CORPO POWERS: POWER TO SUE AND BE SUED A corporation, such as the petitioner, has no powers except those
expressly conferred on it by the Corporation Code and those that
[G.R. No. 131214. July 27, 2000]
BA SAVINGS BANK, petitioner, vs. ROGER T. SIA, TACIANA U. SIA
and JOHN DOE, respondents.
On August 6, 1997, the Court of Appeals issued a Resolution denying
due course to a Petition for Certiorari filed by BA Savings Bank, on
the ground that the Certification on anti-forum shopping
incorporated in the petition was signed not by the duly authorized
representative of the petitioner, but by its counsel.
A Motion for Reconsideration was subsequently filed by the
petitioner, attached to which was a BA Savings Bank Corporate
Secretary’s Certificate. The Certificate showed that the petitioners
Board of Directors approved a Resolution on May 21, 1996,
authorizing the petitioners lawyers to represent it in any action or
proceeding before any court, tribunal or agency; and to sign,
execute and deliver the Certificate of Non-forum Shopping, among
others.
Such MR was denied, on the ground that Supreme Court Revised
Circular No. 28-91 requires that it is the petitioner, not the counsel,
who must certify under oath to all of the facts and undertakings
required therein.
ISSUE: WON Supreme Court Revised Circular No. 28-91 allows a
corporation to authorize its counsel to execute a certificate of non-
forum shopping for and on its behalf.
HELD: YES
are implied by or are incidental to its existence. In turn, a
corporation exercises said powers through its board of directors
and/or its duly authorized officers and agents. Physical acts, like the
signing of documents, can be performed only by natural persons
duly authorized for the purpose by corporate bylaws or by a specific
act of the board of directors. All acts within the powers of a
corporation may be performed by agents of its selection; and,
except so far as limitations or restrictions which may be imposed
by special charter, by-law, or statutory provisions, the same
general principles of law which govern the relation of agency for a
natural person govern the officer or agent of a corporation, of
whatever status or rank, in respect to his power to act for the
corporation; and agents once appointed, or members acting in
their stead, are subject to the same rules, liabilities and
incapacities as are agents of individuals and private persons.
In the present case, the corporation’s board of directors issued a
Resolution specifically authorizing its lawyers to act as their agents.
The Resolution was sufficient to vest such persons with the
authority to bind the corporation and was specific enough as to
the acts they were empowered to do.
In the case of natural persons, Circular 28-91 requires the parties
themselves to sign the certificate of non-forum shopping. However,
such requirement cannot be imposed on artificial persons, like
corporations, for the simple reason that they cannot personally do
the task themselves. As already stated, corporations act only
through their officers and duly authorized agents. In fact, physical
actions, like the signing and the delivery of documents, may be
performed, on behalf of the corporate entity, only by specifically
authorized individuals.
It is noteworthy that the Circular does not require corporate officers
to sign the certificate. More important, there is no prohibition
against authorizing agents to do so. It was prescribed by the
Supreme Court to prohibit and penalize the evils of forum shopping.
We see no circumvention of this rationale if the certificate was
signed by the corporations specifically authorized counsel, who had
personal knowledge of the matters required in the Circular.
CORPO POWERS: POWER TO INCREASE/DECREASE CAPITAL STOCK
G.R. No. L-48237 June 30, 1987
MADRIGAL & COMPANY, INC., petitioner, vs. HON. RONALDO B.
ZAMORA, PRESIDENTIAL ASSISTANT FOR LEGAL AFFAIRS, THE
HON. SECRETARY OF LABOR, and MADRIGAL CENTRAL OFFICE
EMPLOYEES UNION, respondents.
The petitioner was engaged in the management of Rizal Cement
Co., Inc. Admittedly, the petitioner and Rizal Cement Co., Inc. are
sister companies. Both are owned by the same stockholders. On
December 28, 1973, respondent Madrigal Central Office Employees
Union sought for the renewal of its CBA with the petitioner.
Specifically, it proposed a wage increase of P200.00 a month, an
allowance of P100.00 a month, and other economic benefits. The
petitioner, however, requested for a deferment in the negotiations.
On July 29, 1974, by an alleged resolution of its stockholders, the
petitioner reduced its capital stock from 765,000 shares to 267,366
shares. This was effected through the distribution of the marketable
securities owned by the petitioner to its stockholders in exchange
for their shares in an equivalent amount in the corporation.
