case digests; section 2 of BP 68 (the corporation code of the philippines)

8/11/2019 case digests; section 2 of BP 68 (the corporation code of the philippines)

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G.R. No. 152542 July 8, 2004

MONFORT HERMANOS AGRICULTURAL DEVELOPMENT CORPORATION, asrepresented by MA. ANTONIA M. SALVATIERRA,vs.ANTONIO B. MONFORT III, MA. LUISA MONFORT ASCALON, ILDEFONSO B.

MONFORT, ALFREDO B. MONFORT, CARLOS M. RODRIGUEZ, EMILY FRANCISCA R.DOLIQUEZ, ENCARNACION CECILIA R. PAYLADO, JOSE MARTIN M. RODRIGUEZ andCOURT OF APPEALS

G.R. No. 155472 July 8, 2004

ANTONIO B. MONFORT III, MA. LUISA MONFORT ASCALON, ILDEFONSO B.MONFORT, ALFREDO B. MONFORT, CARLOS M. RODRIGUEZ, EMILY FRANCISCA R.DOLIQUEZ, ENCARNACION CECILIA R. PAYLADO, JOSE MARTIN M. RODRIGUEZ,vs.HON. COURT OF APPEALS, MONFORT HERMANOS AGRICULTURAL DEVELOPMENTCORPORATION, as represented by MA. ANTONIA M. SALVATIERRA, and RAMON H.

MONFORT

Monfort Hermanos Agricultural Development Corporation, a domestic privatecorporation, is the registered owner of a farm, fishpond and sugar cane plantation known asHaciendas San Antonio II, Marapara, Pinanoag and Tinampa-an, all situated in Cadiz City. Italso owns one unit of motor vehicle and two units of tractors. The same allowed Ramon H.Monfort, its Executive Vice President, to breed and maintain fighting cocks in his personalcapacity at Hacienda San Antonio.

In 1997, the group of Antonio Monfort III, through force and intimidation, allegedly tookpossession of the 4 Haciendas, the produce thereon and the motor vehicle and tractors, aswell as the fighting cocks of Ramon H. Monfort.

G.R. No. 155472:

April 10, 1997; the Corporation, represented by its president, Maria Antonia M.Salvatierra and Ramon H. Monfort filed against Monfort III for the delivery of motorvehicles, tractors, and 478 fighting cocks, with injunction and damages at the RTC ofNegros Occidental.

Respondents moved to dismiss, alleging that the petitioners have no authority torepresent the Corporation as the resolution by the board authorizing the same werenot validly elected by the same. The trial court dismissed the same. On appeal to theCA, the dismissal was affirmed.

G.R. No. 152542:

April 21, 1997; Ma. Antonia M. Salvatierra filed a complaint for forcible entry,injunction, and TRO against Monfort III at the MTC of Cadiz City, because the latter,thru force and intimidation, took possession of the 4 Haciendas. Monfort III allegesthat they are harvesting the produce on behalf of the Corporation and notthemselves. Monfort III also questions the capacity of Salvatierra to sue on behalf ofthe Corporation.

The MTC dismissed the complaint. On appeal to the RTC, the decision was reversedand remanded the case for further proceeding. Monfort III appealed to the CA. The


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CA set aside the decision of the RTC and dismissed the complaint for forcible entrybecause Salvatierra didnt have the capacity to represent the Corporation. TheCorporation filed this petition for review with the SC.

WON Salvatierra has the legal capacity to represent the Corporation. The group of Antonio Monfort III claims that the March 31, 1997 Board Resolution

authorizing Ma. Antonia M. Salvatierra and/or Ramon H. Monfort to represent the

Corporation is void because the purported Members of the Board who passed thesame were not validly elected officers of the Corporation.

A corporation has no power except those expressly conferred on it by theCorporation Code and those that are implied or incidental to its existence. In turn, acorporation exercises said powers through its board of directors and/or its dulyauthorized officers and agents. Thus, it has been observed that the power of acorporation to sue and be sued in any court is lodged with the board of directors thatexercises its corporate powers. In turn, physical acts of the corporation, like thesigning of documents, can be performed only by natural persons duly authorized forthe purpose by corporate by-laws or by a specific act of the board of directors.

Corporations are required under Section 26 of the Corporation Code to submit to theSEC within 30 days after the election the names, nationalities and residences of theelected directors, trustees and officers of the Corporation.

