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G.R. No. 147590 April 2, 2007

ANTONIO C. CARAG,Petitioner,vs.

NATIONAL LABOR RLATION! CO""I!!ION, I!ABL G. PANGANIBAN#ORTIG$RRA, %s

&e'(tive L%)or Ar)iter, NA*L$, %n+ "ARIL! APPARL CORPORATION LABOR

$NION, Respon+ents.

- C I ! I O N

CARPIO,J.

T/e C%se

T/is is % petition or revie on 'ertior%ri1%ss%ilin t/e -e'ision +%te+ 29 *e)r(%r3 20002%n+ t/e

Resol(tion +%te+ 27 "%r'/ 2001o t/e Co(rt o Appe%ls %ppell%te 'o(rt6 in CA#G.R. !P Nos.

54404#0. T/e %ppell%te 'o(rt %ir8e+ t/e +e'ision +%te+ 17 (ne 1994 4o L%)or Ar)iter Is%)el

P%n%ni)%n#Orti(err% Ar)iter Orti(err%6 in RAB#III#0:#519:#9 %n+ t/e resol(tion +%te+ 5 %n(%r3

19955o t/e N%tion%l L%)or Rel%tions Co88ission NLRC6 in NLRC CA No. L#00771#94.

Ar)iter Orti(err% /el+ t/%t "%riveles App%rel Corpor%tion "AC6, "AC;s C/%ir8%n o t/e Bo%r+

Antonio C%r% C%r%6, %n+ "AC;s Presi+ent Ar8%n+o -%vi+ -%vi+6 'olle'tivel3, respon+ents6 %re

(ilt3 o ille%l 'los(re %n+ %re soli+%ril3 li%)le or t/e sep%r%tion p%3 o "AC;s r%n< %n+ ile

e8plo3ees. T/e NLRC +enie+ t/e 8otion to re+('e )on+ ile+ )3 "AC %n+ C%r%.

T/e *%'ts

N%tion%l *e+er%tion o L%)or $nions NA*L$6 %n+ "%riveles App%rel Corpor%tion L%)or $nion

"ACL$6 'olle'tivel3, 'o8pl%in%nts6, on )e/%l o %ll o "AC;s r%n< %n+ ile e8plo3ees, ile+ %

'o8pl%int %%inst "AC or ille%l +is8iss%l )ro(/t %)o(t )3 its ille%l 'los(re o )(siness. In t/eir

'o8pl%int +%te+ 12 A((st 199, 'o8pl%in%nts %llee+ t/e olloin

2. Co8pl%in%nt NA*L$ is t/e sole %n+ e&'l(sive )%r%inin %ent representin %ll r%n< %n+ ile

e8plo3ees o ="AC>. T/%t t/ere is %n e&istin v%li+ Colle'tive B%r%inin Aree8ent CBA6 e&e'(te+

)3 t/e p%rties %n+ t/%t %t t/e ti8e o t/e '%(se o %'tion /erein )elo +is'(sse+ /%ppene+ t/ere %s

no l%)or +isp(te )eteen t/e $nion %n+ "%n%e8ent e&'ept '%ses pen+in in 'o(rts ile+ )3 one

%%inst t/e ot/er.

. T/%t on (l3 :, 199, it/o(t noti'e o %n3 'e%se+ oper%tions it/ t/e intention o

'o8pletel3 'losin its s/op or %'tor3. !('/ intentions =si'> %s 8%nieste+ in % letter, %llee+l3

'l%i8e+ )3 ="AC> %s its noti'e ile+ onl3 on t/e s%8e +%3 t/%t t/e oper%tions 'lose+.

4. T/%t %t t/e ti8e o 'los(re, e8plo3ees /o /%ve ren+ere+ one to to ee in t/e 8%nner %n+ st3le +one is per'e =si'> ille%l, %n+ /%+ '%(se+

tre8en+o(s pre@(+i'e to %ll o t/e e8plo3ees, /o s(ere+ )ot/ 8ent%l %n+ in%n'i%l %n(is/ %n+

/o in vie t/ereo 8erits =si'> %%r+ o %ll +%8%es %'t(%l, e&e8pl%r3 %n+ 8or%l6, =illei)le> to set

=%n> e&%8ple to ir8s /o in t/e (t(re ill =illei)le> t/e i+e% o si8pl3 pre8%t(rel3 'losin it/o(t

'o8pl3in =it/> t/e )%si' re(ire8ent o Noti'e o Clos(re.8p/%sis s(pplie+6

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$pon re'eipt o t/e re'or+s o t/e '%se, Ar)iter Orti(err% s(88one+ t/e p%rties to e&plore options

or possi)le settle8ent. T/e non#%ppe%r%n'e o respon+ents pro8pte+ Ar)iter Orti(err% to +e'l%re

t/e '%se s()8itte+ or resol(tion )%se+ on t/e e&t%nt ple%+ins.

In t/eir position p%per +%te+ %n(%r3 1994, 'o8pl%in%nts 8ove+ to i8ple%+ C%r% %n+ -%vi+, %s

ollos

& & & & In t/e present '%se, it is (nort(n%te or respon+ents t/%t t/e re'or+s %n+ evi+en'e 'le%rl3

+e8onstr%te t/%t t/e in+ivi+(%l 'o8pl%in%nts %re entitle+ to t/e relies pr%3e+ or in t/eir 'o8pl%int.

oever, %n3 %vor%)le @(+8ent t/e onor%)le L%)or Ar)iter 8%3 ren+er in %vor o /erein

'o8pl%in%nts ill o to n%(/t s/o(l+ t/e Oi'e %ils =si'> to %ppre'i%te t/e l%rin %'t t/%t t/e

respon+ents =si'> 'orpor%tion is no loner e&istin %s it s(++enl3 stoppe+ )(siness oper%tion sin'e

=si'> : (l3 199. $n+er t/is iven 'ir'(8st%n'e, t/e 'o8pl%in%nts /%ve no option let )(t to i8ple%+

Att3. ANTONIO CARAG, in /is oi'i%l '%p%'it3 %s C/%ir8%n o t/e Bo%r+ %lon it/ "R. AR"AN-O

-AI- %s Presi+ent. Bot/ %re %lso oners o t/e respon+ent 'orpor%tion it/ oi'e %++ress %t 10t/

*loor, G%8on Centre, Al%ro !treet, !%l'e+o ill%e=,> "% "etro "%nil% %lt/o(/ t/e3 8%3 )e

'olle'tivel3 serve+ it/ s(88ons %n+ ot/er le%l pro'esses t/ro(/ 'o(nsel o re'or+ Att3. os/(%

P%stores o :t/ *loor, %nston Bl+., 8er%l+ Aven(e, Orti%s=,> P%si, "etro "%nil%. T/is in'l(siono in+ivi+(%l respon+ents %s p%rt3 respon+ents in t/e present '%se is to (%r%ntee t/e s%tis%'tion o

%n3 @(+8ent %%r+ on t/e )%sis o Arti'le 212'6 o t/e P/ilippine L%)or Co+e, %s %8en+e+, /i'/

s%3s

8plo3er in'l(+es %n3 person %'tin in t/e interest o %n e8plo3er, +ire'tl3 or in+ire'tl3. It +oes not,

/oever,in'l(+e %n3 l%)or or%niD%tion or %n3 o its oi'ers or %ents e&'ept /en %'tin %s

e8plo3er.

T/e provision %s '(lle+ ro8 !e'tion 2, Rep()li' A't 02, t/e "ini8(8 E%e A't. I t/e e8plo3er is

%n %rtii'i%l person, it 8(st /%ve %n oi'er /o '%n )e pres(8e+ to )e t/e e8plo3er, )ein t/e

person %'tin in t/e interest o t/e e8plo3er. T/e 'orpor%tion is t/e e8plo3er, onl3 in t/e te'/ni'%l

sense. A.C. R%nso8 L%)or $nion CCL$ !. NLRC, G.R. 9494, (ne 10, 19:6. E/ere t/e

e8plo3er#'orpor%tion, A! IN T PR!NT CA!, is no loner e&istin %n+ (n%)le to s%tis3 t/e

@(+8ent in %vor o t/e e8plo3ee, t/e oi'er s/o(l+ )e /el+ li%)le or %'tin on )e/%l o t/e

'orpor%tion. G(+eD vs. NLRC, G.R. :02, "%r'/ 22, 19906. Also in t/e re'ent 'ele)r%te+ '%se o

C%8el'r%t Corpor%tion vs. NLRC, G.R. 904#5 (ne , 19906, C%r8en 'onten+s t/%t s/e is not

li%)le or t/e %'ts o t/e 'o8p%n3, %ss(8in it /%+ =%'te+> ille%ll3, )e'%(se C%8el'r%t in % +istin't

