COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. JOHN L. MANNING, W.D. McDONALD, E.E.

SIMMONS and
THE COURT OF TAX APPEALS, Respondents.

G.R. No. L-28398. August 6, 1975

CASTRO, J.:

Facts:

Under a trust agreement, Julius Reese who owned 24,700 shares of the 25,000 common shares of MANTRASCO,
and the three private respondents who owned the rest, at 100 shares each, deposited all their shares with the
Trustees. The trust agreement provided that upon Reese’s death MANTRASCO shall purchase Reese’s shares. The
trust agreement was executed in view of Reese’s desire that upon his death the Company would continue under
the management of respondents. Upon Reese’s death and partial payment by the company of Reeses’s share, a
new certificate was issued in the name of MANTRASCO, and the certificate indorsed to the Trustees. Subsequently,
the stockholders reverted the 24,700 shares in the Treasury to the capital account of the company as stock
dividends to be distributed to the stockholders. When the entire purchase price of Reese’s interest in the company
was paid in full by the latter, the trust agreement was terminated, and the shares held in trust were delivered to
the company.

The Bureau of Internal Revenue concluded that the distribution of the 24,700 shares of Reese as stock dividends
was in effect a distribution of the "assets or property of the corporation." It therefore assessed respondents for
deficiency income taxes as well as for fraud penalty and interest charges. The Court of Tax Appeals absolved
respondent from any liability for receiving the questioned stock dividends on the ground that their respective one-
third interest in the Company remained the same before and after the declaration of the stock dividends and only
the number of shares held by each of them had changed.

ISSUE:

Whether the shares involved are treasury shares.

RULING:

The Supreme Court held that the newly acquired shares were not treasury shares; their
declaration as treasury stock dividends was a complete nullity and that the assessment by
the Commissioner of fraud penalty and the imposition of interest charges pursuant to the
provision of the Tax Code were made in accordance with law.
WILSON P. GAMBOA, Petitioner, vs.

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

G.R. No. 176579

CORONA, C.J.,

FACTS

Movants Philippine Stock Exchange’s (PSE) President, Manuel V. Pangilinan, Napoleon L. Nazareno, and the
Securities and Exchange Commission (SEC) contend that the term “capital” in Section 11, Article XII of the
Constitution has long been settled and defined to refer to the total outstanding shares of stock, whether voting or
non-voting. In fact, movants claim that the SEC, which is the administrative agency tasked to enforce the 60-40
ownership requirement in favor of Filipino citizens in the Constitution and various statutes, has consistently
adopted this particular definition in its numerous opinions. Movants point out that with the 28 June 2011 Decision,
the Court in effect introduced a “new” definition or “midstream redefinition” of the term “capital” in Section 11,
Article XII of the Constitution.

ISSUE

Whether the term “capital” includes both voting and non-voting shares.

RULING

NO.

The Constitution expressly declares as State policy the development of an economy “effectively controlled” by
Filipinos. Consistent with such State policy, the Constitution explicitly reserves the ownership and operation of
public utilities to Philippine nationals, who are defined in the Foreign Investments Act of 1991 as Filipino citizens,
or corporations or associations at least 60 percent of whose capital with voting rights belongs to Filipinos. The FIA’s
implementing rules explain that “[f]or stocks to be deemed owned and held by Philippine citizens or Philippine
nationals, mere legal title is not enough to meet the required Filipino equity. Full beneficial ownership of the
stocks, coupled with appropriate voting rights is essential.” In effect, the FIA clarifies, reiterates and confirms the
interpretation that the term “capital” in Section 11, Article XII of the 1987 Constitution refers to shares with voting
rights, as well as with full beneficial ownership. This is precisely because the right to vote in the election of
directors, coupled with full beneficial ownership of stocks, translates to effective control of a corporation.
CAGAYAN FISHING DEVELOPMENT CO., INC., plaintiff-appellant, vs.

TEODORO SANDIKO, defendant-appellee.

