G.R. No. 43350. December 23, 1937.

1. CAGAYAN FISHING DEVELOPMENT CO., Inc., plaintiff-appellant, vs.

TEODORO SANDIKO, defendant-appellee.

|||  LAUREL, J  :
p

When Manuel Tabora obtained a loan of P8,000 and P7,000 from

Philippine National Bank he mortgaged the four parcels of land he owned in
favor of the latter twice. The third mortgage was in favor of Severina Buzon to
whom Tabora was indebted in the sum of P2,900. These mortgages were
registered and annotations thereof appear at the back of transfer certificate.
Later on, Tabora executed a Deed of Sale of the said land in favor of
petitioner Cagayan Fishing Development which is said to be under process of
incorporation, in consideration of one peso (P1) subject to the mortgages in
favor of PNB and Severina Buzon and, to the condition that the certificate of
title to said lands shall not be transferred to the name of Cagayan until the
latter has fully and completely paid Tabora's indebtedness to the PNB. When
petitioner company was incorporated they sold the parcels of land to herein
defendant Teodoro Sandiko who in turn is obligated to shoulder the three
mortgages. Due to Sandiko’s failure to pay, petitioner filed a complaint against
Sandiko. The trial court absolved Sandiko on the ground that the contract id
sale between Tabora and petitioner was invalid.

ISSUE: Whether the contract entered into between Tabora and petitioner is
valid

RULING:
NO. The transfer made by Tabora to the Cagayan Fishing Development
Co., Inc., was effected on May 31, 1930 and the actual incorporation of said
company was effected later on October 22, 1930. In other words, the transfer
was made almost five months before the incorporation of the company.
Unquestionably, a duly organized corporation has the power to purchase and
hold such real property as the purposes for which such corporation was
formed may permit and for this purpose may enter into such contracts as may
be necessary. But before a corporation may be said to be lawfully organized,
many things have to be done. Among other things, the law requires the filing
of articles of incorporation. Although there is a presumption that all the
requirements of law have been complied with (sec. 334, par. 31, Code of Civil
Procedure), in the case before us it cannot be denied that the plaintiff was not
yet incorporated when it entered into the contract of sale, Exhibit A. The
 contract itself referred to the plaintiff as "una sociedad en vias de
incorporacion." It was not even a de factocorporation at the time. Not being in
legal existence then, it did not possess juridical capacity to enter into the
contract.
The contract here was entered into not only between Manuel Tabora
and a non-existent corporation but between Manuel Tabora as owner of four
parcels of land on the one hand and the same Manuel Tabora, his wife and
others, as mere promoters of a corporation on the other hand. For reasons
that are self-evident, these promoters could not have acted as agents for a
projected corporation since that which had no legal existence could have no
agent. A corporation, until organized, has no life and therefore no faculties.

[G.R. No. L-32409. February 27, 1971.]

2. BACHE & CO. (PHIL.), INC. and FREDERICK E.

SEGGERMAN, petitioners, vs. HON. JUDGE VIVENCIO M. RUIZ,
MISAEL P. VERA, in his capacity as Commissioner of Internal
Revenue, ARTURO LOGRONIO, RODOLFO DE LEON, GAVINO
VELASQUEZ, MIMIR DELLOSA, NICANOR ALCORDO, JOHN DOE,
JOHN DOE, JOHN DOE, and JOHN DOE, respondents.

VILLAMOR, J  : p

Respondent Misael P. Vera, Commissioner of Internal Revenue, wrote a letter

addressed to respondent Judge Vivencio M. Ruiz requesting the issuance of a
search warrant against petitioners Bache & Co. (Phil.), Inc., a corporation duly
organized and existing under the laws of the Philippines, and its President,
Frederick E. Seggerman for violation of Section 46(a) of the National Internal
Revenue Code, in relation to all other pertinent provisions thereof, particularly
Sections 53, 72, 73, 208 and 209, and authorizing Revenue Examiner Rodolfo
de Leon, one of herein respondents, to make and file the application for search
warrant which was attached to the letter. The search warrant was served and
six boxes of documents were confiscated.
Petitioner then prayed to declare null and void Search Warrant No. 2-M-70
issued by respondent Judge. Respondent for their part contends that
ISSUE: Whether a corporation is not entitled to protection against unreasonable
search and seizures.

