUTISTA, MANUEL C. PASCUAL, JOSE C. PASCUAL, SUSANA C. PASCUAL-BAUTISTA, ERLINDA C. PASCUAL, WENCESLAO C. PASCUAL, JR., INTESTATE ESTATE OF ELEUTERIO T. PASCUAL, AVELINO PASCUAL, ISOCELES PASCUAL, LEIDA PASCUAL-MARTINES, VIRGINIA PASCUAL-NER, NONA PASCUAL-FERNANDO, OCTAVIO PASCUAL, GERANAIA PASCUAL-DUBERT, and THE HONORABLE PRESIDING JUDGE MANUEL S. PADOLINA of Br. 162, RTC, Pasig, Metro Manila, respondents.

Facts:

·          Petitioners Olivia and Hermes are the acknowledged natural children of the late Eligio Pascual, the latter being the full blood brother of the decedent Don Andres Pascual (Rollo, petition, p. 17).

·          Don Andres Pascual died intestate on October 12, 1973 without any issue, legitimate, acknowledged natural, adopted or spurious children.

·          On October 16, 1985, all the heirs entered into a COMPROMISE AGREEMENT, over the vehement objections of the herein petitioners Olivia S. Pascual and Hermes S. Pascual.

·          Petitioners contend that the term "illegitimate" children as provided in Article 992 must be strictly construed to refer only to spurious children.

·           

Issue: WON NCC 992 can be interpreted to exclude recognized natural children from the inheritance of the deceased. NO.

Ratio:

·          Article 992 of the civil Code, provides:

An illegitimate child has no right to inherit ab intestato from the legitimate children and relatives of his father or mother; nor shall such children or relatives inherit in the same manner from the illegitimate child.

·          In Diaz v. IAC:

Article 992 of the Civil Code provides a barrier or iron curtain in that it prohibits absolutely a succession ab intestato between the illegitimate child and the legitimate children and relatives of the father or mother of said legitimate child. They may have a natural tie of blood, but this is not recognized by law for the purposes of Article 992. Between the legitimate family and illegitimate family there is presumed to be an intervening antagonism and incompatibility. #peaches The illegitimate child is disgracefully looked down upon by the legitimate family; the family is in turn hated by the illegitimate child; the latter considers the privileged condition of the former, and the resources of which it is thereby deprived; the former, in turn, sees in the illegitimate child nothing but the product of sin, palpable evidence of a blemish broken in life; the law does no more than recognize this truth, by avoiding further grounds of resentment.

X x x

Article 902, 989, and 990 clearly speaks of successional rights of illegitimate children, which rights are transmitted to their descendants upon their death. The descendants (of these illegitimate children) who may inherit by virtue of the right of representation may be legitimate or illegitimate. In whatever manner, one should not overlook the fact that the persons to be represented are themselves illegitimate. The three named provisions are very clear on this matter. The right of representation is not available to illegitimate descendants of legitimate children in the inheritance of a legitimate grandparent. It may be argued, as done by petitioners, that the illegitimate descendant of a legitimate child is entitled to represent by virtue of the provisions of Article 982, which provides that "the grandchildren and other descendants shall inherit by right of representation." Such a conclusion is erroneous. It would allow intestate succession by an illegitimate child to the legitimate parent of his father or mother, a situation which would set at naught the provisions of Article 992. Article 982 is inapplicable to the instant case because Article 992 prohibits absolutely a succession ab intestato between the illegitimate child and the legitimate children and relatives of the father or mother. Article 982 is the general rule and Article 992 the exception. #peaches 

The rules laid down in Article 982 that "grandchildren and other descendants shall inherit by right of representation" and in Article 902 that the rights of illegitimate children . . . are transmitted upon their death to their descendants, whether legitimate or illegitimate are subject to the limitation prescribed by Article 992 to the end that an illegitimate child has no right to inherit ab intestato from the legitimate children and relatives of his father or mother.

·          Eligio Pascual is a legitimate child but petitioners are his illegitimate children. Petitioners cannot represent their father Eligio Pascual in the succession of the latter to the intestate estate of the decedent Andres Pascual, full blood brother of their father.

·          Verily, the interpretation of the law desired by the petitioner may be more humane but it is also an elementary rule in statutory construction that when the words and phrases of the statute are clear and unequivocal, their meaning must be determined from the language employed and the statute must be taken to mean exactly what is says.  

·          Clearly the term "illegitimate" refers to both natural and spurious.

·          Finally under Article 176 of the Family Code, all illegitimate children are generally placed under one category, which undoubtedly settles the issue as to whether or not acknowledged natural children should be treated differently, in the negative.

