TESTATE ESTATE OF IDONAH SLADE PERKINS, DECEASED. RENATO D. TAYAG, ANCILLARY ADMINISTRATOR-APPELLEE, VS. BENGUET CONSOLIDATED, INC., OPPOSITOR-APPELLANT.

Confronted by an obstinate and adamant refusal of the domiciliary
administrator, the County Trust Company of New York, United States of America,
of the estate of the deceased Idonah Slade Perkins,
who died in New York City on March 27, 1960, to surrender to the ancillary
administrator in the Philippines the stock certificates owned by her in a
Philippine corporation, Benguet Consolidated, Inc.,
to satisfy the legitimate claims of local creditors, the lower court, then
presided by the Honorable Arsenio Santos, now
retired, issued on May 18, 1964, an order of this tenor:  “After considering the motion of the
ancillary administrator, dated February 11, 1964, as well as the opposition
filed by the Benguet Consolidated, Inc., the Court
hereby (1) considers as lost for all purposes in connection with the
administration and liquidation of the Philippine estate of Idonah
Slade Perkins the stock certificates covering the 33, 002 shares of stock
standing in her name in the books of the Benguet
Consolidated, Inc., (2) orders said certificates cancelled, and (3) directs
said corporation to issue new certificates in lieu thereof, the same to be
delivered by said corporation to either the incumbent ancillary administrator
or to the Probate Division of this Court.”^[1]

From such an order, an appeal was taken to this Court not by the
domiciliary administrator, the County Trust Company of New York, but by the
Philippine corporation, the Benguet Consolidated,
Inc.  The appeal cannot possibly
prosper.  The challenged order represents
a response and expresses a policy, to paraphrase Frankfurter, arising out of a
specific problem, addressed to the attainment of specific ends by the use of
specific remedies, with full and ample support from legal doctrines of weight
and significance.

The facts will explain why. 
As set forth in the brief of appellant Benguet
Consolidated, Inc., Idonah Slade Perkins, who died on
March 27, 1960 in New York City, left among others, two stock certificates
covering 33,002 shares of appellant, the certificates being in the possession
of the County Trust Company of New York, which as noted, is the domiciliary
administrator of the estate of the deceased.^[2]
Then came this portion of the appellant’s brief:  “On August 12, 1960, Prospero Sanidad
instituted ancillary administration proceedings in the Court of First Instance
of Manila; Lazaro A. Marquez was appointed ancillary
administrator; and on January 22, 1963,
he was substituted by the appellee Renato D. Tayag.  A dispute arose between the domiciliary
administrator in New York and the ancillary administrator in the Philippines as
to which of them was entitled to the possession of the stock certificates in
question.  On January 27, 1964, the Court
of First Instance of Manila ordered the domiciliary administrator, County Trust
Company, to ‘produce and deposit’ them with the ancillary administrator or with
the Clerk of Court.  The domiciliary
administrator did not comply with the order, and on February 11, 1964, the
ancillary administrator petitioned the court to ‘issue an order declaring the
certificate or certificates of stocks covering the 33,002 shares issued in the
name of Idonah Slade Perkins by Benguet
Consolidated, Inc. be declared [or] considered as
lost.”^[3]

It is to be note d further that appellant Benguet
Consolidated, Inc. admits that “it is immaterial” as far as it is
concerned as to “who is entitled to the possession of the stock
certificates in question; appellant opposed the petition of the ancillary
administrator because the said stock certificates are in existence, they are
today in the possession of the domiciliary administrator, the County Trust
Company, in New York, U. S. A.  * *
*.  “^[4]

It is its view, therefore, that under the circumstances, the
stock certificates cannot be declared or considered as lost.  Moreover, it would allege that there was a
failure to observe certain requirements of its by-laws before new stock
certificates could be issued.  Hence, its appeal.

