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[G.R. No. L-23145. November 29, 1968.]

TESTATE ESTATE OF IONA! SLAE "ER#INS,

$e%e&'e$. RENATO . TA(AG, &)%*++&r &$m*)*'r&or-

&e++ee, v. /ENG0ET ONSOLIATE, IN., Oppositor-

Appellant.

*r*+o F. A'er*++o, r., or &)%*++&r &$m*)*'r&or-

&e++ee.

Ro'', S&+%e$o, e+ Ro'&r*o, /*o *'& or Oppositor-

Appellant.

S(LLA/0S

1. REMEDIAL LAW; SPECIAL PROCEEDINGS; SETTLEMENT OF

ESTATE; WHEN ANCILLARY ADMINISTRATION IS PROPER.

The ancillar a!"ini#$ra$i%n i# &r%&er' (hene)er a &er#%n

!ie#' lea)in* in a c%+n$r %$her $han $ha$ %, hi# la#$ !%"icile'

&r%&er$ $% -e a!"ini#$ere! in $he na$+re %, a##e$# %, $he

!ecea#e! lia-le ,%r hi# in!i)i!+al !e-$# %r $% -e !i#$ri-+$e!

a"%n* hi# heir# /%hanne# ). Har)e' 0 Phil. 1234. Ancillar

a!"ini#$ra$i%n i# nece##ar %r $he rea#%n ,%r #+ch

a!"ini#$ra$i%n i# -eca+#e a *ran$ %, a!"ini#$ra$i%n !%e# n%$

e5 &r%&ri% )i*%re ha)e an e6ec$ -e%n! $he li"i$# %, $he

c%+n$r in (hich i$ i# *ran$e!. Hence' an a!"ini#$ra$%r

a&&%in$e! in a ,%rei*n #$a$e ha# n% a+$h%ri$ in $he

Phili&&ine#.

7. ID.; ID.; ID.; SCOPE OF POWER AND A8THORITY OF AN

ANCILLARY ADMINISTRATOR. N% %ne c%+l! !i#&+$e $he

&%(er %, an ancillar a!"ini#$ra$%r $% *ain c%n$r%l an!

&%##e##i%n %, all a##e$# %, $he !ece!en$ (i$hin $he 9+ri#!ic$i%n

%, $he Phili&&ine#. S+ch a &%(er i# inheren$ in hi# !+$ $%

#e$$le her e#$a$e an! #a$i#, $he clai"# %, l%cal cre!i$%r# R+le

:0' Sec. ' R+le# %, C%+r$. C, Pa)ia ). De la R%#a' : Phil. 2;

Li(ana* ). Ree#' L0; I*naci% ). Elchic%'

L2; e$c.4. I$ i# a *eneral r+le +ni)er#all

rec%*ni?e! $ha$ a!"ini#$ra$i%n' (he$her &rinci&al %r ancillar'

cer$ainl e5$en!# $% $he a##e$# %, a !ece!en$ ,%+n! (i$hin $he

#$a$e %r c%+n$r (here i$ (a# *ran$e!' $he c%r%llar -ein*

@$ha$ an a!"ini#$ra$%r a&&%in$e! in %ne #$a$e %r c%+n$r ha#

n% &%(er %)er &r%&er$ in an%$her #$a$e %r c%+n$r@ Le%n an!

Ghe??i ). Man+,ac$+rer# Li,e In#. C%.' = Phil. 03=4.

. ID.; ID.; ID.; ID.; CASE AT AR. Since' in $he ca#e a$ -ar'

$here i# a re,+#al' &er#i#$en$l a!here! $% - $he !%"iciliar

a!"ini#$ra$%r in Ne( Y%rB' $% !eli)er $he #hare# %, #$%cB# %,

a&&ellan$ c%r&%ra$i%n %(ne! - $he !ece!en$ $% $he ancillar

a!"ini#$ra$%r in $he Phili&&ine#' $here (a# n%$hin*

+nrea#%na-le %r ar-i$rar in c%n#i!erin* $he" a# l%#$ an!

re+irin* $he a&&ellan$ $% i##+e ne( cer$ica$e# in lie+ $here%,

There-' $he $a#B inc+"-en$ +n!er $he la( %n $he ancillar

a!"ini#$ra$%r c%+l! -e !i#char*e! an! hi# re#&%n#i-ili$,+llle!. An %$her )ie( (%+l! re#+l$ in $he c%"&liance $% a

)ali! 9+!icial %r!er -ein* "a!e $% !e&en! %n $he +nc%n$r%lle!

!i#cre$i%n %, a &ar$ %r en$i$

0. CORPORATION LAW; CORPORATIONS; CONCEPT AND

NAT8RE. A c%r&%ra$i%n i# an ar$icial -ein* crea$e! -

%&era$i%n %, la( Sec. 7' Ac$ N%. 103=4. A c%r&%ra$i%n a#

Bn%(n $% Phili&&ine 9+ri#&r+!ence i# a crea$+re (i$h%+$ an

e5i#$ence +n$il i$ ha# recei)e! $he i"&ri"a$+r %, $he #$a$e

ac$in* acc%r!in* $% la(. I$ i# l%*icall inc%ncei)a-le $here,%re$ha$ i$ (ill ha)e ri*h$# an! &ri)ile*e# %, a hi*her &ri%ri$ $han

$ha$ %, i$# crea$%r. M%re $han $ha$' i$ cann%$ le*i$i"a$el re,+#e

$% iel! %-e!ience $% ac$# %, i$# #$a$e %r*an#' cer$ainl n%$

e5cl+!in* $he 9+!iciar' (hene)er calle! +&%n $% !% #%. A

c%r&%ra$i%n i# n%$ in ,ac$ an! in reali$ a &er#%n' -+$ $he la(

$rea$# i$ a# $h%+*h i$ (ere a &er#%n - &r%ce## %, c$i%n' %r -

re*ar!in* i$ a# an ar$icial &er#%n !i#$inc$ an! #e&ara$e ,r%"

i$# in!i)i!+al #$%cBh%l!er# 1 Fle$cher' Ccl%&e!ia

C%r&%ra$i%n#' &&. 1=


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in her na"e in $he -%%B# %, $he en*+e$ C%n#%li!a$e!' Inc.'

74 %r!er# #ai! cer$ica$e# cancelle!' an! 4 !irec$# #ai!

c%r&%ra$i%n $% i##+e ne( cer$ica$e# in lie+ $here%,' $he #a"e

$% -e !eli)ere! - #ai! c%r&%ra$i%n $% ei$her $he inc+"-en$

ancillar a!"ini#$ra$%r %r $% $he Pr%-a$e Di)i#i%n %, $hi#

C%+r$.@ 1

Fr%" #+ch an %r!er' an a&&eal (a# $aBen $% $hi# C%+r$ n%$ -$he !%"iciliar a!"ini#$ra$%r' $he C%+n$ Tr+#$ C%"&an %,

Ne( Y%rB' -+$ - $he Phili&&ine c%r&%ra$i%n' $he en*+e$

C%n#%li!a$e!' Inc. The a&&eal cann%$ &%##i-l &r%#&er. The

%r!er challen*e! re&re#en$# a re#&%n#e an! e5&re##e# a

&%lic' $% &ara&hra#e FranB,+r$er' ari#in* %+$ %, a #&ecic

&r%-le"' a!!re##e! $% $he a$$ain"en$ %, #&ecic en!# - $he

+#e %, #&ecic re"e!ie#' (i$h ,+ll an! a"&le #+&&%r$ ,r%"

le*al !%c$rine# %, (ei*h$ an! #i*nicance.

The ,ac$# (ill e5&lain (h. A# #e$ ,%r$h in $he -rie, %, a&&ellan$en*+e$ C%n#%li!a$e!' Inc.' I!%nah Sla!e PerBin#' (h% !ie! %n

March 72' 1=> in Ne( Y%rB Ci$' le,$ a"%n* %$her#' $(% #$%cB

cer$ica$e# c%)erin* '7 #hare# %, a&&ellan$' $he

cer$ica$e# -ein* in $he &%##e##i%n %, $he C%+n$ Tr+#$

C%"&an %, Ne( Y%rB' (hich a# n%$e!' i# $he !%"iciliar

a!"ini#$ra$%r %, $he e#$a$e %, $he !ecea#e! 7 Then ca"e $hi#

&%r$i%n %, $he a&&ellan$# -rie, @On A+*+#$ 17' 1=>' Pr%#&er%

Sani!a! in#$i$+$e! ancillar a!"ini#$ra$i%n &r%cee!in*# in $he

C%+r$ %, Fir#$ In#$ance %, Manila; La?ar% A. Mar+e? (a#

a&&%in$e! ancillar a!"ini#$ra$%r; an! %n /an+ar 77' 1=>'

he (a# #+-#$i$+$e! - $he a&&ellee Rena$% D. Taa*. A !i#&+$e

ar%#e -e$(een $he !%"iciliar a!"ini#$ra$%r in Ne( Y%rB an!

$he ancillar a!"ini#$ra$%r in $he Phili&&ine# a# $% (hich %,

$he" (a# en$i$le! $% $he &%##e##i%n %, $he #$%cB cer$ica$e# in

+e#$i%n. On /an+ar 72' 1=>0' $he C%+r$ %, Fir#$ In#$ance %,

Manila %r!ere! $he !%"iciliar a!"ini#$ra$%r' C%+n$ Tr+#$

C%"&an' $% &r%!+ce an! !e&%#i$ $he" (i$h $he ancillar

a!"ini#$ra$%r %r (i$h $he ClerB %, C%+r$. The !%"iciliar

a!"ini#$ra$%r !i! n%$ c%"&l (i$h $he %r!er' an! %n Fe-r+ar

11' 1=>0' $he ancillar a!"ini#$ra$%r &e$i$i%ne! $he c%+r$ $%

@i##+e an %r!er !eclarin* $he cer$ica$e %r cer$ica$e# %,

#$%cB# c%)erin* $he '7 #hare# i##+e! in $he na"e %,

I!%nah Sla!e PerBin# - en*+e$ C%n#%li!a$e!' Inc. -e

!eclare! %r c%n#i!ere! a# l%#$.@

I$ i# $% -e n%$e! ,+r$her $ha$ a&&ellan$ en*+e$ C%n#%li!a$e!'

Inc. a!"i$# $ha$ @i$ i# i""a$erial@ a# ,ar a# i$ i# c%ncerne! a#

$% @(h% i# en$i$le! $% $he &%##e##i%n %, $he #$%cB cer$ica$e#

in +e#$i%n; a&&ellan$ %&&%#e! $he &e$i$i%n %, $he ancillar

a!"ini#$ra$%r -eca+#e $he #ai! #$%cB cer$ica$e# are in

e5i#$ence' $he are $%!a in $he &%##e##i%n %, $he !%"iciliar

a!"ini#$ra$%r' $he C%+n$ Tr+#$ C%"&an' in Ne( Y%rB

8.S.A.. . . .@ 0

I$ i# i$# )ie(' $here,%re' $ha$ +n!er $he circ+"#$ance#' $he

#$%cB cer$ica$e# cann%$ -e !eclare! %r c%n#i!ere! a# l%#$

M%re%)er' i$ (%+l! alle*e $ha$ $here (a# a ,ail+re $% %-#er)e

cer$ain re+ire"en$# %, i$# -


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&%(er %, $he a&&ellee ancillar a!"ini#$ra$%r $% *ain c%n$r%l

an! &%##e##i%n %, all a##e$# %, $he !ece!en$ (i$hin $he

9+ri#!ic$i%n %, $he Phili&&ine#. N%r c%+l! i$. S+ch a &%(er i#

inheren$ in hi# !+$ $% #e$$le her e#$a$e an! #a$i#, $he clai"#

%, l%cal cre!i$%r#. 3 A# /+#$ice T+a#%n #&eaBin* ,%r $hi# C%+r$

"a!e clear' i$ i# a @*eneral r+le +ni)er#all rec%*ni?e!@ $ha$

a!"ini#$ra$i%n' (he$her &rinci&al %r ancillar' cer$ainl

@e5$en!# $% $he a##e$# %, a !ece!en$ ,%+n! (i$hin $he #$a$e %rc%+n$r (here i$ (a# *ran$e!'@ $he c%r%llar -ein* @$ha$ an

a!"ini#$ra$%r a&&%in$e! in %ne #$a$e %r c%+n$r ha# n% &%(er

%)er &r%&er$ in an%$her #$a$e %r c%+n$r.@ >

I$ i# $% -e n%$e! $ha$ $he #c%&e %, $he &%(er %, $he ancillar

a!"ini#$ra$%r (a#' in an earlier ca#e' #e$ ,%r$h - /+#$ice

Malc%l". Th+# @I$ i# %,$en nece##ar $% ha)e "%re $han %ne

a!"ini#$ra$i%n %, an e#$a$e. When a &er#%n !ie# in$e#$a$e

%(nin* &r%&er$ in $he c%+n$r %, hi# !%"icile a# (ell a# in a

,%rei*n c%+n$r' a!"ini#$ra$i%n i# ha! in -%$h c%+n$rie#. Tha$(hich i# *ran$e! in $he 9+ri#!ic$i%n %, !ece!en$# la#$ !%"icile

i# $er"e! $he &rinci&al a!"ini#$ra$i%n' (hile an %$her

a!"ini#$ra$i%n i# $er"e! $he ancillar a!"ini#$ra$i%n. The

rea#%n ,%r $he la$$er i# -eca+#e a *ran$ %, a!"ini#$ra$i%n !%e#

n%$ e5 &r%&ri% )i*%re ha)e an e6ec$ -e%n! $he li"i$# %, $he

c%+n$r in (hich i$ i# *ran$e!. Hence' an a!"ini#$ra$%r

a&&%in$e! in a ,%rei*n #$a$e ha# n% a+$h%ri$ in $he

Phili&&ine#. The ancillar a!"ini#$ra$i%n i# &r%&er' (hene)er

a &er#%n !ie#' lea)in* in a c%+n$r %$her $han $ha$ %, hi# la#$

!%"icile' &r%&er$ $% -e a!"ini#$ere! in $he na$+re %, a##e$#

%, $he !ecea#e! lia-le ,%r hi# in!i)i!+al !e-$# %r $% -e

!i#$ri-+$e! a"%n* hi# heir#.@ 2

I$ (%+l! ,%ll%( $hen $ha$ $he a+$h%ri$ %, $he &r%-a$e c%+r$ $%

re+ire $ha$ ancillar a!"ini#$ra$%r# ri*h$ $% @$he #$%cB

cer$ica$e# c%)erin* $he '7 #hare# .. #$an!in* in her

na"e in $he -%%B# %, a&&ellan$ en*+e$ C%n#%li!a$e!' Inc..@

-e re#&ec$e! i# e+all -e%n! +e#$i%n. F%r a&&ellan$ i# a

Phili&&ine c%r&%ra$i%n %(in* ,+ll alle*iance an! #+-9ec$ $% $he

+nre#$ric$e! 9+ri#!ic$i%n %, l%cal c%+r$#. I$# #hare# %, #$%cB

cann%$ $here,%re -e c%n#i!ere! in an (i#e a# i""+ne ,r%"

la(,+l c%+r$ %r!er#.

O+r h%l!in* in Well# Far*% anB an! 8ni%n ). C%llec$%r %,

In$ernal Re)en+e : n!# a&&lica$i%n. @In $he in#$an$ ca#e' $he

ac$+al #i$+# %, $he #hare# %, #$%cB i# in $he Phili&&ine#' $he

c%r&%ra$i%n -ein* !%"icile! here.@ T% $he ,%rce %, $he a-%)e

+n!enia-le &r%&%#i$i%n' n%$ e)en a&&ellan$ i# in#en#i-le. I$

!%e# n%$ !i#&+$e i$. N%r c%+l! i$ #+cce##,+ll !% #% e)en i, i$

(ere #% "in!e!.

7. In $he ,ace %, #+ch inc%n$r%)er$i-le !%c$rine# $ha$ ar*+e in a

ra$her c%ncl+#i)e ,a#hi%n ,%r $he le*ali$ %, $he challen*e!

