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    Sawadjaan vs. Ca

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    MarioneMaeThiam
    The Supreme Court ruled that Al-Amanah Investment Bank of the Philippines (AIIBP) is a de facto corporation. The AIIBP was created by an act of Congress to take over the assets and personnel of the Philippine American Bank after it was dissolved. Although the AIIBP failed to submit its bylaws on time, it continues to operate as a corporation with offices, employees, assets, and representation by the Government Corporate Counsel. As a de facto corporation, its corporate status cannot be challenged through collateral private suits. The petitioner, a former AIIBP employee investigated for losses related to a non-performing loan, failed to show that the lower courts gravely abused their discretion.

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    Sawadjaan vs. Ca

    Uploaded by

    MarioneMaeThiam
    385 views2 pages
    The Supreme Court ruled that Al-Amanah Investment Bank of the Philippines (AIIBP) is a de facto corporation. The AIIBP was created by an act of Congress to take over the assets and personnel of the Philippine American Bank after it was dissolved. Although the AIIBP failed to submit its bylaws on time, it continues to operate as a corporation with offices, employees, assets, and representation by the Government Corporate Counsel. As a de facto corporation, its corporate status cannot be challenged through collateral private suits. The petitioner, a former AIIBP employee investigated for losses related to a non-performing loan, failed to show that the lower courts gravely abused their discretion.

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    Corpo Case Digest

    Original Title

    SAWADJAAN-VS.-CA

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    The Supreme Court ruled that Al-Amanah Investment Bank of the Philippines (AIIBP) is a de facto corporation. The AIIBP was created by an act of Congress to take over the assets and personnel of the Philippine American Bank after it was dissolved. Although the AIIBP failed to submit its bylaws on time, it continues to operate as a corporation with offices, employees, assets, and representation by the Government Corporate Counsel. As a de facto corporation, its corporate status cannot be challenged through collateral private suits. The petitioner, a former AIIBP employee investigated for losses related to a non-performing loan, failed to show that the lower courts gravely abused their discretion.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    385 views2 pages

    Sawadjaan vs. Ca

    Uploaded by

    MarioneMaeThiam
    The Supreme Court ruled that Al-Amanah Investment Bank of the Philippines (AIIBP) is a de facto corporation. The AIIBP was created by an act of Congress to take over the assets and personnel of the Philippine American Bank after it was dissolved. Although the AIIBP failed to submit its bylaws on time, it continues to operate as a corporation with offices, employees, assets, and representation by the Government Corporate Counsel. As a de facto corporation, its corporate status cannot be challenged through collateral private suits. The petitioner, a former AIIBP employee investigated for losses related to a non-performing loan, failed to show that the lower courts gravely abused their discretion.

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    © All Rights Reserved
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    of 2

    SAPPARI K. SAWADJAAN, petitioner, vs.

    THE HONORABLE COURT OF APPEALS, THE CIVIL SERVICE COMMISSION and AL-AMANAH
    INVESTMENT BANK OF THE PHILIPPINES, respondents.
    G.R. No. 141735, June 8, 2005
    CHICO-NAZARIO, J.

    DOCTRINE:

    The AIIBP was created by Rep. Act No. 6848. It has a main office where it conducts business, has
    shareholders, corporate officers, a board of directors, assets, and personnel. It is, in fact, here
    represented by the Office of the Government Corporate Counsel, "the principal law office of
    governmentowned corporations, one of which is respondent bank." At the very least, by its failure to
    submit its by-laws on time, the AIIBP may be considered a de facto corporation whose right to
    exercise corporate powers may not be inquired into collaterally in any private suit to which such
    corporations may be a party. Moreover, a corporation which has failed to file its by-laws within the
    prescribed period does not ipso facto lose its powers as such. The SEC Rules on
    Suspension/Revocation of the Certificate of Registration of Corporations, details the procedures and
    remedies that may be availed of before an order of revocation can be issued. There is no showing
    that such a procedure has been initiated in this case.

    FACTS:

    Sawadjaan was among the first employees of the PAB when it was created by virtue of Presidential
    Decree No. 264 on 02 August 1973. He rose through the ranks, working his way up from his initial
    designation as security guard, to settling clerk, bookkeeper, credit investigator, project analyst,
    appraiser/ inspector, and eventually, loans analyst. In February 1988, while still designated as
    appraiser/investigator, Sawadjaan was assigned to inspect the properties offered as collaterals by
    CAMEC for a credit line of P5M. The properties consisted of two parcels of land, On the basis of his
    Inspection and Appraisal Report, the PAB granted the loan application. When the loan matured,
    CAMEC requested an extension of 180 days, but was granted only 120 days to repay the loan.