%n+ sep%r%te entit3 it/ % le%l person%lit3 o its on. !/e 'l%i8s t/%t s/e is onl3 %n %ent o t/e

'o8p%n3 '%rr3in o(t t/e +e'isions o its )o%r+ o +ire'tors, Ee +o not %ree, s%i+ t/e !(pre8e

Co(rt. !/e is, in %'t %n+ le%l ee't, t/e 'orpor%tion, )ein not onl3 its presi+ent %n+ ener%l8%n%er )(t %lso its oner. T/e responsi)le oi'er o %n e8plo3er '%n )e /el+ person%ll3 li%)le not

to s%3 even 'ri8in%ll3 li%)le or nonp%38ent o )%'

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In /er -e'ision +%te+ 17 (ne 1994, Ar)iter Orti(err% r(le+ %s ollos

T/is is % 'o8pl%int or ille%l +is8iss%l )ro(/t %)o(t )3 t/e ille%l 'los(re %n+ 'ess%tion o )(siness

ile+ )3 NA*L$ %n+ "%riveles App%rel Corpor%tion L%)or $nion or %n+ in )e/%l o %ll r%n< %n+ ile

e8plo3ees %%inst respon+ents "%riveles App%rel Corpor%tion, Antonio C%r% %n+ Ar8%n+o -%vi+

=/o %re> its oners, C/%ir8%n o t/e Bo%r+ %n+ Presi+ent, respe'tivel3.

T/is '%se %s oriin%ll3 r%le+ to t/e s%l% o L%)or Ar)iter A+olo . Creen'i%. E/en t/e l%tter ent

on si'< le%ve, /is '%ses ere re#r%le+ %n+ t/e inst%nt '%se %s %ssine+ to t/e s%l% o t/e

(n+ersine+. $pon re'eipt o t/e re'or+ o t/e '%se, t/e p%rties ere s(88one+ or t/e8 to )e %)le

to e&plore options or settle8ent. T/e respon+ents /oever +i+ not %ppe%r pro8ptin t/is Oi'e to

s()8it t/e '%se or resol(tion )%se+ on e&t%nt ple%+ins, t/(s t/is +e'ision.

T/e 'o8pl%in%nts 'l%i8 t/%t on (l3 :, 199 it/o(t noti'e o %n3

oners %n+ responsi)le oi'er=s> o respon+ent 'o8p%n3 to %ss(re t/e s%tis%'tion o t/e @(+8ent,s/o(l+ % +e'ision %vor%)le to t/e8 )e ren+ere+. In s(pport o t/eir 'l%i8s, t/e 'o8pl%in%nts invo

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2. E/et/er or not in+ivi+(%l respon+ents 'o(l+ )e /el+ person%ll3 li%)leF %n+

. E/et/er or not t/e 'o8pl%in%nts %re entitle+ to %n %%r+ o %ttorne3;s ees.

Ater % @(+i'io(s %n+ i8p%rti%l 'onsi+er%tion o t/e re'or+, t/is Oi'e is o t/e ir8 )elie t/%t t/e

'o8pl%in%nts 8(st prev%il.

T/e respon+ents +es'ri)e+ t/e 'ess%tion o oper%tions in its pre8ises %s % te8por%r3 s/(t#+on.

E/ile s('/ post(rin 8%3 /%ve )een initi%ll3 tr(e, it is not so %n38ore. T/e 'ess%tion o oper%tions/%s 'le%rl3 e&'ee+e+ t/e si& 8ont/s perio+ i&e+ in Arti'le 2: o t/e L%)or Co+e. T/e te8por%r3

s/(t+on /%s ripene+ into % 'los(re or 'ess%tion o oper%tions or '%(ses not +(e to serio(s

)(siness losses or in%n'i%l reverses. Conse(entl3, t/e respon+ents 8(st p%3 t/e +ispl%'e+

e8plo3ees sep%r%tion p%3 in %''or+%n'e it/ t/e 'o8p(t%tion pres'ri)e+ in t/e CBA, to it, one

8ont/ p%3 or ever3 3e%r o servi'e. It 8(st )e stresse+ t/%t respon+ents +i+ not 'ontrovert t/e verit3

o t/e CBA provi+e+ 'o8p(t%tion.

T/e 'o8pl%in%nts 'l%i8 t/%t Att3. Antonio C%r% %n+ "r. Ar8%n+o -%vi+ s/o(l+ )e /el+ @ointl3 %n+

sever%ll3 li%)le it/ respon+ent 'orpor%tion. T/is )i+ is pre8ise+ on t/e )elie t/%t t/e i8ple%+er o

t/e %ores%i+ oi'ers ill (%r%ntee p%38ent o /%tever 8%3 )e %+@(+e+ in 'o8pl%in%nts; %vor )3virt(e o t/is '%se. It is % )%si' prin'iple in l% t/%t 'orpor%tions /%ve person%lit3 +istin't %n+ sep%r%te

ro8 t/e sto'

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2.1 E/ile Att3. Antonio C. C%r% is t/e C/%ir8%n o t/e Bo%r+ o "AC %n+ "r. Ar8%n+o -%vi+ is t/e

Presi+ent, t/e3 %re not t/e oners o "ACF

2.2 "AC is one+ )3 % 'onsorti(8 o )%n

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IN IE ERO*, t/e petitions %re -I!"I!!-. T/e +e'ision o L%)or Ar)iter Is%)el P%n%ni)%n#

Orti(err% +%te+ (ne 17, 1994, %n+ t/e Resol(tion +%te+ %n(%r3 5, 1995, iss(e+ )3 t/e N%tion%l

L%)or Rel%tions Co88ission %re /ere)3 A**IR"-. As % 'onse(en'e o +is8iss%l, t/e te8por%r3

restr%inin or+er iss(e+ on "%r'/ 2, 1995, )3 t/e T/ir+ -ivision o t/e !(pre8e Co(rt is LI*T-.

Costs %%inst petitioners.

!O OR-R-.128p/%sis in t/e oriin%l6

T/e %ppell%te 'o(rt +enie+ respon+ents; sep%r%te 8otions or re'onsi+er%tion. 1

In % resol(tion +%te+ 20 (ne 2001, t/is Co(rt;s *irst -ivision +enie+ t/e petition or C%r%;s %il(re to

s/o s(i'ientl3 t/%t t/e %ppell%te 'o(rt 'o88itte+ %n3 reversi)le error to %rr%nt t/e e&er'ise o o(r

+is'retion%r3 %ppell%te @(ris+i'tion. C%r% ile+ % 8otion or re'onsi+er%tion o o(r resol(tion +en3in

/is petition. In % resol(tion +%te+ 1 A((st 2001, t/is Co(rt;s *irst -ivision +enie+ C%r%;s

re'onsi+er%tion it/ in%lit3.

-espite o(r 1 A((st 2001 resol(tion, C%r% ile+ % se'on+ 8otion or re'onsi+er%tion it/ %n

o8ni)(s 8otion or le%ve to ile % se'on+ 8otion or re'onsi+er%tion. T/is Co(rt;s *irst -ivision

reerre+ t/e 8otion to t/e Co(rt n B%n'. In % resol(tion +%te+ 25 (ne 2002, t/e Co(rt n B%n'resolve+ to r%nt t/e o8ni)(s 8otion or le%ve to ile % se'on+ 8otion or re'onsi+er%tion, reinst%te+

t/e petition, %n+ re(ire+ respon+ents to 'o88ent on t/e petition. On 25 Nove8)er 200, t/e Co(rt

n B%n' resolve+ to s(spen+ t/e r(les to %llo t/e se'on+ 8otion or re'onsi+er%tion. T/is Co(rt;s

*irst -ivision reerre+ t/e petition to t/e Co(rt n B%n' on 14 (l3 2004, %n+ t/e Co(rt n B%n'

%''epte+ t/e reerr%l on 15 "%r'/ 2005.

