RICHARDSON V. ARIZONA FUELS CORP, 614 p.2d 636 Facts: Plaintiffs are stockholders of Major Oil Corporation.

The defendants are the legal or beneficial owners of 47% of t ! "##$!d %&d o$t#t%&d"&' # %(!# of #to)* of +%,o(. Plaintiffs, in an amended complaint moved for an order certif ing this s!it as a class action, which the co!rt granted. The amended complaint states "# ca!ses of actions, the first eight of which allege some f(%$d$-!&t %pp(op("%t"o& of o( #) !.! to %pp(op("%t! +%,o(/# %##!t# 01 d!f!&d%&t#. These ca!ses of action seek to re$!ire the defendants to d"#'o('! %&d (!t$(& to +%,o( t ! %##!t# 2(o&'f$--1 o0t%"&!d . Of the remaining % ca!ses, & seek )o.p!&#%to(1 o( p$&"t"3! d%.%'!# fo( "&,$(1 %tt("0$t%0-! to %--!'!d 0(!%) !# of f"d$)"%(1 d$t1 ".p-")"t "& t ! f(%$d$-!&t %)t# %# !&$.!(%t!d "& t ! f"(#t !"' t )%$#!#. 4 ! f"&%- )%$#! of %)t"o& #!!*# %ppo"&t.!&t of % (!)!"3!(. 'ss!e: (O) the co!rt erred in certif ing the s!it as a class action. *!ling: +es. 'n this case, neither the memorand!m decision nor the order of the district co!rt does an more than recite that the s!it ma be maintained as a class action. F!rthermore, the complaint in alleging the action sho!ld be maintained as a class action, does no more than mimic the *!les of Co!rt. , class action and a derivative action rest !pon f!ndamentall different principles of s!bstantive law. A d!("3%t"3! %)t"o& .$#t &!)!##%("-1 0! 0%#!d o& % )-%". fo( (!-"!f 2 ") "# o2&!d 01 t ! #to)* o-d!(#/ )o(po(%t"o&. 'ndeed, % p(!(!5$"#"t! fo( f"-"&' % d!("3%t"3! %)t"o& "# t ! f%"-$(! of t ! )o(po(%t"o& to "&"t"%t! t ! %)t"o& "& "t# o2& &%.!. The stockholder, as a nominal part , has no right, title or interest whatsoever in the claim itself - whether the action is bro!ght b the corporation or b the stockholder on behalf of the corporation. A )-%## %)t"o&, o& t ! ot !( %&d, "# p(!d")%t!d o& o2&!(# "p of t ! )-%". fo( (!-"!f #$!d $po& "& t ! (!p(!#!&t%t"3! of t ! )-%## %&d %-- ot !( )-%## .!.0!(# "& t !"( )%p%)"t1 %# "&d"3"d$%-#, .hareholders of the corporation ma , of co!rse, have claims for relief directl against their corporation beca!se the corporation itself has violated rights possessed b the shareholders, and class action wo!ld be an appropriate means for enforcing their claim. A (!)o3!(1 "& % )-%## %)t"o& "# % (!)o3!(1 2 ") 0!-o&'# d"(!)t-1 to t ! # %(! o-d!(#. Ho2!3!(, "& % d!("3%t"3! %)t"o&, t ! p-%"&t"ff # %(! o-d!( (!)o3!(# &ot "&' %&d t ! ,$d'.!&t ($& "& f%3o( of t ! )o(po(%t"o&. The difference in the two proced!res and their relationship to !nderl ing s!bstantive law has been stated as follows: S$"t# 2 ") %(! #%"d to 0! d!("3%t"3! %&d t !(!fo(! )o.! 2"t "& t ! ($-!, %(! t o#! 2 ") #!!* to !&fo()! %&1 ("' t 2 ") 0!-o&'# to t ! )o(po(%t"o& %&d "# &ot 0!"&' !&fo()!d, #$) %# t ! -"%0"-"t1 of )o(po(%t! off")!(# o( .%,o("t1 # %(! o-d!(# fo( ."#.%&%'!.!&t, to (!)o3!( )o(po(%t! %##!t# %&d (!-%t!d )-%".#, to !&fo()! ("' t# of t ! )o(po(%t"o& 01 3"(t$! of "t# )o&t(%)t 2"t % t "(d