·          #DURALEXSEDLEX

·          Petition dismissed for lack of merit. 

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Corpuz v. Administrator

·          Teodoro R. Yangco died in Manila at the age of seventy-seven years. His will was probated in the CFI.

·          Yangco had no forced heirs. At the time of his death, his nearest relatives were

o    (1) his half brother, Luis R. Yangco,

o    (2) his half sister, Paz Yangco,

o    (3) Amalia Corpus, Jose A. V. Corpus, and Ramon L. Corpus, the children of his half brother, Pablo Corpus, and

o    (4) Juana (Juanita) Corpus, the daughter of his half brother Jose Corpus. (†)

·          A project of partition was submitted by the administrator and the legatees named in the will. That project of partition was opposed by the estate of Luis R. Yangco whose counsel contended that an intestacy should be declared because the will does not contain an institution of heir.

·          The Probate court approved the project of partition. Appeals were taken by Pedro Martinez, Juliana de Castro , Juanita Corpus (deceased) and the estate of Luis R. Yangcobut were dismissed after the legatees and the appellants entered into compromise agreements.

·          In the compromise the legatees agreed to pay P35,000 to Pedro Martinez, the heirs of Pio V. Corpus, peaches, the heirs of Isabel Corpus and the heir of Juanita Corpus (Tomas Corpus). Tomas Corpus signed that compromise settlement and received from the Yangco estate P2,000as settlement of his full share. 

·          But, subsequently, Tomas Corpusfiled an action to recover her (Juanita’s) supposed share in Yangco intestate estate.

·          He alleged in his complaint that the dispositions are void since it was a perpetual prohibition on alienation and an intestacy be declared.

·          TC dismissed the action on the grounds of res judicata and laches.

·          CA endorsed the case to the SC since it covers real property valued at more than 50k.

Issue: WON Tomas Corpus may inherit from TeodoroYangco [NO, because his mother (Juana Corpus does not have the right to inherit via intestacy from his half-blood brother]

Ruling:

·          Trial Court: Teodoro R. Yangco was an acknowledged natural child and not a legitimate child. Itwas proven in the statement in the will of his father, Luis Rafael Yangco.

·          Court presumed that there was a marriage between Ramona and Tomas (first family).

·          Since Teodoro R. Yangco was an acknowledged natural child or was illegitimate and since Juanita Corpus was the legitimate child of Jose Corpus, himself a legitimate child, we hold that appellant Tomas Corpus has no cause of action for the recovery of the supposed hereditary share of his mother, Juanita Corpus, as a legal heir, in Yangco's estate. Juanita Corpus was not a legal heir of Yangco because there is no reciprocal succession between legitimate and illegitimate relatives.

·          OCC 943 "prohibits all successory reciprocity mortis causa between legitimate and illegitimate relatives"

·          article 992 of the Civil Code which provides that "an illegitimate child has no right to inherit ab intestato from the legitimate children and relatives of his father or mother; nor shall such children or relatives inherit in the same manner from the illegitimate child".

·          Under articles 944 and 945 of the Spanish Civil Code, "if an acknowledged natural or legitimated child should die without issue, either legitimate or acknowledged, the father or mother who acknowledged such child shall succeed to its entire estate; and if both acknowledged it and are alive, they shall inherit from it share and share alike. In default of natural ascendants, natural and legitimated children shall be succeeded by their natural brothers and sisters in accordance with the rules established for legitimate brothers and sisters."

·          Hence, Teodoro R. Yangco'shalf brothers on the Corpus side, who were legitimate, had no right to succeed to his estate under the rules of intestacy.

·          By reason of that same rule, the natural child cannot represent his natural father in the succession to the estate of the legitimate grandparent. The natural daughter cannot succeed to the estate of her deceased uncle, a legitimate brother of her natural mother

·          Trial Court Affirmed.

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Xiamen Academy of International Law

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KOPPEL VS. ALFREDO L. YATCO, COLLECTOR OF INTERNAL REVENUE,

G.R. No. L-47673             October 10, 1946

Facts:

·          Koppel Philippines Inc. (KPI) has a capital stock divided into thousand (1,000) shares of P100 each.

·          The Koppel Industrial Car and Equipment Company (KICEC) owns 995 shares of the total capital stock. KICEC is organized under US laws and not licensed to do business in the Philippines. The remaining five (5) shares only were and are owned one each by officers of the KPI.