%r!er' h%( !%e# a&&ellan$ en*+e$ C%n#%li!a$e!' Inc. &r%&%#e

$% carr $he e5$re"el hea) -+r!en %, &er#+a#i%n %

&reci#el !e"%n#$ra$in* $he c%n$rarK I$ (%+l! a##i*n a# $he

-a#ic err%r alle*e!l c%""i$$e! - $he l%(er c%+r$ i$#

@c%n#i!erin* a# l%#$ $he #$%cB cer$ica$e# c%)erin* '7#hare# %, en*+e$ -el%n*in* $% $he !ecea#e! I!%nah Sla!e

PerBin#' . . .@ = M%re #&ecicall' a&&ellan$ (%+l! #$re## $ha$

$he @l%(er c%+r$ c%+l! n%$ c%n#i!er a# l%#$ $he #$%cB

cer$ica$e# in +e#$i%n (hen' a# a "a$$er %, ,ac$' hi# H%n%

$he $rial /+!*e Bne(' an! !%e# Bn%(' an! i$ i# a!"i$$e! - $he

a&&ellee' $ha$ $he #ai! #$%cB cer$ica$e# are in e5i#$ence an!

are $%!a in $he &%##e##i%n %, $he !%"iciliar a!"ini#$ra$%r in

Ne( Y%rB.@ 1

There "a -e an ele"en$ %, c$i%n in $he a-%)e )ie( %, $hel%(er c%+r$. Tha$ cer$ainl !%e# n%$ #+Jce $% call ,%r $he

re)er#al %, $he a&&eale! %r!er. Since $here i# a re,+#al

&er#i#$en$l a!here! $% - $he !%"iciliar a!"ini#$ra$%r in

Ne( Y%rB' $% !eli)er $he #hare# %, #$%cB# %, a&&ellan$

c%r&%ra$i%n %(ne! - $he !ece!en$ $% $he ancillar

a!"ini#$ra$%r in $he Phili&&ine#' $here (a# n%$hin*

+nrea#%na-le %r ar-i$rar in c%n#i!erin* $he" a# l%#$ an!

re+irin* $he a&&ellan$ $% i##+e ne( cer$ica$e# in lie+ $here%,

There-' $he $a#B inc+"-en$ +n!er $he la( %n $he ancillar

a!"ini#$ra$%r c%+l! -e !i#char*e! an! hi# re#&%n#i-ili$

,+llle!.

An %$her )ie( (%+l! re#+l$ in $he c%"&liance $% a )ali!

9+!icial %r!er -ein* "a!e $% !e&en! %n $he +nc%n$r%lle!

!i#cre$i%n %, $he &ar$ %r en$i$' in $hi# ca#e !%"icile! a-r%a!

(hich $h+# ,ar ha# #h%(n $he +$"%#$ &er#i#$ence in re,+#in*

$% iel! %-e!ience. Cer$ainl' a&&ellan$ (%+l! n%$ -e hear! $%

c%n$en! in all #eri%+#ne## $ha$ a 9+!icial !ecree c%+l! -e

$rea$e! a# a "ere #cra& %, &a&er' $he c%+r$ i##+in* i$ -ein*

&%(erle## $% re"e! i$# a*ran$ !i#re*ar!

I$ "a -e a!"i$$e! %, c%+r#e $ha$ #+ch alle*e! l%## a# ,%+n!

- $he l%(er c%+r$ !i! n%$ c%rre#&%n! e5ac$l (i$h $he ,ac$#

T% -e "%re -l+n$' $he +ali$ %, $r+$h "a -e lacBin* in #+ch a

c%ncl+#i%n arri)e! a$. I$ i# $% -e re"e"-ere! h%(e)er' a*ain

$% -%rr%( ,r%" FranB,+r$er' @$ha$ c$i%n# (hich $he la( "a

rel +&%n in $he &+r#+i$ %, le*i$i"a$e en!# ha)e &lae! an

i"&%r$an$ &ar$ in i$# !e)el%&"en$.@ 11

S&eaBin* %, $he c%""%n la( in i$# earlier &eri%!' Car!%?%


4/103

c%+l! #$a$e $ha$ c$i%n# @(ere !e)ice# $% a!)ance $he en!# %,

9+#$ice' e)en i, cl+"# an! a$ $i"e# %6en#i)e.@ 17 S%"e %,

$he" ha)e &er#i#$e! e)en $% $he &re#en$' $ha$ e"inen$ 9+ri#$'

n%$in* @$he +a#i c%n$rac$' $he a!%&$e! chil!' $he c%n#$r+c$i)e

$r+#$' all %, %+ri#hin* )i$ali$' $% a$$e#$ $he e"&ire %, a# i,

$%!a.@ 1 He liBe(i#e n%$e! @a cla## %, c$i%n# %, an%$her

%r!er' $he c$i%n (hich i# a (%rBin* $%%l %, $h%+*h$' -+$ (hich

a$ $i"e# hi!e# i$#el, ,r%" )ie( $ill reec$i%n an! anal#i# ha)e-r%+*h$ i$ $% $he li*h$.@ 10

Wha$ cann%$ -e !i#&+$e!' $here,%re' i# $he a$ $i"e#

in!i#&en#a-le r%le $ha$ c$i%n# a# #+ch &lae! in $he la(.

There #h%+l! -e $hen %n $he &ar$ %, $he a&&ellan$ a ,+r$her

rene"en$ in $he ca$h%lici$ %, i$# c%n!e"na$i%n %, #+ch

9+!icial $echni+e. I, e)er an %cca#i%n !i! call ,%r $he

e"&l%"en$ %, a le*al c$i%n $% &+$ an en! $% $he an%"al%+#

#i$+a$i%n %, a )ali! 9+!icial %r!er -ein* !i#re*ar!e! (i$h

a&&aren$ i"&+ni$' $hi# i# i$. Wha$ i# $h+# "%#$ %-)i%+# i# $ha$$hi# &ar$ic+lar alle*e! err%r !%e# n%$ carr &er#+a#i%n.

. A&&ellan$ en*+e$ C%n#%li!a$e!' Inc. (%+l! #eeB $% -%l#$er

$he a-%)e c%n$en$i%n - i$# in)%Bin* %ne %, $he &r%)i#i%n# %,

i$# -


5/103

$ha$ %, i$# crea$%r. M%re $han $ha$' i$ cann%$ le*i$i"a$el re,+#e

$% iel! %-e!ience $% ac$# %, i$# #$a$e %r*an#' cer$ainl n%$

e5cl+!in* $he 9+!iciar' (hene)er calle! +&%n $% !% #%.

A# a "a$$er %, ,ac$' a c%r&%ra$i%n %nce i$ c%"e# in$% -ein*'

,%ll%(in* A"erican la( #$ill %, &er#+a#i)e a+$h%ri$ in %+r

9+ri#!ic$i%n' c%"e# "%re %,$en (i$hin $he Ben %, $he 9+!iciar

$han $he %$her $(% c%%r!ina$e -ranche#. I$ in#$i$+$e# $hea&&r%&ria$e C%+r$ Ac$i%n $% en,%rce i$# ri*h$#. C%rrela$i)el' i$

i# n%$ i""+ne ,r%" 9+!icial c%n$r%l in $h%#e in#$ance#' (here a

!+$ +n!er $he la( a# a#cer$aine! in an a&&r%&ria$e le*al

&r%cee!in* i# ca#$ +&%n i$.

T% a##er$ $ha$ i$ can ch%%#e (hich c%+r$ %r!er $% ,%ll%( an!

(hich $% !i#re*ar! i# $% c%n,er +&%n i$ n%$ a+$%n%" (hich

"a -e c%nce!e! -+$ licen#e (hich cann%$ -e $%lera$e!. I$ i#

$% ar*+e $ha$ i$ "a' (hen #% "in!e!' %)err+le $he #$a$e' $he

#%+rce %, i$# )er e5i#$ence; i$ i# $% c%n$en! $ha$ (ha$ an %,i$# *%)ern"en$al %r*an# "a la(,+ll re+ire c%+l! -e i*n%re!

a$ (ill. S% e5$ra)a*an$ a clai" cann%$ &%##i-l "eri$ a&&r%)al.

3. One la#$ &%in$. In il%ria ). A!"ini#$ra$%r %, e$eran# A6air#'

77 i$ (a# #h%(n $ha$ in a *+ar!ian#hi& &r%cee!in* $hen

&en!in* in a l%(er c%+r$' $he 8ni$e! S$a$e# e$eran#

A!"ini#$ra$i%n le! a "%$i%n ,%r $he re,+n! %, a cer$ain #+"

%, "%ne &ai! $% $he "in%r +n!er *+ar!ian#hi&' alle*in* $ha$

$he l%(er c%+r$ ha! &re)i%+#l *ran$e! i$# &e$i$i%n $% c%n#i!er

$he !ecea#e! ,a$her a# n%$ en$i$le! $% *+erilla -ene$#

acc%r!in* $% a !e$er"ina$i%n arri)e! a$ - i$# "ain %Jce in

$he 8ni$e! S$a$e#. The "%$i%n (a# !enie!. In #eeBin* a

rec%n#i!era$i%n %, #+ch %r!er' $he A!"ini#$ra$%r relie! %n an

A"erican ,e!eral #$a$+$e "aBin* hi# !eci#i%n# @nal an!

c%ncl+#i)e %n all +e#$i%n# %, la( %r ,ac$@ &recl+!in* an

%$her A"erican %Jcial $% e5a"ine $he "a$$er ane(' @e5ce&$ a

9+!*e %r 9+!*e# %, $he 8ni$e! S$a$e# c%+r$.@ 7

Rec%n#i!era$i%n (a# !enie!' an! $he A!"ini#$ra$%r a&&eale!.

In an %&ini%n - /+#$ice /..L. Ree#' (e #+#$aine! $he l%(er

c%+r$. Th+# @We are %, $he %&ini%n $ha$ $he a&&eal #h%+l! -e

re9ec$e!. The &r%)i#i%n# %, $he 8.S. C%!e' in)%Be! - $he

a&&ellan$' "aBe $he !eci#i%n# %, 8.S. e$eran A!"ini#$ra$%r

nal an! c%ncl+#i)e (hen "a!e %n clai"# &r%&erl #+-"i$$e!

$% hi" ,%r re#%l+$i%n; -+$ $he are n%$ a&&lica-le $% $he

&re#en$ ca#e' (here $he A!"ini#$ra$%r i# n%$ ac$in* a# a 9+!*e

-+$ a# a li$i*an$. There i# a *rea$ !i6erence -e$(een ac$i%n#

a*ain#$ $he A!"ini#$ra$%r (hich "+#$ -e le! #$ric$l in

acc%r!ance (i$h $he c%n!i$i%n# $ha$ are i"&%#e! - $he

e$eran# Ac$' incl+!in* $he e5cl+#i)e re)ie( - 8ni$e! S$a$e#

c%+r$#4' an! $h%#e ac$i%n# (here $he e$eran# A!"ini#$ra$%r

#eeB# a re"e! ,r%" %+r c%+r$# an! #+-"i$# $% $hei

9+ri#!ic$i%n - lin* ac$i%n# $herein. O+r a$$en$i%n ha# n%

-een calle! $% an la( %r $rea$ $ha$ (%+l! "aBe $he n!in*#

%, $he e$eran# A!"ini#$ra$%r' in ac$i%n# (here he i# a &ar$

c%ncl+#i)e %n %+r c%+r$#. Tha$' in e6ec$' (%+l! !e&ri)e %+

$ri-+nal# %, 9+!icial !i#cre$i%n an! ren!er $he" "ere

#+-%r!ina$e in#$r+"en$ali$ie# %, $he e$eran#A!"ini#$ra$%r.@crala( )ir$+a1a( li-rar

I$ i# -a! en%+*h a# $he il%ria !eci#i%n "a!e &a$en$ ,%r %+r

9+!iciar $% acce&$ a# nal an! c%ncl+#i)e' !e$er"ina$i%n#

"a!e - ,%rei*n *%)ern"en$al a*encie#. I$ i# inni$el (%r#e

i, $hr%+*h $he a-#ence %, an c%erci)e &%(er - %+r c%+r$#

%)er 9+ri!ical &er#%n# (i$hin %+r 9+ri#!ic$i%n' $he ,%rce an!

e6ec$i)i$ %, $heir %r!er# c%+l! -e "a!e $% !e&en! %n $he

(hi" %r ca&rice %, alien en$i$ie#. I$ i# !iJc+l$ $% i"a*ine %, a

#i$+a$i%n "%re %6en#i)e $% $he !i*ni$ %, $he -ench %r $heh%n%r %, $he c%+n$r

Ye$ $ha$ (%+l! -e $he e6ec$' e)en i, +nin$en!e!' %, $he

&r%&%#i$i%n $% (hich a&&ellan$ en*+e$ C%n#%li!a$e! #ee"# $%

-e r"l c%""i$$e! a# #h%(n - i$# ,ail+re $% acce&$ $he

)ali!i$ %, $he %r!er c%"&laine! %,; i$ #eeB# i$# re)er#al

Cer$ainl (e "+#$ a$ all &ain# #ee $% i$ $ha$ i$ !%e# n%$

#+ccee!. The !e&l%ra-le c%n#e+ence# a$$en!an$ %n

a&&ellan$ &re)ailin* a$$e#$ $% $he nece##i$ %, a ne*a$i)e

re#&%n#e ,r%" +#. Tha$ i# (ha$ a&&ellan$ (ill *e$

Tha$ i# all $hen $ha$ $hi# ca#e &re#en$#. I$ i# %-)i%+# (h $he

a&&eal cann%$ #+ccee!. I$ i# al(a# ea# $% c%n9+re e5$re"e

an! e)en %&&re##i)e &%##i-ili$ie#. Tha$ i# n%$ !eci#i)e. I$ !%e#

n%$ #e$$le $he i##+e. Wha$ carrie# (ei*h$ an! c%n)ic$i%n i# $he

re#+l$ arri)e! a$' $he 9+#$ #%l+$i%n %-$aine!' *r%+n!e! in $he

#%+n!e#$ %, le*al !%c$rine# an! !i#$in*+i#he! - i$#

c%rre#&%n!ence (i$h (ha$ a #en#e %, reali#" re+ire#. F%r

$hr%+*h $he a&&eale! %r!er' $he i"&era$i)e re+ire"en$ %

9+#$ice acc%r!in* $% la( i# #a$i#e! an! na$i%nal !i*ni$ an!

h%n%r "ain$aine!

WHEREFORE' $he a&&eale! %r!er %, $he H%n%ra-le Ar#eni%

San$%#' $he /+!*e %, $he C%+r$ %, Fir#$ In#$ance' !a$e! Ma 1:

1=>0' i# aJr"e!. Wi$h c%#$# a*ain#$ %&&%#i$%r


6/103

[G.R. No. L-17295. + 3, 1962. ]

ANG "0E O"AN(, ET AL., Plaintifs-Appellants, v.

SERETAR( OF OERE AN IN0STR(, Deendant-

Appellee.

Fe+*%*'*mo E. E'%&r&), or Plaintifs-Appellants.

So+*%*or Ge)er&+, or Deendant-Appellee.

S(LLA/0S

1. PARTNERSHIP; TO ORGANIE NOT ASOL8TE RIGHT. T%

%r*ani?e a c%r&%ra$i%n %r &ar$ner#hi& $ha$ c%+l! clai" a

9+ri!ical &er#%nali$ %, i$# %(n an! $ran#ac$ -+#ine## a# #+ch'

i# n%$ a "a$$er %, a-#%l+$e ri*h$ -+$ a &ri)ile*e (hich "a -e

en9%e! %nl +n!er #+ch $er"# a# $he #$a$e "a !ee"

nece##ar $% i"&%#e.

7. ID.; ONLY FILIPINOS TO ENGAGE IN RETAIL 8SINESS; REP.

ACT 11: APPLICALE TO EISTING PARTNERSHIP. The

#$a$e $hr%+*h C%n*re## ha! $he ri*h$ $% enac$ Re&+-lic Ac$ N%.

11: &r%)i!in* $ha$ %nl Fili&in%# "a en*a*e in $he re$ail

-+#ine## an! #+ch &r%)i#i%n (a# in$en!e! $% a&&l $%

&ar$ner#hi& %(ne! - ,%rei*ner# alrea! e5i#$in* a$ $he $i"e

%, i$# enac$"en$ *i)in* $he" $he ri*h$ $% c%n$in+e en*a*in* in

$heir re$ail -+#ine## +n$il $he e5&ira$i%n %, $heir $er" %, li,e.

. ID.; AMENDMENT OF ARTICLES OF PARTNERSHIP TO ETEND

TERM AFTER ENACTMENT OF THE LAW. The a*ree"en$ in

$he ar$icle# %, &ar$ner#hi& $% e5$en! $he $er" %, i$# li,e i# n%$ a

&r%&er$ ri*h$ an! i$ "+#$ -e !ee"e! #+-9ec$ $% $he la(

e5i#$in* a$ $he $i"e (hen $he &ar$ner# ca"e $% a*ree

re*ar!in* $he e5$en#i%n. In $he ca#e a$ -ar' (hen $he &ar$ner#

a"en!e! $he ar$icle# %, &ar$ner#hi&' $he &r%)i#i%n# %,

Re&+-lic Ac$ 11: (ere alrea! in ,%rce' an! $here can -e n%$

$he #li*h$e#$ !%+-$ $ha$ $he ri*h$ clai"e! - a&&ellan$# $%

e5$en! $he %ri*inal $er" %, $heir &ar$ner#hi& $% an%$her )e

ear# (%+l! -e in )i%la$i%n %, $he clear in$en$ an! &+r&%#e %,

#ai! Ac$.