p!(#o& %&d to !&,o"& t o#! "& ) %('! of t ! )o(po(%t"o& f(o. )%$#"&' "t to )o.."t %& $-t(% 3"(!# %)t. O& t ! ot !( %&d, "f t ! "&,$(1 "# o&! to t ! p-%"&t"ff %# % #to)* o-d!( %&d to ". "&d"3"d$%--1, %&d &ot to t ! )o(po(%t"o&, %# 2 !(! t ! %)t"o& "# 0%#!d o& % )o&t(%)t to 2 ") ! "# % p%(t1, o( o& % ("' t 0!-o&'"&' #!3!(%--1 to "., o( o& % f(%$d %ff!)t"&' ". d"(!)t-1, "t "# %& "&d"3"d$%- %)t"o&.

6I4ON7 VS C.A Facts: No(% 6"to&' "&#t"t$t!d %& %)t"o& 0!fo(! t ! SEC %'%"&#t t ! off")!(# of +(. A&d +#. P$0-"# "&' Co(po(%t"o&. .he alleged that the private respondents is liable for fra!d, misrepresentation, dislo alt , evident bad faith, conflict of interest and mismanagement. This arose from the fact that t ! #%"d off")!(# !8t!&d!d % -o%& to P "-"pp"&! D%"-1 I&5$"(!( 2"t o$t (!#o-$t"o& of t ! # %(! o-d!(# %&d 2"t o$t "&t!(!#t. On the other hand, the respondent alleged that /itong is not a real part in interest #"&)! # ! "# o&-1 % o-d!( "& t($#t of t ! # %(!# of 9A:A I&3!#t.!&t Co(po(%t"o& in the Mr. and Ms. P!blishing corporation. 'ss!e: (hether or not /itong )%& "&#t"t$t! % d!("3%t"3! #$"t "& 0! %-f of 9A:A against the officers of Mr. and Ms. P!blishing corporation. 0eld: A d!("3%t"3! #$"t "# % -%2#$"t 0(o$' t 01 % # %(! o-d!( o& 0! %-f of % )o(po(%t"o& %'%"&#t % t "(d p%(t1. 'n the case at hand there is no do!bt that petitioner /itong was an emplo ee of 1,2, as its managing officer, as testified to b .enator 3nrile. 0owever, in the %0#!&)! of % Sp!)"%- A$t o("t1 f(o. t ! 0o%(d of d"(!)to(# of 9A:A to "&#t"t$t! % d!("3%t"3! #$"t %&d "& "t# 0! %-f, p!t"t"o&!( "# d"#5$%-"f"!d 01 -%2 to #$! "& !( o2& &%.!. the power to s!e and be s!ed in an co!rt b a corporation even as a stockholder is lodged in the board of directors that e4ercises its corporate powers and not in the president or officer thereof. Petition is denied.

SAN +I7UEL CORPORA4ION 3#. :AHN F,CT.: &&,"&&,#55 shares of the o!tstanding capital stock of the .an Mig!el Corporation were ac$!ired b "% other corporations, and were placed !nder a Vot"&' 4($#t A'(!!.!&t "& f%3o( of t ! -%t! A&d(!# So("%&o, 9(. (hen the latter died, 3d!ardo M. Coj!angco, 1r. was elected .!bstit!te Tr!stee with power to delegate the tr!steeship in writing to ,ndres .oriano '''. .hortl after the *evol!tion of Febr!ar , "675, Coj!angco left the co!ntr . ,n 8,greement8 was e4ec!ted between ,ndres .oriano ''', as 8/! er,8 and the "% corporations, as 8.ellers,8 for the p!rchase b .oriano, 8for himself and as agent of several persons,8 of the &&,"&&,#55 shares of stock. ,ct!all , according to .oriano and the other private respondents, t ! 0$1!( of t ! # %(!# 2%# % fo(!"'& )o.p%&1, N!pt$&"% Co(po(%t"o& L"."t!d ;of Ho&'*o&'<, a