·          They have the following business process:

o    (1) "When a local buyer was interested in the purchase of railway materials, machinery, and supplies, it asked for price quotations from KPI";

o    (2) "KPI then cabled for the quotation desired from Koppel Industrial Car and Equipment Company";

o    (3) "KPI, however, quoted to the purchaser a selling price above the figures quoted by Koppel Industrial Car and Equipment Company";

o    (4) "On the basis of these quotations, orders were placed by the local purchasers

·          KPI paid under protest the P64,122.51 demanded by the CIR.

Total profit	Php 3,772,403,82
KPI Share	Php 132,201.30
KPI paid commercial broker’s tax (4% of KPI Share)	Php 5,288.05
CIR demanded (1% of Total Profit) + 25% surcharge for late payment – Paid tax	Php 64,122.51

·          It appears that KICEC is the only foreign principal of KPI.

·          The KPI corporation bore alone incidental expenses - as, for instance, cable expenses-not only those of its own cables but also those of its "principal" .

·          The KPI's "share in the profits" realized from the transactions in which it intervened was left virtually in the hands of KICEC

·          Where drafts were not paid by the purchasers, the local banks were instructed not to protest them but to refer them to KPI which was fully empowered by KICEC to instruct the banks with regards to disposition of the drafts and documents

·          Where the goods were European origin, consular invoices, bill of lading, and, in general, the documents necessary for clearance were sent directly to KPI

·          If the KPI had in stock the merchandise desired by local buyers, it immediately filled the orders of such local buyers and made delivery in the Philippines without the necessity of cabling its principal in America either for price quotations or confirmation or rejection of that agreed upon between it and the buyer 

·          Whenever the deliveries made by KICEC were incomplete or insufficient to fill the local buyer's orders, KPI used to make good the deficiencies by deliveries from its own local stock, but in such cases it charged its principal only the actual cost of the merchandise thus delivered by it from its stock and in such transactionsKPI did not realize any profit #fluffypeaches

·          CFI:

o    KPI is a mere dummy or branch ("hechura") of KICEC.

o    did not deny legal personality to Koppel (Philippines), Inc. for any and all purposes, but in effect its conclusion was that, in the transactions involved herein, the public interest and convenience would be defeated and what would amount to a tax evasion perpetrated, unless resort is had to the doctrine of "disregard of the corporate fiction."

Issues/Ruling:

1. WON KPI is a domestic corporation distinct and separate from, and not a mere branch of KICEC

KPI:

·          Its corporate existence as cannot be collaterally attacked and that the Government is estopped from so doing.

SC:

·          Koppel (Philippines), Inc. was a mere branch or agency or dummy ("hechura") of Koppel Industrial Car and Equipment Co. The lower court did not hold that the corporate personality of KPI would also be disregarded in other cases or for other purposes. It would have had no power to so hold. The courts' action in this regard must be confined to the transactions involved in the case at bar "for the purpose of adjudging the rights and liabilities of the parties in the case. They have no jurisdiction to do more."  <3 peaches

·          United States vs. Milwaukee Refrigeration Transit

o    General Rule: a corporation will be looked upon as a legal entity as a general rule, and until sufficient reason to the contrary appears;

o    Exception: Wthe notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons.

·          Manifestly, the principle is the same whether the "person" be natural or artificial.

·          A very numerous and growing class of cases wherein the corporate entity is disregarded is that (it is so organized and controlled, and its affairs are so conducted, as to make it merely an instrumentality, agency, conduit or adjunct of another corporation)." 

·          Where it appears that two business enterprises are owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect the rights of third persons, disregard the legal fiction that two corporations are distinct entities, and treat them as identical. (Abney vs. Belmont Peaches Country Club Properties, Inc., 279 Pac., 829.)  #bebegurrpeaches

·          The fact that KPI is a mere branch is conclusively borne out by the fact, among others, that the amount of the so-called "share in the profits" of KPIwas ultimately left to the sole, unbridled control of KICEC. If KPI was intended to function as a bona fide separate corporation, we cannot conceive how this arrangement could have been adopted.

·          No group of businessmen could be expected to organize a mercantile corporation if the amount of that profit were to be subjected to such a unilateral control of another corporation, unless indeed the former has previously been designed by the incorporators to serve as a mere subsidiary, branch or agency of the latter. 

·          KPI charged the parent corporation no more than actual cost - without profit whatsoever - for merchandise allegedly of its own to complete deficiencies of shipments made by said parent corporation.

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Manuel Dulay Enterprises, Inc. v. CA, Torres [Aug 27, 1993]

Facts:

·         Manuel R. Dulay Enterprises, Inc, a domestic corporation obtained various loans for the construction of its hotel project, Dulay Continental Hotel (now Frederick Hotel).  

·         Manuel Dulay by virtue of Board Resolution No 18  sold the subject property to spouses Maria Theresa and Castrense Veloso.