RULING: NO. A corporation is, after all, but an association of individuals under an
assumed name and with a distinct legal entity. In organizing itself as a collective body
it waives no constitutional immunities appropriate to such body. Its property cannot be
taken without compensation. n Stonehill, et al. vs. Diokno, et al., supra, this Court
impliedly recognized the right of a corporation to object against unreasonable
searches and seizures.

[G.R. No. L-22973. January 30, 1968.]

3. MAMBULAO LUMBER COMPANY, plaintiff-appellant, vs. PHILIPPINE

NATIONAL BANK and ANACLETO HERADO, ETC., defendants-
appellees.

ANGELES, J  : p

Petitioner Mambulao Lumber Company had an outstanding debt with

respondent Philippine National Bank (PNB) for P58,213.51. To settle its
obligation with PNB, a foreclosure sale of petitioner’s real property was made in
the amount of P56,908.00. However, according to PNB, there are still
deficiency which prompted PNB for a subsequent foreclosure sale of
petitioner’s chattels. Petitioner then filed a complaint against PNB for the sum of
P3,582.52. The trial court dismissed the case. Petitioner assails the claim of
moral damages of PNB.

ISSUE: Whether the claim of moral damages by PNB is proper.

RULING: NO. An artificial person like herein appellant corporation cannot
experience physical sufferings, mental anguish, fright, serious anxiety,
wounded feelings, moral shock or social humiliation which are the basis of
moral damages. 21 A corporation may have a good reputation which, if
besmirched, may also be a ground for the award of moral damages. The same
cannot be considered under the facts of this case, however, not only because it
is admitted that herein appellant had already ceased in its business operation at
the time of the foreclosure sale of the chattels, but also for the reason that
whatever adverse effect the foreclosure sale of the chattels could have upon its
reputation or business standing would undoubtedly be the same whether the
sale was conducted at Jose Panganiban. Camarines Norte, or in Manila which
is the place agreed upon by the parties in the mortgage contract.
[G.R. No. 11897. September 24, 1918.]er

4. J. F. RAMIREZ, plaintiff-appellee, vs. THE ORIENTALIST CO., and

RAMON J. FERNANDEZ, defendants-appellants.

||| STREET, J  :p

FACTS:
The Orientalist Company was engaged in the business of maintaining and
conducting a theater in the city of Manila for the exhibition of cinematographic
films. An offer was made by petitioner with respondent to acquire the exclusive
agency of "Eclair Films" and the "Milano Films.” Wanting to act speedily and
take advantage of said offer, defendant Ramon J. Fernandez, one of the
directors of the Orientalist Company, had an informal conference with all the
members of the company's board of directors except one, and with the approval
of those with whom he had communicated, addressed a letter to Jose Ramirez,
in Manila, accepting the offer. The letter of acceptance written by R. J.
Fernandez was signed in the following form, in which it will be noted the
separate signature of R. J. Fernandez, as an individual, is placed somewhat
below and to the left of the signature of the Orientalist Company as signed by
R. J. Fernandez, in the capacity of treasurer. However, when the films arrived
draft for the cost and expenses incident to each shipment being attached to the
proper bill of lading. It appears that the Orientalist Company was without funds
to meet these obligations.

ISSUE: Whether Ramon J. Fernandez, based upon his personal signature shall
be liable.

