corpo digest 10

8/9/2019 Corpo Digest 10

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won vs wackwack

doctrine: law does not prescribe a period within which the registrationshould be effected, the action to enforce the right does not accrue untilthere has been a demand and a refusal concerning the transfer.

facts: Wack wack gold a non-stock corporation issued to teruyama membershipcertificate which was assigned to M.T. Reyes. Such certificate was transferred toLee Won. fter the war an action was filed to register in its book the assignment infa!or of Lee Won and to issue a new certificate. WackWack"s defense is that itwas beyond the # year period fi$ed by the ci!il code. The certificate in %uestioncontains a condition to the effect that no assignment thereof &shall be effecti!ewith respect to the club until such assignment is registered in the books of theclub' as pro!ided in the (y-Laws.) *+, dismissed the complaint

issue: W the plaintiff was bound' under said condition and (y-Laws of thedefendant or any statutory rule for that matter' to present and register thecertificate assigned to him in /011 within any definite or fi$ed period

ruling: The e$istence of a right is one thing' and the duration of said right isanother.

n the other hand' it is stated in the appealed order of dismissal thatthe plaintiff sought to register the assignment on pril /2' /0##3 whereas inplaintiff4s brief it is alleged that it was only in +ebruary' /0##' when the defendantrefused to recogni5e the plaintiff. ,f' as already obser!ed, there is no fixedperiod for registering an assignment' how can the complaint be considered asalready barred by the Statute of Limitations when it was f iled on pril 67' /0##' orbarely a few days 8according to the lower court9 and two months 8according to theplaintiff9' after the demand for registration and its denial by the defendant.laintiff4s right was !iolated only sometime in /0##' and it could not accordinglyha!e asserted any cause of action against the defendant before that.

The defendant seems to belie!e that the plaintiff was compelledimmediately to register his assignment. ny such compulsion is ob!iously for thebenefit of the plaintiff' because it is only after registration that the transfer wouldbe binding against the defendant. (ut we are not here concerned with a situationwhere the plaintiff claims anything against the defendant allegedly accruing underthe outstanding certificate in %uestion between the date of the assignment to theplaintiff and the date of the latters demand for registration and issuance of a newcertificate.

LAMBE! vs "#$*reditors of ;ohn R. <dgar = *o decided to take o!er the business >

,*RT< > ccept stocks in payment

Lambert and +o$ became two largest stockholders > greement not to sell shares

w?in / year

@espite this +o$ sold his stocks 0 months after > Lambert rotested

Trial court decided the case in fa!or of the +o$. Aence appeal

%ssue:W suspending the power to sell the stock > illegal stipulation ? restraint of tradew?c !iolates public policyB

&eld: '#There is !alid suspension of the right to sell stock in a corporation when

/. has a beneficial purpose6. results in the protection of the corporation as well as of the indi!idual

parties to the contract2. reasonable as to the length of time of the suspension

"LE%()&E vs B#!%)A '#LA()#

Con5ales re%uested (otica olasco > effect of transferred to +leischer"s name

%t was registered to the name of B#!%)A * has preferential right to bu+ theshares

+leischer > demanded that the stocks should be registered in his name

+iled Mandamus

(otica4s @efense:article /6 of its by-laws: it had preferential right to buy the shares

Trial court ordered (otica to register. Aence appeal

%ssue:

W the pro!isions of preferential right in by-laws may be used as a defense todeny registrationB

&eld: '# B+-laws not inconsistent with an+ existing law for the transferring of itsstock

The holder of shares' as owner of personal property' is at liberty to

dispose of them in fa!or of whomsoe!er he pleases without any other limitation than the general pro!isions of law

ule )orporation )ode contemplates no restriction as to whomthe+ ma+ be transferred or sold

by-law cannot

a9 operate to defeat his rights as a purchaser who obtainedthem in good faith and for a !aluable consideration

b9 Dustify an unreasonable restriction upon the right to sell

/A01E!! vs BAB)#)2 3 !EM/LE!#', %').