As was made clear at the outset of this opinion, the appeal lacks
merit.  The challenged order constitutes
an emphatic affirmation of judicial authority sought to be emasculated by the wilful conduct of the domiciliary administrator in refusing
to accord obedience to a court decree. 
How, then, can this order be stigmatized as illegal?

As is true of many problems confronting the judiciary, such a
response was called for by the realities of the situation.  What cannot be ignored is that conduct
bordering on willful defiance, if it had not actually reached it, cannot
without undue loss of judicial prestige, be condoned or tolerated.  For the law is not so lacking in flexibility
and resourcefulness as to preclude such a solution, the more so as deeper
reflection would make clear its being buttressed by indisputable principles and
supported by the strongest policy considerations.

It can truly be said then that the result arrived at upheld and
vindicated the honor of the judiciary no less than that of the country.  Through this challenged order, there is thus
dispelled the atmosphere of contingent frustration brought about by the
persistence of the domiciliary administrator to hold on to the stock
certificates after it had, as admitted, voluntarily submitted itself to the
jurisdiction of the lower court by entering its appearance through counsel on
June 27, 1963, and filing a petition for relief from a previous order of March
15, 1963.

Thus did the lower court, in the order now on appeal, impart
vitality and effectiveness to what was decreed. 
For without it, what it had been decided would be set at naught and
nullified.  Unless such a blatant
disregard by the domiciliary administrator, with residence abroad, of what was
previously ordained by a court order could be thus remedied, it would have
entailed, insofar as this matter was concerned, not a partial but a well-nigh
complete paralysis of judicial authority.

1.       Appellant Benguet Consolidated, Inc. did not dispute the power of the
appellee ancillary administrator to gain control and
possession of all assets of the decedent within the jurisdiction of the
Philippines.  Nor
could it.  Such a power is
inherent in his duty to settle her estate and satisfy the claims of local
creditors.^[5]
As justice Tuason speaking for this Court made clear,
it is a “general rule universally recognized” that administration,
whether principal or ancillary, certainly “extends to the assets of a
decedent found within the state or country where it was granted,” the
corollary being “that an administrator appointed in one state or country
has no power over property in another state or country.”^[6]

It is to be noted that the scope of the power of the ancillary
administrator was, in an earlier case, set forth by Justice Malcolm.  Thus: 
“It is often necessary to have more than one administration of an
estate.  When a person dies intestate
owning property in the country of his domicile as well as in a foreign country,
administration is had in both countries. 
That which is granted in the jurisdiction of decedent’s last domicile is
termed the principal administration, while any other administration is termed
the ancillary administration.  The reason
for the latter is because a grant of administration does not ex proprio vigore have
any effect beyond the limits of the country in which it is granted.  Hence, an administrator appointed in a
foreign state has no authority in the [Philippines].  The ancillary administration is proper,
whenever, a person dies, leaving in a country other than that of his last
domicile, property to be administered in the nature of assets of the deceased
liable for his individual debts or to be distributed among his heirs.”^[7]

It would follow then that the authority of the probate court to
require that ancillary administrator’s right to “the stock certificates
covering the 33,002 shares * * * standing in her name in the books of
[appellant] Benguet Consolidated, Inc. * * *” be
respected is equally beyond question. 
For appellant is a Philippine corporation owing full allegiance and
subject to the unrestricted jurisdiction of local courts.  Its shares of stock cannot therefore be
considered in any wise as immune from lawful court orders.

Our holding in Wells Fargo Bank and Union v. Collector of
Internal Revenue^[8]
finds application.  “In the instant
case, the actual situs of the shares of stock is in
the Philippines, the corporation being domiciled [here].” To the force of
the above undeniable proposition, not even appellant is insensible.  It does not dispute it.  Nor could it successfully do so even if it
were so minded.