On August 22 1975, by yet another alleged stockholders' action, the
petitioner reduced its authorized capitalization from 267,366 shares
to 110,085 shares, again, through the same scheme.
After the petitioner's failure to sit down with the respondent union,
the latter, on August 28, 1974, commenced a complaint for unfair
labor practice. In due time, the petitioner filed its position paper,
alleging operational losses. Pending the resolution of such case, the
petitioner, in a letter, informed the Secretary of Labor that Rizal
Cement Co., Inc., "from which it derives income" "as the General
Manager or Agent" had "ceased operating temporarily." In addition,
"because of the desire of the stockholders to phase out the
operations of the Madrigal & Co., Inc. due to lack of business
incentives and prospects, and in order to prevent further losses," it
had to reduce its capital stock on two occasions "As the situation,
therefore, now stands, the Madrigal & Co., Inc. is without
substantial income to speak of, necessitating a reorganization, by
way of retrenchment, of its employees and operations." The
petitioner then requested that it "be allowed to effect said
reorganization gradually." The letter, however, was not verified and
neither was it accompanied by the proper supporting papers. For
this reason, the Department of Labor took no action on the
petitioner's request.
On January 19, 1976, the labor arbiter rendered a decision in favor
of the petitioner's employees. The arbiter specifically found that the
petitioner "had been making substantial profits in its operation"
since 1972 through 1975. The petitioner appealed.
On January 29, 1976, the petitioner applied for clearance to
terminate the services of a number of employees pursuant
supposedly to its retrenchment program. On the same date, the
respondent union went to the Regional Office (No. IV) of the
Department of Labor to complain of illegal lockout against the
petitioner. The Secretary of Labor found the dismissals "to be
contrary to law" and ordered the petitioner to reinstate some 40
employees. Such was affirmed by the Office of the President.
In urging reversal of the appealed decision, appellant contends inter
alia that the individual appellees' dismissal had no relation to any
union activities, but was the result of an honest-to-goodness
retrenchment policy occasioned by loss of income due to cessation
of operation.
HELD:
The individual appellees’ dismissal was an offshoot of the union's
demand for a renegotiation of the then validly existing collective
bargaining Agreement.
The pattern of appellant's acts after the decision of the Labor
Arbiter in the ULP case has convinced us that its sole objective was
to render moot and academic the desire of the union to exercise its
right to bargain collectively with management, especially so when it
is considered in the light of the fact that under the said decision the
demand by the union for wage increase and allowances was
granted. What renders appellant's motive suspect was its haste in
terminating the services of individual appellees, without waiting the
outcome of its appeal in the said case. The amount involved by its
offer to pay double separation could very well have been used to
pay the salaries of those employees whose services were sought to
be terminated, until the resolution of its appeal with the NLRC, since
anyway, if its planned retrenchment is found to be justifiable and
done in good faith, its only liability is to answer for the separation
pay provided by law. We agree with the Acting Secretary that,
under the circumstances obtaining in this case, "respondent's action
[was] a systematic and deliberate attempt to get rid of
complainants because of their union activities.
We do not also subscribe to appellant's argument that by reducing
its capital, it is made evident that it is phasing out its operations. On
the contrary, whatever may be the reason behind such reductions,
it is indicative of an intention to keep the company a going concern.
So much so that until now almost four (4) years later, it is still very
much in existence and operational as before.
What clearly emerges from the recorded facts is that the petitioner,
awash with profits from its business operations but confronted with
the demand of the union for wage increases, decided to evade its
responsibility towards the employees by a devised capital reduction.
While the reduction in capital stock created an apparent need for
retrenchment, it was, by all indications, just a mask for the purge of
union members, who, by then, had agitated for wage increases. In
the face of the petitioner company's piling profits, the unionists had
the right to demand for such salary adjustments.
A clear scrutiny of the financial reports of the respondent [herein
petitioner] reveals that it had been making substantial profits in the
operation.
In 1972, when it still had 765,000 common shares, of which 305,000
were unissued and 459,000 outstanding capitalized at
P16,830,000.00, the respondent made a net profit of P2,403,211.58.
Its total assets were P70,821,317.81.
In 1973, based on the same capitalization, its profit increased to
P2,724,465.33. Its total assets increased to P83,240,473.73.
In 1974, although its capitalization was reduced from
P16,830,000.00 to P11,230,459.36, its profits were further
increased to P2,922,349.70. Its assets were P78,842,175.75.