G.R. No. L-43350, December 23, 1937

LAUREL, J.:

FACTS:

Manuel Tabora is the registered owner of four parcels of land situated in the barrio of Linao, town of Aparri,
Province of Cagayan. To guarantee the payment of a loan in the sum of P8,000, Manuel Tabora, on August 14,
1929, executed in favor of the Philippine National Bank a first mortgage on the four parcels of land above-
mentioned. A second mortgage in favor of the same bank was in April of 1930 executed by Tabora over the same
lands to guarantee the payment of another loan amounting to P7,000. A third mortgage on the same lands was
executed on April 16, 1930 in favor of Severina Buzon to whom Tabora was indebted in the sum of P2,9000.

Tabora executed a public document entitled "Escritura de Transpaso de Propiedad Inmueble" by virtue of which
the four parcels of land owned by him was sold to the plaintiff company, said to under process of incorporation, in
consideration of one peso (P1) subject to the mortgages in favor of the Philippine National Bank and Severina
Buzon and, to the condition that the certificate of title to said lands shall not be transferred to the name of the
plaintiff company until the latter has fully and completely paid Tabora's indebtedness to the Philippine National
Bank.

The plaintiff company filed its article incorporation with the Bureau of Commerce and Industry on October 22,
1930. A year later, on October 28, 1931, the board of directors of said company adopted a resolution authorizing
its president, Jose Ventura, to sell the four parcels of lands in question to Teodoro Sandiko for P42,000.

Teodoro Sandiko drawn a promissory note in favor of Cagayan Fishing Development Co., Inc., payable after one
year. Having failed to pay the sum stated in the promissory note, plaintiff, on January 25, 1934, brought this action
in the Court of First Instance of Manila praying that judgment be rendered against the defendant for the sum of
P25,300.

The transfer made by Tabora to the Cagayan fishing Development Co., Inc. was affected on May 31, 1930 and the
actual incorporation of said company was affected later on October 22, 1930. In other words, the transfer was
made almost five months before the incorporation of the company. Unquestionably, a duly organized corporation
has the power to purchase and hold such real property as the purposes for which such corporation was formed
may permit and for this purpose may enter into such contracts as may be necessary.

ISSUE:

Whether the subsequent sale of the properties to Sandiko is valid.

RULING:

In the case before us, it can not be denied that the plaintiff was not yet incorporated when it entered into a
contract of sale. The contract itself referred to the plaintiff as "una sociedad en vias de incorporacion." It was not
even a de facto corporation at the time. Not being in legal existence then, it did not possess juridical capacity to
enter into the contract.

Corporations are creatures of the law, and can only come into existence in the manner prescribed by law.
Boiled down to its naked reality, the contract here was entered into not between Manuel Tabora and a non-
existent corporation but between the Manuel Tabora as owner of the four parcels of lands on the one hand and
the same Manuel Tabora, his wife and others, as mere promoters of a corporations on the other hand. For reasons
that are self-evident, these promoters could not have acted as agent for a projected corporation since that which
no legal existence could have no agent. A corporation, until organized, has no life and therefore no faculties.
THE MUNICIPALITY OF MALABANG, LANAO DEL SUR, and AMER MACAORAO BALINDONG, petitioners, vs.

PANGANDAPUN BENITO, HADJI NOPODIN MACAPUNUNG, HADJI HASAN MACARAMPAD, FREDERICK V. DUJERTE
MONDACO ONTAL, MARONSONG ANDOY, MACALABA INDAR LAO. respondents.

G.R. No. L-28113, March 28, 1969

CASTRO, J.:

FACTS:

The petitioner Amer Macaorao Balindong is the mayor of Malabang, Lanao del Sur, while the respondent
Pangandapun Bonito is the mayor, and the rest of the respondents are the councilors, of the municipality of
Balabagan of the same province. Balabagan was formerly a part of the municipality of Malabang, having been
created on March 15, 1960, by Executive Order 386 of the then President Carlos P. Garcia, out of barrios and sitios
1 of the latter municipality.