The six signatories to the March 31, 1997 Board Resolution authorizing Ma. AntoniaM. Salvatierra and/or Ramon H. Monfort to represent the Corporation were: Ma.

Antonia M. Salvatierra, President; Ramon H. Monfort, Executive Vice President;Directors Paul M. Monfort, Yvete M. Benedicto and Jaqueline M. Yusay; and Ester S.Monfort, Secretary. However, the names of the last four (4) signatories to the saidBoard Resolution do not appear in the 1996 General Information Sheet submitted bythe Corporation with the SEC.

The objective sought to be achieved by Section 26 is to give the public information,under sanction of oath of responsible officers, of the nature of business, financialcondition and operational status of the company together with information on its keyofficers or managers so that those dealing with it and those who intend to dobusiness with it may know or have the means of knowing facts concerning the

corporation's financial resources and business responsibility.

A corporation is mandated to inform the SEC of the names and the change in thecomposition of its officers and board of directors within 30 days after election if onewas held, or 15 days after the death, resignation or cessation of office of any of itsdirector, trustee or officer if any of them died, resigned or in any manner, ceased tohold office. This, the Corporation failed to do. The alleged election of the directorsand officers who signed the March 31, 1997 Board Resolution was held on October16, 1996, but the SEC was informed thereof more than two years later, or onNovember 11, 1998. The 4 Directors appearing in the 1996 General InformationSheet died between the years 19841987, but the records do not show if suchdemise was reported to the SEC.

Considering the foregoing, we find that Ma. Antonia M. Salvatierra failed to prove thatfour of those who authorized her to represent the Corporation were the lawfully

elected Members of the Board of the Corporation. As such, they cannot confer validauthority for her to sue on behalf of the corporation.

The Court notes that the complaint in Civil Case No. 506-C, for replevin before theRegional Trial Court of Negros Occidental, Branch 60, has 2 causes of action, i.e.,unlawful detention of the Corporation's motor vehicle and tractors, and the unlawfuldetention of the of 387 fighting cocks of Ramon H. Monfort. Since Ramon soughtredress of the latter cause of action in his personal capacity, the dismissal of thecomplaint for lack of capacity to sue on behalf of the corporation should be limitedonly to the corporation's cause of action for delivery of motor vehicle and tractors. In


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view, however, of the demise of Ramon on June 25, 1999, substitution by his heirs isproper.

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

TESTATE ESTATE OF IDONAH SLADE PERKINS, deceased. RENATO D. TAYAG,

vs.BENGUET CONSOLIDATED, INC.,

Idonah Slade Perkins, who died on in New York City, left among others, two stockcertificates covering 33,002 shares of appellant, the certificates being in thepossession of the County Trust Company of New York, which as noted, is thedomiciliary administrator of the estate of the deceased.

Renato Tayag, was substituted as ancilliary administrator of Perkins estate. Adispute arose between the Tayag and the domiciary administrator of New York as towho was entitled to possession of the stock certificates.

January 27, 1964; the CFI of Manila ordered the domiciary administrator, CountyTrust Company, to produce and deposit the stock certificates with the CFI or clerk

of court. The domiciary did not comply. Tayag then filed a petition to issue an orderdeclaring the certificate or certificates of stocks in question to be declared orconsidered lost. The lower court granted the petition.

Respondents opposed the petition because the certificates are in existence and inthe possession of the County Trust Company. Moreover it would allege that therewas failure to observe certain requirements of its by-laws before new stockcertificates could be issued.

WON the order to provide Tayag with new certificates of stock is wrong

WON new certificates may be granted considering that the said certificateswere not lost

WON there is a violation of the respondents by-laws

As to first issue, appellant Benguet Consolidated, Inc. did not dispute the power ofthe appellee ancillary administrator to gain control and possession of all assets of thedecedent within the jurisdiction of the Philippines. It would follow then that theauthority of the probate court to require that ancillary administrator's right to "thestock certificates must be respected.

"It is often necessary to have more than one administration of an estate. When aperson dies intestate owning property in the country of his domicile as well as in aforeign country, administration is had in both countries. That which is granted in the

jurisdiction of decedent's last domicile is termed the principal administration, whileany other administration is termed the ancillary administration. The reason for thelatter is because a grant of administration does not ex proprio vigore have any effectbeyond the limits of the country in which it is granted. Hence, an administratorappointed in a foreign state has no authority in the [Philippines]. The ancillaryadministration is proper, whenever a person dies, leaving in a country other than that

of his last domicile, property to be administered in the nature of assets of thedeceased liable for his individual debts or to be distributed among his heirs."