The reduction in its assets by P4,398,297.98 was due to the fact that
its capital stock was reduced by the amount of P5,599,540.54.
In 1975, for the period of only six months, the respondent reported
a net profit of P547,414.72, which when added to the surplus of
P5,591.214.19, makes a total surplus of P6,138,628.91 as of June 30,
1975.
The petitioner would, however, have us believe that it in fact
sustained losses. Whatever profits it earned, so it claims were in the
nature of dividends "declared on its shareholdings in other
companies in the earning of which the employees had no
participation whatsoever." "Cash dividends," according to it, "are
the absolute property of the stockholders and cannot be made
available for disposition if only to meet the employees' economic
demands."
There is no merit in this contention. "[T]he dividends received by
the company are corporate earnings arising from corporate
investment." Indeed, as found by the Commission, the petitioner
had entered such earnings in its financial statements as profits,
which it would not have done if they were not in fact profits.
Moreover, it is incorrect to say that such profits — in the form of
dividends — are beyond the reach of the petitioner's creditors since
the petitioner had received them as compensation for its
management services in favor of the companies it managed as a
shareholder thereof. As such shareholder, the dividends paid to it
were its own money, which may then be available for wage
increments. It is not a case of a corporation distributing dividends in
favor of its stockholders, in which case, such dividends would be the
absolute property of the stockholders and hence, out of reach by
creditors of the corporation. Here, the petitioner was acting as
stockholder itself, and in that case, the right to a share in such
dividends, by way of salary increases, may not be denied its
employees.
Accordingly, this court is convinced that the petitioner's capital
reduction efforts were, to begin with, a subterfuge, a deception as it
were, to camouflage the fact that it had been making profits, and
consequently, to justify the mass layoff in its employee ranks,
especially of union members. They were nothing but a premature
and plain distribution of corporate assets to obviate a just sharing to
labor of the vast profits obtained by its joint efforts with capital
through the years. It is an unfair labor practice.
The petitioner would claim that "the phasing out of its operations
which brought about the retrenchment of the affected employees
was mainly dictated be the necessity of its stockholders in their
capacity as heirs of the late Don Vicente Madrigal to partition the
estate left by him." It must be noted, however, it is not impossible
to partition the Madrigal estate — assuming that the estate is up for
partition — without the petitioner's business closing shop and
inevitably, without the petitioner laying off its employees.
CORPO POWERS: POWER TO SELL/DISPOSE/LEASE/ECUMBER
ASSETS
G.R. No. 91478 February 7, 1991
ROSITA PEÑA petitioner, vs. THE COURT OF APPEALS, SPOUSES
RISING T. YAP and CATALINA YAP, PAMPANGA BUS CO., INC.,
JESUS DOMINGO, JOAQUIN BRIONES, SALVADOR BERNARDEZ,
MARCELINO ENRIQUEZ and EDGARDO A. ZABAT, respondents.
Plaintiffs-appellants, the spouses Rising T. Yap and Catalina Lugue,
are the registered owners of the lots in question. In the complaint
filed on December 15, 1978, appellants sought to recover
possession over the subject lands from defendants Rosita Peña and
Washington Distillery on the ground that being registered owners,
they have to enforce their right to possession against defendants
who have been allegedly in unlawful possession thereof.
In their answer, defendants Rosita Peña and Washington Distillery
denied the material allegations of the complaint and by way of an
affirmative and special defense asserted that Peña is now the
legitimate owner of the subject lands for having purchased the
same in a foreclosure proceeding instituted by the DBP against
PAMBUSCO and no valid redemption had been effected within the
period provided by law. It was contended that plaintiffs could not
have acquired ownership over the subject properties under a deed
of absolute sale executed in their favor by one Marcelino B.
Enriquez who likewise could not have become the owner of the
properties in question by redeeming the same on August 18, 1975
under an allegedly void deed of assignment executed in his favor on
March 18, 1975 by the original owners of the land in question, the
PAMBUSCO. The defense was that since the deed of assignment
executed by PAMBUSCO in favor of Enriquez was void ab initio for
being an ultra vires act of its board of directors and, for being
without any valuable consideration, it could not have had any legal
effect; hence, all the acts which flowed from it and all the rights and
obligations which derived from the aforesaid void deed are likewise
void and without any legal effect.
