.R. No.

L-23145      November 29, 1968 specific remedies, with full and ample support from legal
doctrines of weight and significance. chanroblesvirtualawlibrarychanrobles virtual law library

TESTATE ESTATE OF IDONAH SLADE PERKINS, deceased.

RENATO D. TAYAG, ancillary administrator-appellee, The facts will explain why. As set forth in the brief of appellant
vs. BENGUET CONSOLIDATED, INC., oppositor-appellant. Benguet Consolidated, Inc., Idonah Slade Perkins, who died on
March 27, 1960 in New York City, left among others, two stock
Cirilo F. Asperillo, Jr., for ancillary administrator-appellee. certificates covering 33,002 shares of appellant, the certificates
Ross, Salcedo, Del Rosario, Bito and Misa for oppositor- being in the possession of the County Trust Company of New
appellant. York, which as noted, is the domiciliary administrator of the
estate of the deceased.2 Then came this portion of the
FERNANDO, J.: appellant's brief: "On August 12, 1960, Prospero Sanidad
instituted ancillary administration proceedings in the Court of
Confronted by an obstinate and adamant refusal of the First Instance of Manila; Lazaro A. Marquez was appointed
domiciliary administrator, the County Trust Company of New ancillary administrator, and on January 22, 1963, he was
York, United States of America, of the estate of the deceased substituted by the appellee Renato D. Tayag. A dispute arose
Idonah Slade Perkins, who died in New York City on March 27, between the domiciary administrator in New York and the
1960, to surrender to the ancillary administrator in the ancillary administrator in the Philippines as to which of them
Philippines the stock certificates owned by her in a Philippine was entitled to the possession of the stock certificates in
corporation, Benguet Consolidated, Inc., to satisfy the question. On January 27, 1964, the Court of First Instance of
legitimate claims of local creditors, the lower court, then Manila ordered the domiciliary administrator, County Trust
presided by the Honorable Arsenio Santos, now retired, issued Company, to "produce and deposit" them with the ancillary
on May 18, 1964, an order of this tenor: "After considering the administrator or with the Clerk of Court. The domiciliary
motion of the ancillary administrator, dated February 11, 1964, administrator did not comply with the order, and on February
as well as the opposition filed by the Benguet Consolidated, 11, 1964, the ancillary administrator petitioned the court to
Inc., the Court hereby (1) considers as lost for all purposes in "issue an order declaring the certificate or certificates of stocks
connection with the administration and liquidation of the covering the 33,002 shares issued in the name of Idonah Slade
Philippine estate of Idonah Slade Perkins the stock certificates Perkins by Benguet Consolidated, Inc., be declared [or]
covering the 33,002 shares of stock standing in her name in the considered as lost."3 chanrobles virtual law library

books of the Benguet Consolidated, Inc., (2) orders said

certificates cancelled, and (3) directs said corporation to issue It is to be noted further that appellant Benguet Consolidated,
new certificates in lieu thereof, the same to be delivered by said Inc. admits that "it is immaterial" as far as it is concerned as to
corporation to either the incumbent ancillary administrator or to "who is entitled to the possession of the stock certificates in
the Probate Division of this Court."1 chanrobles virtual law library
question; appellant opposed the petition of the ancillary
administrator because the said stock certificates are in
From such an order, an appeal was taken to this Court not by existence, they are today in the possession of the domiciliary
the domiciliary administrator, the County Trust Company of administrator, the County Trust Company, in New York,
New York, but by the Philippine corporation, the Benguet U.S.A...."4
chanrobles virtual law library

Consolidated, Inc. The appeal cannot possibly prosper. The

challenged order represents a response and expresses a policy, It is its view, therefore, that under the circumstances, the stock
to paraphrase Frankfurter, arising out of a specific problem, certificates cannot be declared or considered as lost. Moreover,
addressed to the attainment of specific ends by the use of it would allege that there was a failure to observe certain
requirements of its by-laws before new stock certificates could possession of all assets of the decedent within the jurisdiction of
be issued. Hence, its appeal. chanroblesvirtualawlibrarychanrobles virtual law library the Philippines. Nor could it. Such a power is inherent in his
duty to settle her estate and satisfy the claims of local
As was made clear at the outset of this opinion, the appeal lacks creditors.5 As Justice Tuason speaking for this Court made clear,
merit. The challenged order constitutes an emphatic affirmation it is a "general rule universally recognized" that administration,
of judicial authority sought to be emasculated by the wilful whether principal or ancillary, certainly "extends to the assets of
conduct of the domiciliary administrator in refusing to accord a decedent found within the state or country where it was
obedience to a court decree. How, then, can this order be granted," the corollary being "that an administrator appointed in
stigmatized as illegal?
chanrobles virtual law library
one state or country has no power over property in another
state or country."6chanrobles virtual law library