adgett > (abcock = Templation ,nc> bought 2# shares /EE and 0 shares from *hristmas bonus 8 /EE

par 9

/6 certificates were issued word FnontransferableF

(efore lea!ing the corporation > proposed/. to buy his 11 shares at par !alue plus the interest6. he be authori5ed to sell them to other

the president offered to buy G H#. Refused to sell

%((4E:

W? the shares are transferable despite the restriction appearing thereinB

&eld: 5E(word 6nontransferable6 appearing on the 78 certificates 'ull and 9iod

1: (& ma+ dispose of them as he sees fit Exception:

/. the corporation has been dissol!ed6. the right to do so is properly restricted2. owner"s pri!ilege of disposing of his shares has been

hampered by his own action

,n the absence of a similar contractual obligation and of a legal pro!isionapplicable thereto' it is logical to conclude that it would be unDust andunreasonable to compel the said defendants to comply with a non-e$istent orimaginary obligation

(A'!AMA%A vs !&E &#'12#'1 A'0 (&A'1&A%

Santa Maria bought shares of (atangas Minerals 8 broker > Woo 9

Santa Maria recei!ed > stock certificates in the name of Woo and indorsed inblank by the firm.

Santamaria bought shares of *rown Mines' ,nc. 8 broker > R.;. *ampos = *o. 9 II Sta Maria ga!e her shares in (atangas Minerals > as security II Still in the name of Woo

RD *ampos was ordered by S<* to discontinue transacting business @Batangas Minerals stock was pledged to &(B)

AS(* sent the certificate to (atangas Minerals' ,nc. for registration > WSR<C,ST<R<@

Aence' this ci!il action

%ssue:W the (ank was obligated to in%uire who was the real owner of the sharesrepresented by the certificate of stockB

&eld: '#!he Bank was not obligated to look be+ond the certificate to ascertain theownership of the stock

This certificate is what it is known as > & street certificate )

it is a well-known practice that a certificate of stock' indorsed in blank'

is deemed quasi negotiable <RC > transferee thereof is Dustified in belie!ing that it belongs to

the holder and transferor

bona fide pledgee or transferee of a stock from the apparent owner is notchargeable with knowledge of the limitations placed on it by the real owner' or ofany secret agreement relating to the use which might be made of the stock by theholder.



0e Los (antos vs epublic

@e los Santos LL<C<S that he ac%uired /.7 million shares of the Lepanto*onsolidated +RM ;uan *ampos and *arl Aess

shares are registered in the name of Jicente Madrigal in the books of thecorporation

+T<R the WR > property was se%uestered being classified as & ;apaneseroperty &

ttorney Ceneral argues that:7. shares were bought b+ Madrigal in trust for Mitsuis * ;apanese

corp 6. Madrigal deli!ered to Mitsuis with his blank indorsement on it2. The said shares were ne!er sold and were most probably lost or

stolen during liberation

%ssue:W the contested certificates of stock could be transferred to @e Los SantosB

&eld: '#4LE if the owner of the certificate has indorsed it in blank < stolen from

him no title is ac=uired b+ an innocent purchaser for value Madrigal ne!er disposed of the said shares e$cept by

deli!ery to Mitsuis Managers of Mitsui > also did not disposed of the

properties e!idence of a receipt of the alleged purchase by @e Los

Santos from *ampos and Aess 8 ot Registeredowners 9 was lost in fire

Supplementary Notes Shares of stock are personal property and may be transferred by

endorsement of the corresponding stock certificate' coupled with itsdeli!ery.

*ertificates are mere e!idence. ;ust because you hold it does not

automatically translate into you being a stockholder. Stock andtransfer book as the best e!idence to determine who the realstockholder is.

*S< T (R: The one who claims to be the owner of the shares of stock as e!idenced bycertificate of stock has the burden of pro!ing that he ac%uired it from theregistered owner thereof or his duly appointed representati!es.