Further, it was alleged in the same Answer that plaintiffs are buyers
in bad faith because they have caused the titles of the subject
properties with the Register of Deeds to be issued in their names
despite an order from the then CFI, Br. III, Pampanga in Civil Case
No. 4310, entitled Dante Gutierrez, et al. vs. Pampanga Bus
Company, Inc., et al., to desist from registering or noting in his
registry of property . . . any of the above-mentioned documents
under contest, until further orders.
For its part, defendant Washington Distillery stated that it has never
occupied the subject lots hence they should not have been
impleaded in the complaint.
The defendants, therefore, prayed that the complaint be dismissed;
that the deed of assignment executed in favor of Marcelino
Enriquez, the certificate of redemption issued by the Provincial
Sheriff also in favor of Marcelino Enriquez, and the deed of sale of
these parcels of land executed by Marcelino Enriquez in favor of the
plaintiffs herein be all declared null and void; and further, that the
TCTs covering these parcels issued in the plaintiffs name be
cancelled and, in lieu thereof, corresponding certificates of title over
these same parcels be issued in the name of defendant Rosita Peña.
Thereafter, the defendants filed a third-party complaint against
PAMBUSCO, Jesus Domingo, Joaquin Briones, Salvador Bernardez
(as members of the Board of Directors of PAMBUSCO), Marcelino
Enriquez, and Deputy Sheriff Edgardo Zabat of Pampanga. All these
third-party defendants, how ever, were declared as in default for
failure to file their answer, except Edgardo Zabat who did file his
answer but failed to appear at the pre-trial.
After trial, a decision was rendered by the court in favor of the
defendants-appellees. CA reversed. The appellate court ordered
Peña to vacate the lands in question and pay the plaintiffs-
appellants the accrued rentals.
HELD:
The respondent court ruled that the trial court has no jurisdiction to
annul the board resolution as the matter falls within the jurisdiction
of the SEC and that petitioner did not have the proper standing to
have the same declared null and void.
this Court held that it is the fact of relationship between the parties
that determines the proper and exclusive jurisdiction of the SEC to
hear and decide intra-corporate disputes; that unless the
controversy has arisen between and among stockholders of the
corporation, or between the stockholders and the officers of the
corporation, then the case is not within the jurisdiction of the SEC.
Where the issue involves a party who is neither a stockholder or
officer of the corporation, the same is not within the jurisdiction of
the SEC.
In order that the SEC can take cognizance of a case, the controversy
must pertain to any of the following relationships (a) between the
corporation, partnership or association and the public; (b) between
the corporation, partnership or association and its stockholders,
partners, members, or officers; (c) between the corporation,
partnership or association and the state in so far as its franchise,
permit or license to operate is concerned; and (d) among the
stockholders, partners or associates themselves.
In this case, neither petitioner nor respondents Yap spouses are
stockholders or officers of PAMBUSCO. Consequently, the issue of
the validity of the series of transactions resulting in the subject
properties being registered in the names of respondents Yap may
be resolved only by the regular courts.
As to the question of validity of the board resolution of respondent
PAMBUSCO adopted on November 19, 1974, Section 4, Article III of
the amended by-laws of respondent PAMBUSCO, provides as
follows:
Sec. 4. Notices of regular and special meetings of the Board of
Directors shall be mailed to each Director not less than five days
before any such meeting, and notices of special meeting shall state
the purpose or purposes thereof Notices of regular meetings shall
be sent by the Secretary and notices of special meetings by the
President or Directors issuing the call. No failure or irregularity of
notice of meeting shall invalidate any regular meeting or proceeding
thereat; Provided a quorum of the Board is present, nor of any
special meeting; Provided at least four Directors are present.
The trial court in finding the resolution void held as follows:
On the other hand, this Court finds merit in the position taken by
the defendants that the questioned resolution should be declared
invalid it having been approved in a meeting attended by only 3 of
the 5 members of the Board of Directors of PAMBUSCO which
attendance is short of the number required by the by-laws of the
corporation.
In the meeting of November 19, 1974 when the questioned
resolution was approved, the three members of the Board of
Directors of PAMBUSCO who were present were Jesus Domingo,
Joaquin Briones, and Salvador Bernardez The remaining 2 others,
namely: Judge Pio Marcos and Alfredo Mamuyac were both absent
therefrom.