E I S I O N

I:ON,J.

Ac$i%n ,%r !eclara$%r relie, le! in $he C%+r$ %, Fir#$ In#$ance

%, Il%il% - An* P+e C%"&an' An* P+e an! Tan Si%n*

a*ain#$ $he Secre$ar %, C%""erce an! In!+#$r $% #ec+re

9+!*"en$ @!eclarin* $ha$ &lain$i6# c%+l! e5$en! ,%r )e ear#

$he $er" %, $he &ar$ner#hi& &+r#+an$ $% $he &r%)i#i%n# %

&lain$i6# A"en!"en$ $% $he Ar$icle# %, C%

&ar$ner#hi&.@crala( )ir$+a1a( li-rar

The an#(er le! - $he !e,en!an$ alle*e!' in #+-#$ance' $ha$

$he e5$en#i%n ,%r an%$her )e ear# %, $he $er" %, $he

&lain$i6# &ar$ner#hi& (%+l! -e in )i%la$i%n %, $he &r%)i#i%n# %

Re&+-lic Ac$ N%. 11:.

I$ a&&ear# $ha$ %n Ma 1' 1=3' An* P+e an! Tan Si%n*' -%$h

Chine#e ci$i?en#' %r*ani?e! $he &ar$ner#hi& An* P+e

C%"&an ,%r a $er" %, )e ear# ,r%" Ma 1' 1=3

e5$en!i-le - $heir "+$+al c%n#en$. The &+r&%#e %, $he

&ar$ner#hi& (a# @$% "ain$ain $he -+#ine## %, *enera"erchan!i#in*' -+in* an! #ellin* a$ (h%le#ale an! re$ail

&ar$ic+larl %, l+"-er' har!(are an! %$her c%n#$r+c$i%n

"a$erial# ,%r c%""erce' ei$her na$i)e %r ,%rei*n.@ The

c%rre#&%n!in* ar$icle# %, &ar$ner#hi& E5hi-i$ 4 (ere

re*i#$ere! in $he OJce %, $he Sec+ri$ie# E5chan*e

C%""i##i%n %n /+ne 1>' 1=3.

On /+ne 1=' 1=30 Re&+-lic Ac$ N%. 11: (a# enac$e! $%

re*+la$e $he re$ail -+#ine##. I$ &r%)i!e!' a"%n* %$her $hin*#

$ha$' a,$er i$# enac$"en$' a &ar$ner#hi& n%$ (h%ll ,%r"e! -

Fili&in%# c%+l! c%n$in+e $% en*a*e in $he re$ail -+#ine## +n$i

$he e5&ira$i%n %, i$# $er"chanr%-1e# )ir$+al 1a( li-rar

On A&ril 13' 1=3: &ri%r $% $he e5&ira$i%n %, $he )e


7/103

-+#ine## a# #+ch' i# n%$ a "a$$er %, a-#%l+$e ri*h$ -+$ a

&ri)ile*e (hich "a -e en9%e! %nl +n!er #+ch $er"# a# $he

S$a$e "a !ee" nece##ar $% i"&%#e. Tha$ $he S$a$e' $hr%+*h

C%n*re##' an! in $he "anner &r%)i!e! - la(' ha! $he ri*h$ $%

enac$ Re&+-lic Ac$ N%. 11: an! $% &r%)i!e $herein $ha$ %nl

Fili&in%# an! c%ncern# (h%ll %(ne! - Fili&in%# "a en*a*e

in $he re$ail -+#ine## can n%$ -e #eri%+#l !i#&+$e!. Tha$ $hi#

&r%)i#i%n (a# clearl in$en!e! $% a&&l $% &ar$ner#hialrea! e5i#$in* a$ $he $i"e %, $he enac$"en$ %, $he la( i#

clearl #h%(n - i$# &r%)i#i%n *i)in* $he" $he ri*h$ $%

c%n$in+e en*a*in* in $heir re$ail -+#ine## +n$il $he e5&ira$i%n

%, $heir $er" %, li,e.

T% ar*+e $ha$ -eca+#e $he %ri*inal ar$icle# %, &ar$ner#hi&

&r%)i!e! $ha$ $he &ar$ner# c%+l! e5$en! $he $er" %, $he

&ar$ner#hi&' $he &r%)i#i%n# %, Re&+-lic Ac$ 11: cann%$

a!)er#el a6ec$ a&&ellan$# herein' i# $% err%ne%+#l a##+"e

$ha$ $he a,%re#ai! &r%)i#i%n c%n#$i$+$e a &r%&er$ ri*h$ %,(hich $he &ar$ner# can n%$ -e !e&ri)e! (i$h%+$ !+e &r%ce##

%r (i$h%+$ $heir c%n#en$. The a*ree"en$ c%n$aine! $herein

"+#$ -e !ee"e! #+-9ec$ $% $he la( e5i#$in* a$ $he $i"e (hen

$he &ar$ner# c%"e $% a*ree re*ar!in* $he e5$en#i%n. In $he

&re#en$ ca#e' a# alrea! #$a$e!' (hen $he &ar$ner# a"en!e!

$he ar$icle# %, &ar$ner#hi&' $he &r%)i#i%n# %, Re&+-lic Ac$ 11:

(ere alrea! in ,%rce' an! $here can -e n%$ $he #li*h$e#$ !%+-$

$ha$ $he ri*h$ clai"e! - a&&ellan$# $% e5$en! $he %ri*inal

$er" %, $heir &ar$ner#hi& $% an%$her )e ear# (%+l! -e in

)i%la$i%n %, $he clear in$en$ an! &+r&%#e %, $he la( a,%re#ai!.

WHEREFORE' $he 9+!*"en$ a&&eale! ,r%" i# aJr"e!' (i$h

c%#$#.

FIRST I;ISION

[G.R. No. 12138. Seember 5, 1997.]

AN0EL A. TORRES, R.,


8/103

/+!*e T%rre#chanr%-1e# )ir$+al 1a( li-rar

ASSIGNMENT DATE PROPERLY ASSIGNED LOCATION SHARES

TO E

ISS8ED

1. /+l 1' 1=:0 TCT :1:0 +e?%n Ci$ 1'737

TCT 10070 +e?%n Ci$

7. /+l 1' 1=:0 TCT 22: Manila

TCT >3>:= Manila 2:'0=

TCT 1=7 Manila

. /+l 1' 1=:0 TCT 202= MaBa$i :'2

0. /+l 70' 1=:0 TCT 01372 Pa#a

TCT 0137: Pa#a =':33

TCT 0137= Pa#a

3. A+*. >' 1=:0 El H%*ar Fil i&in% S$%cB# 7'

>. A+*. >' 1=:0 Manila /%cBe Cl+- S$%cB# 0:'22

2. A+*. 2' 1=:0 San Mi*+el C%r&. S$%cB# 3'7:

:. A+*. 2' 1=:0 China anBin* C%r&. S$%cB# >'

=. A+*. 7' 1=:0 Aala C%r&. S$%cB# 2'0>:

1. A+*. 7=' 1=:0 Aala F+n! S$%cB# 1'77

773'=27 7

C%n#e+en$l' $he a,%reli#$e! &r%&er$ie# (ere !+l rec%r!e! in

$he in)en$%r %, a##e$# %, T%r"il Real$ an! $he re)en+e#

*enera$e! - $he #ai! &r%&er$ie# (ere c%rre#&%n!in*l

en$ere! in $he c%r&%ra$i%n# -%%B# %, acc%+n$ an! nancial

rec%r!#.

LiBe(i#e' all $he a##i*ne! &arcel# %, lan! (ere !+l re*i#$ere!

(i$h $he re#&ec$i)e Re*i#$er %, Dee!# in $he na"e %, T%r"i

Real$' e5ce&$ ,%r $he %ne# l%ca$e! in MaBa$i an! Pa#a Ci$

A$ $he $i"e %, $he a##i*n"en$# an! e5chan*e' h%(e)er' %nl

773' T%r"il Real$ #hare# re"aine! +n#+-#cri-e!' all %,

(hich (ere !+l i##+e! $% an! recei)e! - /+!*e T%rre# a#e)i!ence! - #$%cB cer$ica$e# n%#. 12' 1:' 1=' 7' 71' 77' 7

70 734.

D+e $% $he in#+Jcien$ n+"-er %, #hare# %, #$%cB i##+e! $%

/+!*e T%rre# an! $he alle*e! re,+#al %, &ri)a$e re#&%n!en$# $%

a&&r%)e $he nee!e! increa#e in $he c%r&%ra$i%n# a+$h%ri?e!

ca&i$al #$%cB $% c%)er $he #h%r$a*e %, =27 #hare# !+e $%

/+!*e T%rre# +n!er $he @e#$a$e &lannin*@ #che"e4' %n 11

Se&$e"-er 1=:>' /+!*e T%rre# re)%Be! $he $(% 74 !ee!# %,

a##i*n"en$ c%)erin* $he &r%&er$ie# in MaBa$i an! Pa#a Ci$0

N%$in* $he !i#a&&earance %, $he MaBa$i an! Pa#a Ci$

&r%&er$ie# ,r%" $he c%r&%ra$i%n# in)en$%r %, a##e$# an!

nancial rec%r!# &ri)a$e re#&%n!en$#' %n 1 March 1=:2' (ere

c%n#$raine! $% le a c%"&lain$ (i$h $he Sec+ri$ie# an!

E5chan*e C%""i##i%n SEC4 !%cBe$e! a# SEC Ca#e N%. 13

$% c%"&el /+!*e T%rre# $% !eli)er $% T%r"il c%r&%ra$i%n $he $(%

74 !ee!# %, a##i*n"en$ c%)erin* $he a,%re"en$i%ne! MaBa$

an! Pa#a Ci$ &r%&er$ie# (hich he ha! +nila$erall re)%Be!

an! $% ca+#e $he re*i#$ra$i%n %, $he c%rre#&%n!in* $i$le# in $he

na"e %, T%r"il. Pri)a$e re#&%n!en$# alle*e! $ha$ ,%ll%(in* $he

!i#a&&earance %, $he &r%&er$ie# ,r%" $he c%r&%ra$i%n#

in)en$%r %, a##e$#' $he ,%+n! $ha$ %n Oc$%-er 70' 1=:>

/+!*e T%rre#' $%*e$her (i$h E!*ar!% Pa-alan an! Gracian%

T%-ia#' $hen General Mana*er an! le*al c%+n#el' re#&ec$i)el

%, T%r"il' ,%r"e! an! %r*ani?e! a c%r&%ra$i%n na"e! @T%rre# an! a$ $he

-acB %, each cer$ica$e $he ,%ll%(in* in#cri&$i%n i#

,%+n!chanr%-1e# )ir$+al 1a( li-rar

The &re#en$ cer$ica$e an!Q%r $he %ne #hare i$ re&re#en$#'

c%n,%r"a-l $% $he &+r&%#e an! in$en$i%n %, $he Dee! %,

A##i*n"en$ !a$e! March >' 1=:2' i# n%$ hel! - "e +n!er an

clai" %, %(ner#hi& an! I acBn%(le!*e $ha$ I h%l! $he #a"e"erel a# $r+#$ee %, /+!*e Man+el A. T%rre#' /r. an! ,%r $he

#%le &+r&%#e %, +ali,in* "e a# Direc$%r;

Si*na$+re %, A##i*nee4 3

The rea#%n -ehin! $he a,%re#$a$e! ac$i%n (a# $% re"e! $he

@ine+i$a-le l%i!e! #e$

On 73 March 1=:2' $he ann+al #$%cBh%l!er# "ee$in* (a# hel!

a# #che!+le!. Wha$ $ran#&ire! $herein (a# a-l narra$e! -

A$$#. eni$% Ca$aran an! aani De l%# Ree#' $he %Jcial

re&re#en$a$i)e# !i#&a$che! - $he SEC $% %-#er)e $he

&r%cee!in*# +&%n re+e#$ %, $he la$e /+!*e T%rre#4 in $heir

re&%r$ !a$e! 72 March 1=:2chanr%-1e# )ir$+al 1a( li-rar

x x x

The +n!er#i*ne! arri)e! a$ 133 &.". in $he &lace %, $he

"ee$in*' a re#i!en$ial -+n*al%( in 8r!ane$a illa*e' MaBa$i'

Me$r% Manila. 8&%n arri)al' /%#ena T%rre# in$r%!+ce! +# $% $he

#$%cBh%l!er# na"el Mila*r%# T%rre#' An$%ni% T%rre#' /r.' Ma.

L+i#a M%rale#' Ma. Cri#$ina Carl%# an! Ma. /acin$a T%rre#.

An$%ni% T%rre#' /r. +e#$i%ne! %+r a+$h%ri$ an! &er#%nali$ $%

a&&ear in $he "ee$in* clai"in* #+-9ec$ c%r&%ra$i%n i# a ,a"il

an! &ri)a$e r". We e5&laine! $ha$ %+r a&&earance $here (a#

"erel in re#&%n#e $% $he re+e#$ %, Man+el T%rre#' /r. an!

$ha$ SEC ha# 9+ri#!ic$i%n %)er all re*i#$ere! c%r&%ra$i%n#

Man+el T%rre#' /r.' a #e&$+a*enarian' ar*+e! $ha$ a# h%l!er %,

$he "a9%r an! c%n$r%llin* #hare#' he a&&r%)e! %, %+

a$$en!ance in $he "ee$in*

A$ a-%+$ 7 &.".' a *r%+& c%"&%#e! %, E!*ar!% Pa-alan

A$$. Gracian% T%-ia#' A$$. R%!%l,% /%c#%n' /r.' A$$. Mel)in

/+ri#&r+!encia' an! A$$. A+*+#$+# Ce#ar A?+ra arri)e!. A$$

A?+ra $%l! $he -%! $ha$ $he ca"e a# c%+n#el# %, Man+e

T%rre#' /r. an! a# #$%cBh%l!er# ha)in* a##i*ne! +ali,in*

#hare# - Man+el T%rre#. /r

The #$%cBh%l!er# "ee$in* #$ar$e! a$ 703 &.". (i$h Mr

Pa-alan &re#i!in* a,$er )er-all a+$h%ri?e! - Man+el T%rre#

/r.' $he Pre#i!en$ an! Chair"an %, $he %ar!. The #ecre$ar(hen a#Be! a-%+$ $he +%r+"' #ai! $ha$ $here (a# "%re $han

a +%r+". Mr. Pa-alan !i#$ri-+$e! c%&ie# %, $he &re#i!en$#

re&%r$ an! $he nancial #$a$e"en$#. An$%ni% T%rre#' /r

re+e#$e! $i"e $% #$+! $he #ai! re&%r$# an! -r%+*h$ %+$ $he

+e#$i%n %, a+!i$in* $he nance# %, $he c%r&%ra$i%n (hich he

clai"e! (a# a&&r%)e! &re)i%+#l - $he -%ar!. Hea$e!

ar*+"en$# en#+e! (hich al#% $%+che! %n ,a"il "a$$er#

An$%ni% T%rre#' /r. "%)e! ,%r $he #+#&en#i%n %, $he "ee$in*

-+$ Man+el T%rre#' /r. )%$e! ,%r $he c%n$in+a$i%n %, $he

&r%cee!in*#.

Mr. Pa-alan #+**e#$e! $ha$ $he %&ini%n %, $he SEC

re&re#en$a$i)e# -e a#Be! %n $he &r%&rie$ %, #+#&en!in* $he

"ee$in* -+$ An$%ni% T%rre#' /r. %-9ec$e! rea#%nin* %+$ $ha$ (e

(ere 9+#$ %-#er)er#

When $he Chair"an calle! ,%r $he elec$i%n %, !irec$%r#' $he

Secre$ar re,+#e! $% (ri$e !%(n $he na"e# %, n%"inee#

&r%"&$in* A$$. A?+ra $% ini$ia$e $he a&&%in$"en$ %, A$$

/%c#%n' /r. a# Ac$in* Secre$ar

An$%ni% T%rre#' /r. n%"ina$e! $he &re#en$ "e"-er# %, $he

%ar!. A$ $hi# 9+nc$+re' Mila*r%# T%rre# crie! %+$ an! $%l! $he

*r%+& %, Man+el T%rre#' /r. $% lea)e $he h%+#e

Man+el T%rre#' /r.' $%*e$her (i$h hi# la(er#


10/103

#$%cB an! #$ill c%n#$i$+$e! a +%r+".