wholl owned s!bsidiar of .an Mig!el 'nternational which is, in t!rn, a wholl owned s!bsidiar of .an Mig!el Corporation9 and it was )ept!nia which on or abo!t ,pril ", "675 had made the down pa ment of P:;;,;;;,;;;.;;, 8from the proceeds of certain loans8. ,t this point the 33,133,266 S+C # %(!# 2!(! #!5$!#t!(!d 01 t ! P(!#"d!&t"%Co.."##"o& o& 7ood 7o3!(&.!&t ;PC77<, on the gro!nd that the stock belonged to 3d!ardo Coj!angco, 1r., allegedl a close associate and d!mm of former President Marcos. 'n <ecember, "675, the S+C 6o%(d, 01 R!#o-$t"o& No. =6>122, ?d!)"d!d to %##$.! t ! -o%&# "&)$((!d 01 N!pt$&"% fo( t ! do2& p%1.!&t ;;P@AA+<< o& t ! 33,133,266 # %(!#. 0owever, at the meeting of the .MC /oard on 1an!ar &;, "67=, 3d!ardo de los ,ngeles, one of the PC>> representatives in the .MC board, imp!gned said *esol!tion )o. 75?"#?#, den ing that it was ever adopted, and stating that what in tr!th was agreed !pon at the meeting of <ecember %, "675 was merel a 8f!rther st!d 8 b <irector *amon del *osario of a plan presented b him for the ass!mption of the loan. <e los ,ngeles also pointed o!t certain 8deleterio!s effects8 thereof. 0e was however overr!led b private respondents. "% B !& "# !ffo(t# to o0t%"& (!-"!f 2"t "& t ! )o(po(%t"o& %&d -%t!( t ! PC77 p(o3!d f$t"-!, ! (!p%"(!d to t ! S!)$("t"!# %&d E8) %&'! Co.."##"o&. <e los ,ngeles filed with the .3C in ,pril, "67=, what he describes as a d!("3%t"3! #$"t "& 0! %-f of S%& +"'$!- Co(po(%t"o&, %'%"&#t t!& ;1A< of t ! f"ft!!&>.!.0!( 6o%(d of D"(!)to(# who had 8either voted to approve and@or ref!sed to reconsider and revoke /oard *esol!tion )o. 75?"#?#.8 The respondents filed motion to dismiss. '..A3: (@) de los ,ngeles has the personalit corporation. to bring s!it in behalf of the

)< t ! )%$#! of %)t"o& %)t$%--1 d!3o-3!# o& t ! )o(po(%t"o&, t ! 2(o&'do"&' o( %(. %3"&' 0!!&, o( 0!"&' )%$#!d to t ! )o(po(%t"o& %&d &ot to t ! p%(t")$-%( #to)* o-d!( 0("&'"&' t ! #$"t. The bona fide ownership b a stockholder of stock in his own right s!ffices to invest him with standing to bring a derivative action for the benefit of the corporation. 4 ! &$.0!( of "# # %(!# "# "..%t!("%- #"&)! ! "# &ot #$"&' "& "# o2& 0! %-f, o( fo( t ! p(ot!)t"o& o( 3"&d")%t"o& of "# o2& p%(t")$-%( ("' t, o( t ! (!d(!## of % 2(o&' )o.."tt!d %'%"&#t "., "&d"3"d$%--1, 0$t "& 0! %-f %&d fo( t ! 0!&!f"t of t ! )o(po(%t"o&.