As it becomes clear that the resolution approved on November 19,
1974 is null and void it having been approved by only 3 of the
members of the Board of Directors who were the only ones present
at the said meeting, the deed of assignment subsequently executed
in favor of Marcelino Enriquez pursuant to this resolution also
becomes null and void.
The by-laws of a corporation are its own private laws which
substantially have the same effect as the laws of the corporation.
They are in effect, written, into the charter. In this sense they
become part of the fundamental law of the corporation with which
the corporation and its directors and officers must comply.
Apparently, only three (3) out of five (5) members of the board of
directors of respondent PAMBUSCO convened on November 19,
1974 by virtue of a prior notice of a special meeting. There was no
quorum to validly transact business since, under Section 4 of the
amended by-laws hereinabove reproduced, at least four (4)
members must be present to constitute a quorum in a special
meeting of the board of directors of respondent PAMBUSCO.
Under Section 25 of the Corporation Code of the Philippines, the
articles of incorporation or by-laws of the corporation may fix a
greater number than the majority of the number of board members
to constitute the quorum necessary for the valid transaction of
business. Any number less than the number provided in the articles
or by-laws therein cannot constitute a quorum and any act therein
would not bind the corporation; all that the attending directors
could do is to adjourn.
Moreover, the records show that respondent PAMBUSCO ceased to
operate as of November 15, 1949 as evidenced by a letter of the
SEC to said corporation dated April 17, 1980. Being a dormant
corporation for several years, it was highly irregular, if not
anomalous, for a group of three (3) individuals representing
themselves to be the directors of respondent PAMBUSCO to pass a
resolution disposing of the only remaining asset of the corporation
in favor of a former corporate officer.
As a matter of fact, the three (3) alleged directors who attended the
special meeting on November 19, 1974 were not listed as directors
of respondent PAMBUSCO in the latest general information sheet of
PAMBUSCO filed with the SEC. Similarly, the latest list of
stockholders of respondent PAMBUSCO on file with the SEC does
not show that the said alleged directors were among the
stockholders of respondent PAMBUSCO.
Under Section 30 of the then applicable Corporation Law, only
persons who own at least one (1) share in their own right may
qualify to be directors of a corporation. Further, under Section 28
1/2 of the said law, the sale or disposition of an and/or substantially
all properties of the corporation requires, in addition to a proper
board resolution, the affirmative votes of the stockholders holding
at least two-thirds (2/3) of the voting power in the corporation in a
meeting duly called for that purpose. No doubt, the questioned
resolution was not confirmed at a subsequent stockholders meeting
duly called for the purpose by the affirmative votes of the
stockholders holding at least two-thirds (2/3) of the voting power in
the corporation. The same requirement is found in Section 40 of the
present Corporation Code.
It is also undisputed that at the time of the passage of the
questioned resolution, respondent PAMBUSCO was insolvent and
its only remaining asset was its right of redemption over the subject
properties. Since the disposition of said redemption right of
respondent PAMBUSCO by virtue of the questioned resolution was
not approved by the required number of stockholders under the
law, the said resolution, as well as the subsequent assignment
executed on March 8, 1975 assigning to respondent Enriquez the
said right of redemption, should be struck down as null and void.
Respondent court, in upholding the questioned deed of assignment,
which appears to be without any consideration at all, held that the
consideration thereof is the liberality of the respondent PAMBUSCO
in favor of its former corporate officer, respondent Enriquez, for
services rendered. Assuming this to be so, then as correctly argued
by petitioner, it is not just an ordinary deed of assignment, but is in
fact a donation. Under Article 725 of the Civil Code, in order to be
valid, such a donation must be made in a public document and the
acceptance must be made in the same or in a separate instrument.
In the latter case, the donor shall be notified of the acceptance in an
authentic form and such step must be noted in both instruments.
Non-compliance with this requirement renders the donation null
and void. Since undeniably the deed of assignment dated March 8,
1975 in question, shows that there was no acceptance of the
donation in the same and in a separate document, the said deed of
assignment is thus void ab initio and of no force and effect.
G.R. No. 117897. May 14, 1997
ISLAMIC DIRECTORATE OF THE PHILIPPINES, MANUEL F. PEREA and
SECURITIES & EXCHANGE COMMISSION, petitioners, vs. COURT OF
APPEALS and IGLESIA NI CRISTO, respondents.