As is true of many problems confronting the judiciary, such a

response was called for by the realities of the situation. What It is to be noted that the scope of the power of the ancillary
cannot be ignored is that conduct bordering on wilful defiance, if administrator was, in an earlier case, set forth by Justice
it had not actually reached it, cannot without undue loss of Malcolm. Thus: "It is often necessary to have more than one
judicial prestige, be condoned or tolerated. For the law is not so administration of an estate. When a person dies intestate
lacking in flexibility and resourcefulness as to preclude such a owning property in the country of his domicile as well as in a
solution, the more so as deeper reflection would make clear its foreign country, administration is had in both countries. That
being buttressed by indisputable principles and supported by which is granted in the jurisdiction of decedent's last domicile is
the strongest policy considerations. chanroblesvirtualawlibrarychanrobles virtual law library
termed the principal administration, while any other
administration is termed the ancillary administration. The
It can truly be said then that the result arrived at upheld and reason for the latter is because a grant of administration does
vindicated the honor of the judiciary no less than that of the not ex proprio vigore  have any effect beyond the limits of the
country. Through this challenged order, there is thus dispelled country in which it is granted. Hence, an administrator
the atmosphere of contingent frustration brought about by the appointed in a foreign state has no authority in the
persistence of the domiciliary administrator to hold on to the [Philippines]. The ancillary administration is proper, whenever a
stock certificates after it had, as admitted, voluntarily submitted person dies, leaving in a country other than that of his last
itself to the jurisdiction of the lower court by entering its domicile, property to be administered in the nature of assets of
appearance through counsel on June 27, 1963, and filing a the deceased liable for his individual debts or to be distributed
petition for relief from a previous order of March 15, 1963. chanroblesvirtualawlibrarychanrobles virtual law library
among his heirs."7 chanrobles virtual law library

Thus did the lower court, in the order now on appeal, impart It would follow then that the authority of the probate court to
vitality and effectiveness to what was decreed. For without it, require that ancillary administrator's right to "the stock
what it had been decided would be set at naught and nullified. certificates covering the 33,002 shares ... standing in her name
Unless such a blatant disregard by the domiciliary in the books of [appellant] Benguet Consolidated, Inc...." be
administrator, with residence abroad, of what was previously respected is equally beyond question. For appellant is a
ordained by a court order could be thus remedied, it would have Philippine corporation owing full allegiance and subject to the
entailed, insofar as this matter was concerned, not a partial but unrestricted jurisdiction of local courts. Its shares of stock
a well-nigh complete paralysis of judicial authority. chanroblesvirtualawlibrarychanrobles virtual law library
cannot therefore be considered in any wise as immune from
lawful court orders. chanroblesvirtualawlibrarychanrobles virtual law library

1. Appellant Benguet Consolidated, Inc. did not dispute the

power of the appellee ancillary administrator to gain control and Our holding in Wells Fargo Bank and Union v. Collector of
Internal Revenue8 finds application. "In the instant case, the
actual situs of the shares of stock is in the Philippines, the It may be admitted of course that such alleged loss as found by
corporation being domiciled [here]." To the force of the above the lower court did not correspond exactly with the facts. To be
undeniable proposition, not even appellant is insensible. It does more blunt, the quality of truth may be lacking in such a
not dispute it. Nor could it successfully do so even if it were so conclusion arrived at. It is to be remembered however, again to
minded. chanroblesvirtualawlibrarychanrobles virtual law library borrow from Frankfurter, "that fictions which the law may rely
upon in the pursuit of legitimate ends have played an important
2. In the face of such incontrovertible doctrines that argue in a part in its development."11 chanrobles virtual law library

rather conclusive fashion for the legality of the challenged

order, how does appellant, Benguet Consolidated, Inc. propose Speaking of the common law in its earlier period, Cardozo could
to carry the extremely heavy burden of persuasion of precisely state fictions "were devices to advance the ends of justice,
demonstrating the contrary? It would assign as the basic error [even if] clumsy and at times offensive."12 Some of them have
allegedly committed by the lower court its "considering as lost persisted even to the present, that eminent jurist, noting "the
the stock certificates covering 33,002 shares of Benguet quasi contract, the adopted child, the constructive trust, all of
belonging to the deceased Idonah Slade Perkins, ..."9 More flourishing vitality, to attest the empire of "as if" today."13 He
specifically, appellant would stress that the "lower court could likewise noted "a class of fictions of another order, the fiction
not "consider as lost" the stock certificates in question when, as which is a working tool of thought, but which at times hides
a matter of fact, his Honor the trial Judge knew, and does know, itself from view till reflection and analysis have brought it to the
and it is admitted by the appellee, that the said stock light."14
chanrobles virtual law library