As to the second issue, respondent would argue that "lower court could not "consideras lost" the stock certificates in question when, as a matter of fact, his Honor the trialJudge knew, and does know, and it is admitted by the appellee, that the said stockcertificates are in existence and are today in the possession of the domiciliaryadministrator in New York."

There may be an element of fiction in the above view of the lower court. Thatcertainly does not suffice to call for the reversal of the appealed order. Since there is


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a refusal, persistently adhered to by the domiciliary administrator in New York, todeliver the shares of stocks of appellant corporation owned by the decedent to theancillary administrator in the Philippines, there was nothing unreasonable or arbitraryin considering them as lost and requiring the appellant to issue new certificates inlieu thereof. Thereby, the task incumbent under the law on the ancillary administratorcould be discharged and his responsibility fulfilled.

According to Frankfurter, "that fictions which the law may rely upon in the pursuit oflegitimate ends have played an important part in its development."

What cannot be disputed, therefore, is the at times indispensable role that fictions assuch played in the law. There should be then on the part of the appellant a furtherrefinement in the catholicity of its condemnation of such judicial technique. If ever anoccasion did call for the employment of a legal fiction to put an end to the anomaloussituation of a valid judicial order being disregarded with apparent impunity, this is it.What is thus most obvious is that this particular alleged error does not carrypersuasion.

As to the third issue, respondents by-laws provide the procedure to be followed incase of lost, stolen, or destroyed stock certificates; it would stress that in the event ofa contest or the pendency of an action regarding ownership of such certificate orcertificates of stock allegedly lost, stolen or destroyed, the issuance of a new

certificate or certificates would await the "final decision by [a] court regarding theownership [thereof]."

Such reliance is misplaced. In the first place, there is no such occasion to apply suchby-law. It is admitted that the foreign domiciliary administrator did not appeal from theorder now in question. Moreover, there is likewise the express admission of appellantthat as far as it is concerned, "it is immaterial ... who is entitled to the possession ofthe stock certificates ..." Even if such were not the case, it would be a legal absurdityto impart to such a provision conclusiveness and finality. Assuming that a contrarietyexists between the above by-law and the command of a court decree, the latter is tobe followed.

As to Philippine Jurisprudence, a corporation is a creature without any existence untilit has received the imprimatur of the state according to law. It is logically

inconceivable therefore that it will have rights and privileges of a higher priority thanthat of its creator. More than that, it cannot legitimately refuse to yield obedience toacts of its state organs, certainly not excluding the judiciary, whenever called upon todo so.

To assert that it can choose which court order to follow and which to disregard is toconfer upon it not autonomy which may be conceded but license which cannot betolerated. It is to argue that it may, when so minded, overrule the state, the source ofits very existence; it is to contend that what any of its governmental organs maylawfully require could be ignored at will. So extravagant a claim cannot possibly meritapproval.

It is infinitely worse if through the absence of any coercive power by our courts overjuridical persons within our jurisdiction, the force and effectivity of their orders couldbe made to depend on the whim or caprice of alien entities. It is difficult to imagine of

a situation more offensive to the dignity of the bench or the honor of the country.


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G.R. No. 119002 October 19, 2000

INTERNATIONAL EXPRESS TRAVEL & TOUR SERVICES, INC.,vs.HON. COURT OF APPEALS, HENRI KAHN, PHILIPPINE FOOTBALL FEDERATION,

June 30 1989; petitioner International Express Travel and Tour Services, Inc.,through its managing director, wrote a letter to the Philippine Football Federation(Federation), through its president private respondent Henri Kahn, wherein theformer offered its services as a travel agency to the latter.

Petitioner secured the airline tickets to the SEA Games in Kuala Lumpur and varioustrips to China and Brisbane amounting to P449,654.83. the Federation made 2 partialpayments on September 1989 in the amount of P176,467.50.

October 4, 1989; petitioner wrote the Federation to pay the P265,894.33. October30, 1989; Federation paid P31,603. December 27, 1989; Henri Kahn issued a checkfor P50k for the outstanding balance of the Federation. Thereafter, no furtherpayments were made despite demands.

Petitioner filed a civil case in the RTC of Manila, suing Kahn and the Federation for

the balance. Kahn argues that he cannot be sued because he merely acted as anagent of the Federation, having a separate and distinct personality.