A$ $he re#+"&$i%n %, $he "ee$in*' $he ,%ll%(in* (ere

n%"ina$e! an! elec$e! a# !irec$%r# ,%r $he ear 1=:2. Mel)in /+ri#&r+!encia

2. A+*+#$+# Ce#ar A?+ra

:. /%#ena T%rre#

=. Dan$e M%rale#

A,$er $he elec$i%n' i$ (a# re#%l)e! $ha$ a,$er $he "ee$in*' $he

ne( -%ar! %, !irec$%r# #hall c%n)ene ,%r $he elec$i%n %,

%Jcer#.

5 5 5 2

C%n#e+en$l' %n 1 A&ril 1=:2' &ri)a$e re#&%n!en$#

in#$i$+$e! a c%"&lain$ (i$h $he SEC SEC Ca#e N%. 1>14

&rain* in $he "ain' $ha$ $he elec$i%n %, &e$i$i%ner# $% $he

%ar! %, Direc$%r# -e ann+lle!.

Pri)a$e re#&%n!en$# alle*e! $ha$ $he &e$i$i%ner#


11/103

Will an! Te#$a"en$ %, Man+el A. T%rre#' /r.@4 (a# &en!in*. T(%

#i"ilar "%$i%n# ,%r #+#&en#i%n (ere le! - &e$i$i%ner# %n 7:

/+ne 1== an! = /+l 1==.

On 1= /+l 1==' $he SEC en -anc i##+e! an Or!er !enin*

&e$i$i%ner# a,%reci$e! "%$i%n# %n $he ,%ll%(in*

*r%+n!9*cchanr%-le#.c%".&h

@e,%re $he lin* %, $he#e "%$i%n#' $he C%""i##i%n en -anc

ha! alrea! c%"&le$e! all &r%cee!in*# an! ha! liBe(i#e r+le!

%n $he "eri$# %, $he a&&eale! ca#e#. ie(e! in $hi# li*h$' (e

$h+# ,eel $ha$ $here i# n%$hin* le,$ $% -e !%ne e5ce&$ $% !en

$he#e "%$i%n# $% #+#&en! &r%cee!in*#.@ 1

On $he #a"e !a$e' $he SEC en -anc ren!ere! a !eci#i%n' $he

!i#&%#i$i)e &%r$i%n %, (hich rea!#. $h+#chanr%-1e# )ir$+al

1a( li-rar

WHEREFORE' &re"i#e# c%n#i!ere!' $he a&&eale! !eci#i%n %,

$he hearin* &anel i# here- aJr"e! an! all "%$i%n# &en!in*

-e,%re +# inci!en$ $% $hi# a&&eale! ca#e are nece##aril

DISMISSED.

SO ORDERED. 11

8n!a+n$e!' %n 1 A+*+#$ 1==' &e$i$i%ner# &r%cee!e! $%

&lea! i$# ca+#e $% $he C%+r$ %, A&&eal# - (a %, a &e$i$i%n ,%r

re)ie( !%cBe$e! a# CA


12/103

Pe$i$i%ner# in#i#$ $ha$ $he ,ail+re $% $ran#"i$ $he %ri*inal

rec%r!# $% $he C%+r$ %, A&&eal# !e&ri)e! $he" %, &r%ce!+ral

!+e &r%ce##. Wi$h%+$ $he e)i!ence an! $he %ri*inal rec%r!# %,

$he &r%cee!in*# -e,%re $he SEC' $he C%+r$ %, A&&eal#'

&e$i$i%ner# a!a"an$l #$a$e' c%+l! n%$ ha)e &%##i-l "a!e a

&r%&er a&&recia$i%n an! c%rrec$ !e$er"ina$i%n %, $he i##+e#'

&ar$ic+larl $he ,ac$+al i##+e#' $he ha! rai#e! %n a&&eal.

Pe$i$i%ner# al#% a##er$ $ha$ #ince $he C%+r$ %, A&&eal#alle*e!l *a)e !+e c%+r#e $% $heir &e$i$i%n' $he %ri*inal

rec%r!# #h%+l! ha)e -een ,%r(ar!e! $% #ai! c%+r$.

Pe$i$i%ner# anch%r $heir ar*+"en$ %n Sec#. : an! 11 %, SC

Circ+lar 1


13/103

(%+l! (arran$ re)er#al %r "%!ica$i%n %, $he a(ar!'

9+!*"en$' nal %r!er %r re#%l+$i%n #%+*h$ $% -e re)ie(e!' i$

"a *i)e !+e c%+r#e $% $he &e$i$i%n; %$her(i#e' i$ #hall !i#"i##

$he #a"e. The n!in*# %, ,ac$ %, $he c%+r$ %r a*enc

c%ncerne!' (hen #+&&%r$e! - #+-#$an$ial e)i!ence' #hall -e

-in!in* %n $he C%+r$ %, A&&eal#.

11. Tran#"i$$al %, rec%r!. Wi$hin ,$een 134 !a# ,r%"n%$ice $ha$ $he &e$i$i%n ha# -een *i)en !+e c%+r#e' $he C%+r$

%, A&&eal# "a re+ire $he c%+r$ %r a*enc c%ncerne! $%

$ran#"i$ $he %ri*inal %r a le*i-le cer$ie! $r+e c%& %, $he

en$ire rec%r! %, $he &r%cee!in* +n!er re)ie(. The rec%r! $% -e

$ran#"i$$e! "a -e a-ri!*e! - a*ree"en$ %, all &ar$ie# $%

$he &r%cee!in*. The C%+r$ %, A&&eal# "a re+ire %r &er"i$

#+-#e+en$ c%rrec$i%n %, %r a!!i$i%n $% $he rec%r!.

8n!er#c%rin* %+r#.4

The a,%reci$e! circ+lar n%( ,%r"ali?e# $he c%rrec$ &rac$ice an!clearl #$a$e# $ha$ in re#%l)in* a&&eal# ,r%" +a#i 9+!icial

a*encie#' i$ i# (i$hin $he !i#cre$i%n %, $he C%+r$ %, A&&eal# $%

ha)e $he %ri*inal rec%r!# %, $he &r%cee!in*# +n!er re)ie( -e

$ran#"i$$e! $% i$. In $hi# c%nnec$i%n' &e$i$i%ner# clai" $ha$ $he

C%+r$ %, A&&eal# c%+l! n%$ ha)e !eci!e! $he ca#e %n $he

"eri$# (i$h%+$ $he rec%r!# -ein* -r%+*h$ -e,%re i$ i# &a$en$l

la"e. In!+-i$a-l' $he C%+r$ %, A&&eal# !eci!e! $he ca#e %n

$he -a#i# %, $he +nc%n$r%)er$e! ,ac$# an! a!"i##i%n#

c%n$aine! in $he &lea!in*#' $ha$ i#' $he &e$i$i%n' c%""en$'

re&l' re9%in!er' "e"%ran!a' e$c. le! - $he &ar$ie#.

II

Pe$i$i%ner# c%n$en! $ha$ $he !eci#i%n# %, $he SEC an! $he

C%+r$ %, A&&eal# are n+ll an! )%i! ,%r -ein* ren!ere! (i$h%+$

$he nece##ar #+-#$i$+$i%n %, &ar$ie# ,%r $he !ecea#e!

&e$i$i%ner Man+el A. T%rre#' /r.4 a# "an!a$e! - Sec. 12' R+le

%, $he Re)i#e! R+le# %, C%+r$' (hich &r%)i!e# a#

,%ll%(#chanr%-1e# )ir$+al 1a( li-rar

SEC. 12. Dea$h %, &ar$. A,$er a &ar$ !ie# an! $he clai" i#

n%$ $here- e5$in*+i#he!' $he c%+r$ #hall %r!er' +&%n &r%&er

n%$ice' $he le*al re&re#en$a$i)e %, $he !ecea#e! $% a&&ear an!

$% -e #+-#$i$+$e! ,%r $he !ecea#e!' (i$hin a &eri%! %, $hir$

4 !a#' %r (i$hin #+ch $i"e a# "a -e *ran$e!. I, $he le*al

re&re#en$a$i)e ,ail# $% a&&ear (i$hin #ai! $i"e' $he c%+r$ "a

%r!er $he %&&%#in* &ar$ $% &r%c+re $he a&&%in$"en$ %, a

le*al re&re#en$a$i)e %, $he !ecea#e! (i$hin a $i"e $% -e

#&ecie! - $he c%+r$' an! $he re&re#en$a$i)e #hall

i""e!ia$el a&&ear ,%r an! %n -ehal, %, $he in$ere#$ %, $he

!ecea#e!. The c%+r$ char*e# in)%l)e! in &r%c+rin* #+ch

a&&%in$"en$' i, !e,rae! - $he %&&%#in* &ar$' "a -e

rec%)ere! a# c%#$#. The heir# %, $he !ecea#e! "a -e all%(e!

$% -e #+-#$i$+$e! ,%r $he !ecea#e!' (i$h%+$ re+irin* $he

a&&%in$"en$ %, an e5ec+$%r %r a!"ini#$ra$%r an! $he c%+r$

"a a&&%in$ *+ar!ian a! li$e" ,%r $he "in%r heir#

Pe$i$i%ner# in#i#$ $ha$ $he SEC en -anc #h%+l! ha)e *ran$e!

$he "%$i%n# $% #+#&en! $he le! -a#e! a# $he (ere %n $he

*r%+n! $ha$ $he Re*i%nal Trial C%+r$ %, MaBa$i' (here $he

&r%-a$e %, $he la$e /+!*e T%rre# (ill (a# &en!in*' ha! e$ $%

a&&%in$ an a!"ini#$ra$%r %r le*al re&re#en$a$i)e %, hi# e#$a$e

We are n%$ +na(are %, $he &rinci&le +n!erlin* $he

a,%re+%$e! &r%)i#i%nchanr%-1e# )ir$+al 1a( li-rar

I$ ha# -een hel! $ha$ (hen a &ar$ !ie# in an ac$i%n $ha$#+r)i)e#' an! n% %r!er i# i##+e! - $he C%+r$ ,%r $he

a&&earance %, $he le*al re&re#en$a$i)e %r %, $he heir# %, $he

!ecea#e! $% -e #+-#$i$+$e! ,%r $he !ecea#e!' an! a# a "a$$er

%, ,ac$ n% #+ch #+-#$i$+$i%n ha# e)er -een e6ec$e!' $he $ria

hel! - $he c%+r$ (i$h%+$ #+ch le*al re&re#en$a$i)e %r heir#

an! $he 9+!*"en$ ren!ere! a,$er #+ch $rial' are n+ll an! )%i!

-eca+#e $he c%+r$ ac+ire! n% 9+ri#!ic$i%n %)er $he &er#%n# %,

$he le*al re&re#en$a$i)e %r %, $he heir# +&%n (h%" $he $ria

an! $he 9+!*"en$ are n%$ -in!in*. 1>

A# earl a# : A&ril 1=::' /+!*e T%rre# in#$i$+$e! S&ecia

Pr%cee!in*# N%. M: -e,%re $he Re*i%nal Trial C%+r$ %,

MaBa$i ,%r $he an$e. Te#$i,in* in $he

#ai! &r%cee!in*#' /+!*e T%rre# c%nr"e! hi# a&&%in$"en$ %,

&e$i$i%ner E!*ar!% D. Pa-alan a# $he #%le e5ec+$%r %, hi# (il

an! a!"ini#$ra$%r %, hi# e#$a$e. The &r%cee!in*#' h%(e)er

(ere %&&%#e! - $he #a"e &ar$ie#' herein &ri)a$e

re#&%n!en$# An$%ni% P. T%rre#' /r.' Ma. L+i#a T. M%rale# an! Ma

Cri#$ina T. Carl%#' 12 (h% are ne&he( an! niece# %, /+!*e

T%rre#' -ein* $he chil!ren %, hi# la$e -r%$her An$%ni% A. T%rre#

I$ can rea!il -e %-#er)e! $here,%re $ha$ $he &ar$ie# in)%l)e!

in $he &re#en$ c%n$r%)er# are )ir$+all $he #a"e &ar$ie#

*h$in* %)er $he re&re#en$a$i%n %, $he la$e /+!*e T%rre#

e#$a$e. I$ #h%+l! -e recalle! $ha$ $he &+r&%#e -ehin! $he r+le

%n #+-#$i$+$i%n %, &ar$ie# i# $he &r%$ec$i%n %, $he ri*h$ %, e)er

&ar$ $% !+e &r%ce##. I$ i# $% en#+re $ha$ $he !ecea#e! &ar$

(%+l! c%n$in+e $% -e &r%&erl re&re#en$e! in $he #+i$ $hr%+*h

$he !+l a&&%in$e! le*al re&re#en$a$i)e %, hi# e#$a$e. In $he


14/103

&re#en$ ca#e' $hi# &+r&%#e ha# -een #+-#$an$iall ,+llle!

!e#&i$e $he lacB %, ,%r"al #+-#$i$+$i%n4 in )ie( %, $he &ec+liar

,ac$ $ha$ -%$h &r%cee!in*# in)%l)e &rac$icall $he #a"e

&ar$ie#. %$h &ar$ie# ha)e -een ercel *h$in* in $he &r%-a$e

&r%cee!in*# %, /+!*e T%rre# h%l%*ra&hic (ill ,%r a&&%in$"en$

a# le*al re&re#en$a$i)e %, hi# e#$a$e. Since -%$h &ar$ie# clai"

in$ere#$# %)er $he e#$a$e' $he ri*h$# %, $he e#$a$e (ere

e5&ec$e! $% -e ,+ll &r%$ec$e! in $he &r%cee!in*# -e,%re $heSEC en -anc an! $he C%+r$ %, A&&eal#. In ei$her ca#e' (h%e)er

#hall -e a&&%in$e! le*al re&re#en$a$i)e %, /+!*e T%rre# e#$a$e

&e$i$i%ner Pa-alan %r &ri)a$e re#&%n!en$#4 (%+l! n% l%n*er

-e a #$ran*er $% $he &re#en$ ca#e' $he #ai! &ar$ie# ha)in*

)%l+n$aril #+-"i$$e! $% $he 9+ri#!ic$i%n %, $he SEC an! $he

C%+r$ %, A&&eal# an! ha)in* $h%r%+*hl &ar$ici&a$e! in $he

&r%cee!in*#.

The ,%re*%in* ra$i%nale n!# #+&&%r$ in $he recen$ ca#e %,

!a. !e Sala?ar ). CA' 1: (herein $he C%+r$ e5&%+n!e!$h+#chanr%-1e# )ir$+al 1a( li-rar

The nee! ,%r #+-#$i$+$i%n %, heir# i# -a#e! %n $he ri*h$ $% !+e

&r%ce## accr+in* $% e)er &ar$ in an &r%cee!in*. The

ra$i%nale +n!erlin* $hi# re+ire"en$ in ca#e a &ar$ !ie#

!+rin* $he &en!enc %, &r%cee!in*# %, a na$+re n%$

e5$in*+i#he! - #+ch !ea$h' i# $ha$ . . . $he e5erci#e %, 9+!icial

&%(er $% hear an! !e$er"ine a ca+#e i"&lici$l &re#+&&%#e#

in $he $rial c%+r$' a"%n*#$ %$her e##en$ial#' 9+ri#!ic$i%n %)er

$he &er#%n# %, $he &ar$ie#. Tha$ 9+ri#!ic$i%n (a# ine)i$a-l

i"&aire! +&%n $he !ea$h %, $he &r%$e#$ee &en!in* $he

&r%cee!in*# -el%( #+ch $ha$ +nle## an! +n$il a le*al

re&re#en$a$i)e i# ,%r hi" !+l na"e! an! (i$hin $he

9+ri#!ic$i%n %, $he $rial c%+r$' n% a!9+!ica$i%n in $he ca+#e

c%+l! ha)e -een acc%r!e! an )ali!i$ %r -in!in* e6ec$ +&%n

an &ar$' in re&re#en$a$i%n %, $he !ecea#e!' (i$h%+$

$renchin* +&%n $he ,+n!a"en$al ri*h$ $% a !a in c%+r$ (hich

i# $he )er e##ence %, $he c%n#$i$+$i%nall en#hrine!

*+aran$ee %, !+e &r%ce##.

We are n%$ +na(are %, #e)eral ca#e# (here (e ha)e r+le!