Petitioner IDP-Tamano Group alleges that sometime in 1971, Islamic
leaders of all Muslim major tribal groups in the Philippines headed
by Dean Cesar Adib Majul organized and incorporated the ISLAMIC
DIRECTORATE OF THE PHILIPPINES (IDP), the primary purpose of
which is to establish an Islamic Center in Quezon City for the
construction of a Mosque (prayer place), Madrasah (Arabic School),
and other religious infrastructures so as to facilitate the effective
practice of Islamic faith in the area.
Towards this end, that is, in the same year, the Libyan government
donated money to the IDP to purchase land at Culiat, Tandang Sora,
Quezon City, to be used as a Center for the Islamic populace.
According to the petitioner, in 1972, after the purchase of the land
by the Libyan government in the name of IDP, Martial Law was
declared by the late President Ferdinand Marcos. Most of the
members of the 1971 Board of Trustees flew to the Middle East to
escape political persecution. Thereafter, two Muslim groups sprung,
the Carpizo Group, headed by Engineer Farouk Carpizo, and the
Abbas Group, led by Mrs. Zorayda Tamano and Atty. Firdaussi
Abbas. Both groups claimed to be the legitimate IDP.
Significantly, on October 3, 1986, the SEC, in a suit between these
two contending groups, came out with a Decision declaring the
election of both the Carpizo Group and the Abbas Group as IDP
board members to be null and void for being violative of the Articles
of Incorporation of IDP. SEC further ruled that, before any election
of the members of the Board of Trustees could be conducted, there
must be an approved by-laws to govern the internal government of
the association including the conduct of election. And since the
election of both petitioners and respondents have been declared
null and void, a vacuum is created as to who should adopt the by-
laws and certify its adoption. To remedy this, the members of IDP
were authorized by SEC to prepare and adopt their by-laws for
submission to the Commission. Once approved, an election of the
members of the Board of Trustees shall immediately be called
pursuant to the approved by-laws.
Neither group, however, took the necessary steps prescribed by the
SEC, and, thus, no valid election of the members of the Board of
Trustees of IDP was ever called. Although the Carpizo Group
attempted to submit a set of by-laws, the SEC found that, aside
from Engineer Farouk Carpizo and Atty. Musib Buat, those who
prepared and adopted the by-laws were not bona fide members of
the IDP, thus rendering the adoption of the by-laws likewise null
and void.
On April 20, 1989, without having been properly elected as new
members of the Board of Trustees of IDP, the Carpizo Group caused
to be signed an alleged Board Resolution of the IDP, authorizing the
sale of the subject two parcels of land to the INC for a consideration
of P22,343,400.00.
On May 30, 1991, the petitioner 1971 IDP Board of Trustees headed
by former Senator Mamintal Tamano, or the Tamano Group, filed a
petition before the SEC, seeking to declare null and void the Deed of
Absolute Sale signed by the Carpizo Group and the INC since the
group of Engineer Carpizo was not the legitimate Board of Trustees
of the IDP.
Meanwhile, INC filed an action for Specific Performance with
Damages against the vendor Carpizo Group with the RTC to compel
said group to clear the property of squatters and deliver complete
and full physical possession thereof to INC.
The IDP-Tamano Group, on June 11, 1991, sought to intervene in
Civil Case No. Q-90-6937 averring, inter alia:
2. That the Intervenor has filed a case before the SEC against
Carpizo, et, al., who, through false schemes and machinations,
succeeded in executing the Deed of Sale between the IDP and INC;
3. That main issue of which is whether or not the aforesaid Deed of
Sale between IDP and INC is null and void;
4. That, furthermore, Intervenor herein is the duly constituted body
which can lawfully and legally represent the Islamic Directorate of
the Philippines;
INC opposed the motion arguing, inter alia, that the issue sought to
be litigated by way of intervention is an intra-corporate dispute
which falls under the jurisdiction of the SEC.
RTC denied petitioners motion to intervene on the ground of lack of
juridical personality of the IDP-Tamano Group and that the issues
being raised by way of intervention are intra-corporate in nature,
jurisdiction thereto properly pertaining to the SEC.
Apprised of the pendency of the SEC Case involving the
controverted status of the IDP-Carpizo Group but without waiting
for the outcome of said case, the RTC rendered Partial Judgment
ordering the IDP-Carpizo Group to comply with its obligation under
the Deed of Sale of clearing the subject lots of squatters and of
delivering the actual possession thereof to INC. Thereupon, RTC
Judge Reyes in another Order, treated INC as the rightful owner of
the real properties.