2.       In the face of such
incontrovertible doctrines that argue in a rather conclusive fashion for the
legality of the challenged order, how does appellant Benguet
Consolidated, Inc. propose to carry the extremely heavy burden of persuasion of
precisely demonstrating the contrary?  It
would assign as the basic error allegedly committed by the lower court its
“considering as lost the stock certificates covering 33,002 shares of Benguet belonging to the deceased Idonah
Slade Perkins, * *.”^[9]
More specifically, appellant would stress that the “lower court could not
‘consider as lost’ the stock certificates in question when, as a matter of
fact, his Honor the trial Judge knew, and does know, and it is admitted by the appellee, that the said stock certificates are in existence
and are today in the possession of the domiciliary administrator in New
York.”^[10]

There may be an element of fiction in the above view of the lower
court.  That certainly does not suffice
to call for the reversal of the appealed order. 
Since there is a refusal, per­sistently adhered to by the domicliary administrator in New York,
to deliver the shares of stocks of appellant corporation
owned by the decedent to the ancillary administrator in the Philippines,
there was nothing unreasonable or arbitrary in considering them as lost and
requiring the appellant to issue new certificates in lieu thereof.  Thereby, the task incumbent under the law on
the ancillary administrator could be discharged and his responsibility
fulfilled.

Any other view would result in the compliance to a valid judicial
order being made to depend on the uncontrolled discretion of the party or
entity, in this case domiciled abroad, which thus far has shown the utmost
persistence in refusing to yield obedience. 
Certainly, appellant would not be heard to contend in all seriousness
that a judicial decree could be treated as a mere scrap of paper, the court
issuing it being powerless to remedy its flagrant disregard.

It may be admitted of course that such alleged loss as found by
the lower court did not correspond exactly with the facts.  To be more blunt, the quality of truth may be
lacking in such a conclusion arrived at. 
It is to be remembered however, again to borrow from Frankfurter,
“that fictions which the law may rely upon in the pursuit of legitimate
ends have played an im­portant part in its development.”^[11]

Speaking of the common law in its earlier period, Cardozo could state that fictions “were devices to
advance the ends of justice, [even if] clumsy and at times offensive.^[12]
Some of them have persisted even to the present, that eminent jurist, noting
“the quasi contract, the adopted child, the constructive trust, all of
flourishing vitality, to attest the empire of ‘as if’ today.”^[13]
He likewise noted “a class of fictions of another order, the fiction which
is a working tool of thought, but which at times hides itself from view till
reflection and analysis have brought it to the light.”^[14]

What cannot be disputed, therefore, is the at times indispensable
role that fictions as such played in the law. 
There should be then on the part of the appellant a further refinement
in the catholicity of its condemnation of such judicial technique.  If ever an occasion did call for the
employment of a legal fiction to put an end to the anomalous situation of a
valid judicial order being disregarded with apparent impunity, this is it.  What is thus most obvious is that this
particular alleged error does not carry persuasion.

3.       Appellant Benguet Consolidated, Inc. would seek-to bolster the above
contention by its invoking one of the provisions of its by laws which would set
forth the procedure to be followed in case of a lost, stolen or destroyed stock
certificate; it would stress that in the event of a contest or the pendency of an action regarding ownership of such
certificate or certificates of stock allegedly lost, stolen or destroyed, the
issuance of a new certificate or certificates would await the “final
decision by [a] court regarding the ownership [thereof].”^[15]

Such reliance is misplaced. 
In the first place, there is no such occasion to apply such a
by-law.  It is admitted that the foreign
domiciliary administrator did not appeal from the order now in question.  Moreover, there is likewise the express admission
of appellant that as far as it is concerned, “it is immaterial * * * who
is entitled to the possession of the stock certificates * * *.” Even if
such were not the case, it would be a legal absurdity to impart to such a
provision conclusiveness and finality. 
Assuming that a contrariety exists between the above by-law and the command
of a court decree, the latter is to be followed.

It is understandable, as Cardozo
pointed out, that the Constitution overrides a statute, to which, however, the
judiciary must yield deference, when appropriately invoked and deemed
applicable.  It would be most highly
unorthodox, however, if a corporate by-law would be accorded such a high estate
in the jural order that a court must not only take
note of it but yield to its alleged controlling force.