1AMB#A vs 9%)!#%A'#

Lopue et al > bought shares of stock of the ,nocentes de la Rama' ,nc.

To pre!ent the ac%uisition > 1amboa et al passed a resolution authori>ing thesale of those unissued shares to them

Lopue filed a complaint contending that:

• the sale of the unissued shares was in !iolation of the plaintiffs"

and pre-empti!e rights and made without the appro!al of theboard of directors representing 6?2 of the outstanding capitalstock

Camboa motioned to dismiss the case contending that:/. court has no Durisdiction to interfere with the management of the

corporation by the board of directors6. the enactment of a resolution was purely a management concern

which the courts could not interfere with

Trial *ourt denied the motion

%ssue:W trial court has Durisdiction on matters affecting the management of thecorporationB

&eld: 5E(1 courts cannot undertake to control the discretion of the board ofdirectors about administrative matters as to which the+ have legitimatepower of, action and contracts intra vires entered into b+ the board ofdirectors are binding upon the corporation and courts will not interfere Exception: contracts are so unconscionable and oppressive as to amount

to a wanton destruction of the rights of the minority

1okongwei vs. (E)

Cokongwei > filed w? S<* declaration of nullity of amended by-laws

,nDunction against the maDority of the members of

the (@ of San Miguel

*ontentions/. Soriano' ;r. et al amended by bylaws of the corporation' basing their

authority to do so on a resolution of the stockholders adopted on

• section 66 of the *orporation Law

• ower to mend may be delegated to the (@ LK by > !ote

of 6?2 SA

• *omputation of 6?2 > on the basis of the capitali5ation at the

time of the amendment• contended that the (oard acted without authority and in

usurpation of the power of the stockholders

• the authority granted in /07/ had already been e$ercised in

/076 and /072' after which the authority of the (oard ceased toe$ist

• the membership of the (oard of @irectors had changed since

the authority was gi!en in /07/' there being 7 new directors

6. prior to the %uestioned amendment > Cokogwei had all the %ualificationsto be a director of the corporation > being a substantial stockholderthereof

• Cokongwei had ac%uired rights inherent in stock ownership

• rights to !ote and to be !oted upon in the election of directors

• Soriano' et purposely pro!ided for Cokongwei"s dis%ualification

and depri!ed him of his !ested right as afore-mentioned

2. corporations ha!e no inherent power to dis%ualify a stockholder from being

elected as a director > TA<R<+R< %uestioned act is ultra !ires and !oid• Soriano' ;r. while representing other corporations entered into

management contracts with San Miguel

• ?#'1 =uestioned amendment gave the Board itselfthe prerogative of determining whether the+ or otherpersons are engaged in competitive or antagonisticbusiness

• portion of the amended by-laws which states that in

determining whether or not a person is engaged in competiti!ebusiness' the (oard may consider such factors as businessand family relationship' is unreasonable and oppressi!e and'therefore' !oid

1. the corporation has been in!esting corporate funds in other corporationsand businesses outside of the primary purpose clause of the corporation

,ssue:/. W the corporation has the power to pro!ide for the 8additional9

%ualifications of its directorsB6. W the dis%ualification of a competitor from being elected to the(oard of @irectors is a reasonable e$ercise of corporate authorityB

2. W the S<* gra!ely abused its discretion in denying Cokongwei"sre%uest for an e$amination of the records of San Miguel ,nternational',nc.' a fully owned subsidiary of San Miguel *orporationB

1. W the S<* gra!ely abused its discretion in allowing thestockholders of San Miguel *orporation to ratify the in!estment ofcorporate funds in a foreign corporationB

&eld:/. 5E(. A corporation ma+ prescribe in its b+-laws 6the

=ualifications, duties and compensation of directors, officers andemplo+ees.6 -- *orporation Law