T/e Iss(es

C%r% (estions t/e %ppell%te 'o(rt;s +e'ision o 29 *e)r(%r3 2000 )3 r%isin t/e olloin iss(es

)eore t/is Co(rt

1. %s petitioner C%r%;s ri/t to +(e pro'ess )een )l%t%ntl3 viol%te+ )3 /ol+in /i8 person%ll3 li%)le

or over P50 8illion o t/e 'orpor%tion;s li%)ilit3, 8erel3 %s )o%r+ '/%ir8%n %n+ solel3 on t/e )%sis o

t/e 8otion to i8ple%+ /i8 in 8i+stre%8 o t/e pro'ee+ins %s %++ition%l

respon+ent, it/o(t %or+in /i8 t/e ri/t to present evi+en'e %n+ in viol%tion o t/e %''epte+

pro'e+(re pres'ri)e+ )3 R(le o t/e NLRC R(les o Pro'e+(re, %s to ren+er t/e r(lin n(ll %n+

voi+H

2. Ass(8in, arguendo, t/%t /e /%+ )een %''or+e+ +(e pro'ess, is t/e +e'ision /ol+in /i8 soli+%ril3

li%)le s(pporte+ )3 evi+en'e /en t/e onl3 ple%+ins not evi+en'e6 )eore t/e L%)or Ar)iter %n+

t/%t o t/e Co(rt o Appe%ls %re t/e l%)or (nion;s 8otion to i8ple%+ /i8 %s respon+ent %n+ /is

opposition t/ereto, it/o(t position p%pers, it/o(t evi+en'e s()8itte+, %n+ it/o(t /e%rin on t/e

iss(e o person%l li%)ilit3, %n+ even /en )%+ %it/ or 8%li'e, %s t/e onl3 le%l )%sis or person%l

li%)ilit3, %s e&pressl3 o(n+ %)sent %n+ %ntin )3 =t/e> L%)or Ar)iter, %s to ren+er s%i+ +e'ision n(ll

%n+ voi+H

. -i+ t/e NLRC 'o88it r%ve %)(se o +is'retion in +en3in petitioner;s 8otion to re+('e %ppe%l

)on+H14

T/e R(lin o t/e Co(rt

Ee in+ t/e petition 8eritorio(s.

On -eni%l o -(e Pro'ess to C%r% %n+ -%vi+

C%r% %sserts t/%t Ar)iter Orti(err% ren+ere+ /er -e'ision o 17 (ne 1994 it/o(t iss(in

s(88ons on /i8, it/o(t re(irin /i8 to s()8it /is position p%per, it/o(t settin %n3 /e%rin,

it/o(t ivin /i8 noti'e to present /is evi+en'e, %n+ it/o(t inor8in /i8 t/%t t/e '%se /%+ )een

s()8itte+ or +e'ision # in viol%tion o !e'tions 2,15,14,175)6,1:%n+ 11'6 19o R(le o T/e Ne

R(les o Pro'e+(re o t/e NLRC.20

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It is 'le%r ro8 t/e n%rr%tion in Ar)iter Orti(err%;s -e'ision t/%t s/e onl3 s(88one+ 'o8pl%in%nts

%n+ "AC, %n+ not C%r%, to % 'oneren'e or possi)le settle8ent. In /er -e'ision, Ar)iter Orti(err%

st%te+ t/%t s/e s'/e+(le+ t/e 'oneren'e (pon re'eipt o t/e re'or+ o t/e '%se. At t/e ti8e o t/e

'oneren'e, 'o8pl%in%nts /%+ not 3et s()8itte+ t/eir position p%per /i'/ 'ont%ine+ t/e 8otion to

i8ple%+ C%r%. Co8pl%in%nts 'o(l+ not /%ve s()8itte+ t/eir position p%per )eore t/e 'oneren'e

sin'e pro'e+(r%ll3 t/e Ar)iter +ire'ts t/e s()8ission o position p%pers onl3 %ter t/e

'oneren'e.21Co8pl%in%nts s()8itte+ t/eir position p%per onl3 on 10 %n(%r3 1994, ive 8ont/s %ter

ilin t/e 'o8pl%int. In s/ort, %t t/e ti8e o t/e 'oneren'e, C%r% %s not 3et % p%rt3 to t/e '%se.T/(s, Ar)iter Orti(err% 'o(l+ not /%ve possi)l3 s(88one+ C%r% to t/e 'oneren'e.

C%r% vioro(sl3 +enie+ re'eivin s(88ons to t/e 'oneren'e, %n+ 'o8pl%in%nts /%ve not pro+('e+

%n3 or+er o Ar)iter Orti(err% s(88onin C%r% to t/e 'oneren'e. A t/oro(/ se%r'/ o t/e re'or+s

o t/is '%se %ils to s/o %n3 or+er o Ar)iter Orti(err% +ire'tin C%r% to %tten+ t/e 'oneren'e.

Cle%rl3, Ar)iter Orti(err% +i+ not s(88on C%r% to t/e 'oneren'e.

E/en "AC %ile+ to %ppe%r %t t/e 'oneren'e, Ar)iter Orti(err% +e'l%re+ t/e '%se s()8itte+ or

resol(tion. In /er -e'ision, Ar)iter Orti(err% r%nte+ 'o8pl%in%nts; 8otion to i8ple%+ C%r% %n+ %t

t/e s%8e ti8e, in t/e s%8e -e'ision, o(n+ C%r% person%ll3 li%)le or t/e +e)ts o "AC 'onsistino P

49,101,21 in sep%r%tion p%3 to 'o8pl%in%nts. Ar)iter Orti(err% never iss(e+ s(88ons to

C%r%, never '%lle+ /i8 to % 'oneren'e or possi)le settle8ent, never re(ire+ /i8 to s()8it %

position p%per, never set t/e '%se or /e%rin, never notiie+ /i8 to present /is evi+en'e, %n+ never

inor8e+ /i8 t/%t t/e '%se %s s()8itte+ or +e'ision # %ll in viol%tion o !e'tions 2, , 4, 5)6, %n+

11'6 o R(le o T/e Ne R(les o Pro'e+(re o t/e NLRC.

In+isp(t%)l3, t/ere %s (tter %)sen'e o +(e pro'ess to C%r% %t t/e %r)itr%tion level. T/e pro'e+(re

%+opte+ )3 Ar)iter Orti(err% 'o8pletel3 prevente+ C%r% ro8 e&pl%inin /is si+e %n+ presentin /is

evi+en'e. T/is %lone ren+ers Ar)iter Orti(err%;s -e'ision % n(llit3 inso%r %s C%r% is 'on'erne+.

E/ile l%)or %r)iters %re not re(ire+ to 'on+('t % or8%l /e%rin or tri%l, t/e3 /%ve no li'ense to+ispense it/ t/e )%si' re(ire8ents o +(e pro'ess s('/ %s %or+in respon+ents t/e opport(nit3 to

)e /e%r+. In %)%n% v. NLRC,22e /el+

T/e sole iss(e to )e resolve+ is /et/er priv%te respon+ents O"AN*IL %n+ $N-AI ere +enie+

+(e pro'ess /en t/e L%)or Ar)iter +e'i+e+ t/e '%se solel3 on t/e )%sis o t/e position p%per %n+

s(pportin +o'(8ents s()8itte+ in evi+en'e )3 %)%n% %n+ -e G(D8%n.

Ee r(le in t/e %ir8%tive. T/e 8%nner in /i'/ t/is '%se %s +e'i+e+ )3 t/e L%)or Ar)iter let 8('/

to )e +esire+ in ter8s o respe't or t/e ri/t o priv%te respon+ents to +(e pro'ess #

*irst, t/ere %s onl3 one 'on'ili%tor3 'oneren'e /el+ in t/is '%se. T/is %s on 10 "%3 199. -(rint/e 'oneren'e, t/e p%rties +i+ not +is'(ss %t %ll t/e possi)ilit3 o %8i'%)le settle8ent +(e to

petitioner;s st())orn insisten'e t/%t priv%te respon+ents )e +e'l%re+ in +e%(lt.

!e'on+, t/e p%rties %ree+ to s()8it t/eir respe'tive 8otions # petitioner;s 8otion to +e'l%re

respon+ents in +e%(lt %n+ priv%te respon+ents; 8otion or )ill o p%rti'(l%rs # or t/e 'onsi+er%tion o

t/e L%)or Ar)iter. T/e L%)or Ar)itr%tion Asso'i%te, one "s. Glori% iv%r, t/en inor8e+ t/e p%rties

t/%t t/e3 o(l+ )e notiie+ o t/e %'tion o t/e L%)or Ar)iter on t/e pen+in 8otions.

& & &

T/ir+, sin'e t/e 'oneren'e on 10 "%3 199 no or+er or noti'e %s to /%t %'tion %s t%

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It is 'le%r ro8 t/e oreoin t/%t t/ere %s %n (tter %)sen'e o opport(nit3 to )e /e%r+ %t t/e

%r)itr%tion level, %s t/e pro'e+(re %+opte+ )3 t/e L%)or Ar)iter virt(%ll3 prevente+ priv%te

respon+ents ro8 e&pl%inin 8%tters (ll3 %n+ presentin t/eir si+e o t/e 'ontrovers3. T/e3 /%+ no

'/%n'e /%tsoever to %t le%st %'(%int t/e L%)or Ar)iter it/ /%tever +eenses t/e3 8i/t /%ve to

t/e '/%re t/%t t/e3 ille%ll3 +is8isse+ petitioner. In %'t, priv%te respon+ents presente+ t/eir position

p%per %n+ +o'(8ent%r3 evi+en'e onl3 or t/e irst ti8e on %ppe%l to t/e NLRC.