The RTC ruled for petitioner saying: the defendant Henri Kahn has adduced anyevidence proving the corporate existence of the defendant Federation. A voluntaryunincorporated association, like defendant Federation has no power to enter into, orto ratify, a contract. The contract entered into by its officers or agents on behalf ofsuch association is not binding on, or enforceable against it. The officers or agentsare themselves personally liable.

On appeal to the CA, the decision was reversed. The CA recognized the juridicalexistence of the Federation. It rationalized that since petitioner failed to prove thatHenri Kahn guaranteed the obligation of the Federation, he should not be held liablefor the same as said entity has a separate and distinct personality from its officers.

WON the federation has judicial personality

The appellate court recognized the existence of the Federation. In support of this, theCA cited Republic Act 3135, otherwise known as the Revised Charter of thePhilippine Amateur Athletic Federation, and Presidential Decree No. 604 as the lawsfrom which said Federation derives its existence.

RA 3135, Section 14;

SEC. 14. Functions, powers and duties of Associations. - The National Sports'Association shall have the following functions, powers and duties:

1. To adopt a constitution and by-laws for their internal organization and government;

2. To raise funds by donations, benefits, and other means for their purposes.

3. To purchase, sell, lease or otherwise encumber property both real and personal,for the accomplishment of their purpose;

4. To affiliate with international or regional sports' Associations after due consultationwith the executive committee;


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13. To perform such other acts as may be necessary for the proper accomplishmentof their purposes and not inconsistent with this Act.

PD 604, Section 8:

SEC. 8. Functions, Powers, and Duties of National Sports Association. - The

National sports associations shall have the following functions, powers, and duties:

1. Adopt a Constitution and By-Laws for their internal organization and governmentwhich shall be submitted to the Department and any amendment thereto shall takeeffect upon approval by the Department: Provided, however, That no team, school,club, organization, or entity shall be admitted as a voting member of an associationunless 60 per cent of the athletes composing said team, school, club, organization,or entity are Filipino citizens;

2. Raise funds by donations, benefits, and other means for their purpose subject tothe approval of the Department;

3. Purchase, sell, lease, or otherwise encumber property, both real and personal, forthe accomplishment of their purpose;

4. Conduct local, interport, and international competitions, other than the Olympicand Asian Games, for the promotion of their sport;

5. Affiliate with international or regional sports associations after due consultationwith the Department;

13. Perform such other functions as may be provided by law.

The above powers and functions granted to national sports associations clearly

indicate that these entities may acquire a juridical personality. The powers topurchase, sell, lease and encumber property are acts, which may only be done bypersons, whether natural or artificial, with juridical capacity. However, while we agreewith the appellate court that national sports associations may be accorded corporatestatus, such does not automatically take place by the mere passage of these laws.

Before a corporation may acquire juridical personality, the State must give itsconsent either in the form of a special law or a general enabling act. We cannotagree with the view of the appellate court and the private respondent that thePhilippine Football Federation came into existence upon the passage of these laws.Nowhere can it be found in R.A. 3135 or P.D. 604 any provision creating thePhilippine Football Federation. These laws merely recognized the existence ofnational sports associations and provided the manner by which these entities mayacquire juridical personality.

Before an entity may be considered as a national sports association, such entitymust be recognized by the accrediting organization, the Philippine Amateur AthleticFederation under R.A. 3135, and the Department of Youth and Sports Developmentunder P.D. 604. This fact of recognition, however, Henri Kahn failed to substantiate.In attempting to prove the juridical existence of the Federation, Henri Kahn attachedto his motion for reconsideration before the trial court a copy of the constitution andby-laws of the Philippine Football Federation. Unfortunately, the same does notprove that said Federation has indeed been recognized and accredited by either thePhilippine Amateur Athletic Federation or the Department of Youth and Sports


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Development. Accordingly, we rule that the Philippine Football Federation is not anational sports association within the purview of the aforementioned laws and doesnot have corporate existence of its own.

Thus being said, it follows that private respondent Henry Kahn should be held liablefor the unpaid obligations of the unincorporated Philippine Football Federation. It is asettled principal in corporation law that any person acting or purporting to act on

behalf of a corporation, which has no valid existence, assumes such privileges andbecomes personally liable for contract entered into or for other acts performed assuch agent.

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case digests; section 2 of BP 68 (the corporation code of the philippines)