RL< > ny person Fwho buys stock in a corporation

does so with the knowledge that its affairs aredominated b+ a ma@orit+ of the stockholders and thathe impliedl+ contracts that the will of the ma@orit+shall govern in all matters within the limits of the act of

incorporation and lawfully enacted by-laws and notforbidden by law.F

SA > parted with his personal right or pri!ilege to regulate

his in!estment to the will of the maDority of his fellowincorporators

the owners of the maDority of the subscribed capital stock

may amend or repeal any by-law or adopt new by-laws Cokongwei has J<ST<@ R,CAT to be elected directo

> (y-laws is S(;<*T T *AC<

6. 5E(. 6the+ occup+ a fiduciar+ relation, and in this sense therelation is one of trust.6

@irectors > agents entrusted with the management of the

corporation for the collecti!e benefit of the stockholders Ae who is in such fiduciary position cannot ser!e himself

first and his cestuis second.



doctrine of "corporate opportunity" = the fiduciary

standards could not be upheld where the fiduciarywas acting for two entities with competing interests. II based fundamentally on the unfairness officer or

director taking ad!antage of an opportunityfor his own personal profit when the interestof the corporation Dustly calls for protection

mendment > ob!iously to pre!ent the creation of an

opportunity for an officer of a competing corporation fromtaking ad!antage of the information which he ac%uires asdirector to promote his indi!idual or corporate interests

2. '#. !his right is predicated upon the necessit+ of self-protection. where the right is granted by statute to the stockholder > it

is gi!en to him with respect to his interest as a stockholder

has to be proper and lawful in character and notinimical to the interest of the corporation

1. '#. %f the investment is made in pursuance of the corporatepurpose, it does not need the approval of the stockholders.

the purchase of beer manufacturing facilities by SM* was

an in!estment in the same business stated as its mainpurpose in its rticles of ,ncorporation

urpose > manufacture and market beer

ssuming arguendo o authority > there is no =uestionthat a corporation, like an individual, ma+ ratif+ andthereb+ render binding upon it the originall+unauthori>ed acts of its officers or other agents.

This is true because the %uestioned in!estment is neither

contrary to law' morals' public order or public policy. The mere fact that the corporation submitted the

assailed investment to the stockholders forratification at the annual meeting cannot be construed

as an admission that the corporation had committedan ultra vires act

%(LAM%) 0%E)!#A!E #" !&E /&%L%//%'E( vs )#4! #" A//EAL(

,@-Tamano Croup alleges > ,slamic leaders of all Muslim maDor tribal groupsorgani5ed and incorporated the ,SLM,* @,R<*TRT< + TA< A,L,,<S8,@9

Libyan go!ernment donated money to the ,@ to purchase land

fter the purchase > Martial Law was declared

Two Muslim groups sprung > *arpi5o Croup and bbas Croup claiming to be thelegitimate ,@

S<* declaring the election of both the *arpi5o Croup and the bbas Croup as,@ board members to be null and !oid II R@<R<@ > to prepare and adopt their by-laws for submission to the*ommission.

either group took the necessary steps prescribed by the S<*

ST,LL *arpi5o Croup caused to be signed an alleged (oard Resolution >authori5ing the sale of the subDect two parcels of land to ,*

,@ (oard of Trustees filed a petition before the S<* seeking to declare the saleull and Joid

,* filed an action for Specific erformance against *arpi5o Croup

@uring pendency of S<* *ase > Trial court ordered ,@-*arpi5o Croup to complywith its obligation

S<* ruled that since there was '# B#0 the resolution of sale was 'ull andvoid

,* appealed to * > set aside the ruling made. Aence ,@-Tamano Crouppetitioned for certiorari

%ssue:W * erred in setting aside S<*4s rulingB

&eld: 5E(/. all acts carried out by the *arpi5o (oard > ha!e to be struck down for

ha!ing been done without the consent of the ,@ thru a legitimate(oard of Trustees consent is essential for the e$istence of a contract

the ,@' owner of the subDect parcels of land' ne!er ga!e its

consent' thru a legitimate (oard of Trustees

*S<T > hence !oid and produces no effect

whatsoe!er.