The petitioners brought this action for prohibition to nullify Executive Order 386 and to restrain the respondent
municipal officials from performing the functions of their respective office.

The respondents argue that the municipality of Balabagan is at least a de facto corporation, having been organized
under color of a statute before this was declared unconstitutional, its officers having been either elected or
appointed, and the municipality itself having discharged its corporate functions for the past five years preceding
the institution of this action. It is contended that as a de facto corporation, its existence cannot be collaterally
attacked, although it may be inquired into directly in an action for quo warranto at the instance of the State and
not of an individual like the petitioner Balindong.

ISSUE:

Whether the municipality of Balabagan is a de facto corporation.

RULING:

Accordingly, we address ourselves to the question whether a statute can lend color of validity to an attempted
organization of a municipality despite the fact that such statute is subsequently declared unconstitutional.

In the cases where a de facto municipal corporation was recognized as such despite the fact that the statute
creating it was later invalidated, the decisions could fairly be made to rest on the consideration that there was
some other valid law giving corporate vitality to the organization. Hence, in the case at bar, the mere fact that
Balabagan was organized at a time when the statute had not been invalidated cannot conceivably make it a de
facto corporation, as, independently of the Administrative Code provision in question, there is no other valid
statute to give color of authority to its creation.

Executive Order 386 "created no office." This is not to say, however, that the acts done by the municipality of
Balabagan in the exercise of its corporate powers are a nullity because the executive order "is, in legal
contemplation, as inoperative as though it had never been passed." For the existence of Executive, Order 386 is
"an operative fact which cannot justly be ignored."

There is then no basis for the respondents' apprehension that the invalidation of the executive order creating
Balabagan would have the effect of unsettling many an act done in reliance upon the validity of the creation of
that municipality.
ACCORDINGLY, the petition is granted, Executive Order 386 is declared void, and the respondents are hereby
permanently restrained from performing the duties and functions of their respective offices.
C. ARNOLD HALL and BRADLEY P. HALL, petitioners, vs.

EDMUNDO S. PICCIO, Judge of the Court of First Instance of Leyte, FRED BROWN, EMMA BROWN, HIPOLITA
CAPUCIONG, in his capacity as receiver of the Far Eastern Lumber and Commercial Co., Inc., respondents.

G.R. No. L-2598, June 29, 1950

BENGZON, J.:

FACTS:

On May 28, 1947, the petitioners C. Arnold Hall and Bradley P. Hall, and the respondents Fred Brown, Emma
Brown, Hipolita D. Chapman and Ceferino S. Abella, signed and acknowledged in Leyte, the article of incorporation
of the Far Eastern Lumber and Commercial Co., Inc., organized to engage in a general lumber business to carry on
as general contractors, operators and managers, etc. Attached to the article was an affidavit of the treasurer
stating that 23,428 shares of stock had been subscribed and fully paid with certain properties transferred to the
corporation.

Immediately after the execution of said articles of incorporation, the corporation proceeded to do business with
the adoption of by-laws and the election of its officers. On December 2, 1947, the said articles of incorporation
were filed in the office of the Securities and Exchange Commissioner, for the issuance of the corresponding
certificate of incorporation.

On March 22, 1948, pending action on the articles of incorporation by the aforesaid governmental office, the
respondents Fred Brown, Emma Brown, Hipolita D. Chapman and Ceferino S. Abella filed before the Court of First
Instance alleging among other things that the Far Eastern Lumber and Commercial Co. was an unregistered
partnership; that they wished to have it dissolved because of bitter dissension among the members,
mismanagement and fraud by the managers and heavy financial losses.

The defendants in the suit, namely, C. Arnold Hall and Bradley P. Hall, filed a motion to dismiss, contesting the
court's jurisdiction and the sufficiently of the cause of action

After hearing the parties, the Hon. Edmund S. Piccio ordered the dissolution of the company.

ISSUE:

Whether or not the court had jurisdiction to decree the dissolution of the company.