$ha$ a &ar$ ha)in* !ie! in an ac$i%n $ha$ #+r)i)e#' $he $rial

hel! - $he c%+r$ (i$h%+$ a&&earance %, $he !ecea#e!# le*al

re&re#en$a$i)e %r #+-#$i$+$i%n %, heir# an! $he 9+!*"en$

ren!ere! a,$er #+ch $rial' are n+ll an! )%i! -eca+#e $he c%+r$

ac+ire! n% 9+ri#!ic$i%n %)er $he &er#%n# %, $he le*al

re&re#en$a$i)e# %r %, $he heir# +&%n (h%" $he $rial an! $he

9+!*"en$ (%+l! -e -in!in*. Thi# *eneral r+le n%$(i$h#$an!in*'

in !enin* &e$i$i%ner# "%$i%n ,%r rec%n#i!era$i%n' $he C%+r$

%, A&&eal# c%rrec$l r+le! $ha$ ,%r"al #+-#$i$+$i%n %, heir# i#

n%$ nece##ar (hen $he heir# $he"#el)e# )%l+n$aril

a&&eare!' &ar$ici&a$e! in $he ca#e an! &re#en$e! e)i!ence in

!e,en#e %, !ecea#e! !e,en!an$. A$$en!in* $he ca#e a$ -ench

a,$er all' are $he#e &ar$ic+lar circ+"#$ance# (hich ne*a$e

&e$i$i%ner# -ela$e! an! #ee"in*l %#$en#i-le clai" %

)i%la$i%n %, her ri*h$# $% !+e &r%ce##. We #h%+l! n%$ l%#e #i*h$

%, $he &rinci&le +n!erlin* $he *eneral r+le $ha$ ,%r"a

#+-#$i$+$i%n %, heir# "+#$ -e e6ec$+a$e! ,%r $he" $% -e -%+n!- a #+-#e+en$ 9+!*"en$. S+ch ha! -een $he *eneral r+le

e#$a-li#he! n%$ -eca+#e $he r+le %n #+-#$i$+$i%n %, heir# an!

$ha$ %n a&&%in$"en$ %, a le*al re&re#en$a$i)e are

9+ri#!ic$i%nal re+ire"en$# &er #e -+$ -eca+#e n%n

c%"&liance $here(i$h re#+l$# in $he +n!enia-le )i%la$i%n %, $he

ri*h$ $% !+e &r%ce## %, $h%#e (h%' $h%+*h n%$ !+l n%$ie! %,

$he &r%cee!in*#' are #+-#$an$iall a6ec$e! - $he !eci#i%n

ren!ere! $herein. .

I$ i# a&&r%&ria$e $% "en$i%n here $ha$ (hen /+!*e T%rre# !ie!%n A&ril ' 1==1' $he SEC en -anc ha! alrea! ,+ll hear! $he

&ar$ie# an! (ha$ re"aine! (a# $he e)al+a$i%n %, $he e)i!ence

an! ren!i$i%n %, $he 9+!*"en$

F+r$her' &e$i$i%ner# le! $heir "%$i%n# $% #+#&en! &r%cee!in*#

%nl a,$er "%re $han $(% 74 ear# ,r%" $he !ea$h %, /+!*e

T%rre#. Pe$i$i%ner# c%+n#el (a# e)en re"i## in hi# !+$ +n!e

Sec. 1>' R+le %, $he Re)i#e! R+le# %, C%+r$. 1= In#$ea!' i$

(a# &ri)a$e re#&%n!en$# (h% in,%r"e! $he SEC %, /+!*e

T%rre# !ea$h $hr%+*h a "ani,e#$a$i%n !a$e! 70 A&ril 1==1

F%r $he SEC en -anc $% ha)e #+#&en!e! $he &r%cee!in*# $%

a(ai$ $he a&&%in$"en$ %, $he le*al re&re#en$a$i)e - $he

e#$a$e (a# i"&rac$ical an! (%+l! ha)e ca+#e! +n!+e !ela in

$he &r%cee!in*# an! a !enial %, 9+#$ice. There i# n% $ellin*

(hen $he &r%-a$e c%+r$ (ill !eci!e $he i##+e' (hich "a #$il

-e a&&eale! $% $he hi*her c%+r$#

In an ca#e' $here ha# -een n% nal !i#&%#i$i%n %, $he

&r%&er$ie# %, $he la$e /+!*e T%rre# -e,%re $he SEC. On $he

c%n$rar' $he !eci#i%n %, $he SEC en -anc a# aJr"e! - $he

C%+r$ %, A&&eal# #er)e! $% &r%$ec$ an! &re#er)e hi# e#$a$e

C%n#e+en$l' $he r+le $ha$ (hen a &ar$ !ie#' he #h%+l! -e

#+-#$i$+$e! - hi# le*al re&re#en$a$i)e $% &r%$ec$ $he in$ere#$#

%, hi# e#$a$e in %-#er)ance %, !+e &r%ce## (a# n%$ )i%la$e! in

$hi# ca#e in )ie( %, i$# &ec+liar #i$+a$i%n (here $he e#$a$e (a#

,+ll &r%$ec$e! - $he &re#ence %, $he &ar$ie# (h% clai"

in$ere#$# $herein ei$her a# !irec$%r#' #$%cBh%l!er# %r heir#

Finall' (e a*ree (i$h &e$i$i%ner# c%n$en$i%n $ha$ $he &rinci&le


15/103

%, ne*%$i%r+" *e#$i% 7 !%e# n%$ a&&l in $he &re#en$ ca#e.

Sai! &rinci&le e5&lici$l c%)er# a-an!%ne! %r ne*lec$e!

&r%&er$ %r -+#ine##.

III

Pe$i$i%ner# n! le*al -a#i# ,%r /+!*e T%rre# ac$ %, re)%Bin* $hea##i*n"en$ %, hi# &r%&er$ie# in MaBa$i an! Pa#a Ci$ $% T%r"il

c%r&%ra$i%n - relin* %n Ar$. 11=1 %, $he Ci)il C%!e (hich

&r%)i!e# $ha$chanr%-1e# )ir$+al 1a( li-rar

ART. 11=1. The &%(er $% re#cin! %-li*a$i%n# i# i"&lie! in

reci&r%cal %ne#' in ca#e %ne %, $he %-li*%r# #h%+l! n%$ c%"&l

(i$h (ha$ i# inc+"-en$ +&%n hi".

The in9+re! &ar$ "a ch%%#e -e$(een $he ,+lll"en$ an! $he

re#ci##i%n %, $he %-li*a$i%n' (i$h $he &a"en$ %, !a"a*e# in

ei$her ca#e. He "a al#% #eeB re#ci##i%n' e)en a,$er he ha#

ch%#en ,+lll"en$' i, $he la$$er #h%+l! -ec%"e i"&%##i-le.

The c%+r$ #hall !ecree $he re#ci##i%n clai"e!' +nle## $here -e

9+#$ ca+#e a+$h%ri?in* $he 5in* %, a &eri%!.

Thi# i# +n!er#$%%! $% -e (i$h%+$ &re9+!ice $% $he ri*h$# %, $hir!

&er#%n# (h% ha)e ac+ire! $he $hin*' in acc%r!ance (i$h

ar$icle# 1:3 an! 1:: an! $he M%r$*a*e La(.

Pe$i$i%ner# c%n$en$i%n# cann%$ -e #+#$aine!. We #ee n%

9+#$ia-le rea#%n $% !i#$+r- $he n!in*# %, SEC' a# aJr"e! -

$he C%+r$ %, A&&eal#chanr%-1e# )ir$+al 1a( li-rar

We #+#$ain $he r+lin* %, re#&%n!en$ SEC in $he !eci#i%n

a&&eale! ,r%" R%ll%' &&. 034 $ha$

. . . $he #h%r$a*e %, =27 #hare# (%+l! n%$ -e )ali! *r%+n! ,%r

re#&%n!en$ T%rre# $% +nila$erall re)%Be $he !ee!# %,

a##i*n"en$ he ha! e5ec+$e! %n /+l 1' 1=:0 an! /+l 70'

1=:0 (herein he )%l+n$aril a##i*ne! $% TORMIL real

&r%&er$ie# c%)ere! - TCT N%. 202= MaBa$i4 an! TCT N%.

01372' 0137: an! 0137= Pa#a4 re#&ec$i)el.

A c%"&ari#%n %, $he n+"-er %, #hare# $ha$ re#&%n!en$ T%rre#

recei)e! ,r%" TORMIL - )ir$+e %, $he @!ee!# %, a##i*n"en$@

an! $he #$%cB cer$ica$e# i##+e! - $he la$$er $% $he ,%r"er

rea!il #h%(# $ha$ TORMIL ha! #+-#$an$iall &er,%r"e! (ha$

(a# e5&ec$e! %, i$. In ,ac$' $he r#$ $(% i##+ance# (ere in

#a$i#,ac$i%n $% $he &r%&er$ie# -ein* re)%Be! - re#&%n!en$

T%rre#. Hence' $he #h%r$a*e %, =27 #hare# (%+l! ne)er -e a

)ali! *r%+n! ,%r $he re)%ca$i%n %, $he !ee!# c%)erin* Pa#a

an! +e?%n Ci$ &r%&er$ie#

In 8ni)er#al F%%! C%r&. ). CA' $he S+&re"e C%+r

hel!chanr%-1e# )ir$+al 1a( li-rar

The *eneral r+le i# $ha$ re#ci##i%n %, a c%n$rac$ (ill n%$ -e&er"i$$e! ,%r a #li*h$ %r carnal -reach' -+$ %nl ,%r #+ch

#+-#$an$ial an! ,+n!a"en$al -reach a# (%+l! !e,ea$ $he )er

%-9ec$ %, $he &ar$ie# in "aBin* $he a*ree"en$

The #h%r$a*e %, =27 #hare# !eni$el i# n%$ #+-#$an$ial an!

,+n!a"en$al -reach a# (%+l! !e,ea$ $he )er %-9ec$ %, $he

&ar$ie# in en$erin* in$% c%n$rac$. Ar$. 133 %, $he Ci)il C%!e

al#% &r%)i!e# @E5ce&$ in ca#e# #&ecie! - la(' le#i%n %

ina!e+ac %, ca+#e #hall n%$ in)ali!a$e a c%n$rac$' +nle##

$here ha# -een ,ra+!' "i#$aBe %r +n!+e in+ence#.@ There-ein* n% ,ra+!' "i#$aBe %r +n!+e in+ence e5er$e! %n

re#&%n!en$ T%rre# - TORMIL an! $he la$$er ha)in* alrea!

i##+e! $% $he ,%r"er %, i$# 773' +ni##+e! #hare#' $he "%#$

l%*ical c%+r#e %, ac$i%n i# $% !eclare a# n+ll an! )%i! $he !ee!

%, re)%ca$i%n e5ec+$e! - re#&%n!en$ T%rre#. R%ll%' &&. 03.4 71

The a,%re+%$e! Ci)il C%!e &r%)i#i%n !%e# n%$ a&&l in $hi#

&ar$ic+lar #i$+a$i%n ,%r $he %-)i%+# rea#%n $ha$ a #&ecic

n+"-er %, #hare# %, #$%cB a# e)i!ence! - #$%cB cer$ica$e#4

ha! alrea! -een i##+e! $% $he la$e /+!*e T%rre# in e5chan*e

,%r hi# MaBa$i an! Pa#a Ci$ &r%&er$ie#. The rec%r!# $h+#

!i#cl%#echanr%-1e# )ir$+al 1a( li-rar

DATE OF PROPERTY LOCATION NO. OF SHARES ORDER OF

ASSIGNMENT ASSIGNED TO E ISS8ED COMPLIANCE

1. /+l 1' 1=:0 TCT :1:0 +e?%n Ci$ 1'737 r!

TCT 10070 +e?%n Ci$

7. /+l 1' 1=:0 TCT 22: Manila

TCT >3>:= Manila 2:'0= 7n!

TCT 177 Manila

. /+l 1' 1=:0 TCT 202= MaBa$i :'2 1#


16/103

0. /+l 70' 1=:0 TCT 01372 Pa#a

TCT 0137: Pa#a =':33 0$h

TCT 0137= Pa#a

3. A+*+#$ >' 1=:0 El H%*ar Fili&in% S$%cB# 7' 2$h

>. A+*+#$ >' 1=:0 Manila /%cBe Cl+- S$%cB# 0:'22 3$h

2. A+*+#$ 2' 1=:0 San Mi*+el C%r&. S$%cB# 3'7: :$h

:. A+*+#$ 2' 1=:0 China anBin* C%r&. S$%cB# >' >$h

=. A+*+#$ 7' 1=:0 Aala C%r&. S$%cB# 2'0>:.74

1. A+*+#$ 7=' 1=:0 Aala F+n! S$%cB# 1'77.14 =$h

TOTAL 773'=27.

Or!er %, #$%cB cer$ica$e i##+ance# - TORMIL $% re#&%n!en$

T%rre# rela$i)e $% $he Dee!# %, A##i*n"en$ he e5ec+$e!

#%"e$i"e in /+l an! A+*+#$' 1=:0. 77 E"&ha#i# %+r#.4

M%re%)er' (e a*ree (i$h $he c%n$en$i%n %, $he S%lici$%r

General $ha$ $he #h%r$a*e %, #hare# #h%+l! n%$ ha)e a6ec$e!

$he a##i*n"en$ %, $he MaBa$i an! Pa#a Ci$ &r%&er$ie# (hich

(ere e5ec+$e! in 1 an! 70 /+l 1=:0 an! $he c%n#i!era$i%n

,%r (hich ha)e -een !+l &ai! %r ,+llle! -+$ #h%+l! ha)e

-een a&&lie! l%*icall $% $he la#$ a##i*n"en$ %, &r%&er$

/+!*e T%rre# Aala F+n! #hare# (hich (a# e5ec+$e! %n 7=

A+*+#$ 1=:0. 7

Pe$i$i%ner# in#i#$ $ha$ $he a##i*n"en$ %, @+ali,in* #hare#@ $%

$he n%"inee# %, $he la$e /+!*e T%rre# herein &e$i$i%ner#4 !%e#

n%$ &ar$aBe %, $he real na$+re %, a $ran#,er %r c%n)eance %,

#hare# %, #$%cB a# (%+l! call ,%r $he @i"&%#i$i%n %, #$rin*en$

re+ire"en$# (i$h re#&ec$ $% $he4 rec%r!in* %, $he $ran#,er %,

#ai! #hare#.@ An(a' &e$i$i%ner# a!!' $here (a# #+-#$an$ial

c%"&liance (i$h $he a-%)e#$a$e! re+ire"en$ #ince #ai!

a##i*n"en$# (ere en$ere! - $he la$e /+!*e T%rre# hi"#el, in

$he c%r&%ra$i%n# #$%cB an! $ran#,er -%%B %n > March 1=:2'

&ri%r $% $he 73 March 1=:2 ann+al #$%cBh%l!er# "ee$in* an!

(hich en$rie# (ere c%nr"e! %n : March 1=:2 - &e$i$i%ner

A?+ra (h% (a# a&&%in$e! A##i#$an$ C%r&%ra$e Secre$ar -

/+!*e T%rre#.

Pe$i$i%ner# ,+r$her ar*+e $ha$chanr%-1e# )ir$+al 1a( li-rar

1.1. Cer$ainl' $here i# n% le*al %r 9+#$ -a#i# ,%r $he

re#&%n!en$ S.E.C. $% &enali?e $he la$e /+!*e T%rre# -

in)ali!a$in* $he +e#$i%ne! en$rie# in $he #$%cB an! $ran#,er

-%%B' #i"&l -eca+#e he ini$iall "a!e $h%#e en$rie# $he

(ere la$er aJr"e! - an ac$in* c%r&%ra$e #ecre$ar4 an!-eca+#e $he #$%cB an! $ran#,er -%%B (a# in hi# &%##e##i%n

in#$ea! %, $he elec$e! c%r&%ra$e #ecre$ar' i, $he -acB*r%+n!

,ac$# herein


17/103

#ecre$ar# !+$ an! %-li*a$i%n $% re*i#$er )ali! $ran#,er# %,

#$%cB# an! i, #ai! c%r&%ra$e %Jcer re,+#e# $% c%"&l' $he

$ran#,er%r!ANGE, IN., Petitioner, v. T!E

!ONORA/LE O0RT OF A""EALS, SE0RITIES AN

E>!ANGE OISSION &)$ "0ERTO A:0L LAN

IN.,Respondents.

E I S I O N

TORRES, R.,J.

The Sec+ri$ie# an! E5chan*e C%""i##i%n i# $he *%)ern"ena*enc' +n!er $he !irec$ *eneral #+&er)i#i%n %, $he OJce %,

$he Pre#i!en$' 1 (i$h $he i""en#e $a#B %, en,%rcin* $he

Re)i#e! Sec+ri$ie# Ac$' an! all %$her !+$ie# a##i*ne! $% i$ -

&er$inen$ la(#. A"%n* i$# inn+"era-le ,+nc$i%n#' an! %ne %,

$he "%#$ i"&%r$an$' i# $he #+&er)i#i%n %, all c%r&%ra$i%n#

&ar$ner#hi %r a##%cia$i%n#' (h% are *ran$ee# %, &ri"ar

,ranchi#e an!Q%r a licen#e %r &er"i$ i##+e! - $he *%)ern"en$

$% %&era$e in $he Phili&&ine#. 7 /+#$ h%( ,ar $hi# re*+la$%r

a+$h%ri$ e5$en!#' &ar$ic+larl' (i$h re*ar! $% $he Pe$i$i%ne

Phili&&ine S$%cB E5chan*e' Inc. i# $he i##+e in $he ca#e a$ -ar

In $hi# Pe$i$i%n ,%r Re)ie( %n Certiorari' &e$i$i%ner a##ail# $he

re#%l+$i%n %, $he re#&%n!en$ C%+r$ %, A&&eal#' !a$e! /+ne 72

1==>' (hich aJr"e! $he !eci#i%n %, $he Sec+ri$ie# an!