RULING:
Ramon J. Fernandez, as treasurer, had no independent authority to bind the
company by signing its name to the letters in question. It is declared in section
28 of the Corporation Law that corporate powers shall be exercised, and all
corporate business conducted by the board of directors; and this principle is
recognized in the by-laws of the corporation in question which contain a
provision declaring that the power to make contracts shall be vested in the
board of directors. It is true that it is also declared in the same by-laws that the
president shall have the power, and it shall be his duty, to sign contracts; but
this has reference rather to the formality of reducing to proper form the
contracts which are authorized by the board and is not intended to confer an
independent power to make contracts binding on the corporation.
The fact that the power to make corporate contracts is thus vested in the board
of directors does not signify that a formal vote of the board must always be
taken before contractual liability can be fixed upon a corporation; for the board
can create liability, like an individual, by other means than by a formal
expression of its will.
We believe it is a fair inference from the recitals of the minutes of the
stockholder's meeting, that this body was then cognizant that the offer had
already been accepted in the name of the Orientalist Company and that the
films which were then expected to arrive were being imported by virtue of
such acceptance. Certainly four members of the board of directors there
present were aware of this fact, as the letters accepting the offer had been
sent with their knowledge and consent. In view of this circumstance, a certain
doubt arises whether the stockholders meant by their final resolution really to
repudiate the contracts which had been made in the name of the company or
whether they meant to utilize the financial assistance of the four so-called
importers in order that the corporation might get the benefit of the contracts
for the films, just a it would have utilized the credit of the bank if such credit
had been extended. If such was the intention of the stock-holders their action
amounted to a virtual, though indirect, approval of the contracts.

[G.R. No. L-32991. June 29, 1972.]

5. SALVADOR P. LOPEZ, President of the University of the

Philippines; BOARD OF REGENTS, University of the Philippines; and
OSEAS DEL ROSARIO, Officer-in-Charge, College of Education,
University of the Philippines, petitioners, vs. HON. VICENTE ERICTA,
Judge of the Court of First Instance of Rizal, Branch XVIII (Quezon
City), and DR. CONSUELO S. BLANCO, respondents.

||| MAKALINTAL, J  : p

FACTS:
UP’s Board of Regents met and President Lopez submitted to it the ad
interim appointment of Dr. Consuelo Blanco for reconsideration. The minutes
of that meeting disclose that "the Board voted to defer action on the matter in
view of the objections cited by Regent Kalaw (Senator Eva Estrada Kalaw)
based on the petition against the appointment, addressed to the Board, from a
majority of the faculty and from a number of alumni. Accordingly, President
Lopez extended another ad interim appointment to her, effective from May 26,
1970 to April 30, 1971, with the same conditions as the first, namely, "unless
 sooner terminated, and subject to the approval of the Board of Regents and to
pertinent University regulations." During the roll-call five (5) votes in favor of
Dr. Blanco's ad interim appointment, three (3) votes against, and four (4)
abstentions — all the twelve constituting the total membership of the Board of
the time. The Chairman of the Board of Regents terminated the ad interim
appointment.
Her protest not being acted upon, respondent then filed an action for
prohibition with preliminary injunction. The trial court declared that Blanco was
duly elected Dean of the College of Education, University of the Philippines.

ISSUE: Whether Blanco was duly elected Dean of the College of Education,
University of the Philippines, in the meeting of the Board of Regents.

RULING: NO. The votes of abstention, viewed in their setting, can in no way
be construed as votes for confirmation of the appointment. There can be no
doubt whatsoever as to the decision and recommendation of the three
members of the Personnel Committee: it was for rejection of the appointment.
If the committee opted to withdraw the recommendation it was on the
understanding (also referred to in the record as gentlemen's agreement) that
the President would balk to Dr. Blanco for the purpose of having her
appointment withdrawn in order to save them from embarrassment. No
inference can be drawn from this that the members of the Personnel
Committee, by their abstention, intended to acquiesce in the action taken by
those who voted affirmatively. Neither, for that matter, can such inference be
drawn from the abstention that he was abstaining because he was not then
ready to make a decision.
All arguments on the legal question of how an abstention should be treated,
all authorities cited in support of one or the other position, become academic
and purposeless in the face of the fact that respondent Dr. Blanco was clearly
not the choice of a majority of the members of the Board of Regents, as
unequivocally demonstrated by the transcript of the proceedings.
[G.R. No. 152392. May 26, 2005.]