T/e essen'e o +(e pro'ess is t/%t % p%rt3 )e %or+e+ % re%son%)le opport(nit3 to )e /e%r+ %n+ tos()8it %n3 evi+en'e /e 8%3 /%ve in s(pport o /is +eense. E/ere, %s in t/is '%se, s(i'ient

opport(nit3 to )e /e%r+ eit/er t/ro(/ or%l %r(8ents or position p%per %n+ ot/er ple%+ins is not

%''or+e+ % p%rt3 to % '%se, t/ere is (n+o()te+l3 % +eni%l o +(e pro'ess.

It is tr(e t/%t L%)or Ar)iters %re not )o(n+ )3 stri't r(les o evi+en'e %n+ o pro'e+(re. T/e 8%nner

)3 /i'/ Ar)iters +ispose o '%ses )eore t/e8 is 'on'e+e+l3 % 8%tter o +is'retion. oever, t/%t

+is'retion 8(st )e e&er'ise+ re(l%rl3, le%ll3 %n+ it/in t/e 'onines o +(e pro'ess. T/e3 %re

8%n+%te+ to (se ever3 re%son%)le 8e%ns to %s'ert%in t/e %'ts o e%'/ '%se, spee+il3, o)@e'tivel3

%n+ it/o(t re%r+ to te'/ni'%lities o l% or pro'e+(re, %ll in t/e interest o @(sti'e %n+ or t/e

p(rpose o %''(r%'3 %n+ 'orre'tness in %+@(+i'%tin t/e 8onet%r3 %%r+s.

In t/is '%se, C%r% %s in % %r orse sit(%tion. ere, C%r% %s not iss(e+ s(88ons, not %''or+e+

% 'on'ili%tor3 'oneren'e, not or+ere+ to s()8it % position p%per, not %''or+e+ % /e%rin, not iven

%n opport(nit3 to present /is evi+en'e, %n+ not notiie+ t/%t t/e '%se %s s()8itte+ or resol(tion.

T/(s, e /ol+ t/%t Ar)iter Orti(err%;s -e'ision is voi+ %s %%inst C%r% or (tter %)sen'e o +(e

pro'ess. It %s error or t/e NLRC %n+ t/e Co(rt o Appe%ls to (p/ol+ Ar)iter Orti(err%;s +e'ision %s

%%inst C%r%.

On t/e Li%)ilit3 o -ire'tors or Corpor%te -e)ts

T/is '%se %lso r%ises t/is iss(e /en is % +ire'tor person%ll3 li%)le or t/e +e)ts o t/e 'orpor%tionHT/e r(le is t/%t % +ire'tor is not person%ll3 li%)le or t/e +e)ts o t/e 'orpor%tion, /i'/ /%s %

sep%r%te le%l person%lit3 o its on. !e'tion 1 o t/e Corpor%tion Co+e l%3s +on t/e e&'eptions to

t/e r(le, %s ollos

Liability of directors, trustees or officers. # -ire'tors or tr(stees /o il(ll3 %n+

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@(+8ent in %vor o e8plo3ees 'o(l+ )e s%tisie+, 'orpor%te oi'ers '%n )e /el+ @ointl3 %n+ sever%ll3

li%)le it/ t/e 'o8p%n3.2

Ater st%tin /%t s/e )elieve+ is t/e l% on t/e 8%tter, Ar)iter Orti(err% stoppe+ t/ere %n+ +i+ not

8%iol%tion o t/is provision is /ere)3 +e'l%re+ (nl%(l %n+ s()@e't to t/e pen%l provisions provi+e+(n+er Arti'le 2:: o t/is Co+e. Li

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T/is le%ves (s it/ Ar)iter Orti(err%;s %ssertion t/%t /en t/e 'o8p%n3 /%+ %lre%+3 'e%se+

oper%tions %n+ t/ere is no %3 )3 /i'/ % @(+8ent in %vor o e8plo3ees 'o(l+ )e s%tisie+,

'orpor%te oi'ers '%n )e /el+ @ointl3 %n+ sever%ll3 li%)le it/ t/e 'o8p%n3. T/is %ssertion e'/oes

t/e 'o8pl%in%nts; 'l%i8 t/%t C%r% is person%ll3 li%)le or "AC;s +e)ts to 'o8pl%in%nts on t/e )%sis

o Arti'le 212e6 o t/e L%)or Co+e, %s %8en+e+, /i'/ s%3s

;8plo3er; in'l(+es %n3 person %'tin in t/e interest o %n e8plo3er, +ire'tl3 or in+ire'tl3. T/e ter8

s/%ll not in'l(+e %n3 l%)or or%niD%tion or %n3 o its oi'ers or %ents e&'ept /en %'tin %se8plo3er. 8p/%sis s(pplie+6

In+ee+, 'o8pl%in%nts see< to /ol+ C%r% person%ll3 li%)le or t/e +e)ts o "AC )%se+ solel3 on

Arti'le 212e6 o t/e L%)or Co+e. T/is is t/e spe'ii' le%l ro(n+ 'ite+ )3 'o8pl%in%nts, %n+ (se+ )3

Ar)iter Orti(err%, in /ol+in C%r% person%ll3 li%)le or t/e +e)ts o "AC.

Ee /%ve %lre%+3 r(le+ in "'Leo+ v. NLRC29%n+ !po(ses Santos v. NLRC0t/%t Arti'le 212e6 o t/e

L%)or Co+e, )3 itsel, +oes not 8%

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T/e responsi)le oi'er o %n e8plo3er 'orpor%tion '%n )e /el+ person%ll3, not to s%3 even 'ri8in%ll3,

li%)le or non#p%38ent o )%'< %es. T/%t is t/e poli'3 o t/e l%.

& & & &

'6 I t/e poli'3 o t/e l% ere ot/erise, t/e 'orpor%tion e8plo3er '%n /%ve +evio(s %3s or

ev%+in p%38ent o )%'< %es. In t/e inst%nt '%se, it o(l+ %ppe%r t/%t RAN!O", in 199,

oreseein t/e possi)ilit3 or pro)%)ilit3 o p%38ent o )%'< %es to t/e 22 stri

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It is )%si' t/%t % 'orpor%tion is investe+ )3 l% it/ % person%lit3 sep%r%te %n+ +istin't ro8 t/ose o

t/e persons 'o8posin it %s ell %s ro8 t/%t o %n3 ot/er le%l entit3 to /i'/ it 8%3 )e rel%te+.

"ere oners/ip )3 % sinle sto'

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G.R. No. 91925 April 1, 1991

-$AR-O ". CO$ANGCO, R., "AN$L ". CO$ANGCO %n+ RA*AL G.

ABLLO,petitioners,vs.

ANTONIO . ROA!, O! L. C$I!IA, R., O!CAR ILA-O, Presi+enti%l Co88ission on Goo+

Govern8ent PCGG6, !AN "IG$L CORPORATION !"C6 %n+ !AN-IGANBAAN *irst

-ivision6,respon+ents.

G.R. No. 9005 April 1, 1991

-$AR-O ". CO$ANGCO, R., NRIM$ ". CO$ANGCO %n+ "AN$L ".

CO$ANGCO,petitioners,vs.

A-OL*O AC$NA, -I!ON CO!TNG, PATRICIO PIN-A, Presi+enti%l Co88ission on Goo+Govern8ent PCGG6, %n+ !AN "IG$L CORPORATION !"C6,respon+ents.&stelito $. Mendo'a and (illareal La) *ffices for %etitioners.

GANCACO,J.+%T/e iss(e s(%rel3 presente+ )3 t/e petitioners is /et/er or not t/e Presi+enti%l Co88ission on

Goo+ Govern8ent PCGG6 8%3 vote t/e se(estere+ s/%res o sto'< o !%n "i(el Corpor%tion

!"C6 %n+ ele't its 8e8)ers o t/e )o%r+ o +ire'tors.