E5chan*e C%""i##i%n %r!erin* $he &e$i$i%ner Phili&&ine S$%cB

E5chan*e' Inc. $% all%( $he &ri)a$e re#&%n!en$ P+er$% A?+

Lan!' Inc. $% -e li#$e! in i$# #$%cB "arBe$' $h+# &a)in* $he (a

,%r $he &+-lic %6erin* %, PALI# #hare#


18/103

The ,ac$# %, $he ca#e are +n!i#&+$e!' an! are here- re#$a$e!

in #+".

The P+er$% A?+l Lan!' Inc. PALI4' a !%"e#$ic real e#$a$e

c%r&%ra$i%n' ha! #%+*h$ $% %6er i$# #hare# $% $he &+-lic in

%r!er $% rai#e ,+n!# alle*e!l $% !e)el%& i$# &r%&er$ie# an!

&a i$# l%an# (i$h #e)eral -anBin* in#$i$+$i%n#. In /an+ar'

1==3' PALI (a# i##+e! a Per"i$ $% Sell i$# #hare# $% $he &+-lic- $he Sec+ri$ie# an! E5chan*e C%""i##i%n SEC4. T%

,acili$a$e $he $ra!in* %, i$# #hare# a"%n* in)e#$%r#' PALI

#%+*h$ $% c%+r#e $he $ra!in* %, i$# #hare# $hr%+*h $he

Phili&&ine S$%cB E5chan*e' Inc. PSE4' ,%r (hich &+r&%#e i$

le! (i$h $he #ai! #$%cB e5chan*e an a&&lica$i%n $% li#$ i$#

#hare#' (i$h #+&&%r$in* !%c+"en$# a$$ache!.

On Fe-r+ar :' 1==>' $he Li#$in* C%""i$$ee %, $he PSE' +&%n

a &er+#al %, PALI# a&&lica$i%n' rec%""en!e! $% $he PSE#

%ar! %, G%)ern%r# $he a&&r%)al %, PALI# li#$in* a&&lica$i%n.

On Fe-r+ar 10' 1==>' -e,%re i$ c%+l! ac$ +&%n PALI#

a&&lica$i%n' $he %ar! %, G%)ern%r# %, $he PSE recei)e! a

le$$er ,r%" $he heir# %, Fer!inan! E. Marc%#' clai"in* $ha$ $he

la$e Pre#i!en$ Marc%# (a# $he le*al an! -enecial %(ner %,

cer$ain &r%&er$ie# ,%r"in* &ar$ %, $he P+er$% A?+l each H%$el

an! Re#%r$ C%"&le5 (hich PALI clai"# $% -e a"%n* i$# a##e$#

an! $ha$ $he Terna$e De)el%&"en$ C%r&%ra$i%n' (hich i#

a"%n* $he #$%cBh%l!er# %, PALI' liBe(i#e a&&ear# $% ha)e

-een hel! an! c%n$in+e $% -e hel! in $r+#$ - %ne Re-ecc%

Panlili% ,%r $hen Pre#i!en$ Marc%# an! n%(' e6ec$i)el ,%r hi#

e#$a$e' an! re+e#$e! PALI# a&&lica$i%n $% -e !e,erre!. PALI

(a# re+e#$e! $% c%""en$ +&%n $he #ai! le$$er.

PALI# an#(er #$a$e! $ha$ $he &r%&er$ie# ,%r"in* &ar$ %, $he

P+er$% A?+l each H%$el an! Re#%r$ C%"&le5 (ere n%$ clai"e!

- PALI a# i$# a##e$#. On $he c%n$rar' $he re#%r$ i# ac$+all

%(ne! - Fan$a#ia Fili&ina Re#%r$' Inc. an! $he P+er$% A?+l

C%+n$r Cl+-' en$i$ie# !i#$inc$ ,r%" PALI. F+r$her"%re' $he

Terna$e De)el%&"en$ C%r&%ra$i%n %(n# %nl 1.7V %, PALI.

The Marc%#e# re#&%n!e! $ha$ $heir clai" i# n%$ c%nne! $% $he

,acili$ie# ,%r"in* &ar$ %, $he P+er$% A?+l H%$el an! Re#%r$

C%"&le5' $here- i"&lin* $ha$ $he are al#% a##er$in* le*al

an! -enecial %(ner#hi& %, %$her &r%&er$ie# $i$le! +n!er $he

na"e %, PALI.chanr%-le#)ir$+ala(li-rar

On Fe-r+ar 7' 1==>' $he PSE (r%$e Chair"an Ma*$an**%l

G+ni*+n!% %, $he Pre#i!en$ial C%""i##i%n %n G%%!

G%)ern"en$ PCGG4 re+e#$in* ,%r c%""en$# %n $he le$$er# %,

$he PALI an! $he Marc%#e#. On March 0' 1==>' $he PSE (a#

in,%r"e! $ha$ $he Marc%#e# recei)e! a Te"&%rar Re#$rainin*

Or!er %n $he #a"e !a$e' en9%inin* $he Marc%#e# ,r%"' a"%n*

%$her#' @,+r$her i"&e!in*' %-#$r+c$in*' !elain* %r in$er,erin*

in an "anner - %r an "ean# (i$h $he c%n#i!era$i%n

&r%ce##in* an! a&&r%)al - $he PSE %, $he ini$ial &+-lic

%6erin* %, PALI.@ The TRO (a# i##+e! - /+!*e Mar$in S

illara"a' E5ec+$i)e /+!*e %, $he RTC %, Pa#i* Ci$ in Ci)i

Ca#e N%. >33>1' &en!in* in ranch >= $here%,

In i$# re*+lar "ee$in* hel! %n March 72' 1==>' $he %ar! %,

G%)ern%r# %, $he PSE reache! i$# !eci#i%n $% re9ec$ PALI#

a&&lica$i%n' ci$in* $he e5i#$ence %, #eri%+# clai"#' i##+e# an!

circ+"#$ance# #+rr%+n!in* PALI# %(ner#hi& %)er i$# a##e$#

$ha$ a!)er#el a6ec$ $he #+i$a-ili$ %, li#$in* PALI# #hare# in

$he #$%cB e5chan*e

On A&ril 11' 1==>' PALI (r%$e a le$$er $% $he SEC a!!re##e! $%

$he $hen Ac$in* Chair"an' Per,ec$% R. Ya#a' /r.' -rin*in* $%$he SEC# a$$en$i%n $he ac$i%n $aBen - $he PSE in $he

a&&lica$i%n %, PALI ,%r $he li#$in* %, i$# #hare# (i$h $he PSE'

an! re+e#$in* $ha$ $he SEC in $he e5erci#e %, i$# #+&er)i#%r

an! re*+la$%r &%(er# %)er #$%cB e5chan*e# +n!er Sec$i%n

>94 %, P.D. N%. =7' $he PSE #+-"i$$e! a le$$er $%

$he SEC c%n$ainin* i$# c%""en$# $% $he A&ril 11' 1==> le$$er

%, PALI

On A&ril 70' 1==>' $he SEC ren!ere! i$# Or!er' re)er#in* $he

PSE# !eci#i%n. The !i#&%#i$i)e &%r$i%n %, $he #ai! %r!e

rea!#9*cchanr%-le#.c%".&h

@WHEREFORE' &re"i#e# c%n#i!ere!' an! in)%Bin* $he

C%""i##i%ner# a+$h%ri$ an! 9+ri#!ic$i%n +n!er Sec$i%n %

$he Re)i#e! Sec+ri$ie# Ac$' in c%n9+nc$i%n (i$h Sec$i%n ' >9

an! >"4 %, Pre#i!en$ial Decree N%. =7


19/103

$he in)e#$in* &+-lic.

Thi# Or!er #hall $aBe e6ec$ i""e!ia$el.

SO ORDERED.@crala( )ir$+a1a( li-rar

PSE le! a "%$i%n ,%r rec%n#i!era$i%n %, $he #ai! %r!er %n

A&ril 7=' 1==>' (hich (a#' h%(e)er !enie! - $he C%""i##i%nin i$# Ma =' 1==> Or!er (hich #$a$e#9*cchanr%-le#.c%".&h

@WHEREFORE' &re"i#e# c%n#i!ere!' $he C%""i##i%n n!# n%

c%"&ellin* rea#%n $% rec%n#i!er i$# %r!er !a$e! A&ril 70' 1==>'

an! in $he li*h$ %, recen$ !e)el%&"en$# %n $he a!)er#e clai"

a*ain#$ $he PALI &r%&er$ie#' PSE #h%+l! re+ire PALI $% #+-"i$

,+ll !i#cl%#+re %, "a$erial ,ac$# an! in,%r"a$i%n $% &r%$ec$ $he

in)e#$in* &+-lic. In $hi# re*ar!' PALI i# here- %r!ere! $%

a"en! i$# re*i#$ra$i%n #$a$e"en$# le! (i$h $he C%""i##i%n

$% inc%r&%ra$e $he ,+ll !i#cl%#+re %, $he#e "a$erial ,ac$# an!in,%r"a$i%n.@crala( )ir$+a1a( li-rar

Di##a$i#e! (i$h $hi# r+lin*' $he PSE le! (i$h $he C%+r$ %,

A&&eal# %n Ma 12' 1==> a Pe$i$i%n ,%r Re)ie( (i$h

A&&lica$i%n ,%r Wri$ %, Preli"inar In9+nc$i%n an! Te"&%rar

Re#$rainin* Or!er4' a##ailin* $he a-%)e "en$i%ne! %r!er# %,

$he SEC' #+-"i$$in* $he ,%ll%(in* a# err%r# %, $he

SECchanr%-1e# )ir$+al 1a( li-rar

I. SEC COMMITTED SERIO8S ERROR AND GRAE A8SE OF

DISCRETION IN ISS8ING THE ASSAILED ORDERS WITHO8T

POWER' /8RISDICTION' OR A8THORITY; SEC HAS NO POWER

TO ORDER THE LISTING AND SALE OF SHARES OF PALI WHOSE

ASSETS ARE SE8ESTERED AND TO REIEW AND S8STIT8TE

DECISIONS OF PSE ON LISTING APPLICATIONS;

II. SEC COMMITTED SERIO8S ERROR AND GRAE A8SE OF

DISCRETION IN FINDING THAT PSE ACTED IN AN ARITRARY

AND A8SIE MANNER IN DISAPPROING PALIS LISTING

APPLICATION;

III. THE ASSAILED ORDERS OF SEC ARE ILLEGAL AND OID

FOR ALLOWING F8RTHER DISPOSITION OF PROPERTIES IN

C8STODIA LEGIS AND WHICH FORM PART OF NAALQMILITARY

RESERATION; AND

I. THE F8LL DISCLOS8RE OF THE SEC WAS NOT PROPERLY

PROM8LGATED AND ITS IMPLEMENTATION AND APPLICATION

IN THIS CASE IOLATES THE D8E PROCESS CLA8SE OF THE

CONSTIT8TION.

On /+ne 0' 1==>' PALI le! i$# C%""en$ $% $he Pe$i$i%n ,%r

Re)ie( an! #+-#e+en$l' a C%""en$ an! M%$i%n $% Di#"i##

On /+ne 1' 1==>' PSE le! i$# Re&l $% C%""en$ an!

O&&%#i$i%n $% M%$i%n $%

Di#"i##.chanr%-le#)ir$+alla(li-rarre!

On /+ne 72' 1==>' $he C%+r$ %, A&&eal# &r%"+l*a$e! i$#Re#%l+$i%n !i#"i##in* $he PSE# Pe$i$i%n ,%r Re)ie(. Hence

$hi# Pe$i$i%n - $he PSE

The a&&ella$e c%+r$ ha! r+le! $ha$ $he SEC ha! -%$h

9+ri#!ic$i%n an! a+$h%ri$ $% l%%B in$% $he !eci#i%n %, $he

&e$i$i%ner PSE' &+r#+an$ $% Sec$i%n %, $he Re)i#e!

Sec+ri$ie# Ac$ in rela$i%n $% Sec$i%n >94 an! >"4 0 %, P.D. N%

=7


20/103

ac$e! !i6eren$l %n $he a&&lica$i%n %, PALI' a# c%"&are! $%

$he IPO# %, %$her c%"&anie# #i"ilarl #i$+a$e! $ha$ (ere

all%(e! li#$in* in $he E5chan*e;

. I$ a&&ear# $ha$ $he clai"# an! i##+e# %n $he $i$le $% PALI#

&r%&er$ie# (ere e)en le## #eri%+# $han $he clai"# a*ain#$ $he

a##e$# %, $he %$her c%"&anie# in $ha$' $he a##er$i%n# %, $he

Marc%#e# $ha$ $he are %(ner# %, $he !i#&+$e! &r%&er$ie#(ere n%$ #+-#$an$ia$e! en%+*h $% %)erc%"e $he #$ren*$h %, a

$i$le $% &r%&er$ie# i##+e! +n!er $he T%rren# S#$e" a#

e)i!ence %, %(ner#hi& $here%,;

0. N% ac$i%n ha# -een le! in an c%+r$ %, c%"&e$en$

9+ri#!ic$i%n #eeBin* $% n+lli, PALI# %(ner#hi& %)er $he

!i#&+$e! &r%&er$ie#' nei$her ha# $he *%)ern"en$ in#$i$+$e!

rec%)er &r%cee!in*# a*ain#$ $he#e &r%&er$ie#. Ye$ $he i"&%r$

%, PSE# !eci#i%n in !enin* PALI# a&&lica$i%n i# $ha$ i$ (%+l!

-e PALI' n%$ $he Marc%#e#' $ha$ "+#$ *% $% c%+r$ $% &r%)e $hele*ali$ %, i$# %(ner#hi& %n $he#e &r%&er$ie# -e,%re i$# #hare#

can -e li#$e!.@crala( )ir$+a1a( li-rar

In a!!i$i%n' $he ar*+"en$ $ha$ $he PALI &r%&er$ie# -el%n* $%

$he Mili$arQNa)al Re#er)a$i%n !%e# n%$ in#&ire -elie,. The

&%in$ i#' $he PALI &r%&er$ie# are n%( $i$le!. A &r%&er$ l%#e# i$#

&+-lic charac$er $he "%"en$ i$ i# c%)ere! - a $i$le. A# a

"a$$er %, ,ac$' $he $i$le# ha)e l%n* -een #e$$le! - a nal

9+!*"en$; an! $he nal !ecree ha)in* -een re*i#$ere!' $he

can n% l%n*er -e re. A #+&&le"en$al C%""en$ (a# le! - PALI %n Oc$%-er

73' 1==2. The OJce %, $he S%lici$%r General' re&re#en$in* $he

SEC an! $he C%+r$ %, A&&eal#' liBe(i#e le! i$# C%""en$ %n

Dece"-er 7>' 1==>. In an#(er $% $he PCGG# "%$i%n ,%r lea)e

$% le &e$i$i%n ,%r in$er)en$i%n' PALI le! i$# C%""en$ $here$%

%n /an+ar 12' 1==2' (herea# $he PSE le! i$# %(n C%""en$

%n /an+ar 7' 1==2

On Fe-r+ar 73' 1==>' $he PSE le! i$# C%n#%li!a$e! Re&l $%

$he c%""en$# %, re#&%n!en$ PALI Oc$%-er 12' 1==>4 an! $he

S%lici$%r General Dece"-er 7>' 1==>4. On Ma 1>' 1==2' PAL

le! i$# Re9%in!er $% $he #ai! c%n#%li!a$e! re&l %, PSE

PSE #+-"i$# $ha$ $he C%+r$ %, A&&eal# erre! in r+lin* $ha$ $he

SEC ha! a+$h%ri$ $% %r!er $he PSE $% li#$ $he #hare# %, PALI in

$he #$%cB e5chan*e. 8n!er Pre#i!en$ial Decree N%. =7


21/103

c%r&%ra$i%n# (ere #e+e#$ere! - $he PCGG %n March 1'

1=:> an! A&ril 0' 1=::.