6. EXPERTRAVEL & TOURS, INC., petitioner, vs. COURT OF APPEALS

and KOREAN AIRLINES, respondents.

CALLEJO, SR., J  : p

FACTS:
Korean Airlines (KAL) is a corporation established and registered in the
Republic of South Korea and licensed to do business in the Philippines. KAL,
through Atty. Aguinaldo, filed a Complaint against Expertravel and Tours, Inc.
(ETI) for the collection of the principal amount of P260,150.00, plus attorney's
fees and exemplary damages. The verification and certification against forum
shopping was signed by Atty. Aguinaldo, who indicated therein that he was the
resident agent and legal counsel of KAL and had caused the preparation of the
complaint. ETI filed a motion to dismiss the complaint on the ground that Atty.
Aguinaldo was not authorized to execute the verification and certificate of non-
forum shopping as required by Section 5, Rule 7 of the Rules of Court. During
the hearing Atty. Aguinaldo claimed that he had been authorized to file the
complaint through a resolution of the KAL Board of Directors approved during a
special meeting. KAL opposed the motion, contending that Atty. Aguinaldo was
its resident agent and was registered as such with the Securities and Exchange
Commission (SEC) as required by the Corporation Code of the Philippines.
ISSUE: Whether Atty. Aguinaldo is authorized to execute the verification and
certificate of non-forum shopping.
RULING: NO. In a case where the plaintiff is a private corporation, the
certification may be signed, for and on behalf of the said corporation, by a
specifically authorized person, including its retained counsel, who has personal
knowledge of the facts required to be established by the documents. While Atty.
Aguinaldo is the resident agent of the respondent in the Philippines, this does not
mean that he is authorized to execute the requisite certification against forum
shopping. Under Section 127, in relation to Section 128 of the Corporation Code,
the authority of the resident agent of a foreign corporation with license to do
business in the Philippines is to receive, for and in behalf of the foreign
corporation, services and other legal processes in all actions and other legal
proceedings against such corporation. Under the law, Atty. Aguinaldo was not
specifically authorized to execute a certificate of non-forum shopping as required
by Section 5, Rule 7 of the Rules of Court. This is because while a resident agent
may be aware of actions filed against his principal (a foreign corporation doing
business in the Philippines), such resident may not be aware of actions initiated
by its principal, whether in the Philippines against a domestic corporation or
private individual, or in the country where such corporation was organized and
registered, against a Philippine registered corporation or a Filipino citizen.

[G.R. No. 140667. August 12, 2004.]

7. WOODCHILD HOLDINGS, INC., petitioner, vs. ROXAS ELECTRIC

AND CONSTRUCTION COMPANY, INC.,respondent.

CALLEJO, SR., J  : p

FACTS:
At a special meeting, the RECCI’s Board of Directors approved a
resolution authorizing the corporation, through its president, Roberto B. Roxas, to
sell one of its land, Lot No. 491-A-3-B-2. Petitioner then bought the land with a
stipulation that WHI will have a right of way as well as beneficial use of the
adjacent lot of RECCI. Later on, petitioner demanded to buy a 500-square-meter
portion of the land of RECCI as provided for in the deed of absolute sale. A
complaint for specific performance and damages was filed by WHI against
RECCI. In its answer, RECCI alleged that it never authorized its former
president, Roberto Roxas, to grant the beneficial use of any portion of Lot No.
491-A-3-B-1, nor agreed to sell any portion thereof or create a lien or burden
thereon. It alleged that, under the Resolution approved on May 17, 1991, it
merely authorized Roxas to sell Lot No. 491-A-3-B-2. WHI contends that in
allowing Roxas to execute the contract to sell and the deed of absolute sale and
failing to reject or disapprove the same, the respondent thereby gave him
apparent authority to grant a right of way over Lot No. 491-A-3-B-1 and to grant
an option for the respondent to sell a portion thereof to the petitioner.
The trial court ruled in favor of WHI on the basis that RECCI was estopped
from disowning the apparent authority of Roxas under the Resolution of its Board
of Directors. On appeal, the CA reversed the decision.