In G.R. No. 91925 t/e %'ts %llee+ %re (n+isp(te+. Petitioners %re sto'

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R%%el G. A)ello 5,750

On April 1:, 19:9, t/e %nn(%l 8eetin o s/%re/ol+ers o !"C %s /el+. A8on t/e 8%tters t%

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"I!T "O$NTAIN! AGRI;L CORP. ,5:7,95

PA!TORAL *AR"!, INC. ,5:7,95

"A-OE LARQ PLANTATION, INC. 2,90,771

!ILR LA* PLANTATION, INC. 2,90,771

L$CNA OIL *ACTOR, INC. 19,174

PC OIL *ACTOR, INC. 17,:7

"TROPL CO""O-ITI!, INC. 17,777

QA$NLARAN AGRIC$LT$RAL CORP. 145,475

R-- -LOPR!, INC. 19,071

AGR;L CON!$LTANC !R., INC. 17,907

*IR!T $NIT- TRAN!PORT, INC. 1:,9

R-ANT PLANTATION!, INC. 145,475

CRI!TN!N PLANTATION!, INC. 1:,920

NORTRN CARRIR! CORPORATION 17,:91

!TA AGRIC$LT$RAL CORP. 145,475

OCAN !I- "ARITI" NT., INC. 12,250

P$RA LCTRIC CO"PAN, INC. 99,5:7

$NPLOR- LAN- -LOPR!, INC. 102,:2

P$NONG#BAAN O$!ING -T. CORP. 12,250

ABAGAT RALT -LOP"NT, INC. 145,:22

!PA- ON R!ORT! CORP. 147,040

EING! R!ORT! CORPORATION 104,::5

QALAEAQAN R!ORT!, INC. 12,250

LABA$G AIR TR"INAL!, INC. 159,10

LAN-AIR INT;L "ARQTING CORP. 1:,95

!AN !TBAN -LOP"NT CORP. 17,79

PILIPPIN TCNOLOGI!, INC. 12,250

BALT RANC, INC. 1,95

-I!COR RALT CORP. 19,20

ARCIPLAGO RALT CORP. 17,71

!O$TRN !RIC TRA-R!, INC. 120,4:0

ORO R- !RIC!, INC. 12,250

NORTA!T CONTRACT TRA-R!, INC. 159,5

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-RA" PA!T$R!, INC. 19,27

LL CATTL CORPORATION 19,21

RANCO GRAN-, INC. 17,14

CO RANC, INC. 17,:97

*AR A!T RANC, INC. 19,227

!O$TRN !TAR CATTL CORP. 19,095

RA-IO A$-INC -LOPR!

INTGRAT- ORGANIATION, INC 17,7:7

RA-O PILIPINO CORPORATION 17,777

-$AR-O ". CO$ANGCO, R. 1,225

TOTAL 27,211,770

T/e %)ove s/%res %re 'olle'tivel3 reerre+ to %s 'orpor%te s/%res in t/e petition.

Represent%tives o t/e 'orpor%te s/%res present %t t/e 8eetin 'l%i8e+ t/%t t/e s/%res %re not (n+er

se(estr%tionF or t/%t i t/e3 %re (n+er se(estr%tion, t/e PCGG /%+ no ri/t to vote t/e s%8e. T/e3

ere overr(le+.

Eit/ PCGG votin t/e 'orpor%te s/%res, t/e olloin %s t/e res(lt o t/e ele'tion or 8e8)ers o

t/e !"C )o%r+ o +ire'tors

Stoc"older No.of (otes

1. "r. +(%r+o -e Los Aneles 15,115,521

2. "r. *eli'i%no Bel8onte, r. 15,12,254

. "r. Teo+oro L. Lo'sin 12,09,520

4. "r. -o8ino lee 12,0:,55

5. "r. P/ilip ll% (i'o 12,01,59

. "r. P%tri'< Pine+% 12,2:4,5

7. "r. A+olo AD'(n% 12,2:4,4

:. "r. +ison Coseten 12,2:4,4

9. "r. An+res !ori%no III 12,1:2,000

10. "r. +(%r+o !ori%no 12,17,94

11. "r. *r%n'is'o C. iD8en+i, r. 12,14,470

12. "r. Benino P. To+%, r. 12,147,19

1. "r. Antonio . Ro&%s 12,14,107

14. "r. ose L. C(isi%, r. 12,141,775

15. "r. Os'%r il%+o 12,110,402

1. "r. +(%r+o ". Co@(%n'o, r. 2,2:0,1:

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17. "r. nri(e ". Co@(%n'o 2,279,729

1:. "r. "%n(el ". Co@(%n'o 2,279,719

19. "r. R%%el G. A)ello 2,27:,:

20. "r. ose C. Con'ep'ion 1,59

21. "r. "%r'os O. Co@(%n'o :75

22. "r. -%nilo !. $rs(% 50

2. "r. Ro+olo ". Tins%3 2

24. "r. A8%+o C. "%8(ri' 0

T/e iteen in+ivi+(%ls /o re'eive+ t/e /i/est n(8)er o votes ere +e'l%re+ ele'te+.

T/e PCGG 'l%i8e+ it represente+ :5,75,279 s/%res %t t/e 8eetin in'l(+in t/e 'orpor%te s/%res

/i'/ 'orrespon+e+ to 1,2:,744,1:5 votes /i'/ in t(rn ere +istri)(te+ e(%ll3 %8on t/e iteen

156 '%n+i+%tes /o ere +e'l%re+ ele'te+.

Petitioners %llee t/%t t/e 27,211,770 s/%res or % tot%l o 40:,17,550 votes representin t/e

'orpor%te s/%res, ere ille%ll3 '%st )3 PCGG %n+ s/o(l+ )e 'o(nte+ in %vor o petitioners so t/%t

t/e res(lts o t/e ele'tion o(l+ )e %s ollos

Add

(otes 012,345,661

*riginally divided by 7 Resulting

Stoc"older Credited 8375,162,2619 (otes

1. "r. +(%r+o ".

Co@(%n'o, r. 2,2:0,1: 1,05:,:50 1:,9,4:

2. "r. "%n(el ".

Co@(%n'o 2,279,719 1,05:,:50 1:,:,59

. "r. R%%el G.

A)ello 2,27:,: 1,05:,:50 1:,7,71

Less

(otes 012,345,661

*riginally divided by 36 Resulting

Stoc"older Credited 8:4,:33,4419 (otes

4. "r. +(%r+o

-e Los Aneles 15,115,521 27,211,770 107,90,751

5. "r. *eli'i%no

Bel8onte, r. 12,12,254 27,211,770 105,100,4:4

. "r. Teo+oro

L. Lo'sin 12,09,520 27,211,770 105,097,750

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7. "r. -o8ino

Lee 12,0:,55 27,211,770 105,09,5:5

:. "r. P/ilip

ll% (i'o 12,01,59 27,211,770 105,0:9,799

9. "r. P%tri'ercise control and

management over )"at a%%ear to be %ro%erties and assets o)ned and belonging to t"e government

itself %n+ over /i'/ t/e persons /o %ppe%r in t/is '%se on )e/%l o BA!CO /%ve %ile+ to s/o

%n3 ri/t or even %n3 s/%re/ol+in in s%i+ 'orpor%tion. It%li's s(pplie+6

T/e Co(rt r%nte+ PCGG t/e ri/t to vote t/e se(estere+ s/%res )e'%(se t/e3 %ppe%re+ to )e

%ssets )elonin to t/e overn8ent itsel. T/e Con'(rrin Opinion o (sti'e A8e(rin% A.

"elen'io#errer%, in /i'/ s/e %s @oine+ )3 (sti'e *lorentino P. *eli'i%no, e&pl%ine+ t/is prin'iple%s ollos

I /%ve no o)@e'tion to %''or+in t/e ri/t to vote se(estere+ sto'< in '%se o % t% t/e oriin%l 2:

8illion %n+ t/e s()se(ent :0 8illion '%8e ro8 t/e CC!*, Co'on(t Cons(8ers !t%)iliD%tion *(n+,

+o 3o( %ree it/ t/%tH

Att3. er)os%

es, o(r onor.

& & & & & & & & &

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(sti'e P%n%ni)%n

!o it see8s t/%t t/e p%rties =/%ve> %ree+ (p to t/%t point t/%t t/e (n+s (se+ to p(r'/%se 72 o

t/e or8er *irst $nite+ B%n< '%8e ro8 t/e Co'on(t Cons(8er !t%)iliD%tion *(n+H

Att3. er)os%

es, o(r onor.40

In+ee+ in Cocofed v. $C==,41t/is Co(rt '%teori'%ll3 +e'l%re+ t/%t t/e $CPB %s %'(ire+ it/ t/e

(se o t/e Co'on(t Cons(8ers !t%)iliD%tion *(n+ in virt(e o Presi+enti%l -e'ree No. 755,

pro8(l%te+ on (l3 29, 1975.

Coconut Levy Funds Are Affected Dit" $ublic #nterest

%vin 'on'l(sivel3 s/on t/%t t/e se(estere+ $CPB s/%res ere p(r'/%se+ it/ 'o'on(t levies,

e /ol+ t/%t t/ese (n+s %n+ s/%res %re, %t t/e ver3 le%st, %e'te+ it/ p()li' interest.