PASCUAL V OROSCO F,CT.: Petitioner Candido Pasc!al is a stockholder of /anco 3spanol?Filipino. Petitioner contends that d!ring the ears "6;&, "6;%, "6;:, and "6;= the defendants and appellees, 2"t o$t t ! *&o2-!d'!, )o&#!&t, o( %)5$"!#)!&)! of t ! #to)* o-d!(#, d!d$)t!d t !"( (!#p!)t"3! )o.p!&#%t"o& f(o. t ! '(o## "&)o.! "&#t!%d of f(o. t ! &!t p(of"t# of t ! 0%&*, t !(!01 d!f(%$d"&' t ! 0%&* %&d "t# #to)* o-d!(# of %pp(o8".%t!-1 P2A,AAA p!( %&&$. 9 that tho!gh d!e demands has been made !pon them therefor, defendants ref!se to ref!nd to the bank the s!ms so misappropriated, or an part thereof9 t %t d!f!&d%&t# )o&#t"t$t! % .%,o("t1 of t ! p(!#!&t 0o%(d of d"(!)to(# of t ! 0%&*, who alone can a!thoriEe an action against them in the name of the corporation, and that prior to the filing of the present s!it plaintiff e4ha!sted ever remed in the premises within this banking corporation. '..A3: (O) petitioner is the proper part to the case at bar and (O) the co!rt has j!risdiction. *AB')>: The .C held that the plaintiff, b reason of the fact that he is a stockholder in the bank FcorporationG has a right to maintain a s!it for and on behalf of the bank, 0$t t ! !8t!&t of #$) % ("' t .$#t d!p!&d $po& 2 !&, o2, %&d fo( 2 %t p$(po#! ! %)5$"(!d t ! # %(!# 2 ") ! &o2 o2&#. 't is self?evident that the plaintiff in the case at bar was not, before he ac$!ired in .eptember, "6;&, the shares which he now owns, inj!red or affected in an manner b the transactions set forth in the second ca!se of action. 0is vendor co!ld have complained of these transactions, b!t he did not choose to do so . 4 ! d"#)(!t"o& 2 !t !( to #$! to #!t t !. %#"d!, o( to %)5$"!#)! "& %&d %'(!! to t !., is, in o!r opinion, "&)%p%0-! of t(%&#f!(. 'f the plaintiff himself had been inj!red b the acts of defendantsH predecessors that is another matter. 0e o!ght to take things as he fo!nd them when he vol!ntaril ac$!ired his ten shares. 'f he was defra!ded in the p!rchase of these shares he sho!ld s!e his vendor. If t ! p%(t1 ".#!-f, 2 o "# t ! 3")t". of f(%$d o( $#$(1, ) oo#!# to 2%"3! "# (!.!d1 %&d (!-!%#! t ! p%(t1, "t do!# &ot 0!-o&' to % #$0#!5$!&t p$() %#!( $&d!( ". to (!)%-- %&d %##$.! t ! (!.!d1 fo( ".. FI!oted with approval in the case of the >raham vs. Ba Crosse and Milwa!kee *.*. Co., ";#., A..., "%7.G

03B<: The theor that de los ,ngeles has no personalit to bring s!it in behalf of the corporation beca!se his stockholding is min!sc!le cannot be s!stained. 't is claimed that since de los ,ngeles #; shares represent onl .;;;;"5%%C of the total n!mber of o!tstanding shares, he cannot be deemed to fairl and ade$!atel represent the interests of the minorit stockholders. The implicit arg!ment D that a stockholder, to be considered as $!alified to bring a derivative s!it, m!st hold a s!bstantial or significant block of stock D finds no s!pport whatever in the law. 4 ! (!5$"#"t!# fo( % d!("3%t"3! #$"t %(! %# fo--o2#C %< t ! p%(t1 0("&'"&' #$"t # o$-d 0! % # %(! o-d!( %# of t ! t".! of t ! %)t o( t(%&#%)t"o& )o.p-%"&!d of, t ! &$.0!( of "# # %(!# &ot 0!"&' .%t!("%-D 0< ! %# t("!d to !8 %$#t "&t(%>)o(po(%t! (!.!d"!#, ".!., %# .%d! % d!.%&d o& t ! 0o%(d of d"(!)to(# fo( t ! %pp(op("%t! (!-"!f 0$t t ! -%tt!( %# f%"-!d o( (!f$#!d to !!d "# p-!%D 33 %&d

.o it seems to be settled b the .!preme Co!rt of the Anited .tates, as a matter of s!bstantive law, that % #to)* o-d!( "& % )o(po(%t"o& 2 o 2%# &ot #$) %t t ! t".! of t ! t(%&#%)t"o&# )o.p-%"&!d of, o( 2 o#! # %(!# %d &ot d!3o-3!d $po& ". #"&)! 01 op!(%t"o& of -%2, )%& &ot .%"&t%"& #$"t# of t "# ) %(%)t!(, $&-!## #$) t(%&#%)t"o&# )o&t"&$! %&d %(! "&,$("o$# to t ! #to)* o-d!(, o( %ff!)t ". !#p!)"%--1 %&d #p!)"f")%--1 "& #o.! ot !( 2%1.

