#43 NTC Vs PLDT and #57 Apt Vs CA

NATIONAL TELECOMMUNICATIONS COMMISSION v HONORABLE COURT OF
APPEALS and PHILIPPINE LONG DISTANCE TELEPHONE COMPANY

G.R. No. 127937, July 28, 1999
FACTS:
In 1988, National Telecommunications Commission (NTC) assessed Philippine
Long Distance Telephone Company (PLDT), among others, the amount of
P7,495,161.00 as supervision and regulation fee under Section 40e of the Public
Service Act (PSA) based on the market value of PLDT's outstanding capital stock
inclusive of stock dividends and premium.
PLDT filed a letter of protest on the said assessment contending that the
computation for the supervision and regulation fee under Section 40e of the PSA shall
be based on the par values of private respondent's outstanding capital stock. The NTC
disregarded the letter of protest of PLDT. However, the CA upheld the contention of
PLDT. Hence, this petition.
ISSUE:
What shall be the basis of the computation in determining the fees under
Section 40 e of the PSA?
RULING:
It shall be based on "the capital stock subscribed or paid and not,

alternatively, the property and equipment" as provided for under Section 40e of the
PSA.
The capital subscribed is the total amount of the capital that persons
(subscribers or shareholders) have agreed to take and pay for, which need not
necessarily be, and can be more than, the par value of the shares. In fine, it is the
amount that the corporation receives, inclusive of the premiums if any, in
consideration of the original issuance of the shares. In the case of stock dividends, it is
the amount that the corporation transfers from its surplus profit account to its capital
account. It is the same amount that can loosely be termed as the "trust fund" of the
corporation. The "Trust Fund" doctrine considers this subscribed capital as a trust
fund for the payment of the debts of the corporation, to which the creditors may look
for satisfaction. Until the liquidation of the corporation, no part of the subscribed
capital may be returned or released to the stockholder (except in the redemption of
redeemable shares) without violating this principle. Thus, dividends must never impair
the subscribed capital; subscription commitments cannot be condoned or remitted;
nor can the corporation buy its own shares using the subscribed capital as the
consideration therefor.
The assessment made by NTC to PLDT under Section 40e was based on the
market value of the outstanding capital stock. The actual capital paid or the amount
of capital stock paid and for which PLDT received actual payments were not disclosed
or extant in the records before the Court. Hence, NTC has been ordered to recomputed
the assessment made in accordance with the law.
ASSET PRIVATIZATION TRUST v. COURT OF APPEALS, et. al.
G.R. No. 121171, December 29, 1998
FACTS:
Marinduque Mining and Industrial Corporation (MMIC) entered into a Mortgage

Trust Agreement with Philippine National Bank (PNB) and Development Bank of the
Philippines (DBP). Subsequent thereto, MMIC executed various loans of huge
amounts, thus Deeds of Real Estate Mortgages, among others, were executed by MMIC
in favor of the two banks. MMIC failed to pay said loans when they fell due. Hence, a
Financial Restructuring Plan was a designed to reduce the indebtedness of MMIC. The
FRP was approved by the board of MMIC. However, it was never formally adopted by
PNB or DBP.
Subsequently, PNB and DBP foreclosed the real estate mortgages executed in
their favor where PNB was the only bidder. Thereafter, PNB assigned said properties to
Asset Privatization Trust. MMIC filed suit assailing the validity of the foreclosure of
mortgage contending that PNB and DBP should have complied with the FRP and
should not have foreclosed the mortgages.
When the matter was referred to arbitration, the arbitral body ruled that since
the Board of MMIC which adopted the FRP was composed primarily of the
representatives from DBP and PNB, the doctrine of promissory estoppel applies. As
such, they should have complied with the FRP and they cannot argue that the FRP is
not binding upon them.
ISSUE: Is the FRP binding upon DBP and PNB?
RULING:
No. As in all other contracts, there must be a meeting of minds of the parties;
the PNB and DBP must have to validly adopt and ratify such FRP before they can be
bound by it; before it can be implemented. There is absolutely no evidence that the
DBP and PNB agreed, expressly or impliedly, to the proposed FRP. It cannot be
overemphasized that a FRP, as a contract, requires the consent of the parties thereto.
The contract must bind both contracting parties.
At the time the FRP was adopted, the board of MMIC was mostly composed of
PNB and DBP representatives. But those representatives, singly or collectively, are not
themselves PNB or DBP. They are individuals with personalities separate and distinct
from the banks they represent. PNB and DBP have different boards with different
members who may have different decisions. It is unfair to impose upon them the
decision of the board of another company and thus pin them down on the equitable
principle of estoppel. Estoppel is a principle based on equity and it is certainly not
equitable to apply it in this particular situation. Otherwise the rights of entirely
separate, distinct and autonomous legal entities like PNB and DBP with thousands of
stockholders will be suppressed and rendered nugatory.
As a rule, a corporation exercises its powers, including the power to enter into
contracts, through its board of directors. While a corporation may appoint agents to
enter into a contract in its behalf, the agent, should not exceed his authority. In the
case at bar, there was no showing that the representatives of PNB and DBP in MMIC
even had the requisite authority to enter into a debt-for-equity swap. And if they had
such authority, there was no showing that the banks, through their board of directors,
had ratified the FRP.

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NATIONAL TELECOMMUNICATIONS COMMISSION v HONORABLE COURT OF

APPEALS and PHILIPPINE LONG DISTANCE TELEPHONE COMPANY

It shall be based on "the capital stock subscribed or paid and not,

Marinduque Mining and Industrial Corporation (MMIC) entered into a Mortgage

ISSUE: Is the FRP binding upon DBP and PNB?

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