T/e Resol(tion iss(e+ )3 t/e Co(rt on *e)r(%r3 1, 199 in Re%ublic v. Sandiganbayan42st%te+ t/%t

'o'on(t lev3 (n+s ere 'le%rl3 %e'te+ it/ p()li' interestF t/(s, /erein priv%te respon+ents even i t/e3 %re t/e reistere+ s/%re/ol+ers '%nnot )e %''or+e+ t/e ri/t to vote t/e8. Ee (ote

t/e s%i+ Resol(tion in p%rt, %s ollos

T/e 'o'on(t lev3 (n+s )ein ;'le%rl3 %e'te+ it/ p()li' interest, it ollos t/%t t/e 'orpor%tions

or8e+ %n+ or%niDe+ ro8 t/ose (n+s, %n+ %ll %ssets %'(ire+ t/erero8 s/o(l+ %lso )e re%r+e+

%s ;'le%rl3 %e'te+ it/ p()li' interest.;4

& & & & & & & & &

Ass(8in, /oever, or p(rposes o %r(8ent 8erel3, t/e litin o se(estr%tion to )e 'orre't, 8%3

it %lso )e %ss(8e+ t/%t t/e litin o se(estr%tion re8ove+ t/e '/%r%'ter o t/e 'o'on(t lev3'o8p%nies o )ein %e'te+ it/ p()li' interest, so t/%t t/e3 %n+ t/eir sto'< %n+ %ssets 8%3 no )e

'onsi+ere+ to )e o priv%te oners/ipH "%3 it )e %ss(8e+ t/%t t/e litin o se(estr%tion oper%te+ to

relieve t/e /ol+ers o sto'< in t/e 'o'on(t lev3 'o8p%nies %e'te+ it/ p()li' interest o t/e

o)li%tion o provin /o t/%t sto'< /%+ )een leiti8%tel3 tr%nserre+ to priv%te oners/ip, or t/%t

t/ose sto'

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Ro>as,s(pr%. T/ereore it is o no 8o8ent t/%t t/e Resol(tion +%te+ 1 *e)r(%r3 199 /%s not )eenr%tiie+. #ts @uris%rudential based remain.45It%li's s(pplie+6

To repe%t, t/e oreoin @(ri+i'%l sit(%tion /%s not '/%ne+. It is still t/e tr(t/ to+%3 t/e 'o'on(t lev3

(n+s %re 'le%rl3 %e'te+ it/ p()li' interest. Priv%te respon+ents /%ve not +e8onstr%te+

s%tis%'toril3 t/%t t/e3 /%ve leiti8%tel3 )e'o8e priv%te (n+s.

I priv%te respon+ents re%ll3 %n+ sin'erel3 )elieve+ t/%t t/e final -e'ision o t/e Co(rt in Re%ublic v.

SandiganbayanGR No. 907, pro8(l%te+ on %n(%r3 2, 19956 r%nte+ t/e8 t/e ri/t to vote,

/3 +i+ t/e3 %it or t/e l%pse o si& lon 3e%rs )eore +einitivel3 %ssertin it 16 t/ro(/ t/eir letter

+%te+ *e)r(%r3 1, 2001, %++resse+ to t/e $CPB Bo%r+ o -ire'tors, +e8%n+in t/e /ol+in o %

s/%re/ol+ers; 8eetin on "%r'/ , 2001F %n+ 26 t/ro(/ t/eir O8ni)(s "otion +%te+ *e)r(%r3 2,

2001 ile+ in t/e 'o(rt a ;uo, see

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. T/e ver3 l%s overnin 'o'on(t levies re'oniDe t/eir p()li' '/%r%'ter.

Ee s/%ll no +is'(ss e%'/ o t/e oreoin re%sons, %n3 one o /i'/ is eno(/ to s/o t/eir p()li'

'/%r%'ter.

3. Coconut Levy Funds Are Raised -"roug" t"e States $olice and -a>ing $o)ers.

In+ee+, 'o'on(t lev3 (n+s p%rt%

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)6 T/e 'o'on(t levies ere i8pose+ p(rs(%nt to t/e l%s en%'te+ )3 t/e proper leisl%tive

%(t/orities o t/e !t%te. In+ee+, t/e CC!* %s 'olle'te+ (n+er P- No. 27, iss(e+ )3 or8er

Presi+ent *er+in%n+ . "%r'os /o %s t/en e&er'isin leisl%tive poers.5

'6 T/e3 ere 'le%rl3 i8pose+ or % p()li' p(rpose. T/ere is %)sol(tel3 no (estion t/%t t/e3 ere

'olle'te+ to %+v%n'e t/e overn8ent;s %voe+ poli'3 o prote'tin t/e 'o'on(t in+(str3. T/is Co(rt

t% $"ili%%ines v.

C*A57%n+ *smeIa v. *rbos.5:

ven i t/e 8one3 is %llo'%te+ or % spe'i%l p(rpose %n+ r%ise+ )3 spe'i%l 8e%ns, it is still p()li' in

'/%r%'ter. In t/e '%se )eore (s, t/e (n+s ere even (se+ to or%niDe %n+ in%n'e !t%te oi'es.

In Cocofed v. $C==,59t/e Co(rt o)serve+ t/%t 'ert%in %en'ies or enterprises ere or%niDe+ %n+

in%n'e+ it/ reven(es +erive+ ro8 'o'on(t levies i8pose+ (n+er % s(''ession o l%s o t/e l%te

+i't%tors/ip & & & it/ +epose+ *er+in%n+ "%r'os %n+ /is 'ronies %s t/e s(spe'te+ %(t/ors %n+ '/ie

)enei'i%ries o t/e res(ltin 'o'on(t in+(str3 8onopol3.0T/e Co(rt 'ontin(e+ & & &. It '%nnot )e

+enie+ t/%t t/e 'o'on(t in+(str3 is one o t/e 8%@or in+(stries s(pportin t/e n%tion%l e'ono83. It is,

t/ereore, t/e !t%te;s 'on'ern to 8%

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t"e balance, if any, is to be transferred to t"e general funds of t"e =overnment. -"at is t"e essence

of t"e trust intended 8see 324 Constitution, Art. (#, Sec. :7G, lifted from t"e 376 Constitution,

Article (#, Sec. :73G. It%li's s(pplie+6

T/e '/%r%'ter o t/e !t%)iliD%tion *(n+ %s % spe'i%l (n+ is e8p/%siDe+ )3 t/e %'t t/%t t/e (n+s %re

+eposite+ in t/e P/ilippine N%tion%l B%n< %n+ not in t/e P/ilippine Tre%s(r3, 8one3s ro8 /i'/ 8%3

)e p%i+ o(t onl3 in p(rs(%n'e o %n %ppropri%tion 8%+e )3 l% 19:7 Constit(tion, Arti'le I, !e'.

29=1>, 197 Constit(tion, Arti'le III, !e'. 1:=1>6.

T/%t t/e ees ere 'olle'te+ ro8 s(%r pro+('ers, pl%nters %n+ 8illers, %n+ t/%t t/e (n+s ere

'/%nnele+ to t/e p(r'/%se o s/%res o sto'< in respon+ent B%n< +o not 'onvert t/e (n+s into % tr(st

(n+ or t/eir )eneit nor 8%

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T/(s, t/e 'o'on(t lev3 (n+s li

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overn8ent, in'l(+in t/e overn8ent;s 'o'on(t pro+('tivit3, re/%)ilit%tion, rese%r'/ e&tension,

%r8ers or%niD%tions, %n+ 8%r /%ve leiti8%tel3 )e'o8e

priv%te.

Pro'e+(r%l %n+ In'i+ent%l Iss(es

=rave Abuse of /iscretion, #m%ro%er Arguments and #ntervenors Relief

Pro'e+(r%ll3, respon+ents %r(e t/%t petitioner /%s %ile+ to +e8onstr%te t/%t t/e !%n+i%n)%3%n

'o88itte+ r%ve %)(se o +is'retion, % +e8onstr%tion re(ire+ in ever3 petition (n+er R(le 5.:0

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Ee +is%ree. Ee /ol+ t/%t t/e !%n+i%n)%3%n r%vel3 %)(se+ its +is'retion /en it 'ontr%vene+ t/e

r(lins o t/is Co(rt in as t/ere)3 (nl%(ll3, '%pri'io(sl3 %n+ %r)itr%ril3

+eprivin t/e overn8ent o its ri/t to vote se(estere+ s/%res p(r'/%se+ it/ 'o'on(t lev3 (n+s

/i'/ %re%rima faciep()li' (n+s.