The fear of appellant of a contingent liability with which it
could be saddled unless the appealed order be set aside for its inconsistency
with one of its by-laws does not impress us. 
Its obedience to a lawful court order certainly constitutes a valid
defense, assuming that such apprehension of a possible court action against it
could possibly materialize.  Thus far,
nothing in the circumstances as they have developed gives substance to such a
fear.  Gossamer possibilities of a future
prejudice to appellant do not suffice to nullify the lawful exercise of
judicial authority.

4.       What is more the view
adopted by appellant Benguet Consolidated, Inc. is
fraught with implications at war with the basic postulates of corporate theory.

We start with the undeniable premise that, “a corporation is
an artificial being created by operation of law * * *.”^[16]
It owes its life to the state, its birth being purely dependent on its
will.  As Berle so aptly stated: 
“Classically, a corporation was conceived as an artificial person,
owing its existence through creation by a sovereign power.”^[17]As
a matter of fact, the statutory language employed owes much to Chief Justice
Marshall, who in the Dartmouth College decision,
defined a corporation precisely as “an artificial being, invisible,
intangible, and existing only in contemplation of law.”^[18]

The well-known authority Fletcher could summarize the matter
thus:  “A corporation is not in fact
and in reality a person, but the law treats it as though it were a person by
process of fiction, or by regarding it as an artificial person distinct and
separate from its individual stockholders. *** It owes its existence to
law.  It is an artificial person created
by law for certain specific purposes, the extent of whose existence, powers and
liberties is fixed by its charter.”^[19]
Dean Pound’s terse summary, a juristic person, resulting from an association of
human beings granted legal personality by the state, puts the matter neatly.^[20]

There is thus a rejection of Gierke’s genossenchaft theory, the basic theme of which to
quote from Friedmann, “is the reality of the
group as a social and legal entity, independent of state recognition and
concession.”^[21]
A corporation as known to Philippine jurisprudence is a creature without any
existence until it has received the imprimatur of the state acting according to
law.  It is logically inconceivable
therefore that it will have rights and privileges of a higher priority than
that of its creator.  More than that, it
cannot legitimately refuse to yield obedience to acts of its state organs,
certainly not excluding the judiciary, whenever called upon to do so.

As a matter of fact, a corporation once it comes into being,
following American law still of persuasive authority in our juris­diction,
comes more often within the ken of the judiciary than the other two coordinate
branches.  It institutes the appropriate
court action to enforce its rights. 
Correlatively, it is not immune from judicial control in those
instances, where a duty under the law as ascertained in an appropriate legal
proceeding is cast upon it.

To assert that it can choose which court order to follow and
which to disregard is to confer upon it not autonomy which may be conceded but
license which cannot be tolerated.  It is
to 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 will. 
So extravagant a claim cannot possibly merit approval.

5.       One last point.  In Viloria v.
Administrator of Veterans Affairs,^[22]
it was shown that in a guardianship proceeding then pending in a lower
court, the United States Veterans Adminis­tration filed a motion for the refund
of a certain sum of money paid to the minor under guardianship, alleging that
the lower court had previously granted its petition to consider the deceased
father as not entitled to guerilla benefits according to a determination
arrived at by its main office in the United States.  The motion was denied.  In seeking a reconsideration of such order,
the Administrator relied on an American federal statute making his decisions
“final and conclusive on all questions of law or fact” precluding any
other American official to examine the matter anew, “except
a judge or judges of the United States court.”^[23]
Reconsideration was denied, and the Administrator appealed.