I$ i#' liBe(i#e' in$i"a$e! $ha$ $he C%+r$ %, A&&eal# #anc$i%n

$ha$ PALI# %(ner#hi& %)er i$# &r%&er$ie# can n% l%n*er -e

+e#$i%ne!' #ince cer$ica$e# %, $i$le ha)e -een i##+e! $% PALI

an! "%re $han %ne ear ha# #ince lae!' i# err%ne%+# an!

i*n%re# (ell #e$$le! 9+ri#&r+!ence %n lan! $i$le#. Tha$ acer$ica$e %, $i$le i##+e! +n!er $he T%rren# S#$e" i# a

c%ncl+#i)e e)i!ence %, %(ner#hi& i# n%$ an a-#%l+$e r+le an!

a!"i$# cer$ain e5ce&$i%n#. I$ i# ,+n!a"en$al $ha$ ,%re#$ lan!#

%r "ili$ar re#er)a$i%n# are n%n


22/103

#ec+ri$ie# $hr+ $he ,acili$ie# %, a #$%cB e5chan*e' i, all%(e! $%

in$er&re$ i$# %(n r+le# li-erall a# i$ "a &lea#e. Pe$i$i%ner can

ei$her all%( %r !en $he en$r $% $he "arBe$ %, #ec+ri$ie#. T%

re&ea$' $he "%n%&%l' +nle## acc%"&anie! - c%n$r%l'

-ec%"e# #+-9ec$ $% a-+#e; hence' c%n#i!erin* &+-lic in$ere#$'

$hen i$ #h%+l! -e #+-9ec$ $% *%)ern"en$ re*+la$i%n.@crala(

)ir$+a1a( li-rar

The r%le %, $he SEC in %+r na$i%nal ec%n%" cann%$ -e

"ini"i?e!. The le*i#la$+re' $hr%+*h $he Re)i#e! Sec+ri$ie# Ac$'

Pre#i!en$ial Decree N%. =7


23/103

$hr%+*h in)e#$"en$ #er)ice# an! e5&er$ in)e#$%r#' (ill $en! $%

&r%!+ce a "%re acc+ra$e a&&rai#al %, a #ec+ri$. . . . Th+#' $he

C%""i##i%n "a re,+#e $% &er"i$ a re*i#$ra$i%n #$a$e"en$ $%

-ec%"e e6ec$i)e i, i$ a&&ear# %n i$# ,ace $% -e inc%"&le$e %r

inacc+ra$e in an "a$erial re#&ec$' an! e"&%(er $he

C%""i##i%n $% i##+e a #$%& %r!er #+#&en!in* $he

e6ec$i)ene## %, an re*i#$ra$i%n #$a$e"en$ (hich i# ,%+n! $%

incl+!e an +n$r+e #$a$e"en$ %, a "a$erial ,ac$ %r $% %"i$ $%#$a$e an "a$erial ,ac$ re+ire! $% -e #$a$e! $herein %r

nece##ar $% "aBe $he #$a$e"en$# $herein n%$ "i#lea!in*.

I!e"4.@crala( )ir$+a1a( li-rar

Al#%' a# $he &ri"ar "arBe$ ,%r #ec+ri$ie#' $he PSE ha#

e#$a-li#he! i$# na"e an! *%%!(ill' an! i$ ha# $he ri*h$ $%

&r%$ec$ #+ch *%%!(ill - "ain$ainin* a rea#%na-le #$an!ar! %,

&r%&rie$ in $he en$i$ie# (h% ch%%#e $% $ran#ac$ $hr%+*h i$#

,acili$ie#. I$ (a# rea#%na-le ,%r $he PSE' $here,%re' $% e5erci#e

i$# 9+!*"en$ in $he "anner i$ !ee"# a&&r%&ria$e ,%r i$#-+#ine## i!en$i$' a# l%n* a# n% ri*h$# are $ra"&le! +&%n' an!

&+-lic (el,are i# #a,e*+ar!e!.

In $hi# c%nnec$i%n' i$ i# &r%&er $% %-#er)e $ha$ $he c%nce&$ %,

*%)ern"en$ a-#%l+$i#" i# a $hin* %, $he &a#$' an! #h%+l!

re"ain #%.

The %-#er)a$i%n $ha$ $he $i$le %, PALI %)er i$# &r%&er$ie# i#

a-#%l+$e an! can n% l%n*er -e a##aile! i# %, n% "%"en$. A$

$hi# 9+nc$+re' $here i# $he clai" $ha$ $he &r%&er$ie# (ere

%(ne! - TDC an! MSDC an! (ere $ran#,erre! in )i%la$i%n %,

#e+e#$ra$i%n %r!er#' $% Re-ecc% Panlili% an! la$er %n $% PALI'

-e#i!e# $he clai" %, $he Marc%#e# $ha$ #+ch &r%&er$ie# -el%n*

$% $he Marc%# e#$a$e' an! (ere hel! %nl in $r+#$ - Re-ecc%

Panlili%. I$ i# al#% alle*e! - $he &e$i$i%ner $ha$ $he#e

&r%&er$ie# -el%n* $% na)al an! ,%re#$ re#er)e#' an! $here,%re

-e%n! &ri)a$e !%"ini%n. I, an %, $he#e clai"# i# e#$a-li#he!

$% -e $r+e' $he cer$ica$e# %, $i$le %)er $he #+-9ec$ &r%&er$ie#

n%( hel! - PALI "a -e !i#re*ar!e!' a# i$ i# an e#$a-li#he!

r+le $ha$ a re*i#$ra$i%n %, a cer$ica$e %, $i$le !%e# n%$ c%n,er

%(ner#hi& %)er $he &r%&er$ie# !e#cri-e! $herein $% $he &er#%n

na"e! a# %(ner. The in#cri&$i%n in $he re*i#$r' $% -e

e6ec$i)e' "+#$ -e "a!e in *%%! ,ai$h. The !e,en#e %,

in!e,ea#i-ili$ %, a T%rren# Ti$le !%e# n%$ e5$en! $% a

$ran#,eree (h% $aBe# $he cer$ica$e %, $i$le (i$h n%$ice %, a

a(.

In an ca#e' ,%r $he &+r&%#e %, !e$er"inin* (he$her PSE ac$e!

c%rrec$l in re,+#in* $he a&&lica$i%n %, PALI' $he $r+e

%(ner#hi& %, $he &r%&er$ie# %, PALI nee! n%$ -e !e$er"ine! a#

an a-#%l+$e ,ac$. Wha$ i# "a$erial i# $ha$ $he +ncer$ain$ %,

$he &r%&er$ie# %(ner#hi& an! aliena-ili$ e5i#$#' an! $hi# &+$#

$% +e#$i%n $he +alica$i%n %, PALI# &+-lic %6erin*. In #+"

$he C%+r$ n!# $ha$ $he SEC ha! ac$e! ar-i$raril in arr%*a$in*

+n$% i$#el, $he !i#cre$i%n %, a&&r%)in* $he a&&lica$i%n ,%

li#$in* in $he PSE %, $he &ri)a$e re#&%n!en$ PALI' #ince $hi# i# a

"a$$er a!!re##e! $% $he #%+n! !i#cre$i%n %, $he PSE' a

c%r&%ra$e en$i$' (h%#e -+#ine## 9+!*"en$# are re#&ec$e! in$he a-#ence %, -a! ,ai$h

The +e#$i%n a# $% (ha$ &%lic i#' %r #h%+l! -e relie! +&%n in

a&&r%)in* $he re*i#$ra$i%n an! #ale %, #ec+ri$ie# in $he SEC i#

n%$ ,%r $he C%+r$ $% !e$er"ine' -+$ i# le,$ $% $he #%+n!

!i#cre$i%n %, $he Sec+ri$ie# an! E5chan*e C%""i##i%n. In

"an!a$in* $he SEC $% a!"ini#$er $he Re)i#e! Sec+ri$ie# Ac$

an! in &er,%r"in* i$# %$her ,+nc$i%n# +n!er &er$inen$ la(#' $he

Re)i#e! Sec+ri$ie# Ac$' +n!er Sec$i%n $here%,' *i)e# $he SEC

$he &%(er $% &r%"+l*a$e #+ch r+le# an! re*+la$i%n# a# i$ "ac%n#i!er a&&r%&ria$e in $he &+-lic in$ere#$ ,%r $he en,%rce"en$

%, $he #ai! la(#. The #ec%n! &ara*ra&h %, Sec$i%n 0 %, $he

#ai! la(' %n $he %$her han!' &r%)i!e# $ha$ n% #ec+ri$' +nle##

e5e"&$ - la(' #hall -e i##+e!' en!%r#e!' #%l!' $ran#,erre! %

in an %$her "anner c%n)ee! $% $he &+-lic' +nle## re*i#$ere!

in acc%r!ance (i$h $he r+le# an! re*+la$i%n# $ha$ #hall -e

&r%"+l*a$e! in $he &+-lic in$ere#$ an! ,%r $he &r%$ec$i%n %

in)e#$%r# - $he C%""i##i%n. Pre#i!en$ial Decree N%. =7


24/103

re,+#e $% i##+e a &er"i$ $% #ell $he #ec+ri$ie# incl+!e! in #+ch

re*i#$ra$i%n #$a$e"en$ i, i$ n!# $ha$

14 The re*i#$ra$i%n #$a$e"en$ i# %n i$# ,ace inc%"&le$e %r

inacc+ra$e in an "a$erial re#&ec$ %r incl+!e# an +n$r+e

#$a$e"en$ %, a "a$erial ,ac$ %r %"i$# $% #$a$e a "a$erial ,ac$

re+ire! $% -e #$a$e! $herein %r nece##ar $% "aBe $he

#$a$e"en$# $herein n%$ "i#lea!in*; %r

74 The i##+er %r re*i#$ran$

i4 i# n%$ #%l)en$ %r n%$ in #%+n! nancial c%n!i$i%n;

ii4 ha# )i%la$e! %r ha# n%$ c%"&lie! (i$h $he &r%)i#i%n# %, $hi#

Ac$' %r $he r+le# &r%"+l*a$e! &+r#+an$ $here$%' %r an %r!er

%, $he C%""i##i%n;

iii4 ha# ,aile! $% c%"&l (i$h an %, $he a&&lica-lere+ire"en$# an! c%n!i$i%n# $ha$ $he C%""i##i%n "a' in $he

&+-lic in$ere#$ an! ,%r $he &r%$ec$i%n %, in)e#$%r#' i"&%#e

-e,%re $he #ec+ri$ can -e re*i#$ere!;

i)4 ha# -een en*a*e! %r i# en*a*e! %r i# a-%+$ $% en*a*e in

,ra+!+len$ $ran#ac$i%n#;

)4 i# in an (a !i#h%ne#$ %r i# n%$ %, *%%! re&+$e; %r

)i4 !%e# n%$ c%n!+c$ i$# -+#ine## in acc%r!ance (i$h la( %r i#

en*a*e! in a -+#ine## $ha$ i# ille*al %r c%n$rar $%

*%)ern"en$ r+le# an! re*+la$i%n#.

4 The en$er&ri#e %r $he -+#ine## %, $he i##+er i# n%$ #h%(n $%

-e #%+n! %r $% -e -a#e! %n #%+n! -+#ine## &rinci&le#;

04 An %Jcer' "e"-er %, $he -%ar! %, !irec$%r#' %r &rinci&al

#$%cBh%l!er %, $he i##+er i# !i#+alie! $% -e #+ch %Jcer'

!irec$%r %r &rinci&al #$%cBh%l!er; %r

34 The i##+er %r re*i#$ran$ ha# n%$ #h%(n $% $he #a$i#,ac$i%n

%, $he C%""i##i%n $ha$ $he #ale %, i$# #ec+ri$ (%+l! n%$ (%rB

$% $he &re9+!ice %, $he &+-lic in$ere#$ %r a# a ,ra+! +&%n $he

&+rcha#er# %r in)e#$%r#.@ Emphasis ours4

A rea!in* %, $he ,%re*%in* *r%+n!# re)eal# $he in$en$i%n %, $he

la("aBer# $% "aBe $he re*i#$ra$i%n an! i##+ance %, #ec+ri$ie#

!e&en!en$' $% a cer$ain e5$en$' %n $he "eri$# %, $he #ec+ri$ie#

$he"#el)e#' an! %, $he i##+er' $% -e !e$er"ine! - $he

Sec+ri$ie# an! E5chan*e C%""i##i%n. Thi# "ea#+re (a#

"ean$ $% &r%$ec$ $he in$ere#$# %, $he in)e#$in* &+-lic a*ain#$

,ra+!+len$ an! (%r$hle## #ec+ri$ie#' an! $he SEC i# "an!a$e!

- la( $% #a,e*+ar! $he#e in$ere#$#' ,%ll%(in* $he &%licie# an!

r+le# $here,%re &r%)i!e!. The a-#%l+$e reliance %n $he ,+l

!i#cl%#+re "e$h%! in $he re*i#$ra$i%n %, #ec+ri$ie# i#

$here,%re' +n$ena-le. A# i$ i#' $he C%+r$ n!# $ha$ $he &ri)a$e

re#&%n!en$ PALI' %n a$ lea#$ $(% &%in$# n%#. 1 an! 34 ha#

,aile! $% #+&&%r$ $he &r%&rie$ %, $he i##+e %, i$# #hare# (i$h+n,ailin* clari$' $here- len!in* #+&&%r$ $% $he c%ncl+#i%n

$ha$ $he PSE ac$e! c%rrec$l in re,+#in* $he li#$in* %, PALI in i$#

#$%cB e5chan*e. Thi# !%e# n%$ !i#c%+n$ $he e6ec$i)i$ %

(ha$e)er "e$h%! $he SEC' in $he e5erci#e %, i$# )e#$e!

a+$h%ri$' ch%%#e# in #e$$in* $he #$an!ar! ,%r &+-lic %6erin*#

%, c%r&%ra$i%n# (i#hin* $% !% #%. H%(e)er' $he SEC "+#

rec%*ni?e an! i"&le"en$ $he "an!a$e %, $he la(' &ar$ic+larl

$he Re)i#e! Sec+ri$ie# Ac$' $he &r%)i#i%n# %, (hich cann%$ -e

a"en!e! %r #+&&lan$e! - "ere a!"ini#$ra$i)e i##+ance

In re#+"U' $he C%+r$ n!# $ha$ $he PSE ha# ac$e! (i$h

9+#$ie! circ+"#&ec$i%n' !i#c%+n$in*' $here,%re' an

i"&+$a$i%n %, ar-i$rarine## an! (hi"#ical ani"a$i%n %n i$#

&ar$. I$# ac$i%n in re,+#in* $% all%( $he li#$in* %, PALI in $he

#$%cB e5chan*e i# 9+#$ie! - $he la( an! - $he

circ+"#$ance# a$$en!an$ $% $hi#

ca#e.chanr%-le#)ir$+alla(li-rarre!

ACCORDINGLY' in )ie( %, $he ,%re*%in* c%n#i!era$i%n#' $he

C%+r$ here- GRANTS $he Pe$i$i%n ,%r Re)ie( %n Certiorari

The Deci#i%n# %, $he C%+r$ %, A&&eal# an! $he Sec+ri$ie# an!

E5chan*e C%""i##i%n !a$e! /+l 72' 1==> an! A&ril 70' 1==>

re#&ec$i)el' are here- REERSED an! SET ASIDE' an! a ne(

/+!*"en$ i# here- ENTERED' aJr"in* $he !eci#i%n %, $he

Phili&&ine S$%cB E5chan*e $% !en $he a&&lica$i%n ,%r li#$in* %,

$he &ri)a$e re#&%n!en$ P+er$% A?+l Lan!' Inc

SO ORDERED.

Ar*@%*&+ /e*)

T!IR I;ISION

[G.R. No. 142936. Ar*+ 17, 22.]

"!ILI""INE NATIONAL /AN# NATIONAL S0GAR

E;ELO"ENT OR"ORATION, Petitioners, v. ANRAA

ELETRI ENGINEERING O"AN(, Respondent

E I S I O N


25/103

"ANGANI/AN,J.

a#ic i# $he r+le $ha$ a c%r&%ra$i%n ha# a le*al &er#%nali$

!i#$inc$ an! #e&ara$e ,r%" $he &er#%n# an! en$i$ie# %(nin* i$.

The c%r&%ra$e )eil "a -e li,$e! %nl i, i$ ha# -een +#e! $%

#hiel! ,ra+!' !e,en! cri"e' 9+#$i, a (r%n*' !e,ea$ &+-licc%n)enience' in#+la$e -a! ,ai$h %r &er&e$+a$e in9+#$ice. Th+#'

$he "ere ,ac$ $ha$ $he Phili&&ine Na$i%nal anB PN4 ac+ire!

%(ner#hi& %r "ana*e"en$ %, #%"e a##e$# %, $he Pa"&an*a

S+*ar Mill PAS8MIL4' (hich ha! earlier -een ,%recl%#e! an!