In+ee+, r%ve %)(se o +is'retion 8%3 %rise /en % loer 'o(rt or tri)(n%l viol%tes or 'ontr%venes

t/e Constit(tion, t/e l% or e&istin @(rispr(+en'e. In one '%se,:1t/is Co(rt r(le+ t/%t t/e loer 'o(rt;s

resol(tion %s t%nt%8o(nt to overr(lin % @(+i'i%l prono(n'e8ent o t/e /i/est Co(rt & & & %n+(n8ist%

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+eter8in%tion /ere is 8erel3%rima facie, %n+ s/o(l+ not )%r t/e %nti#r%t 'o(rt ro8 8%

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PA$L L TAN, AN-RE G.R. No. 154:

LI$!ON, !TR EONG,

!TPN CO, A"! TAN, Present

$-IT TAN, RN!TO

TANCI R., -EIN NGO, PANGANIBAN, CJ.,C/%irperson,

IRGINIA QOO, !ABINO NAR!#!ANTIAGO,

PA-ILLA R., -$AR-O P. A$!TRIA#"ARTIN,

LIAR! %n+ GRAC CALLO, !R., %n+

CRI!TIAN IG !COOL, CICO#NAARIO, JJ.

Petitioners,

# vers(s

#

PA$L !CIP %n+ "RRITTO

LI", Pro8(l%te+

Respon+ents. A((st 17, 200

& ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## ## &

-CI!ION

PANGANIBAN,CJ.

*or sto'< 'orpor%tions, t/e S(or(8 reerre+ to in !e'tion 52 o t/e Corpor%tion Co+e is )%se+ on t/e

n(8)er ooutstanding votingsto'Resol(tions o t/e Co(rt o Appe%ls CA6 in CA#GR !P No.

:202. T/e irst %ss%ile+ Resol(tion +is8isse+ t/e %ppe%l ile+ )3 petitioners it/ t/e CA. Allee+l3,

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it/o(t t/e proper %(t/oriD%tion o t/e ot/er petitioners, t/e erii'%tion %n+ Certii'%tion o Non#

*or(8 !/oppin ere sine+ )3 onl3 one o t/e8 ## Att3. !%)ino P%+ill% r. T/e se'on+ Resol(tion

+enie+ re'onsi+er%tion.

T/e *%'ts

Petitioner Gr%'e C/risti%n i/ !'/ool GC!6 is % nonsto' In t/e 8eetin,

Petitioners rnesto T%n'/i, +in No, irini% Q/oo, %n+ (+it/ T%n ere vote+ to repl%'e t/e o(r+e'e%se+ 8e8)er#tr(stees.

E/en t/e 'ontrovers3 re%'/e+ t/e !e'(rities %n+ &'/%ne Co88ission !C6, petitioners

8%int%ine+ t/%t t/e +e'e%se+ 8e8)er#tr(stees s/o(l+ not )e 'o(nte+ in t/e 'o8p(t%tion o t/e

(or(8 )e'%(se, (pon t/eir +e%t/, 8e8)ers %(to8%ti'%ll3 lost %ll t/eir ri/ts in'l(+in t/e ri/t to

vote6 %n+ interests in t/e 'orpor%tion.

!C e%rin Oi'er "%lt/ie G. "ilit%r +e'l%re+ t/e April , 199: 8eetin n(ll %n+ voi+ or l%'o t/e Corpor%tion Co+e,

/i'/ provi+e+ t/e )%sis or +eter8inin % (or(8 or t/e ele'tion o +ire'tors or tr(stees, s/o(l+ )e

re%+ toet/er it/ !e'tion :9. =10>

T/e /e%rin oi'er %lso opine+ t/%t Arti'le III 26=11>o t/e B3#L%s o GC!, inso%r %s it pres'ri)e+

t/e 8o+e o illin v%'%n'ies in t/e )o%r+ o tr(stees, 8(st )e interprete+ in 'on@(n'tion it/ !e'tion

29=12>o t/e Corpor%tion Co+e. T/e !C en )%n' +enie+ t/e %ppe%l o petitioners %n+ %ir8e+ t/e

-e'ision o t/e /e%rin oi'er in toto.=1> It o(n+ to )e (nten%)le t/eir 'ontention t/%t t/e or+

S8e8)ers, %s (se+ in !e'tion 52=14>

o t/e Corpor%tion Co+e, reerre+ onl3 to t/e living8e8)ers o %nonsto'< 'orpor%tion.=15>

As e%rlier st%te+, t/e CA +is8isse+ t/e %ppe%l o petitioners, )e'%(se t/e erii'%tion %n+

Certii'%tion o Non#*or(8 !/oppin /%+ )een sine+ onl3 )3 Att3. !%)ino P%+ill% r. No !pe'i%l

Poer o Attorne3 /%+ )een %tt%'/e+ to s/o /is %(t/orit3 to sin or t/e rest o t/e petitioners.

en'e, t/is Petition.=1>

Iss(es

Petitioners st%te t/e iss(es %s ollos

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SPetitioners prin'ip%ll3 pr%3 or t/e resol(tion o t/e le%l (estion o /et/er or not in NON#

!TOCQ 'orpor%tions, dead members s/o(l+ still )e 'o(nte+ in +eter8in%tion o (or(8 or p(rpose+

o 'on+('tin t/e Ann(%l "e8)ersU "eetin.

SPetitioners /%ve 8%int%ine+ )eore t/e 'o(rts )elo t/%t t/e -A- 8e8)ers s/o(l+ no

loner )e 'o(nte+ in 'o8p(tin (or(8 pri8%ril3 on t/e ro(n+ t/%t 8e8)ersU ri/ts %re V%ersonal

and non!transferableK%s provi+e+ in !e'tions 90 %n+ 91 o t/e Corpor%tion Co+e o t/e P/ilippines.

ST/e !C r(le+ %%inst t/e petitioners solel3 on t/e )%sis o % 19:9 !C Opinion t/%t +i+ not

even involve % non!stoc cor%oration%s petitioner GC!.

ST/e onor%)le Co(rt o Appe%ls on t/e ot/er /%n+ si8pl3 re(se+ to resolve t/is (estion %n+

inste%+ +is8isse+ t/e petition or revie on % te'/ni'%lit3 t/e %il(re to ti8el3 s()8it %n !PA ro8

t/e petitioners %(t/oriDin t/eir co!%etitioner P%+ill%, t/eir 'o(nsel %n+ also a %etitioner )eore t/e

Co(rt o Appe%ls, to sin t/e petition on )e/%l o t/e rest o t/e petitioners.

SPetitioners /(8)l3 s()8it t/%t t/e %'tion o )ot/ t/e !C %n+ t/e Co(rt o Appe%ls %re not in

%''or+ it/ l% p%rti'(l%rl3 t/e prono(n'e8ents o t/is onor%)le Co(rt in &scor%i'o v. niversity of

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s()8itte+ % !pe'i%l Poer o Attorne3, %ttestin t/%t Att3. P%+ill% %s %(t/oriDe+ to ile t/e %'tion on

t/eir )e/%l.=1:>

In t/e interest o s()st%nti%l @(sti'e, t/is initi%l pro'e+(r%l l%pse 8%3 )e e&'(se+. =19>T/ere %ppe%rs to

)e no intention to 'ir'(8vent t/e nee+ or proper verii'%tion %n+ 'ertii'%tion, /i'/ %re %i8e+ %t

%ss(rin t/e tr(t/(lness %n+ 'orre'tness o t/e %lle%tions in t/e Petition or Revie %n+ %t

+is'o(r%in or(8 s/oppin.=20> "ore i8port%nt, t/e s()st%nti%l 8erits o petitionersU '%se %n+ t/e

p(rel3 le%l (estion involve+ in t/e Petition s/o(l+ )e 'onsi+ere+ spe'i%l 'ir'(8st%n'es =21>or

'o8pellin re%sons t/%t @(sti3 %n e&'eption to t/e stri't re(ire8ents o t/e verii'%tion %n+ t/e

'ertii'%tion o non#or(8 s/oppin.=22>

"%in Iss(e

%n+ tr%ns%'tin so8e ot/er )(siness '%llin or or re(irin t/e %'tion or 'onsent o t/e

s/%re/ol+ers or 8e8)ers,=24>s('/ %s t/e %8en+8ent o t/e %rti'les o in'orpor%tion %n+ )3l%s, s%le

or +isposition o %ll or s()st%nti%ll3 %ll 'orpor%te %ssets, 'onsoli+%tion %n+ 8erer %n+ t/e li

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to vote ## eit/er person%ll3 or )3 pro&3 ## or t/e +ire'tors or tr(stees /o %re to 8%n%e t/e 'orpor%te

%%irs.=2:> T/e ri/t to '/oose t/e persons /o ill +ire't, 8%n%e %n+ oper%te t/e 'orpor%tion is

sinii'%nt, )e'%(se it is t/e 8%in %3 in /i'/ % sto' Gener%ll3, t/e ri/t to )e present %n+ to vote in

% 8eetin is +eter8ine+ )3 t/e ti8e in /i'/ t/e 8eetin is /el+. =2>

!e'tion 52 o t/e Corpor%tion Co+e st%tes

S!e'tion 52. M(or(8 in "eetins. $nless ot/erise provi+e+ or in t/is Co+e or in t/e )3#l%s, %

(or(8 s/%ll 'onsist o t/e sto'

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Neit/er t/e sto'

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iven proportion o t/e sto'

!e'tion o t/e Corpor%tion Co+e, in p%rt, provi+es

S!e'tion . Classification of s"ares. T/e s/%res o sto'< o sto'< 'orpor%tions 8%3

)e +ivi+e+ into 'l%sses or series o s/%res, or )ot/, %n3 o /i'/ 'l%sses or series o s/%res 8%3

/%ve s('/ ri/ts, privilees or restri'tions %s 8%3 )e st%te+ in t/e %rti'les o in'orpor%tion $rovided,

T/%t no s/%re 8%3 )e +eprive+ o votin ri/ts e&'ept t/ose 'l%ssiie+ %n+ iss(e+ %s Spreerre+ or

Sre+ee8%)le s/%res, (nless ot/erise provi+e+ in t/is Co+e $rovided, furt"er, t/%t t/ere s/%ll

%l%3s )e % 'l%ss or series o s/%res /i'/ /%ve 'o8plete votin ri/ts.