EVAN7ELIS4A V SAN4OS Facts: 1!an <. 3vangelista, et. al. are ."&o("t1 #to)* o-d!(# of t ! V"t%-" L$.0!( Co.p%&1, I&)., a Philippine corporation organiEed for the e4ploitation of a l!mber concession in Jamboanga, Philippines, while *afael .antos holds more than @A% of t ! #to)*# of #%"d )o(po(%t"o& %&d %-#o "# %&d %-2%1# %# 0!!& t ! p(!#"d!&t, .%&%'!(, %&d t(!%#$(!( t !(!of. .antos, in s!ch triple capacit , t (o$' f%$-t, &!'-!)t, %&d %0%&do&.!&t allowed its l!mber concession to lapse and its properties and assets, among them machineries, b!ildings, wareho!ses, tr!cks, etc., to d"#%pp!%(, th!s ca!sing the complete r!in of the corporation and total depreciation of its stocks. 3vangelista, et. al. therefore pra s for j!dgment re$!iring .antos: F"G to render an acco!nt of his administration of the corporate affairs and assets: F#G to pa plaintiffs the val!e of t heir respective participation in said assets on the basis of the val!e of the stocks held b each of them9 and F&G to pa the costs of s!it. 3vangelista, et. al. also ask for s!ch other remed as ma be and e$!itable. The complaint does not give 3vangelista, et. al.Hs residence, b!t, b!t p!rposes of ven!e, alleges that .antos resides at #""# <ewe /o!levard, corner Bibertad .treet, Pasa , province of *iEal. 0aving been served with s!mmons at that place, S%&to# f"-!d % .ot"o& fo( t ! d"#."##%- of t ! )o.p-%"&t o& t ! '(o$&d of ".p(op!( 3!&$! %&d %-#o o& t ! '(o$&d t %t t ! )o.p-%"&t d"d &ot #t%t! % )%$#! of %)t"o& "& f%3o( of E3%&'!-"#t%, !t. %-. ,fter hearing, the lower co!rt rendered its order, granting the motion for dismissal. *econsideration of the order was denied. 3vangelista, et. al. appealed to the .!preme Co!rt. Issue: (hether 3vangelista, et. al. had the right to bring the action for damages res!lting from mismanagement of the affairs and assets of the corporation b its principal officer, it being alleged that .antosH maladministration has bro!ght abo!t the r!in of the corporation and the conse$!ent loss of val!e of its stocks. Held: The inj!r complained of is primaril to the corporation , #o t %t t ! #$"t fo( t ! d%.%'!# )-%".!d # o$-d 0! 01 t ! )o(po(%t"o& (%t !( t %& 01 t ! #to)* o-d!(#. The stockholders ma not directl claim those damages for themselves for that wo!ld res!lt in the appropriation b , and the distrib!tion among them of part of the corporate assets before the dissol!tion of the corporation and the li$!idation of its debts and liabilities, something which cannot be legall done in view of #!)t"o& 16 of t ! Co(po(%t"o& L%2, 2 ") p(o3"d!# t %t ?No # %-- )o(po(%t"o& # %-- .%*! o( d!)-%(! %&1 #to)* o( 0o&d d"3"d!&d o( %&1 d"3"d!&d 2 %t#o!3!( f(o. t ! p(of"t# %("#"&' f(o. "t# 0$#"&!##, o( d"3"d! o( d"#t("0$t! "t# )%p"t%- #to)* o( p(op!(t1 ot !( t %& %)t$%- p(of"t# %.o&' "t# .!.0!(# o( #to)* o-d!(# $&t"- %ft!( t ! p%1.!&t of "t# d!0t# %&d t ! t!(."&%t"o& of "t# !8"#t!&)! 01 -"."t%t"o& o( -%2f$d"##o-$t"o&.? /!t while it is to the corporation that the action sho!ld pertain in cases of