6. *arpi5o Croup-,* sale is further deemed null and !oid ab initio because of the *arpi5o Croup"s failure to comply with Section 1E ofthe *orporation *ode

Tandang Sora property > constitutes the only property of

the ,@ +alls w?in the sale or disposition of all the corporate

property Re%uires: 8 (oth not Met9

/. maDority !ote of the legitimate (oard6. concurred in by the !ote of at least 6?2 of

the bona fide members of the corporation

AM%E 9( #%E'!AL%(! *must act as a bod+

rientalist company > in charge of maintaining a theatre in manila.> authori5ed to manufacture all accessories necessary for

conducting such a business.

Ramire5 a french resident was engaged in production' distribution ofcinematographic material he was represented by his son in manila.

rientalist *ontracted w? Ramire5 for an e$clusi!e distribution of their films

+<R@< 8 officer and treasurer 9 was acti!e on the deal > They agreed toshow such films

rientalist has no funds to meet the obligations > A<*< sued by ramire5.

Trial court ruled out that orientalist company is principal debtor while fernande5 issubsidary liable as guarantor.

,ssue :W orientalist co. liable for acts of treasurerB

Ruling: K<S '+ernande5 was the particular officer and member of the board of directors whowas most acti!e in the effort to secure the films for the corporation.

The negotiations were conducted by him with the knowledge and

consent of other members of the board contract was made with their prior appro!al

RL< > ,f contract was appro!ed by the (@ and that the company is

bound unless the subse%uent failure of the stockholders to appro!esaid contracts had the effect of abrogating the liability thus created.

+<R@< is liable > intended to be that of a guarantor ha!e us belie!e that his name was signed as a guaranty that the

contract would be appro!ed by the corporation

B#A0 #" L%4%0A!#( 9( 2ALA?,E(!A!E

Ma$imo Nalaw > CM and *hairman of **

1 typhoons that hit the country > ** was unable to fulfill its obligations

Louis @reyfus ltd > filed a suit against **

*** was subse%uently abolished by < 2O6 > gi!ing the (oard ofLi%uidators the function of settling and closing its affairs (L now seeks to reco!er from CM Nalaw and the other two directors > Crounds

/. egligence for ha!ing appro!ed and entered into the aforementionedunprofitable contracts

6. by-laws re%uired prior appro!al of the board2. Nalaw entered into the contracts alone as general manager and without

the board4s prior appro!al

%ssue: W Nalaw and the rest of the board were guilty negligence and bad faith and?obreach of trustfor ha!ing entered into the unprofitable contractsB

&eld: '#Nalaw4s acts were !alid corporate acts.

1: laws re=uired that a general manager first procure approvalof the board members beforeentering into contracts that wouldbind the corporation <$ception: contrary practice ratified by the (oard

<!idence > it was the practice of the corporation to allow its general

manager to negotiate contracts copra trading for and in **4s behalf > without prior board

appro!al



Supplementary Notes: ,t is possible for an e$press pro!ision of the by-laws to be !iolated and

the (oard may' incertain corporate actions' bind the corporation inspite of the fact that it is contrary to the by-law pro!ision

There are 6 ways by which corporate actions may come about

through its (oard of @irectors:a9 The board may empower or authori5e the act or contractb9 Ratification from the board

s long as there is appro!al by the board' e$press or implied' it is

!alid to bind the corporation.

A)4CA vs BA!A) /#04)E(

cuna entered into an agreement with Jerano' manager of R*M,

cuna would be constituted as the R*M4s agent > diligently went about his

business and e!en used personal funds for the benefit of the corporation

Acuna was assured that there need not be an+ board approval for hisconstitution as agent for it would onl+ be a mere formalit+.

Later on' the board disappro!ed the agency and did not pay him.

%ssue:W cuna4s acts are binding to R*MB

&eld: K<S

!he () ruled that the agreement was valid due to the ratification of the corp.proven b+ these acts:/. Ae was assured by the board that no board appro!al was necessary.