RULING:

The first proposition above stated is premised on the theory that, inasmuch as the Far Eastern Lumber and
Commercial Co., is a de facto corporation, section 19 of the Corporation Law applies, and therefore the court had
not jurisdiction to take cognizance of said civil case number 381. Section 19 reads as follows:

. . . The due incorporation of any corporations claiming in good faith to be a corporation under this Act and its right
to exercise corporate powers shall not be inquired into collaterally in any private suit to which the corporation may
be a party, but such inquiry may be had at the suit of the Insular Government on information of the Attorney-
General.

There are least two reasons why this section does not govern the situation. Not having obtained the certificate of
incorporation, the Far Eastern Lumber and Commercial Co. — even its stockholders — may not probably claim "in
good faith" to be a corporation.
Under our statue it is to be noted (Corporation Law, sec. 11) that it is the issuance of a certificate of incorporation
by the Director of the Bureau of Commerce and Industry which calls a corporation into being. The immunity if
collateral attack is granted to corporations "claiming in good faith to be a corporation under this act." Such a claim
is compatible with the existence of errors and irregularities; but not with a total or substantial disregard of the law.
Unless there has been an evident attempt to comply with the law the claim to be a corporation "under this act"
could not be made "in good faith." (Fisher on the Philippine Law of Stock Corporations, p. 75. See also Humphreys
vs. Drew, 59 Fla., 295; 52 So., 362.)

Second, this is not a suit in which the corporation is a party. This is a litigation between stockholders of the alleged
corporation, for the purpose of obtaining its dissolution. Even the existence of a de jure corporation may be
terminated in a private suit for its dissolution between stockholders, without the intervention of the state.
REYNALDO M. LOZANO, petitioner, vs.

HON. ELIEZER R. DE LOS SANTOS, Presiding Judge, RTC, Br. 58, Angeles City; and ANTONIO ANDA, respondents.

G.R. No. 125221 June 19, 1997

PUNO, J.:

FACTS:

On December 19, 1995, petitioner Reynaldo M. Lozano filed Civil Case No. 1214 for damages against respondent
Antonio Anda before the Municipal Circuit Trial Court (MCTC), Mabalacat and Magalang, Pampanga. Petitioner
alleged that he was the president of the Kapatirang Mabalacat-Angeles Jeepney Drivers' Association, Inc.
(KAMAJDA) while respondent Anda was the president of the Samahang Angeles-Mabalacat Jeepney Operators' and
Drivers' Association, Inc. (SAMAJODA); in August 1995, upon the request of the Sangguniang Bayan of Mabalacat,
Pampanga, petitioner and private respondent agreed to consolidate their respective associations and form the
Unified Mabalacat-Angeles Jeepney Operators' and Drivers Association, Inc. (UMAJODA); petitioner and private
respondent also agreed to elect one set of officers who shall be given the sole authority to collect the daily dues
from the members of the consolidated association; elections were held on October 29, 1995 and both petitioner
and private respondent ran for president; petitioner won; private respondent protested and, alleging fraud,
refused to recognize the results of the election; private respondent also refused to abide by their agreement and
continued collecting the dues from the members of his association despite several demands to desist.

Petitioner was thus constrained to file the complaint to restrain private respondent from collecting the dues.

The trial court found the dispute to be intracorporate, hence, subject to the jurisdiction of the SEC, and ordered
the MCTC to dismiss Civil Case No. 1214 accordingly.

ISSUE:

Whether there is a corporation by estoppel placing the case within the ambit of SEC jurisdiction being
intracorporate in nature.

