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[G.R. No. 11789. April 2, 1918. ]


Acting Attorney-General Paredes, for Plaintiff.

Gilbert, Cohn & Fisher and L. M. Southworth, for Defendant.


1. "QUO WARRANTO; FORFEITURE OF FRANCHISE OF CORPORATION. — Held: Under the facts stated in the decision, that the defendant and appellant had, in the management of its business, violated the provisions of its charter and should, therefore, be dissolved as a corporation and prohibited from continuing to do business in the Philippine Islands unless it complies with the conditions mentioned in the decision.



This is an action in the nature of quo warranto. It was brought by the Attorney-General for and on the behalf of the Government of the Philippine Islands for the purpose of having the charter of the defendant corporation declared forfeited. The complaint alleged that the defendant was a corporation duly organized under the laws of the Philippine Islands; that for a period of eighteen months previous to the filing of the complaint (Nov. 21, 1914), it had continuously offended against the laws of the Philippine Islands and had misused its corporate authority franchises, and privileges and had assumed privileges and franchises not granted; that it had engaged in the business of buying and selling real estate; that on the 31st of May, 1913, it entered into a contract with The Tayabas Land Company for the purpose of engaging in the business of purchasing lands along the right of way of the Manila Railroad Company through the Province of Tayabas with a view to reselling the same to the Manila Railroad Company at a profit. A copy of the contract was made part of the complaint. The plaintiff alleged, that by the acts and omissions of the defendant, it had forfeited its corporate rights, privileges, powers, and franchises and prayed that the court render judgment depriving it of all corporate rights, privileges and franchises, dissolving it as a corporation, and to grant such other and further relief as might seem just and equitable to the court, and for costs.

The defendant appeared on January 18, 1915, and demurred to the complaint upon the ground that it failed to state a cause of action. On April 28, 1915, the court overruled said demurrer and the defendant duly excepted On May 5, 1915, the defendant answered the complaint The defendant admitted the first paragraph of the complaint and denied generally the allegations of the second and third paragraphs with the exception that it admitted having entered into the contract set out in paragraph III and alleged that The Tayabas Land Company was an ordinary partnership and not a corporation as alleged in paragraph III. The allegations of paragraph IV were denied generally. The defendant prayed that the complaint be dismissed with costs.

On August 24, 1915, the parties filed a stipulation of facts which appears at page 16 of the bill of exceptions By said stipulation it was agreed that the defendant was a corporation duly organized; that The Tayabas Land Company was a partnership; that a contract was entered into between the defendant and The Tayabas Land Company by virtue of which the defendant delivered to the said The Tayabas Land Company P304,459.42 which the plaintiff contended amounted to a contribution by the defendant to the capital of The Tayabas Land Company but which the defendant contended amounted to a loan to said concern; that the money thus received was devoted to the purchase of real estate in the Province of Tayabas along the proposed right of way of the Manila Railroad Company in that province; that the purpose of these purchases was for resale to the Manila Railroad Company or any other person offering an acceptable price. Attached to this stipulation are three exhibits which are (a) copies of the charter of the defendant; (b) the partnership agreement of The Tayabas Land Company; and (c) the contract entered into between the defendant and The Tayabas Land Company. On October 14, 1915, it was further stipulated and agreed that all of the deeds of land executed to The Tayabas Land Company, which had been in the possession of the defendant, had been delivered to the Board of Public Utility Commissioners in obedience to a subp
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