6. Ae deli!ered 6E'EEE' performed his work with the knowledge of theboard. 2. @ue to ac%uiescence' the board cannot disown or disappro!e thecontract.

"E0 M. &A0E' vs BE'14E! )#'(#L%0A!E0 M%'%'1 )#M/A'5

(enguet *onsolidated Mining and (alatoc Mining *o. > organi5ed for the purposeof engaging in the mining of gold in the hilippines

(alatoc were unable to supply the means for profitable operation > board ordered

a suspension of all work

(alatoc called for a meeting > to establish a committee to find in!estors* A//#9E0 B5 (&

The said committee > approached (ean 8 res and CM of (enguet 9 > to secure the necessary capital for the de!elopment ofthe (alatoc properties

(enguet and (alatoc > e$ecuted a contract which pro!ides that:/. (enguet was to *onstruc a milling plant @ <rect a power plant6. (enguet would recei!e 7EEk shares of (alatoc

(enguet began to perform his side of the contract > (usiness and Stock !aluationflourished

When success of the de!elopment had become apparent > &arden filed a suitagainst Benguet to annul the certificate issued to them III *ontending that > it is unlawful for the (enguet *ompany to hold any interest

in a mining corporation

The trial court dismissed the complaint' Aence this petition.

%ssue:W it is unlawful for (enguet to hold any interest in another mining corporationB

&eld: 5E(/. section O# of the ct *ongress of ;uly /' /0E6 prohibits any such

member of a mining corporation to hold more than /#P outstandingcapital stock of another mining corporation

S<*. /0E 89 of the *orporation Law states that > ,f the

!iolation is committed by a corporation > corporation shallbe dissol!ed by quo warranto proceedings

enforced only by a criminal prosecution or by an action of

%uo warranto

TA<R<+R< ntil thus assailed in a direct proceeding'

the contract by which the interest was ac%uired will betreated as !alid as between the parties

6. (enguet *ompany has committed no ci!il wrong against the plaintiffs directors of the (alatoc *ompany and Aarden > active

inducers of the commission of that wrong The contract ,S unlawful in fact > has been performed on

both sides

T<: Though the arrangement of the mining companies is prohibited by law' the

shareholders cannot maintain an action to annul the contract by which suchprohibited interest was ac%uired

<!en where corporate contracts are illegal per se' when only public or

go!ernment policy is at stake and no pri!ate wrong is committed' the courtswill lea!e the parties as they are in accordance with their original contractuae$pectations.

The only contracts that the courts will touch are contracts which are

void for being illegal per se.

/%)E 9( MA!%'

Sulu corporation filed a case > to dissol!e a mortgage e$ecuted by it in fa!or ofagusan coco company.

rincipal contentions of price/. at the stockholders" meeting > fficers were elected and mortgage

was appro!ed6. 0O shares of stock of the Sulu @e!elopment *ompany !oted by the

pro$y of Mrs. Worcester 2. A< WS TA< W<R + TA< S,@ SAR<S

%ssue:W rice may dissol!e the mortgage e$ecutedB

&eld: '#ntil challenged in a proper proceeding > a stockholder according to the books ofthe company has a right to participate in that meeting

in the absence of fraud the action of the stockholdersD meetingcannot be collaterall+ attacked on account of such participation

s to whether the stock was rightfully the property of Martin > that is a

%uestion for the courts and for a stockholder"s meeting

F person who has purchased stock' and who desires to be recogni5ed as astockholder' for the purpose of !oting' must secure such a standing by having thetransfer recorder upon the books. %f the transfer is not dul+ made uponre=uest, he has, as his remed+, to compel it to be made.F

AM#' 0E LA AMA vs MA-A# (41A )E'!AL )#

@eri!ati!e suit > by minority stockholders against the Ma-ao Sugar *entral *o.',nc and its officers namely Araneta

> illegal and ultra-!ires acts consisting of unauthori5edin!estments

Lower *ourt rendered its @ecision > ordered to refrain from making in!estmentsto company whose purpose is not connected with the Sugar *entral business