·         Maria Veloso (buyer), without the knowledge of Manuel Dulay, mortgaged the subject property to private respondent Manuel A. Torres. #fluffypeaches Upon the failure of Maria Veloso to pay Torres, the property was sold to Torres in an extrajudicial foreclosure sale.

·         Torres filed an action against the corporation, Virgilio Dulay and against the tenants of the apartment. 

·         RTC ordered the corporation and the tenants to vacate the building. 

·         Petitioners: RTC had acted with GAD when it applied the doctrine of piercing the veil of corporate entity considering that the sale has no binding effect on corporation as Board Resolution No. 18 which authorized the sale of the subject property was resolved without the approval of all the members of the board of directors and said Board Resolution was prepared by a person not designated by the corporation to be its secretary.

Issue:

·         WON the sale to Veloso is valid notwithstanding that it was resolved without the approval of all the members of the board of directors. (YES)

Ruling

·         Section 101 of the Corporation Code of the Philippines provides:

Sec. 101. When board meeting is unnecessary or improperly held. Unless the by-laws provide otherwise, any action by the directors of a close corporation without a meeting shall nevertheless be deemed valid if:

1. Before or after such action is taken, written consent thereto is signed by all the directors, or

2. All the stockholders have actual or implied knowledge of the action and make no prompt objection thereto in writing; or

3. The directors are accustomed to take informal action with the express or implied acquiese of all the stockholders, or

4. All the directors have express or implied knowledge of the action in question and none of them makes prompt objection thereto in writing.

If a directors' meeting is held without call or notice, an action taken therein within the corporate powers is deemed ratified by a director who failed to attend, unless he promptly files his written objection with the secretary of the corporation after having knowledge thereof.

·         Dulay Inc. is classified as a close corporation and consequently a board resolution authorizing the sale or mortgage is not necessary to bind the corporation for the action of its president. #fluffypeaches At any rate, corporate action taken at a board meeting without proper call or notice in a close corporation is deemed ratified by the absent director unless the latter promptly files his written objection with the secretary of the corporation after having knowledge of the meeting which, in his case, Virgilio Dulay failed to do.

·         Although a corporation is an entity which has a personality distinct and separate from its individual stockholders or members,  the veil of corporate fiction may be pierced when it is used to defeat public convenience justify wrong, protect fraud or defend crime.

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Union Bank v. SEC [June 6, 2001]

Facts:

·         Union Bank sought the opinion of SEC as to the applicability and coverage of the Full Material Disclosure Rule on banks, contending that said rules, in effect, amend Section 5 (a) (3) of the Revised Securities Act which exempts securities issued or guaranteed by banking institutions from the registration requirement.

·         Because its securities are exempt from the registration requirements under Section 5(a)(3) of the Revised Securities Act, petitioner argues that it is not covered by RSA Implementing Rulels:

o    Rule 11(a)-1, which requires the filing of annual, quarterly, current predecessor and successor reports;

o    Rule 34(a)-1, which mandates the filing of proxy statements and forms of proxy;

o    Rule 34(c)-1, which obligates the submission of information statements.

·         SEC’s reply: While the requirements of registration do not apply to securities of banks, banks with a class of securities listed for trading on the Philippine Stock Exchange, Inc. are covered by certain Revised Securities Act Rules governing the filing of various reports.

·         Unionbank was fined for failure for failure to file SEC Form 11-A.

·         CA affirmed the decision of SEC. #fluffypeaches

Issues:

·         WON the RSA Implementing Rules 11(a)-1, 34(a)-1 and 34(c)-1 applies to Union Bank (YES)

Ruling:

·         NO, petitioner is not exempted from the RSA implementing rules.

·         Section 5(a)(3) of RSA exempts from registration the securities issued by banking or financial institutions.  Nowhere does it state or even imply that petitioner, as a listed corporation, is exempt from complying with the reports required by the assailed RSA Implementing Rules.  

·         The exemption from the registration requirement enjoyed by petitioner does not necessarily connote that [it is] exempted from the other reportorial requirements.  

·         The full disclosure Rules do not amend Section 5(a)(3) of the Revised Securities Act, because they do not revoke or amend the exemption from registration of the securities enumerated. They are reasonable regulations imposed upon petitioner as a banking corporation trading its securities in the stock market. #fluffypeaches

·         The mere fact that in regard to its banking functions, petitioner is already subject to the supervision of the BSP does not exempt the former from reasonable disclosure regulations issued by the SEC.  These regulations are meant to assure full, fair and accurate disclosure of information for the protection of investors in the stock market.  Imposing such regulations is a function within the jurisdiction of the SEC.

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