ISSUE: Whether RECCI is bound by the provisions in the deed of absolute sale
granting to the petitioner beneficial use and a right of way over a portion of Lot
No. 491-A-3-B-1.

RULING: NO. Generally, the acts of the corporate officers within the scope of
their authority are binding on the corporation. However, under Article 1910 of
the New Civil Code, acts done by such officers beyond the scope of their
authority cannot bind the corporation unless it has ratified such acts expressly
or tacitly, or is estopped from denying them. Thus, contracts entered into by
corporate officers beyond the scope of authority are unenforceable against the
corporation unless ratified by the corporation. 
Evidently, Roxas was not specifically authorized under the said resolution to
grant a right of way in favor of the petitioner on a portion of Lot No. 491-A-3-B-1
or to agree to sell to the petitioner a portion thereof. Neither may such authority
be implied from the authority granted to Roxas to sell Lot No. 491-A-3-B-2 to
the petitioner “on such terms and conditions which he deems most reasonable
and advantageous.” The rule is that if the act of the agent is one which requires
authority in writing, those dealing with him are charged with notice of that fact. 

[G.R. No. L-18805. August 14, 1967.]

8. THE BOARD OF LIQUIDATORS 1 representing THE GOVERNMENT

OF THE REPUBLIC OF THE PHILIPPINES,plaintiff-appellant, vs. HEIRS
OF MAXIMO M. KALAW, 2 JUAN BOCAR, ESTATE OF THE
DECEASED CASIMIRO GARCIA, 3 and LEONOR MOLL, defendants-
appellees.

SANCHEZ, J  : p

FACTS:
National Coconut Corporation (NACOCO) charter RA 5 granted NACOCO the
express power "to buy, sell, barter, export, and in any other manner deal in,
coconut, copra, and dessicated coconut, as well as their by-products, and to act
as agent, broker or commission merchant of the producers, dealers or
merchants" thereof. Its General manager and board chairman was Maximo M.
Kalaw; defendants Juan Bocar and Casimiro Garcia were members of the
Board. Several contracts entered by Kalaw was questionable but were still
approved by the Board. However, NACOCO only partially performed the
contracts which resulted for the buyers to sue NACOCO. The settlement sum
amounted to P1,343,274.52. NACOCO then seeks to recover the said amount
from Kalaw, and directors Bocar, Garcia and Leonor Moll. It charges Kalaw with
negligence under Article 1902 of the old Civil Code and defendant board
members, including Kalaw, with bad faith and/or breach trust for having
approved the contracts.
The trial court dismissed the case and ordered NACOCO to pay the heirs of
Maximo Kalaw the sum of P2,601.94 for unpaid salaries and cash deposit due
to Kalaw.

ISSUE: Whether the contracts entered by Kalaw are valid corporate acts.
RULING: YES. The previous contracts, it should be stressed, were signed by
Kalaw without prior authority from the board. Said contracts were known all
along to the board members.
Settled jurisprudence has it that where similar acts have been approved by
the directors as a matter of general practice, custom, and policy, the general
manager may bind the company without formal authorization of the board of
directors. 26 In varying language, existence of such authority is established, by
proof of the course of business, the usages and practices of the company and
by the knowledge which the board of directors has, or must be presumed to
have, of acts and doings of its subordinates in and about the affairs of the
corporation. In the case at bar, the practice of the corporation has been to
allow its general manager to negotiate and execute contracts in its copra
trading activities for and in NACOCO's behalf without prior board approval. If
the by-laws were to be literally followed, the board should give its stamp of
prior approval on all corporate contracts. But that board itself, by its acts and
through acquiescence practically laid aside the by-law requirement of prior
approval.
Under the given circumstances, the Kalaw contracts are valid corporate acts.

[G.R. No. L-15092. May 18, 1962.]

9. ALFREDO MONTELIBANO, ET AL., plaintiffs-

appellants, vs. BACOLOD-MURCIA MILLING CO., INC., defendant-
appellee.