certificates are in existence and are today in the possession of

the domiciliary administrator in New York."10 chanrobles virtual law library
What cannot be disputed, therefore, is the at times
indispensable role that fictions as such played in the law. There
There may be an element of fiction in the above view of the should be then on the part of the appellant a further refinement
lower court. That certainly does not suffice to call for the in the catholicity of its condemnation of such judicial technique.
reversal of the appealed order. Since there is a refusal, If ever an occasion did call for the employment of a legal fiction
persistently adhered to by the domiciliary administrator in New to put an end to the anomalous situation of a valid judicial order
York, to deliver the shares of stocks of appellant corporation being disregarded with apparent impunity, this is it. What is
owned by the decedent to the ancillary administrator in the thus most obvious is that this particular alleged error does not
Philippines, there was nothing unreasonable or arbitrary in carry persuasion. chanroblesvirtualawlibrarychanrobles virtual law library

considering them as lost and requiring the appellant to issue

new certificates in lieu thereof. Thereby, the task incumbent 3. Appellant Benguet Consolidated, Inc. would seek to bolster
under the law on the ancillary administrator could be discharged the above contention by its invoking one of the provisions of its
and his responsibility fulfilled. chanroblesvirtualawlibrarychanrobles virtual law library
by-laws which would set forth the procedure to be followed in
case of a lost, stolen or destroyed stock certificate; it would
Any other view would result in the compliance to a valid judicial stress that in the event of a contest or the pendency of an
order being made to depend on the uncontrolled discretion of action regarding ownership of such certificate or certificates of
the party or entity, in this case domiciled abroad, which thus far stock allegedly lost, stolen or destroyed, the issuance of a new
has shown the utmost persistence in refusing to yield certificate or certificates would await the "final decision by [a]
obedience. Certainly, appellant would not be heard to contend court regarding the ownership [thereof]."15 chanrobles virtual law library

in all seriousness that a judicial decree could be treated as a

mere scrap of paper, the court issuing it being powerless to Such reliance is misplaced. In the first place, there is no such
remedy its flagrant disregard. chanroblesvirtualawlibrarychanrobles virtual law library
occasion to apply such by-law. It is admitted that the foreign
domiciliary administrator did not appeal from the order now in "an artificial being, invisible, intangible, and existing only in
question. Moreover, there is likewise the express admission of contemplation of law."18 chanrobles virtual law library

appellant that as far as it is concerned, "it is immaterial ... who

is entitled to the possession of the stock certificates ..." Even if The well-known authority Fletcher could summarize the matter
such were not the case, it would be a legal absurdity to impart thus: "A corporation is not in fact and in reality a person, but
to such a provision conclusiveness and finality. Assuming that a the law treats it as though it were a person by process of
contrariety exists between the above by-law and the command fiction, or by regarding it as an artificial person distinct and
of a court decree, the latter is to be followed. chanroblesvirtualawlibrarychanrobles virtual law library
separate from its individual stockholders.... It owes its existence
to law. It is an artificial person created by law for certain
It is understandable, as Cardozo pointed out, that the specific purposes, the extent of whose existence, powers and
Constitution overrides a statute, to which, however, the liberties is fixed by its charter."19 Dean Pound's terse summary,
judiciary must yield deference, when appropriately invoked and a juristic person, resulting from an association of human beings
deemed applicable. It would be most highly unorthodox, granted legal personality by the state, puts the matter
however, if a corporate by-law would be accorded such a high neatly.20chanrobles virtual law library

estate in the jural order that a court must not only take note of
it but yield to its alleged controlling force. chanroblesvirtualawlibrarychanrobles virtual law library
There is thus a rejection of Gierke's genossenchaft theory, the
basic theme of which to quote from Friedmann, "is the reality of
The fear of appellant of a contingent liability with which it could the group as a social and legal entity, independent of state
be saddled unless the appealed order be set aside for its recognition and concession."21 A corporation as known to
inconsistency with one of its by-laws does not impress us. Its Philippine jurisprudence is a creature without any existence until
obedience to a lawful court order certainly constitutes a valid it has received the imprimatur of the state according to law. It
defense, assuming that such apprehension of a possible court is logically inconceivable therefore that it will have rights and
action against it could possibly materialize. Thus far, nothing in privileges of a higher priority than that of its creator. More than
the circumstances as they have developed gives substance to that, it cannot legitimately refuse to yield obedience to acts of
such a fear. Gossamer possibilities of a future prejudice to its state organs, certainly not excluding the judiciary, whenever
appellant do not suffice to nullify the lawful exercise of judicial called upon to do so. chanroblesvirtualawlibrarychanrobles virtual law library

authority.chanroblesvirtualawlibrarychanrobles virtual law library

As a matter of fact, a corporation once it comes into being,

4. What is more the view adopted by appellant Benguet following American law still of persuasive authority in our
Consolidated, Inc. is fraught with implications at war with the jurisdiction, comes more often within the ken of the judiciary
basic postulates of corporate theory. chanroblesvirtualawlibrarychanrobles virtual law library than the other two coordinate branches. It institutes the
appropriate court action to enforce its right. Correlatively, it is
We start with the undeniable premise that, "a corporation is an not immune from judicial control in those instances, where a
artificial being created by operation of law...."16 It owes its life duty under the law as ascertained in an appropriate legal
to the state, its birth being purely dependent on its will. As proceeding is cast upon it. chanroblesvirtualawlibrarychanrobles virtual law library