> BT !#$% T#&N'#ST(#NT ()%# &N !hilippine *iber Reason: Ma-ao was engaged in the manufacture of sugar bags > perfectlylegitimate to in!est in another corporation engaged in said manufacture

Aence ppeal > Crounds: II There should be authori5ed by two-thirds of the !oting power of thestockholders

%ssue:W the in!estments made were !alidB

&eld: '#The Law should be understood to mean > that it is prohibited to the *orporation toin!est in shares of another corporation unless such an investment isauthori>ed b+ two-thirds of the voting power of the stockholders ,+ thepurpose of the corporation in which in!estment is made is foreign to the purposeof the in!esting corporation

(T ,+ the in!estment is made in a corporation whose business is important tothe in!esting corporation and would aid it in its purpose > to re=uire authorit+ ofthe stockholders would be to undul+ curtail the /ower of the Board of0irectors



Such an act, if done in pursuance of the corporate purpose, does not need theapproval of the stockholders; but when the purchase of shares of anothercorporation is done solely for investment and not to accomplish the purpose of itsincorporation, the vote of approval of the stockholders is necessary.

1okongwei vs. (E)

'#. %f the investment is made in pursuance of the corporate purpose, itdoes not need the approval of the stockholders.

the purchase of beer manufacturing facilities by SM* was

an in!estment in the same business stated as its mainpurpose in its rticles of ,ncorporation

urpose > manufacture and market beer

ssuming arguendo o authority > there is no =uestionthat a corporation, like an individual, ma+ ratif+ and

thereb+ render binding upon it the originall+unauthori>ed acts of its officers or other agents.

This is true because the %uestioned in!estment is neither

contrary to law' morals' public order or public policy. The mere fact that the corporation submitted the

assailed investment to the stockholders forratification at the annual meeting cannot be construed as an admission that the corporation had committedan ultra vires act

Lunu>a vs )A

doctrine : outstanding capital stock is the totalit+ of all shares, A#% is thecharter of corporation and the contractual relationship between state andcorporation, (& to state , and corpo and (&

MMS, was incorporated with OEE founders share and O7 common shares

(T only 22 common shares was reflected in their , > registered asoutstanding share of MMS,

A meeting was called for and it was held as constituting =uorum with onl+8 common shares representing more than 8FG of common shares issuedand outstanding

cayan filed for property registration ha!ing /6E founders share and /6 commonshares > ,t was granted by the S<*

election of new officers > onrubia %uestioned its !alidity > Crounds: II should not be based on the /7# issued and outstanding shares in the transfer book but on the OO7 shares stated in the ,.

%ssue:W the basis for determining %uorum and outstanding capital be the stockcorporation transfer book or the ,B

&eld: !he A#%because it is binding not @ust to the stockholders but also to the state

stock transfer book > a record of the company TA<R<+R< is not

binding to the public %uorum in meeting pro!ided for by the code is the stockholders

representing maDority of the outstanding capital stock . outstanding capital stock > means the total shares of stock issued to

subscribers or stockholders whether or not fully or partially paid 8aslong as there is binding subscription agreement9 except treasuryshares.

)dditional notes:

what is ,B-@efines the charter of the corporation and the contractual relationships betweenthe State and the corporation' the stockholders and the State' and between thecorporation and its stockholders.-*ontents are binding' not only on the corporation' but also on its shareholders.