RULING:

There is no intracorporate nor partnership relation between petitioner and private respondent. The controversy
between them arose out of their plan to consolidate their respective jeepney drivers' and operators' associations
into a single common association. This unified association was, however, still a proposal. It had not been approved
by the SEC, neither had its officers and members submitted their articles of consolidation is accordance with
Sections 78 and 79 of the Corporation Code. Consolidation becomes effective not upon mere agreement of the
members but only upon issuance of the certificate of consolidation by the SEC. 13 When the SEC, upon processing
and examining the articles of consolidation, is satisfied that the consolidation of the corporations is not
inconsistent with the provisions of the Corporation Code and existing laws, it issues a certificate of consolidation
which makes the reorganization official. 14 The new consolidated corporation comes into existence and the
constituent corporations dissolve and cease to exist. 15

The KAMAJDA and SAMAJODA to which petitioner and private respondent belong are duly registered with the SEC,
but these associations are two separate entities. The dispute between petitioner and private respondent is not
within the KAMAJDA nor the SAMAJODA. It is between members of separate and distinct associations. Petitioner
and private respondent have no intracorporate relation much less do they have an intracorporate dispute. The SEC
therefore has no jurisdiction over the complaint.
The doctrine of corporation by estoppel advanced by private respondent cannot override jurisdictional
requirements. Jurisdiction is fixed by law and is not subject to the agreement of the parties. It cannot be acquired
through or waived, enlarged or diminished by, any act or omission of the parties, neither can it be conferred by the
acquiescence of the court.

Corporation by estoppel is founded on principles of equity and is designed to prevent injustice and unfairness. It
applies when persons assume to form a corporation and exercise corporate functions and enter into business
relations with third person. Where there is no third person involved and the conflict arises only among those
assuming the form of a corporation, who therefore know that it has not been registered, there is no corporation by
estoppel.

IN VIEW WHEREOF, the petition is granted and the decision dated April 18, 1996 and the order dated May 31, 1996
of the Regional Trial Court, Branch 58, Angeles City are set aside. The Municipal Circuit Trial Court of Mabalacat
and Magalang, Pampanga is ordered to proceed with dispatch in resolving Civil Case No. 1214. No costs.
MARIANO A. ALBERT, plaintiff-appellant, vs.

UNIVERSITY PUBLISHING CO., INC., defendant-appellee.

G.R. No. L-19118 June 16, 1965

BENGZON, J.P., J.:

FACTS:

Plaintiff Albert, almost sixteen (16) years ago, sued University Publishing Co., Inc. for breach of contract. On April
18, 1958, in L-9300, this court awarded the sum of P15,000.00 as damages. On October 24, 1960, in L-15275, to
clarify whether the P7,000.00 paid on account should be deducted therefrom, this Court decided that the amount
should be paid in full because said partial payment was already taken into consideration when it fixed P15,000.00
as damages.

From the inception until the time when the decision in L-15275 was to be executed, corporate existence on the
part of University Publishing Co., Inc. seems to have been taken for granted, for it was not put in issue in either of
the cases abovementioned. However, when the Court of First Instance of Manila issued on July 22, 1961 an order
of execution against University Publishing Co., Inc., plaintiff, speaking also for the Sheriff of Manila, reported to the
Court by petition of August 10, 1961 that there is no such entity as University Publishing Co., Inc., thereupon
praying that, Jose M. Aruego being the real defendant, the writ of execution be issued against him. Attached to
said petition was a certification from the Securities and Exchange Commission dated July 31, 1961 attesting: "The
records of this Commission do not show the registration of UNIVERSITY PUBLISHING CO., INC., either as a
corporation or partnership." The issue of its corporate existence was then clearly and squarely presented before
the court.

University Publishing Co., Inc., instead of informing the lower court that it had in its possession copies of its
certificate of registration its by-laws, and all other pertinent papers material to the point in dispute — corporate
existence — chose to remain silent thereon. It merely countered the aforesaid petition by filing through counsel
(Jose M. Aruego's own law firm) a manifestation stating that Jose M. Aruego is not a party to this case and,
therefore, plaintiff's petition should be denied. After the court a quo denied the request that a writ of execution be
issued against Jose M. Aruego, plaintiff brought this present appeal on the issue of the corporate existence of
University Publishing Co., Inc., as determinative of the responsibility of Jose M. Aruego, the person or official who
had always moved and acted for and in behalf of University Publishing Co., Inc.