    Sawadjaan was promoted to Loans Analyst I on 01 July 1989. In January 1990, Congress passed
    Republic Act 6848 creating the AIIBP and repealing P.D. No. 264 (which created the PAB). All assets,
    liabilities and capital accounts of the PAB were transferred to the AIIBP, and the existing personnel of
    the PAB were to continue to discharge their functions unless discharged. In the ensuing
    reorganization, Sawadjaan was among the personnel retained by the AIIBP. When CAMEC failed to
    pay despite the given extension, the bank, now referred to as the AIIBP, discovered that TCT No. N-
    130671 was spurious, the property described therein non-existent, and that the property covered by
    TCT No. C-52576 had a prior existing mortgage in favor of one Divina Pablico. On 08 June 1993, the
    Board of Directors of the AIIBP created an Investigating Committee to look into the CAMEC
    transaction, which had cost the bank Six Million Pesos (P6,000,000.00) in losses. The subsequent
    events, as found and decided upon by the Court of Appeals, are as follows: On 18 June 1993,
    petitioner received a memorandum from Islamic Bank [AIIBP] Chairman Roberto F. De Ocampo
    charging him with Dishonesty in the Performance of Official Duties and/or Conduct Prejudicial to the
    Best Interest of the Service and preventively suspending him. In his memorandum dated 8 September
    1993, petitioner informed the Investigating Committee that he could not submit himself to the
    jurisdiction of the Committee because of its alleged partiality. For his failure to appear before the
    hearing set on 17 September 1993, after the hearing of 13 September 1993 was postponed due to the
    Manifestation of even date filed by petitioner, the Investigating Committee declared petitioner in
    default and the prosecution was allowed to present its evidence ex parte.

    ISSUE:

     WHETHER AIIBP IS A DE FACTO CORPORATION.

    HELD:

    NO. Even if we were to overlook this fact in the broader interests of justice and treat this as a special
    civil action for certiorari under Rule 65, the petition would nevertheless be dismissed for failure of the
    petitioner to show grave abuse of discretion. Petitioner’s recurrent argument, tenuous at its very best,
    is premised on the fact that since respondent AIIBP failed to file its by-laws within the designated 60
    days from the effectivity of Rep. Act No. 6848, all proceedings initiated by AIIBP and all actions
    resulting therefrom are a patent nullity. Or, in his words, the AIIBP and its officers and Board of
    Directors, . . . [H]ave no legal authority nor jurisdiction to manage much less operate the Islamic Bank,
    file administrative charges and investigate petitioner in the manner they did and allegedly passed
    Board Resolution No. 2309 on December 13, 1993 which is null and void for lack of an (sic)
    authorized and valid by-laws.

    The CIVIL SERVICE COMMISSION was therefore affirming, erroneously, a null and void "Resolution
    No. 2309 dated December 13, 1993 of the Board of Directors of Al-Amanah Islamic Investment Bank
    of the Philippines" in CSC Resolution No. 94-4483 dated August 11, 1994. A motion for
    reconsideration thereof was denied by the CSC in its Resolution No. 95-2754 dated April 11, 1995.
    Both acts/resolutions of the CSC are erroneous, resulting from fraud, falsifications and
    misrepresentations of the alleged Chairman and CEO Roberto F. de Ocampo and the alleged Director
    Farouk A. Carpizo and his group at the alleged Islamic Bank. Nowhere in petitioner’s voluminous
    pleadings is there a showing that the court a quo committed grave abuse of discretion amounting to
    lack or excess of jurisdiction reversible by a petition for certiorari. Petitioner already raised the
    question of AIIBP’s corporate existence and lack of jurisdiction in his Motion for New Trial/Motion for
    Reconsideration of 27 May 1997 and was denied by the Court of Appeals. Despite the volume of
    pleadings he has submitted thus far, he has added nothing substantial to his arguments.

    The AIIBP was created by Rep. Act No. 6848. It has a main office where it conducts business, has
    shareholders, corporate officers, a board of directors, assets, and personnel. It is, in fact, here
    represented by the Office of the Government Corporate Counsel, "the principal law office of
    government-owned corporations, one of which is respondent bank." At the very least, by its failure to
    submit its by-laws on time, the AIIBP may be considered a de facto corporation whose right to
    exercise corporate powers may not be inquired into collaterally in any private suit to which such
    corporations may be a party. Moreover, a corporation which has failed to file its by-laws within the
    prescribed period does not ipso facto lose its powers as such. The SEC Rules on
    Suspension/Revocation of the Certificate of Registration of Corporations, details the procedures and
    remedies that may be availed of before an order of revocation can be issued. There is no showing
    that such a procedure has been initiated in this case.

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