What ,s stock transfer bookB-(ook which records the names and addresses of all stockholders arrangedalphabetically' the installments paid and unpaid on all stock for which subscriptionhas been made' and the date of payment thereof3 a statement of e!ery alienation'sale or transfer of stock made' the date thereof and by and to whom made3 andsuch other entries as may be prescribed by law-ot public record' and thus is not e$clusi!e e!idence of the matters and thingswhich ordinarily are or should be written therein

Lee vs. )A

,nternational *orporate (ank > filed complainant for sum of money againstSacoba Manufacturing *orp

Sacoba Manufacturing *orp filed a third party complaint against L+ and Leeand Lacdao

Lee contested that:/. they ceased to be officers and directors of L+' hence' they could no

longer recei!e summons or any court processes for or on behalf of L+

6. @( was the proper party to be called for

issue:/. W the e$ecution of the !oting trust agreement and transferring all

their shares to the trustees depri!es the stockholder of their positionsas directors of the *orpB

6. W the lapsed !oting trust agreement ipso facto re!erted the legaltitle to the stocks o Lee and LacdaoB

2. W proper ser!ice of summons on L+ through Lee and LacdaobindingB

Aeld:/. 5E(. 0B/ has taken over full control and management of the firm

Lee and Lacdao already disposed of all their shares

ceased to own at least one share standing as re=uiredunder (ection 8G of the new )orporation )ode &E')E ceased to be directors

The transfer of shares from the stockholders of L+ to

the @( is the essence of the subDect !oting trustagreement

6. '#. !he duration of the agreement is contingent upon thefulfillment of certain obligations of AL"A with the 0B/ &ence 'ot+et Lapsed.

the fi!e-year period of the !oting trust agreement e$pired

in /0H7 > @( would not ha!e transferred an its rights @ue to the sset ri!ati5ation Trust 8T9

stated that the @( from /0HO until /0H0' had handled

accounts which included L+"s assets pursuant to amanagement agreement by and between the @( and T

!oting trust agreement in %uestion was not yet terminated

2. '#. )orporation Law that a corporation has a personalit+separate and distinct from the officers or members who composeit.

Rules of *ourt enumerates the representati!es of a

corporation who can !alidly recei!e court processes on itsbehalf

Lee and Lacdao do not fall under any of the enumerated

officers Therefore ser!ice of summons through Lee and Lacdao'

therefore' is not !alid

Supplementary Notes what is a voting trust+

trust created by an agreement between a group of thestockholders of a corporation and the trustee or by a group ofidentical agreements between indi!idual stockholders and acommon trustee' whereby it is pro!ided that for a term ofyears' or for a period contingent upon a certain e!ent' or untilthe agreement is terminated' control o!er the stock owned bysuch stockholders' either for certain purposes or for allpurposes' is to be lodged in the trustee' either with or without areser!ation to the owners' or persons designated by them' ofthe power to direct how such control shall be used.

'A!%#'AL %'9E(!ME'! A'0 0E9EL#/ME'! )#/#A!%#' vs A4%'#

(atDak was indebted to some pri!ate banks and to the hilippine ational (ank8(9 II security > mortgage 829 coco-processing oil mills

Re%uested for another financial assistance w? ( > mong those conditions is II !oting trust agreement for fi!e 8#9 years o!er 7EP of the outstanding paid up

and subscribed shares shall be executed b+ +our stockholders in favorof '%0)

accepted by (atDak

@ue to insol!ency of (atDak > ( @ ,@* instituted e$traDudicial foreclosureproceedings against the oil mills of (atDak

(atDak re%uested ,@* to return their assets since ,@* was no longer interestedin renewing the Joting Trust greement

,@* > no intention to comply with the demands of (atDak.

Aence filed a case. *ontentions:



/. ,@* was constituted trustee of the assets operations andmanagement of (atDak

6. Aence upon e$piration of the JT* > ,@* should relin%uish possessionof the il Mills to (atDak

%ssue:W ,@* should return the asset since they do not want to continue the JTB

&eld: '#A voting trust transfers onl+ voting or other rights pertaining to the sharessub@ect of the agreement, or control over the stock

nder their JT 8termination clause9 > what are to be returned to

(atDak are only the certificates of stock representing 7EP shareholdingsubDect of the JT

nowehere in said JT does it appear that properties were ceded to

,@* !hat /'BF'%0) ended up in possession of the mills isbecause of

its capacit+ as foreclosing creditor andnot as trustee per the 9!A

corpo digest 10

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