REYES, J. B. L., J  :
p

FACTS:

Petitioners had been and are sugar planters adhered to the defendant
Bacolod Murcia Milling Co., Inc.’s sugar central mill under identical milling
contracts. Said contracts were stipulated to be in force for 30 years and
 provided that the resulting product should be divided in the ratio of 45% for
the mill and 55% for the planters. However, it was later on proposed to
execute amended milling contracts, increasing the planters' share to 60% of
the manufactured sugar and resulting molasses, besides other concessions,
but extending the operation of the milling contract from the original 30 years to
45 years. Board of Directors of Bacolod Murcia Milling Co., Inc., adopted a
resolution granting further concessions to the planters. Petitioners filed an
action to compel respondent to increase plaintiff's share in the sugar produced
from their cane, from 60% to 62.33 % contending that three Negros sugar
centrals with a total annual production exceeding one-third of the production
of all the sugar central mills in the province, had already granted increased
participation (of 62.5%) to their planters and that under paragraph 9 of the
resolution Bacolod had become obligated to grant similar concessions to
them. Respondent contends that the said resolution were made without
consideration and therefore null and void ab initio, being in effect a donation
that was ultra vires and beyond the powers of the corporate directors to adopt.
The trial court dismissed the case.

ISSUE: Whether the said resolution is valid.

RULING: YES. . It must be remembered that the controverted resolution was

adopted by appellee corporation as a supplement to, or further amendment of,
the proposed milling contract, and that it was approved; so that when the
amended milling contract was executed, the concessions granted by the
disputed resolution had been already incorporated into its terms. No reason
appears of record why, in the face of such concessions, the appellants should
reject them or consider them as separate and apart from the main amended
milling contract.
There can be no doubt that the directors of the appellee company had authority
to modify the proposed terms of the Amended Milling Contract for the purpose
of making its terms more acceptable to the other contracting parties. As the
resolution in question was passed in good faith by the board of directors, it is
valid and binding, and whether or not it will cause losses or decrease the profits
of the central, the court has no authority to review them.
[G.R. No. 125469. October 27, 1997.]

10. PHILIPPINE STOCK EXCHANGE, INC., petitioner, vs. THE

HONORABLE COURT OF APPEALS, SECURITIES AND EXCHANGE
COMMISSION and PUERTO AZUL LAND, INC., respondents.

TORRES, JR., J  : p

FACTS:
Puerto Azul Land, Inc. (PALI) sought to offer its shares to the public in
order to raise funds allegedly to develop its properties and pay its loans with
several banking institutions. PALI was issued a Permit to Sell its shares to the
public by the Securities and Exchange Commission (SEC). To facilitate the
trading of its shares among investors, PALI filed with the said stock exchange an
application to list its shares. Before it could act upon the application, the Board of
Governors of the PSE received a letter from the heirs of Ferdinand E. Marcos to
be deferred on the ground that they are the owners of the assets declared by
PALI as theirs. In its regular meeting the Board of Governors of the PSE decided
to reject PALI's application, citing the existence of serious claims, issues and
circumstances surrounding PALI's ownership over its assets that adversely affect
the suitability of listing PALI's shares in the stock exchange. PALI then requested
SEC to review PSE’s decision. SEC reversed the decision of the PSE.

ISSUE: Whether SEC had authority to order the PSE to list the shares of PALI in
the stock exchange.
RULING: YES. Section 3 of Presidential Decree 902-A, standing alone, is
enough authority to uphold the SEC's challenged control authority over the
petitioner PSE even as it provides that "the Commission shall have absolute
jurisdiction, supervision, and control over all corporations, partnerships or
associations, who are the grantees of primary franchises and/or a license or
permit issued by the government to operate in the Philippines . . ." The SEC's
regulatory authority over private corporations encompasses a wide margin of
areas, touching nearly all of a corporation's concerns. This authority springs from
the fact that a corporation owes its existence to the concession of its corporate
franchise from the state.
Thus, notwithstanding the regulatory power of the SEC over the PSE, and the
resultant authority to reverse the PSE's decision in matters of application for
listing in the market, the SEC may exercise such power only if the PSE's
judgment is attended by bad faith. The Court finds that the PSE has acted with
justified circumspection, discounting, therefore, any imputation of arbitrariness
and whimsical animation on its part. Its action in refusing to allow the listing of
PALI in the stock exchange is justified by the law and by the circumstances
attendant to this case. 

