Collector of Internal Revenue v.

Club Filipino
G.R. No. L-12719, May 31, 1962
Nature: a petition to review the decision of the Court of Tax Appeals, reversing the decision of
the Collector of Internal Revenue, assessing against and demanding from the "Club Filipino, Inc.
de Cebu", the sum of P12,068.84 as fixed and percentage taxes, surcharge and compromise
penalty, allegedly due from it as a keeper of bar and restaurant.
Facts: As found by the Court of Tax Appeals, the "Club Filipino, Inc. de Cebu," (Club, for
short), is a civic corporation organized under the laws of the Philippines. It is covenanted that
upon its dissolution, the Club's remaining assets, after paying debts, shall be donated to a
charitable Philippine Institution in Cebu. The Club owns and operates a club house, a bowling
alley, a golf course and a bar-restaurant where it sells wines and liquors, soft drinks, meals and
short orders to its members and their guests. The bar-restaurant was a necessary incident to the
operation of the club and its golf-course. The club is operated mainly with funds derived from
membership fees and dues. The BIR seeks to tax the said restaurant as a business.
Issue:
Is the Club liable for the payment of fixed and percentage taxes and surcharges in
connection with the operation of its bar and restaurant?
Held:
No. It is claimed that the appellee Club is a stock corporation. This is unmeritorious. The
facts that the capital stock of the respondent Club is divided into shares, does not detract from the
finding of the trial court that it is not engaged in the business of operator of bar and restaurant.
What is determinative of whether or not the Club is engaged in such business is its object or
purpose, as stated in its articles and by-laws. It is a familiar rule that the actual purpose is not
controlled by the corporate form or by the commercial aspect of the business prosecuted, but
may be shown by extrinsic evidence, including the by-laws and the method of operation. From
the extrinsic evidence adduced, the Tax Court concluded that the Club is not engaged in the
business as a barkeeper and restaurateur.
Moreover, for a stock corporation to exist, two requisites must be complied with, to wit:
(1) a capital stock divided into shares and (2) an authority to distribute to the holders of such
shares, dividends or allotments of the surplus profits on the basis of the shares held (sec. 3, Act
No. 1459). In the case at bar, nowhere in its articles of incorporation or by-laws could be found
an authority for the distribution of its dividends or surplus profits. Strictly speaking, it cannot,
therefore, be considered a stock corporation, within the contemplation of the corporation law.
The Club was organized to develop and cultivate sports of all class and denomination, for
the healthful recreation and entertainment of its stockholders and members; that upon its
dissolution, its remaining assets, after paying debts, shall be donated to a charitable Philippine
Institution in Cebu; that it is operated mainly with funds derived from membership fees and
dues; that the Club's bar and restaurant catered only to its members and their guests;. The Club
may have derived profit from the operation of its bar and restaurant, but such fact does not
necessarily convert it into a profit-making enterprise. The bar and restaurant are necessary
adjuncts of the Club to foster its purposes and the profits derived therefrom are necessarily

incidental to the primary objective. That a Club makes some profit, does not make it a profitmaking Club.