& & & & & & & & &

SE/ere t/e %rti'les o in'orpor%tion provi+e or non#votin s/%res in t/e '%ses %lloe+

)3 t/is Co+e, t/e /ol+ers o s('/ s/%res s/%ll nevert/eless )e entitle+ to vote on t/e olloin

8%tters

1. A8en+8ent o t/e %rti'les o in'orpor%tionF

2. A+option %n+ %8en+8ent o )3#l%sF

. !%le, le%se, e&'/%ne, 8ort%e, ple+e or ot/er +isposition o %ll or s()st%nti%ll3 %ll o t/e

'orpor%tion propert3F

4. In'(rrin, 're%tin or in're%sin )on+e+ in+e)te+nessF

5. In're%se or +e're%se o '%pit%l sto'

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In nonsto'< 'orpor%tions, t/e votin ri/ts %tt%'/ to 8e8)ers/ip. =9> "e8)ers vote %s persons,

in %''or+%n'e it/ t/e l% %n+ t/e )3l%s o t/e 'orpor%tion. %'/ 8e8)er s/%ll )e entitle+ to one

vote (nless so li8ite+, )ro%+ene+, or +enie+ in t/e %rti'les o in'orpor%tion or )3l%s. =40> Ee /ol+ t/%t

/en t/e prin'iple or +eter8inin t/e (or(8 or sto'< 'orpor%tions is %pplie+ )3 %n%lo3 to

nonsto'< 'orpor%tions, onl3 t/ose /o %re actual8e8)ers it/ votin ri/ts s/o(l+ )e 'o(nte+.

$n+er !e'tion 52 o t/e Corpor%tion Co+e, t/e 8%@orit3 o t/e 8e8)ers representin

t/e actualn(8)er o votin ri/ts, not

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t/e n(8)er or n(8eri'%l 'onst%nt t/%t 8%3 oriin%ll3 )e spe'iie+ in t/e %rti'les o in'orpor%tion,

'onstit(tes t/e (or(8.=41>

T/e "%r'/ , 19: !C Opinion=42>'ite+ )3 t/e /e%rin oi'er (ses t/e p/r%se S8%@orit3 vote o t/e

8e8)ersF li

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!e'tion 25 o t/e Co+e spe'ii'%ll3 provi+es t/%t % 8%@orit3 o t/e directors or trustees, as fi>ed in

t"e articles of incor%oration, s/%ll 'onstit(te % (or(8 or t/e tr%ns%'tion o 'orpor%te )(siness

(nless t/e %rti'les o in'orpor%tion or t/e )3l%s provi+e or % re%ter 8%@orit36. I t/e intention o t/e

l%8% In ot/er or+s, t/e +eter8in%tion o /et/er or not S+e%+ 8e8)ers %re entitle+

to e&er'ise t/eir votin ri/ts t/ro(/ t/eir e&e'(tor or %+8inistr%tor6, +epen+s on t/ose %rti'les o

in'orpor%tion or )3l%s.

$n+er t/e B3#L%s o GC!, 8e8)ers/ip in t/e 'orpor%tion s/%ll, %8on ot/ers, )e

ter8in%te+ )3 t/e +e%t/ o t/e 8e8)er.=4> !e'tion 91 o t/e Corpor%tion Co+e (rt/er provi+es t/%t

ter8in%tion e&tin(is/es %ll t/e ri/ts o % 8e8)er o t/e 'orpor%tion, (nless ot/erise provi+e+ in

t/e %rti'les o in'orpor%tion or t/e )3l%s.

Appl3in !e'tion 91 to t/e present '%se, e /ol+ t/%t +e%+ 8e8)ers /o %re +roppe+ ro8

t/e 8e8)ers/ip roster in t/e 8%nner %n+ or t/e '%(se provi+e+ or in t/e B3#L%s o GC! %re not

to )e 'o(nte+ in +eter8inin t/e re(isite vote in 'orpor%te 8%tters or t/e re(isite (or(8 or t/e

%nn(%l 8e8)ersU 8eetin. Eit/ 11 re8%inin 8e8)ers, t/e (or(8 in t/e present '%se s/o(l+ )e

. T/ereore, t/ere )ein % (or(8, t/e %nn(%l 8e8)ersU 8eetin, 'on+('te+ it/ si&=47>8e8)erspresent, %s v%li+.

(acancy in t"e

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As re%r+s t/e illin o v%'%n'ies in t/e )o%r+ o tr(stees, !e'tion 29 o t/e Corpor%tion Co+e

provi+es

S!CTION 29. (acancies in t"e office of director or trustee. ## An3 v%'%n'3 o''(rrin in t/e )o%r+ o

+ire'tors or tr(stees ot/er t/%n )3 re8ov%l )3 t/e sto' Corpor%tions, t/ereore, 8%3 '/oose /o v%'%n'ies in t/eir respe'tive )o%r+s 8%3 )e ille+ (p ##

eit/er )3 t/e re8%inin +ire'tors 'onstit(tin % (or(8, or )3 t/e sto'

T/e B3#L%s o GC! pres'ri)e+ t/e s%ecific8o+e o illin (p e&istin v%'%n'ies in its )o%r+

o +ire'torsF t/%t is, )3 % 8%@orit3 vote o t/e re8%inin 8e8)ers o t/e )o%r+.=50>

E/ile % 8%@orit3 o t/e re8%inin 'orpor%te 8e8)ers ere present, /oever, t/e Sele'tion o t/e

o(r tr(stees '%nnot )e le%ll3 (p/el+ or t/e o)vio(s re%son t/%t it %s /el+ in %n %nn(%l 8eetin o

t/e 8e8)ers, not o t/e )o%r+ o tr(stees. Ee %re not (n8in+(l o t/e %'t t/%t t/e 8e8)ers o

GC! t/e8selves %lso 'onstit(te t/e tr(stees, )(t e '%nnot inore t/e GC! )3l% provision,

/i'/ spe'ii'%ll3 pres'ri)es t/%t v%'%n'ies in t/e )o%r+ 8(st )e ille+ (p )3 t/e re8%inintr(stees. In ot/er or+s, t/ese re8%inin 8e8)er#tr(stees must sit as a board in or+er to v%li+l3

ele't t/e ne ones.

In+ee+, t/ere is % ell#+eine+ +istin'tion )eteen % 'orpor%te %'t to )e +one )3 t/e )o%r+ %n+

t/%t )3 t/e 'onstit(ent 8e8)ers o t/e 'orpor%tion. T/e )o%r+ o tr(stees 8(st %'t, not in+ivi+(%ll3 or

sep%r%tel3, )(t %s % )o+3 in % l%(l 8eetin. On t/e ot/er /%n+, in t/eir %nn(%l 8eetin, t/e

8e8)ers 8%3 )e represente+ )3 t/eir respe'tive pro&ies, %s in t/e 'onteste+ %nn(%l 8e8)ersU

8eetin o GC!.

ER*OR, t/e Petition is p%rtl3 =RAN-&/. T/e %ss%ile+ Resol(tions o t/e Co(rt o Appe%ls %re

/ere)3R&(&RS&/ AN/ S&- AS#/&. T/e re8%inin 8e8)ers o t/e )o%r+ o tr(stees o Gr%'e

C/risti%n i/ !'/ool GC!6 8%3 'onvene %n+ ill (p t/e v%'%n'ies in t/e )o%r+, in %''or+%n'e

it/ t/is -e'ision. No prono(n'e8ent %s to 'osts in t/is inst%n'e.

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!O OR-R-.