In an opinion by Justice J. B. L. Reyes, we sustained the lower
court.  Thus:  “We are of the opinion that the appeal
should be rejected.  The provisions of
the U. S. Code, invoked by the appellant, make the decisions of U. S.  Veteran Adminis­trator final and conclusive
when made on claims properly submitted to him for resolution; but they are not
applicable to the present case, where the Administrator is not acting as a
judge but as a litigant.  There is a
great difference between actions against the Administrator (which must be filed
strictly in accordance with the conditions that are imposed by the Veterans’
Act, including the exclusive review by United States courts), and those actions
where the Veterans’ Administrator seeks a remedy from our courts and submits to
their juris­diction by filing actions therein. 
Our attention has not been called to any law or treaty that would make
the findings of the Veterans’ Administrator, in actions where he is a party,
conclusive on our courts.  That, in
effect, would deprive our tribunals of judicial discretion and render them mere
subordinate instrumentalities of the Veterans’ Administrator.”

It is bad enough as the Viloria
decision made patent for our judiciary to accept as final and conclusive,
determinations made by foreign governmental agencies.  It is infinitely worse if through the absence
of any coercive power by our courts over juridical persons within our jurisdiction,
the force and effectivity of their orders could be
made to depend on the whim or caprice of alien entities.  It is difficult to imagine of a situation
more offensive to the dignity of the bench or the honor of the country.

Yet that would be the effect, even if unintended, of the
proposition to which appellant Benguet Consolidated
seems to be firmly committed as shown by its failure to accept the validity of
the order complained of; it seeks its reversal. 
Certainly we must at all pains see to it that it does not succeed.  The deplorable consequences attendant on
appellant prevailing attest to the necessity of a negative response from
us.  That is what appellant will get.

That is all then that this case presents.  It is obvious why the appeal cannot
succeed.  It is always easy to conjure
extreme and even oppressive possibilities. 
That is not decisive.  It does not
settle the issue.  What carries weight
and conviction is the result arrived at, the just solution obtained, grounded,
in the soundest of legal doctrines and distinguished by its correspondence with
what a sense of realism requires.  For
through the appealed order, the imperative requirement of justice according to
law is satisfied and national dignity and honor maintained.

WHEREFORE, the appealed order of the Honorable Arsenio Santos, the Judge of the Court of First Instance,
dated May 18, 1964, is affirmed.  With costs against oppositor-appellant Benguet Consolidated, Inc.

Makalintal, Zaldivar, and Capistrano, JJ., concur.

Concepcion,
C.J., Reyes, J.B.L., Dizon, Sanchez, JJ., and Castro, JJ., concur in the result.

^[1]
Statement of the Case and Issues Involved, Brief for the Oppositor-Appellant,
p. 2.

^[2]
Ibid, p. 3.

^[3]
Ibid, pp. 3 to 4.

^[4]
Ibid, p. 4.

^[5]
Rule 84, Sec. 3, Rules of Court.  Cf. Pavia v.
de la Rosa, 8 Phil. 70 (1907); Suiliong and Co. v.
Chio-Taysan, 12 Phil. 13 (1908); Malahacan
v. Ignacio, 19 Phil. 434 (1911); McMicking v.
Sy Conbieng, 21 Phil. 211
(1912); In re Estate of De Dios, 24 Phil. 573 (1913);
Santos v. Manarang, 27 Phil. 209 (1914); Jaucian v. Querol, 38
Phil. 707 (1918); Buenaventura v. Ramos, 43 Phil. 704 (1922); Roxas v. Peceon, 82 Phil.
407 (1948); De Borja v. De Borja,
83 Phil. 405 (1949); Barraca v. Zayco, 88 Phil. 774 (1951); Pabilonia
v. Santiago, 93 Phil. 516 (1953); Sison v.
Teodoro, 98 Phil. 680 (1956); Ozaeta
v. Palanca, 101 Phil. 976 (1957); Natividad Castelvi de Raquiza v. Castelvi, et
al. , L-17630, Oct. 31, 1963; Habana v. Imbo, L-15598 & 15726, March 31, 1964; Gliceria Liwanag v. Hon.
Luis Reyes, L-19159, Sept. 29, 1964; Ignacio v. Elchico,
L-18937, May 16, 1967.