Liban vs Gordon
Nature:
This resolves the Motion for Clarification and/or for Reconsideration filed on August 10, 2009
by respondent Richard J. Gordon (respondent) of the Decisionpromulgated by this Court on
July 15, 2009 (the Decision), the Motion for Partial Reconsideration filed on August 27,
2009 by movant-intervenor Philippine National Red Cross (PNRC), and the latters Manifestation
and Motion to Admit Attached Position Paper filed on December 23, 2009.
Facts:
the Court held that respondent did not forfeit his seat in the Senate when he accepted the
chairmanship of the PNRC Board of Governors, asthe office of the PNRC Chairman is not a
government office or an office in a government-owned or controlled corporation for purposes of
the prohibition in Section 13, Article VI of the 1987 Constitution. The Decision, however, further
declared void the PNRC Charter insofar as it creates the PNRC as a private corporation and
consequently ruled that the PNRC should incorporate under the Corporation Code and register
with the Securities and Exchange Commission if it wants to be a private corporation
Issue:
Whether or not the office of the Chairman of the Philippine National Red Cross is a
government office or an office in a government-owned or controlled corporation for purposes of
the prohibition in Section 13, Article VI of the 1987 Constitution?
Held:
They are neither because they are auxiliaries. National Societies such as the PNRC act
as auxiliaries to the public authorities of their own countries in the humanitarian field and
provide a range of services including disaster relief and health and social programmes. The
International Federation of Red Cross (IFRC) and Red Crescent Societies (RCS) Position Paper,
[17]
submitted by the PNRC, is instructive with regard to the elements of the specific nature of the
National Societies such as the PNRC,
The PNRC, as a National Society of the International Red Cross and Red Crescent
Movement, can neither be classified as an instrumentality of the State, so as not to lose its
character of neutrality as well as its independence, nor strictly as a private corporation since it is
regulated by international humanitarian law and is treated as an auxiliary of the State.[24]
Based on the above, the sui generis status of the PNRC is now sufficiently
established. Although it is neither a subdivision, agency, or instrumentality of the government,
nor a government-owned or -controlled corporation or a subsidiary thereof, As correctly
mentioned by Justice Roberto A. Abad, the sui generis character of PNRC requires us to
approach controversies involving the PNRC on a case-to-case basis.

In sum, the PNRC enjoys a special status as an important ally and auxiliary of the
government in the humanitarian field in accordance with its commitments under international
law. This Court cannot all of a sudden refuse to recognize its existence, especially since the issue
of the constitutionality of the PNRC Charter was never raised by the parties.

Philippine National Bank v. Merelo B. Aznar

Nature: two petitions for review on certiorari under Rule 45 of the Rules of Court both seeking
to annul and set aside the Decision[1] dated September 29, 2005 as well as the Resolution[2] dated
March 6, 2006 of the Court of Appeals in CA-G.R. CV No. 75744, entitled Merelo B. Aznar,
Matias B. Aznar III, Jose L. Aznar (deceased) represented by his heirs, Ramon A. Barcenilla
(deceased) represented by his heirs, Rosario T. Barcenilla, Jose B. Enad (deceased) represented
by his heirs, and Ricardo Gabuya (deceased) represented by his heirs v. Philippine National
Bank, Jose Garrido and Register of Deeds of Cebu City.
Facts:
In 1958, RISCO ceased operation due to business reverses. Due to plaintiffs desire to
rehabilitate RISCO, they contributed a total amount of P212,720.00which was used in the
purchase of the 3 parcels of land. The amount contributed by plaintiffs constituted as liens and
encumbrances on the aforementioned properties as annotated in the titles of said lots. Thereafter,
various subsequent annotations were made on the same titles, including the Notice of Attachment
and Writ of Execution both dated August 3, 1962 in favor of herein defendant PNB. As a result, a
Certificate of Sale was issued in favor of Philippine National Bank, being the lone and highest
bidder of the 3 parcels of land for the amount of P31,430.00.
Then, a Final Deed of Sale dated May 27, 1991 in favor of the Philippine National Bank
was also issued and Transfer Certificate of Title No. 24576 for Lot 1328-C (corrected to 1323-C)
was cancelled and a new certificate of title, TCT 119848 was issued in the name of PNB on
August 26, 1991. Petitioners argue that the Final Deed of Sale and TCT No. 119848 are null and
void as these were issued only after 28 years and that any right which PNB may have over the
properties had long become stale. Defendant PNB asserted that plaintiffs, as mere stockholders
of RISCO do not have any legal or equitable right over the properties of the corporation.
Issue: Whether or not having a share in the stock vests the owner with any legal right or title to
any of the property?
Held: : No. While a share of stock represents a proportionate or aliquot interest in the property of
the corporation, it does not vest the owner thereof with any legal right or title to any of the
property, his interest in the corporate property being equitable or beneficial in nature.
Shareholders are in no legal sense the owners of corporate property, which is owned by the
corporation as a distinct legal person