TAYAG vs. BENGUET CONSOLIDATED, INC.

G.R. No. L-23145; November 29, 1968

Facts: Idonah Perkins died in New York City and left, among others, two stock certificates covering 33,002
shares of Benguet Consolidated, Inc (BCI). Said stock certificates were in the possession of the Country
Trust Company of New York (Country Trust Company), domiciliary administrator of the estate of the
deceased. Renato Tayag was the substitute of Lazaro A. Marquez, the appointed ancillary administrator of
the properties in the Philippines.

A dispute arose between Country Trust Company and Tayag as to which of them was entitled to the
possession of the stock certificates in question. A case ensued and eventually, the CFI of Manila ordered
Country Trust Company to produce and deposit the stock certificates to Tayag or with the Clerk of Court
but it did not comply with the order. Tayag then filed a petition to have the stock certificates be declared
or considered as lost and compel BCI to issue new stock certificates in replacement thereof. The trial court
granted Tayag’s petition.

BCI assailed said order as it averred that under the circumstances, the stock certificates cannot be declared
or considered as lost. Moreover, it allege that there was a failure to observe certain requirements of its by-
laws before new stock certificates could be issued.

Issue: Whether Benguet Consolidated, Inc. can refuse to comply with the court order to issue stock
certificates for the reason that there was a failure to observe certain requirements of its by-laws .

Held: No. The Court held that “a corporation is an artificial being created by operation of law . . .” 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. 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.”

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.”

Benguet Consolidated is a corporation who owes its existence to Philippine laws. It has been given rights
and privileges under the law. Corollary, it also has obligations under the law and one of those is to follow
valid legal court orders. It is not immune from judicial control because it is domiciled here in the Philippines.
BCI 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.
Further, to allow BCI’s opposition is to render the court order against CTC-NY a mere scrap of paper. It will
leave Tayag without any remedy simply because CTC-NY, a foreign entity refuses to comply with a valid
court order. The final recourse then is for our local courts to create a legal fiction such that the stock
certificates in issue be declared lost even though in reality they exist in the hands of CTC-NY. This is valid. As
held time and again, fictions which the law may rely upon in the pursuit of legitimate ends have played an
important part in its development.