Berle so aptly stated: "Classically, a corporation was conceived

as an artificial person, owing its existence through creation by a To assert that it can choose which court order to follow and
sovereign power."17 As a matter of fact, the statutory language which to disregard is to confer upon it not autonomy which may
employed owes much to Chief Justice Marshall, who in the be conceded but license which cannot be tolerated. It is to
Dartmouth College decision defined a corporation precisely as argue that it may, when so minded, overrule the state, the
source of its very existence; it is to contend that what any of its
governmental organs may lawfully require could be ignored at by foreign governmental agencies. It is infinitely worse if
will. So extravagant a claim cannot possibly merit approval.
library
chanroblesvirtualawlibrarychanrobles virtual law through the absence of any coercive power by our courts over
juridical persons within our jurisdiction, the force and effectivity
5. One last point. In Viloria v. Administrator of Veterans of their orders could be made to depend on the whim or caprice
Affairs,22 it was shown that in a guardianship proceedings then of alien entities. It is difficult to imagine of a situation more
pending in a lower court, the United States Veterans offensive to the dignity of the bench or the honor of the
Administration filed a motion for the refund of a certain sum of country.chanroblesvirtualawlibrarychanrobles virtual law library

money paid to the minor under guardianship, alleging that the

lower court had previously granted its petition to consider the Yet that would be the effect, even if unintended, of the
deceased father as not entitled to guerilla benefits according to proposition to which appellant Benguet Consolidated seems to
a determination arrived at by its main office in the United be firmly committed as shown by its failure to accept the
States. The motion was denied. In seeking a reconsideration of validity of the order complained of; it seeks its reversal.
such order, the Administrator relied on an American federal Certainly we must at all pains see to it that it does not succeed.
statute making his decisions "final and conclusive on all The deplorable consequences attendant on appellant prevailing
questions of law or fact" precluding any other American official attest to the necessity of negative response from us. That is
to examine the matter anew, "except a judge or judges of the what appellant will get. chanroblesvirtualawlibrarychanrobles virtual law library

United States court."23 Reconsideration was denied, and the

Administrator appealed. chanroblesvirtualawlibrarychanrobles virtual law library That is all then that this case presents. It is obvious why the
appeal cannot succeed. It is always easy to conjure extreme
In an opinion by Justice J.B.L. Reyes, we sustained the lower and even oppressive possibilities. That is not decisive. It does
court. Thus: "We are of the opinion that the appeal should be not settle the issue. What carries weight and conviction is the
rejected. The provisions of the U.S. Code, invoked by the result arrived at, the just solution obtained, grounded in the
appellant, make the decisions of the U.S. Veterans' soundest of legal doctrines and distinguished by its
Administrator final and conclusive when made on claims correspondence with what a sense of realism requires. For
property submitted to him for resolution; but they are not through the appealed order, the imperative requirement of
applicable to the present case, where the Administrator is not justice according to law is satisfied and national dignity and
acting as a judge but as a litigant. There is a great difference honor maintained. chanroblesvirtualawlibrarychanrobles virtual law library

between actions against the Administrator (which must be filed

strictly in accordance with the conditions that are imposed by WHEREFORE, the appealed order of the Honorable Arsenio
the Veterans' Act, including the exclusive review by United Santos, the Judge of the Court of First Instance, dated May 18,
States courts), and those actions where the Veterans' 1964, is affirmed. With costs against oppositor-appelant
Administrator seeks a remedy from our courts and submits to Benguet Consolidated, Inc. chanroblesvirtualawlibrarychanrobles virtual law library

their jurisdiction by filing actions therein. Our attention has not

been called to any law or treaty that would make the findings of Makalintal, Zaldivar and Capistrano, JJ., concur.
the Veterans' Administrator, in actions where he is a party, Concepcion, C.J., Reyes, J.B.L., Dizon, Sanchez and Castro,
conclusive on our courts. That, in effect, would deprive our JJ., concur in the result.
tribunals of judicial discretion and render them mere
subordinate instrumentalities of the Veterans' Administrator." chanrobles virtual law library

It is bad enough as the Viloria decision made patent for our

judiciary to accept as final and conclusive, determinations made