[G.R. No. L-14441. December 17, 1966.]

11. PEDRO R. PALTING, petitioner, vs. SAN JOSE PETROLEUM

INCORPORATED, respondent.

BARRERA, J  : p

FACTS:
Respondent San Jose Petroleum filed with the Philippine Securities and
Exchange Commission (PSE) an amended Statement for registration of the sale
in the Philippines of its shares of capital stock, which was increased from
2,000,000 to 5,000,000, at a reduced offering price of from P1.00 to P.70 per
share. At this time the par value of the shares has also been reduced from $.35
to $.01 per share. Petitioner Pedro R. Palting and others, allegedly prospective
investors in the shares of San Jose filed with the SEC an opposition to the
registration and licensing of the securities. Respondent questions the personality
of petitioner to bring this appeal, contending that as a mere "prospective
investor", he is not an "aggrieved" or "interested" person who may properly
maintain the suit.

ISSUE: Whether petitioners as prospective investor may maintain the suit.

RULING: YES. As construed by the administrative office entrusted with the

enforcement of the Securities Act, any person (who may not be "aggrieved" or "
interested" within the legal acceptation of the word) is allowed or permitted to
file an opposition to the registration of securities for sale in the Philippines. It is
for this purpose that herein petitioner duly filed his opposition giving grounds
therefor. Respondent SAN JOSE PETROLEUM was required to reply to the
opposition.
[G.R. No. L-27972. June 30, 1970.]

12. CENTRAL COOPERATIVE EXCHANGE,

INC., petitioner, vs. CONCORDIO TIBE, SR. and THE HONORABLE
COURT OF APPEALS, respondents.

REYES, J.B.L., J  :
p

FACTS:
Petitioner Central Cooperative Exchange, Inc. (CCE) is a national
federation of farmers' cooperative marketing associations, or FACOMAS,
scattered throughout the country. As a member of the petitioner's board of
directors respondent Concordio Tibe, Sr. drew and collected from petitioner
CCE cash advances amounting to P5,668.00. Respondent Tibe had also
drawn several sums, amounting to P14,436.95, representing commutable per
diems for attending meetings of the Board of Directors in Manila, per
diems and transportation expenses for FACOMA visitations, representation
expenses and commutable discretionary funds. All these sums were
disbursed with the approval of general manager, treasurer and auditor of
CCE. Petitioner then filed a complaint for the refund of certain amounts
received by Tibe from the corporation, while he served as a member of the
board of directors of the Exchange.

ISSUE: Whether the board of directors of the CCE had the power and authority
to adopt various resolutions which appropriated the funds of the corporation for
the above-enumerated expenses for the members of the said board.

RULING: NO. The resolutions are contrary to the By-Laws of the federation
and, therefore, are not within the power of the board of directors to enact. The
By-Laws, explicitly reserved unto the stockholders the power to determine the
compensation of members of the board of directors, and the stockholders did
restrict such compensation to "actual transportation expenses plus the per
diems of P30.00 and actual expenses while waiting." Even without the
express reservation of said power, the directors are not entitled to
compensation. Thus, the directors, in assigning themselves additional duties,
such as the visitation of FACOMAS, acted within their power, but, by voting
for themselves compensation for such additional duties, they acted in excess
of their authority, as expressed in the By-Laws.
 Nor may the directors rely on Section 28 of the Corporation Law, giving the
exercise of corporate powers and the control of the corporation's business
and property to the board of directors, or on Section 1 of Article VI of the By-
Laws, empowering the board with "general supervision and control of the
affairs and property of the Exchange," as justifications for the adoption of the
questioned resolutions, because these provisions of the law and the By-Laws
pertain to the board's general powers merely and do not extend to giving the
members of the said board the compensations stated in the resolution, as the
matter of providing for their compensations are specifically withheld from the
board of directors, and reserved to the stockholders.