^[6]
Leon and Ghezzi v. Manuf. Life Ins. Co., 90 Phil. 459 (1951).

^[7]
Johannes v. Harvey, 43 Phil. 175, 177-178 (1922).

^[8]
70 Phil. 325 (1940) Cf. Perkins v. Dizon,
69 Phil. 186 (1939).

^[9]
Brief for Oppositor-Appellant, p. 5.  The Assignment of Error reads: 
“The lower court erred in entering its order of May 18, 1964, (1)
considering as lost the stock certificates covering 33,002 shares of Benguet belonging to the deceased Idonah
Slade Perkins, (2) ordering the said certificates cancelled, and (3) ordering
appellant to issue new certificates in lieu thereof and to deliver them to the
ancillary administrator of the estate of the deceased Idonah
Slade Perkins or to the probate division of the lower court.”

^[10]
Ibid, pp. 5 to 6.

^[11]
Nashville C. St. Louis Ry v.
Browning, 310 US 362 (1940).

^[12]
Cardozo, The Paradoxes of
Legal Science, 34 (1928).

^[13]
Ibid, p. 34.

^[14]
Ibid, p. 34. 
The late Professor Gray in his The Nature and Sources of the Law,
distinguished, following Ihering, historic fictions
from dogmatic fictions, the former being devices to allow the addition of new
law to old without changing the form of the old law and the latter being
intended to arrange recognized and established doctrines under he most convenient
forms.  pp. 30, 36 (1909) Speaking of
historic fictions, Gray added: 
“Such fictions have had their field of operation largely in the
domain of procedure, and have consisted in pretending that a person or thing
was other than that which he or it was in truth, (or that an event had occurred
which had not in fact occurred) for the purpose of thereby giving an action at
law to or against a person who did not really come within the class to or
against which the old action was confined.” Ibid, pp. 30-31 See also
Pound, The Philosophy of Law, pp. 179, 180, 274 (1922).

^[15]
This is what the particular by-law provides:  Section 10.  Lost, Stolen or Destroyed Certificates.  – Any registered stockholder claiming a
certificate or certificates of stock to be lost, stolen or destroyed shall file
an affidavit in triplicate with the Secretary of the Company or with one
of its Transfer Agents, setting forth, if possible, the circumstances as to
how, when and where said certificate or certificates was or were lost, stolen
or destroyed, the number of shares represented by the certificate or by each of
the certificates, the serial number or numbers of the certificate or
certificates, and the name of this Company. The registered stockholder shall
also submit such other information and evidence which he may deem necessary.

* * *.

If a contest is presented to the
Company, or if an action is pending in court regarding the ownership of said
certificate or certificates of stock which have been claimed to have been lost,
stolen or destroyed, the issuance of the new certificate or certificates in
lieu of that or those claimed to have been lost, stolen or destroyed, shall be
suspended until final decision by the court regarding the ownership of said
certificate or certificates.  Brief for Oppositor-Appellant, pp. 8-10.

^[16]
Sec. 2, Act No. 1459 (1906).

^[17]
Berle, The Theory of
Enterprise Entity, 47 Co. Law Rev. 343 (1907).

^[18]
Dartmouth College v. Woodward, 4 Wheat. 518 (1819). Cook would trace such a concept to Lord Coke.
See 1 Cook on Corporations, p. 2 (1923).

^[19]
1 Fletcher, Cyclopedia Corporations, pp. 19-20 (1931).
Chancellor Kent and Chief Justice Baldwin of Connecticut were likewise cited to
the same effect.  At
pp. 12-13.

^[20]
4 Pound on Jurisprudence, pp. 207-209 (1959).

^[21]
Friedmann, Legal Theory, pp. 164-168 (1947). See also
Holdsworth, English Corporation Law, 31 Yale Law
Journal, 382 (1922).

^[22]
101 Phil. 762 (1957).

^[23]
38 USCA, Sec. 808.