It may be worth noting again that Jose M. Aruego started the negotiation which culminated in the contract
between the parties, signing said contract as president of University Publishing Co., Inc. Likewise he was the one
who made partial payments up to the amount of P7,000.00 for, and in behalf of University Publishing Co., Inc. He
also appeared not only as a witness but as lawyer, signing some pleadings or motions in defense of University
Publishing Co., Inc., although in other instances it is one of his associates or members of his law firm who did so.
Known is the fact that even a duly existing corporation can only move and act through natural persons. In this case
it was Jose M. Aruego who moved and acted as or for University, Publishing Co., Inc.

It is elemental that the courts can only decide the merits of a given suit according to the records that are in the
case. It is true that in the two previous cases decided by this Court, the first, awarding damages (L-9300), the
second, clarifying the amount of P15,000.00 awarded as such (L-15275), the corporate existence of University
Publishing Co., Inc. as a legal entity was merely taken for granted.

However, when the said issue was squarely presented before the court, and University Publishing Co., Inc. chose to
keep the courts in the dark by withholding pertinent documents and papers in its possession and control, perforce
this Court had to decide the points raised according to the records of the case and whatever related matters
necessarily included therein. Hence, as a consequence of the certification of the Securities and Exchange
Commission that its records "do not show the registration of University Publishing Co., Inc., either as a corporation
or partnership," this Court concluded that by virtue of its non-registration, it can not be considered a corporation.
We further said that it has therefore no personality separate from Jose M. Aruego and that Aruego was in reality
the one who answered and litigated through his own law firm counsel. Stated otherwise, we found that Aruego
was in fact, if not in name, the defendant. 1 Indeed, the judge of the court of first instance wrote in his decision
thus: "Defendant Aruego (all along the judge who pens this decision considered that the defendant here is the
president of the University Publishing Co., Inc. since it was he who really made the contract with Justice Albert) 2"
And this portion of the decision made by the court a quo was never questioned by the defendant.

The above statement made by the court a quo in its decision compelled this Court to carefully examine the facts
surrounding the dispute starting from the time of the negotiation of the business proposition, followed by the
signing of the contract; considered the benefits received; took into account the partial payments made, the
litigation conducted, the decisions rendered and the appeals undertaken. After thus considering the facts and
circumstances, keeping in mind that even with regard to corporations shown as duly registered and existing, we
have in many a case pierced the veil of corporate fiction to administer the ends of justice, 3 we held Aruego
personally responsible for his acts on behalf of University Publishing Co., Inc.

Defendant would reply that in all those cases where the Court pierced the veil of corporate fiction the officials held
liable were made party defendants. As stated, defendant-appellee could not even pretend to possess corporate
fiction — in view to its non-registration per the evidence — so that from the start Aruego was the real defendant.
Since the purpose of formally impleading a party is to assure him a day in court, once the protective mantle of due
process of law has in fact been accorded a litigant, whatever the imperfection in form, the real litigant may be held
liable as a party. Jose M. Aruego definitely had his day in court, and due process of law was enjoyed by him as a
matter of fact as revealed by the records of the case. 4

The dispositive portion of the decision the reconsideration of which is being sought is the following: "Premises
considered, the order appealed from is hereby set aside and the case remanded ordering the lower court to hold
supplementary proceedings for the purpose of carrying the judgment into effect against University Publishing Co.,
Inc. and/or Jose M. Aruego."

According to several cases a litigant is not allowed to speculate on the decision the court may render in the case. 5
The University Publishing Co., Inc. speculated on a favorable decision based on the issue that Jose M. Aruego, not
being a formal party defendant in this case, a writ of execution against him was not in order. It, therefore,
preferred to suppress vital documents under its possession and control rather than to rebut the certification issued
by the Securities and Exchange Commission that according to its records University Publishing Co., Inc. was not
registered. If the lower court's order is sustained, collection of damages becomes problematical. If a new suit is
filed against Aruego, prescription might be considered as effective defense, aside from the prospect of another ten
years of pending litigation. Such are the possible reasons for adopting the position of speculation of our decision.
Our ruling appeared to be unfavorable to such speculation. It was only after the receipt of the adverse decision
promulgated by this Court that University Publishing Co., Inc., disclosed its registration papers. For purposes of this
case only and according to its particular facts and circumstances, we rule that in view of the late disclosure of said
papers by the University Publishing Co., Inc., the same can no longer considered at this stage of the proceedings.