[G.R. No. 22442. August 1, 1924.]

13. ANTONIO PARDO, petitioner, vs. THE HERCULES LUMBER CO.,

INC., and IGNACIO FERRER, respondents.

STREET, J  : p

FACTS:

Petitioner, Antonio Pardo ,a stockholder in the Hercules Lumber Company, Inc.,

filed with the Court an action to obtain a writ of mandamus to compel the
respondents to permit him and his duly authorized agent and representative to
examine the records and business transactions of said company. Respondent
contends that in article 10 of their By-laws it is declared that "Every shareholder
may examine the books of the company and other documents pertaining to the
same upon the days which the board of directors shall annually fix." Thus, the
resolution of the board constitutes a lawful restriction on the right conferred by
statute; and it is insisted that as the petitioner has not availed himself of the
permission to inspect the books and transactions of the company within the ten
days thus defined, his right to inspection and examination is lost, at least for this
year.

ISSUE: Whether the Board of Directors through resolution may constitute

restriction as to when the corporate books may be examined by stockholders.
RULING: NO. The general right given by the statute may not be lawfully
abridged to the extent attempted in this resolution. It may be admitted that the
officials in charge of a corporation may deny inspection when sought at unusual
hours or under other improper conditions; but neither the executive officers nor
the board of directors have the power to deprive a stockholder of the right
altogether. A by-law unduly restricting the right of inspection is undoubtedly
invalid. It will be noted that our statute declares that the right of inspection can
be exercised "at reasonable hours." This means at reasonable hours on
business days throughout the year, and not merely during some arbitrary period
of a few days chosen by the directors.

[G.R. No. L-33320. May 30, 1983.]

RAMON A. GONZALES, petitioner, vs. THE PHILIPPINE NATIONAL

BANK, respondent.

VASQUEZ, J  : p

FACTS:
Petitioner Ramon A. Gonzales filed a special civil action for mandamus against
the respondent Philippine National Bank PNB praying that the latter be ordered
to allow him to look into the books and records of PNB in order to satisfy himself
as to the truth of the published reports that the respondent has guaranteed the
obligation of Southern Negros Development Corporation in the purchase of a
US$23 million sugar-mill to be financed by Japanese suppliers and financiers as
well as to inquire into the validity of said transactions. The trial court dismissed
the petition on the ground that the right of a stockholder to inspect the record of
the business transactions of a corporation granted under Section 51 of the
former Corporation Law is not absolute, but is limited to purposes reasonably
related to the interest of the stockholder, must be asked for in good faith for a
specific and honest purpose and not gratify curiosity or for speculative or vicious
purposes; that such examination would violate the confidentiality of the records of
the respondent bank as provided in Section 16 of its charter, Republic Act No.
1300, as amended.

ISSUE: Whether petitioner can examine the books and records of PNB.
RULING: NO. The former Corporation Law (Act No. 1459, as amended) has
been replaced by Batas Pambansa Blg. 68, otherwise known as the "Corporation
Code of the Philippines." The right of inspection granted to a stockholder under
Section 51 of Act No. 1459 has been retained, but with some modifications.
While seemingly enlarging the right of inspection, the new Code has prescribed
limitations to the same. It is now expressly required as a condition for such
examination that the one requesting it must not have been guilty of using
improperly any information secured through a prior examination, and that the
person asking for such examination must be "acting in good faith and for a
legitimate purpose in making his demand."
The Philippine National Bank is not an ordinary corporation. Having a charter of
its own, it is not governed, as a rule, by the Corporation Code of the Philippines.
The provision of Section 74 of Batas Pambansa Blg. 68 of the new Corporation
Code with respect to the right of a stockholder to demand an inspection or
examination of the books of the corporation may not be reconciled with the above
quoted provisions of the charter of the respondent bank. It is not correct to claim,
therefore, that the right of inspection under Section 74 of the new Corporation
Code may apply in a supplementary capacity to the charter of the respondent
bank.