&+rcha#e! a$ $he re#+l$in* &+-lic a+c$i%n - $he De)el%&"en$

anB %, $he Phili&&ine# DP4' (ill n%$ "aBe PN lia-le ,%r $he

PAS8MIL# c%n$rac$+al !e-$# $% Respondent.chanr%-1e#

)ir$+a1 1a( 1i-rar

S$a$e"en$ %, $he Ca#e

e,%re +# i# a Pe$i$i%n ,%r Re)ie( a##ailin* $he A&ril 12' 7

Deci#i%n 1 %, $he C%+r$ %, A&&eal# CA4 in CA1. The !ecre$al &%r$i%n %, $he challen*e! Deci#i%n rea!#

a# ,%ll%(#9*cchanr%-le#.c%".&h

@WHEREFORE' $he 9+!*"en$ a&&eale! ,r%" i# here-

AFFIRMED.@ 7

The Fac$#

The ,ac$+al an$ece!en$# %, $he ca#e are #+""ari?e! - $he

C%+r$ %, A&&eal# a# ,%ll%(#9*cchanr%-le#.c%".&h

@In i$# c%"&lain$' $he &lain$i6 herein re#&%n!en$ alle*e! $ha$

i$ i# a &ar$ner#hi& !+l %r*ani?e!' e5i#$in*' an! %&era$in*

+n!er $he la(# %, $he Phili&&ine#' (i$h %Jce an! &rinci&al

&lace %, -+#ine## a$ N%#. 2=0' 1=23' $he !e,en!an$ PN

ac+ire! $he a##e$# %, $he !e,en!an$ PAS8MIL $ha$ (ere

earlier ,%recl%#e! - $he De)el%&"en$ anB %, $he Phili&&ine#DP4 +n!er LOI N%. 11; $ha$ $he !e,en!an$ PN %r*ani?e!

$he !e,en!an$ NAS8DECO in Se&$e"-er' 1=23' $% $aBe

%(ner#hi& an! &%##e##i%n %, $he a##e$# an! +l$i"a$el $%

na$i%nali?e an! c%n#%li!a$e i$# in$ere#$ in %$her PN c%n$r%lle!

#+*ar "ill#; $ha$ &ri%r $% Oc$%-er 7=' 1=21' $he !e,en!an$

PAS8MIL en*a*e! $he #er)ice# %, &lain$i6 ,%r elec$rica

re(in!in* an! re&air' "%#$ %, (hich (ere &ar$iall &ai! - $he

!e,en!an$ PAS8MIL' lea)in* #e)eral +n&ai! acc%+n$# (i$h $he

&lain$i6; $ha$ nall' %n Oc$%-er 7=' 1=21' $he &lain$i6 an! $he

!e,en!an$ PAS8MIL en$ere! in$% a c%n$rac$ ,%r $he &lain$i6 $%&er,%r" $he ,%ll%(in*' $% (i$

Xa4 C%n#$r+c$i%n %, %ne 14 &%(er h%+#e -+il!in*

X-4 C%n#$r+c$i%n %, $hree 4 rein,%rce! c%ncre$e ,%+n!a$i%n

,%r $hree 4 +ni$# 3 W !ie#el en*ine *enera$in* #e$#;

Xc4 C%n#$r+c$i%n %, $hree 4 rein,%rce! c%ncre$e ,%+n!a$i%n

,%r $he 3' W an! 1'73 W $+r-% *enera$%r #e$#

X!4 C%"&le$e %)erha+lin* an! rec%n!i$i%nin* $e#$# #+" ,%

$hree 4 3 W !ie#el en*ine *enera$in* #e$#

Xe4 In#$alla$i%n %, $+r-ine an! !ie#el *enera$in* #e$# incl+!in*

$ran#,%r"er' #(i$ch-%ar!' elec$rical (irin*# an! &i&e &r%)i!e!

$h%#e #$a$e! +ni$# are c%"&le$el #+&&lie! (i$h $hei

acce##%rie#;

X,4 Rel%ca$in* %, 7'0 $ran#"i##i%n line' !e"%li$i%n %, al

e5i#$in* c%ncre$e ,%+n!a$i%n an! !raina*e canal#' e5ca)a$i%n

an! ear$h llin*# all ,%r $he $%$al a"%+n$ %, P30'3. a#

e)i!ence! - a c%n$rac$' a 5er%5 c%& %, (hich i# here$%

a$$ache! a# Anne5 XA an! "a!e an in$e*ral &ar$ %, $hi#

c%"&lain$;

$ha$ a#i!e ,r%" $he (%rB c%n$rac$ "en$i%ne!


26/103

Xa4 S+&&l %, elec$rical !e)ice#;

X-4 E5$ra "echanical (%rB#;

Xc4 E5$ra ,a-rica$i%n (%rB#;

X!4 S+&&l %, "a$erial# an! c%n#+"a-le i$e"#;

Xe4 Elec$rical #h%& re&air;

X,4 S+&&l %, &ar$# an! rela$e! (%rB# ,%r $+r-ine *enera$%r;

X*4 S+&&l %, elec$rical e+i&"en$ ,%r "achiner;

Xh4 S+&&l %, !ie#el en*ine &ar$# an! %$her rela$e! (%rB#

incl+!in* ,a-rica$i%n %, &ar$#.

$ha$ %+$ %, $he $%$al %-li*a$i%n %, P222'7>.:' $he !e,en!an$PAS8MIL ha! &ai! %nl P73'.' lea)in* an +n&ai!

-alance' a# %, /+ne 72' 1=2' a"%+n$in* $% P372'7>.:' a#

#h%(n in $he Cer$ica$i%n %, $he chie, acc%+n$an$ %, $he PN'

a "achine c%& %, (hich i# a&&en!e! a# Anne5 XC %, $he

c%"&lain$; $ha$ %+$ %, #ai! +n&ai! -alance %, P372'7>.:' $he

!e,en!an$ PAS8MIL "a!e a &ar$ial &a"en$ $% $he &lain$i6 %,

P10'.' in -r%Ben a"%+n$#' c%)erin* $he &eri%! ,r%"

/an+ar 3' 1=20 +& $% Ma 7' 1=20' lea)in* an +n&ai!

-alance %, P31'7>.:; $ha$ $he !e,en!an$ PAS8MIL an! $he

!e,en!an$ PN' an! n%( $he !e,en!an$ NAS8DECO' ,aile! an!

re,+#e! $% &a $he &lain$i6 $heir 9+#$' )ali! an! !e"an!a-le

%-li*a$i%n; $ha$ $he Pre#i!en$ %, $he NAS8DECO i# al#% $he

ice.:' (i$h ann+al in$ere#$ %, 10V ,r%" $he $i"e $he

%-li*a$i%n ,all# !+e an! !e"an!a-le

X74 C%n!e"nin* $he !e,en!an$# $% &a a$$%rne# ,ee#

a"%+n$in* $% 73V %, $he a"%+n$ clai"

X4 Or!erin* $he !e,en!an$# $% &a $he c%#$# %, $he #+i$.

@The !e,en!an$# PN an! NAS8DECO le! a 9%in$ "%$i%n $%

!i#"i## $he c%"&lain$ chie %n $he *r%+n! $ha$ $he

c%"&lain$ ,aile! $% #$a$e #+Jcien$ alle*a$i%n# $% e#$a-li#h a

ca+#e %, ac$i%n a*ain#$ -%$h !e,en!an$#' ina#"+ch a# $here i#

lacB %r (an$ %, &ri)i$ %, c%n$rac$ -e$(een $he &lain$i6 an!

$he $(% !e,en!an$#' $he PN an! NAS8DECO' #ai! !e,en!an$#

ci$in* Ar$icle 111 %, $he Ne( Ci)il C%!e' an! $he ca#e la(

r+lin* in Sal%n*a ). Warner arne# C%.' :: Phil. 173; an!Manila P%r$ Ser)ice' E$. Al. ). C%+r$ %, A&&eal#' E$ Al.' 7 SCRA

1710.

@The "%$i%n $% !i#"i## (a# - $he c%+r$ a +% !enie! in i$#

Or!er %, N%)e"-er 72' 1=:; in $he #a"e %r!er' $ha$ c%+r$

!irec$e! $he !e,en!an$# $% le $heir an#(er $% $he c%"&lain$

(i$hin 13 !a#

@In $heir an#(er' $he !e,en!an$ NAS8DECO rei$era$e! $he

*r%+n!# %, i$# "%$i%n $% !i#"i##' $% (i$chanr%-1e# )ir$+a

1a( li-rar

XTha$ $he c%"&lain$ !%e# n%$ #$a$e a #+Jcien$ ca+#e %, ac$i%n

a*ain#$ $he !e,en!an$ NAS8DECO -eca+#e a4 NAS8DECO i#

n%$ . . . &ri) $% $he )ari%+# elec$rical c%n#$r+c$i%n 9%-# -ein*

#+e! +&%n - $he &lain$i6 +n!er $he &re#en$ c%"&lain$; -4 $he

$aBin* %)er - NAS8DECO %, $he a##e$# %, !e,en!an$ PAS8MIL

(a# #%lel ,%r $he &+r&%#e %, rec%n!i$i%nin* $he #+*ar cen$ra

%, !e,en!an$ PAS8MIL &+r#+an$ $% "ar$ial la( &%(er# %, $he

Pre#i!en$ +n!er $he C%n#$i$+$i%n; c4 n%$hin* in $he LOI N%

1:=


27/103

rea#%n %, $he lin* - $he &lain$i6 %, $he &re#en$ #+i$' (hich i$

la-ele! a# +n,%+n!e! %r -a#ele##' $he !e,en!an$ NAS8DECO

(a# c%n#$raine! $% li$i*a$e an! inc+r li$i*a$i%n e5&en#e# in $he

a"%+n$ %, P3'.' (hich &lain$i6 #h%+l! -e #en$ence! $%

&a. Acc%r!in*l' NAS8DECO &rae! $ha$ $he c%"&lain$ -e

!i#"i##e! an! %n i$# c%+n$erclai"' $ha$ $he &lain$i6 -e

c%n!e"ne! $% &a P3'. in c%nce&$ %, a$$%rne# ,ee# a#

(ell a# e5e"&lar !a"a*e#.

@In i$# an#(er' $he !e,en!an$ PN liBe(i#e rei$era$e! $he

*r%+n!# %, i$# "%$i%n $% !i#"i##' na"el 14 $he c%"&lain$

#$a$e# n% ca+#e %, ac$i%n a*ain#$ $he !e,en!an$ PN; 74 $ha$

PN i# n%$ a &ar$ $% $he c%n$rac$ alle*e! in &ar. > %, $he

c%"&lain$ an! $ha$ $he alle*e! #er)ice# ren!ere! - $he

&lain$i6 $% $he !e,en!an$ PAS8MIL +&%n (hich &lain$i6# #+i$ i#

erec$e!' (a# ren!ere! l%n* -e,%re PN $%%B &%##e##i%n %, $he

a##e$# %, $he !e,en!an$ PAS8MIL +n!er LOI N%. 1:=7.: &l+# in$ere#$ $here%n a$ $he ra$e %

10V &er ann+" a# clai"e! ,r%" Se&$e"-er 73' 1=: +n$i

,+ll &ai!

X7. The #+" %, P17'270.2> a# a$$%rne# ,ee#; an!

X. C%#$#

XSO ORDERED

XManila' Phili&&ine#' Se&$e"-er 0' 1=:>

XSGD4 ERNESTO S. TENGCO


28/103

X/+!*e X@

R+lin* %, $he C%+r$ %, A&&eal#

AJr"in* $he $rial c%+r$' $he CA hel! $ha$ i$ (a# %6en#i)e $%

$he -a#ic $ene$# %, 9+#$ice an! e+i$ ,%r a c%r&%ra$i%n $% $aBe%)er an! %&era$e $he -+#ine## %, an%$her c%r&%ra$i%n' (hile

!i#a)%(in* %r re&+!ia$in* an re#&%n#i-ili$' %-li*a$i%n %r

lia-ili$ ari#in* $here,r%". 0

Hence' $hi# Pe$i$i%n. 3

I##+e#

In $heir Me"%ran!+"' &e$i$i%ner# rai#e $he ,%ll%(in* err%r# ,%r

$he C%+r$# c%n#i!era$i%nchanr%-1e# )ir$+al 1a( li-rar

@I

The C%+r$ %, A&&eal# *ra)el erre! in la( in h%l!in* $he herein

&e$i$i%ner# lia-le ,%r $he +n&ai! c%r&%ra$e !e-$# %, PAS8MIL' a

c%r&%ra$i%n (h%#e c%r&%ra$e e5i#$ence ha# n%$ -een le*all

e5$in*+i#he! %r $er"ina$e!' #i"&l -eca+#e %, &e$i$i%ner#

$aBe


29/103

Hence' an a&&lica$i%n %, $he !%c$rine %, &iercin* $he

c%r&%ra$e )eil #h%+l! -e !%ne (i$h ca+$i%n. 12 A c%+r$ #h%+l!

-e "in!,+l %, $he "ilie+ (here i$ i# $% -e a&&lie!. 1: I$ "+#$

-e cer$ain $ha$ $he c%r&%ra$e c$i%n (a# "i#+#e! $% #+ch an

e5$en$ $ha$ in9+#$ice' ,ra+!' %r cri"e (a# c%""i$$e! a*ain#$

an%$her' in !i#re*ar! %, i$# ri*h$#. 1= The (r%n*!%in* "+#$ -e

clearl an! c%n)incin*l e#$a-li#he!; i$ cann%$ -e &re#+"e!.7 O$her(i#e' an in9+#$ice $ha$ (a# ne)er +nin$en!e! "a

re#+l$ ,r%" an err%ne%+# a&&lica$i%n. 71

Thi# C%+r$ ha# &ierce! $he c%r&%ra$e )eil $% (ar! %6 a

9+!*"en$ cre!i$' 77 $% a)%i! incl+#i%n %, c%r&%ra$e a##e$# a#

&ar$ %, $he e#$a$e %, $he !ece!en$' 7 $% e#ca&e lia-ili$

ari#in* ,r%" a !e-$' 70 %r $% &er&e$+a$e ,ra+! an!Q%r c%n,+#e

le*i$i"a$e i##+e# 73 ei$her $% &r%"%$e %r $% #hiel! +n,air

%-9ec$i)e# 7> %r $% c%)er +& an %$her(i#e -la$an$ )i%la$i%n %,

$he &r%hi-i$i%n a*ain#$ ,%r+" %, Ac$ N%

13. 03 The#e a##e$# (ere la$er c%n)ee! $% PN ,%r a

c%n#i!era$i%n' $he $er"# %, (hich (ere e"-%!ie! in $he

Re!e"&$i%n A*ree"en$ 0> PN' a# #+cce##%r


30/103

In $he in#$an$ ca#e' $he CA erre! in aJr"in* $he $rial c%+r$#

li,$in* %, $he c%r&%ra$e "a#B. 3 The CA !i! n%$ &%in$ $% an

,ac$ e)i!encin* -a! ,ai$h %n $he &ar$ %, PN an! i$# $ran#,eree.

31 The c%r&%ra$e c$i%n (a# n%$ +#e! $% !e,ea$ &+-lic

c%n)enience' 9+#$i, a (r%n*' &r%$ec$ ,ra+! %r !e,en! cri"e.

37 N%ne %, $he ,%re*%in* e5ce&$i%n# (a# #h%(n $% e5i#$ in $he

&re#en$ ca#e. 3 On $he c%n$rar' $he li,$in* %, $he c%r&%ra$e

)eil (%+l! re#+l$ in "ani,e#$ in9+#$ice. Thi# (e cann%$ all%(.

N% Mer*er %r

C%n#%li!a$i%n

Re#&%n!en$ ,+r$her clai"# $ha$ &e$i$i%ner# #h%+l! -e hel!

lia-le ,%r $he +n&ai! %-li*a$i%n# %, PAS8MIL - )ir$+e %, LOI

N%#. 1:= F%r a )ali! "er*er %r c%n#%li!a$i%n' $he

a&&r%)al - $he Sec+ri$ie# an! E5chan*e C%""i##i%n SEC4 %,

$he ar$icle# %, "er*er %r c%n#%li!a$i%n i# re+ire!. 32 The#e

ar$icle# "+#$ liBe(i#e -e !+l a&&r%)e! - a "a9%ri$ %, $he

re#&ec$i)e #$%cBh%l!er# %, $he c%n#$i$+en$ c%r&%ra$i%n#. 3:

In $he ca#e a$ -ar' (e h%l! $ha$ $here i# n% "er*er %r

c%n#%li!a$i%n (i$h re#&ec$ $% PAS8MIL an! PN. The &r%ce!+re

&re#cri-e! +n!er Ti$le I %, $he C%r&%ra$i