In the meantime, the SEC, on July 5, 1993, finally came out with a
Decision in SEC Case No. 4012 in this wise:
1. Declaring the by-laws submitted by the Carpizo Group as
unauthorized, and hence, null and void.
2. Declaring the sale of the two parcels of land in Quezon City
entered into by INC and IDPnull and void.
3. Declaring the election of the Board of Directors of the
corporation from 1986 to 1991 as null and void;
4. Declaring the acceptance of the respondents, except Farouk
Carpizo and Musnib Buat, as members of the IDP null and void.
INC elevated the SEC Case to the CA by way of a special civil action
for certiorari. Accordingly, the portion of the SEC Decision in which
declared the sale of the 2 lots in question to INC as void was set
aside. Thus, the IDP-Tamano Group brought the instant petition.
ISSUE: WON the CA erred in setting aside the SEC’s Decision which
declared the sale of the 2 parcels of land in question null and void?
HELD: YES.
There can be no question as to the authority of the SEC to pass
upon the issue as to who among the different contending groups is
the legitimate Board of Trustees of the IDP since this is a matter
properly falling within the original and exclusive jurisdiction of the
SEC by virtue of Sections 3 and 5(c) of Presidential Decree No. 902.
If the SEC can declare who is the legitimate IDP Board, then by
parity of reasoning, it can also declare who is not the legitimate IDP
Board. This is precisely what the SEC did when it adjudged the
election of the Carpizo Group to the IDP Board of Trustees to be null
and void. By this ruling, the SEC in effect made the unequivocal
finding that the IDP-Carpizo Group is a bogus Board of Trustees.
Consequently, the Carpizo Group is bereft of any authority
whatsoever to bind IDP in any kind of transaction including the sale
or disposition of IDP property. Nothing thus becomes more settled
than that the IDP-Carpizo Group with whom private respondent INC
contracted is a fake Board.
Premises considered, all acts carried out by the Carpizo Board,
particularly the sale of the Tandang Sora property, allegedly in the
name of the IDP, have to be struck down for having been done
without the consent of the IDP thru a legitimate Board of Trustees.
Consent is essential for the existence of a contract, and where it is Furthermore, the Court observed that the INC bought the
wanting, the contract is non-existent. In this case, the IDP, owner questioned property from the Carpizo Group without even seeing
of the subject parcels of land, never gave its consent, thru a the owners duplicate copy of the titles covering the property. This is
legitimate Board of Trustees, to the disputed Deed of Absolute very strange considering that the subject lot is a large piece of real
Sale executed in favor of INC. This is, therefore, a case not only of property in Quezon City worth millions, and that under the Torrens
vitiated consent, but one where consent on the part of one of the System of Registration, the minimum requirement for one to be a
supposed contracting parties is totally wanting. Ineluctably, the good faith buyer for value is that the vendee at least sees the
subject sale is void and produces no effect whatsoever. owners duplicate copy of the title and relies upon the same. INC,
presumably knowledgeable on the aforesaid working of the Torrens
The Carpizo Group-INC sale is further deemed null and void ab initio System, did not take heed of this and nevertheless went through
because of the Carpizo Groups failure to comply with Section 40 of with the sale with undue haste. The unexplained eagerness of INC
the Corporation Code pertaining to the disposition of all or to buy this valuable piece of land in Quezon City without even being
substantially all assets of the corporation. presented with the owners copy of the titles casts very serious
The Tandang Sora property, it appears from the records, doubt on the rightfulness of its position as vendee in the
constitutes the only property of the IDP. Hence, its sale to a third- transaction.
party is a sale or disposition of all the corporate property and
assets of IDP falling squarely within the contemplation of the
foregoing section. For the sale to be valid, the majority vote of the
legitimate Board of Trustees, concurred in by the vote of at least
2/3 of the bona fide members of the corporation should have
been obtained. These twin requirements were not met as the
Carpizo Group which voted to sell the Tandang Sora property was a
fake Board of Trustees, and those whose names and signatures
were affixed by the Carpizo Group together with the sham Board
Resolution authorizing the negotiation for the sale were, from all
indications, not bona fide members of the IDP as they were made to
appear to be. Apparently, there are only 15 official members of the
petitioner corporation including the 8 members of the Board of
Trustees.