Specifically said original papers are:

1. Original Certificate of Registration of the University Publishing Co., Inc., signed by then Director of Commerce,
Cornelio Balmaceda, showing that said company was duly registered as a corporation with the Mercantile Registry
of the then Bureau of Commerce (predecessor of the Securities and Exchange Commission) as early as August 7,
1936;

2. Original copy of the Articles of Incorporation of the University Publishing Co., Inc consisting of five (5) pages,
showing that said corporation was incorporated as early as August 1, 1936, Manila, Philippines, with an authorized
capital stock of TEN THOUSAND PESOS (P10,000), TWO THOUSAND PESOS (P2,000.00) of which was fully
subscribed and FIVE HUNDRED PESOS (P500.00), fully paid up; that it had a corporate existence of fifty (50) years
and the original incorporators of the same are: Jose M. Aruego, Jose A. Adeva, Delfin T. Bruno Enrique Rimando
and Federico Mangahas;

3. The original copy of the By-Laws of the University Publishing Co., Inc. consisting of eleven (11) pages, showing
that it exercised its franchise as early as September 4, 1936;

4. A certificate of Reconstitution of Records issued by the Securities and Exchange Commission recognized the
corporate existence of the University Publishing, Co., Inc. as early as August 7, 1936.

Defendant-appellee could have presented the foregoing papers before the lower court to counter the evidence of
non-registration, but defendant-appellee did not do so. It could have reconstituted its records at that stage of the
proceedings, instead of only on April 1, 1965, after decision herein was promulgated.

It follows, therefore, that defendant-appellee may not now be allowed to submit the abovementioned papers to
form part of the record. Sec. 7 of Rule 48, Rules of Court (in relation to Sec. 1. Rule 42), invoked by movant, states:

SEC. 7. Original papers may be required. Whenever it is necessary or proper in the opinion of the court that original
papers of any kind should be inspected in the court on appeal, it may make such order for the transmission,
safekeeping, and return of such original papers as may seem proper, and the court may receive and consider such
original papers in connection with the record.
The provision obviously refers to papers the originals of which are of record in the lower court, which the appellate
court may require to be transmitted for inspection. The original papers in question not having been presented
before the lower court as part of its record, the same cannot be transmitted on appeal under the aforesaid section.
In contrast, the certification as to University Publishing Co., Inc.'s non-registration forms part of the record in the
lower court.

For original papers not part of the lower court's record, the applicable rule is Sec. 1 of Rule 59 on New Trial. Under
said Rule, the papers in question cannot be admitted, because they are not "newly discovered evidence ," for with
due diligence movant could have presented them in the lower court, since they were in its possession and control.

As far as this case is concerned, therefore, University Publishing Co., Inc. must be deemed as unregistered, since by
defendant-appellee's choice the record shows it to be so. Defendant-appellee apparently sought to delay the
execution by remaining unregistered per the certification of the Securities and Exchange Commission. It was only
when execution was to be carried out, anyway, against it and/or its president — and almost 19 years after the
approval of the law authorizing reconstitution — that it reconstituted its records to show its registration, thereby
once more attempting to delay the payment of plaintiff's claim, long since adjudged meritorious. Deciding,
therefore, as we must, this particular case on its record as submitted by the parties, defendant-appellee's
proffered evidence of its corporate existence cannot at this stage be considered to alter the decision reached
herein. This is not to preclude in future cases the consideration of properly submitted evidence as to defendant-
appellee's corporate existence.

WHEREFORE, the motion for reconsideration and for leave to file original papers not in the record, is hereby
denied. It is so ordered.