this nat!re, however, if the officers of the corporation, who are the ones called !pon to protect their rights, ref!se to s!e, or where a demand !pon them to file the necessar s!it wo!ld be f!tile beca!se the are the ver ones to be s!ed or beca!se the hold the controlling interest in the corporation, then in that case an one of the stockholders is allowed to bring s!it. 6$t "& t %t )%#! "t "# t ! )o(po(%t"o& "t#!-f %&d &ot t ! p-%"&t"ff #to)* o-d!( t %t "# t ! (!%- p(op!(t1 "& "&t!(!#t, #o t %t #$) d%.%'!# %# .%1 0! (!)o3!(!d # %-- p!(t%"& to t ! )o(po(%t"o&. 'n other words, it is a derivative s!it bro!ght b a stockholder as the nominal part plaintiff for the benefit of the corporation, which is the real propert in interest. 0erein, 3vangelista, et. al. have bro!ght the action not for the benefit of the corporation b!t for their own benefit, since the ask that .antos make good the losses occasioned b his mismanagement and pa to them the val!e of their respective participation in the corporate assets on the basis of their respective holdings. C-!%(-1, t "# )%&&ot 0! do&! $&t"- %-- )o(po(%t! d!0t#, "f t !(! 0! %&1, %(! p%"d %&d t ! !8"#t!&)! of t ! )o(po(%t"o& t!(."&%t!d 01 t ! -"."t%t"o& of "t# ) %(t!( o( 01 -%2f$- d"##o-$t"o& "& 3"!2 of t ! p(o3"#"o&# of #!)t"o& 16 of t ! Co(po(%t"o& L%2. 't res!lts that 3vangelista, et. al.Hs complaint shows no ca!se of action in their favor.

REPU6LIC 6AN: 3#. CUADERNO F,CT.: <amaso PereE had complained to the Monetar /oard of the Central /ank certain fra!ds allegedl committed b defendant Pablo *oman, as chairman of the /oard of <irectors of the *ep!blic /ank, and of its 34ec!tive Boan Committee. Mig!el C!aderno Fthen >overnor of the Central /ankG and the Monetar /oard ordered an investigation. 6%&* E8%."&!(# (!po(t!d t %t )!(t%"& .o(t'%'! -o%&# 2!(! '(%&t!d "& 3"o-%t"o& of #!)t"o&# 77, 7= %&d == of t ! 7!&!(%- 6%&*"&' A)tD that acting on said reports, the Monetar /oard, of which defendant C!aderno was a member, o(d!(!d % &!2 6o%(d of D"(!)to(# of t ! R!p$0-") 6%&* to 0! !-!)t!d, 2 ") 2%# do&!, and s!bse$!entl approved b the Monetar /oard. The latter accepted the offer of Pablo *oman to p!t !p ade$!ate sec!rit for the $!estioned loans made b the *ep!blic /ank, and s!ch sec!rit was made a condition for the res!mption of the /ankHs normal operations9 that s!bse$!entl , the Central /ank thro!gh its >overnor, Mig!el C!aderno, referred to special prosec!tors of the <epartment of 1!stice the banking fra!ds and violations of the /anking ,ct, reported for investigation and prosec!tion, b!t no information was filed !p to the time of the retirement of C!aderno. To ne!traliEe the impending action against him, Pablo *oman engaged Mig!el C!aderno as technical cons!ltant and selected /ienvenido <iEon as chairman of the /oard of <irectors of the *ep!blic /ank. The /oard of <irectors composed of individ!als personall selected and chosen b *oman, allegedl connived and confederated in approving the appointment and selection of C!aderno and <iEon to protect Pablo *oman from criminal prosec!tion. '..A3: (@) appellant PereE can $!estion the appointment and selection of defendants C!aderno and <iEon.

03B<: E!#, P!(!F )%& 5$!#t"o& t ! %ppo"&t.!&t The <efendants mainl controvert the right of plaintiff to $!estion the appointment and selection of defendants C!aderno and <iEon, which the contend to be the res!lt of corporate acts with which plaintiff, as stockholder, cannot interfere. )ormall , this is correct, b!t Philippine j!rispr!dence is settled that an individ!al stockholder is permitted to instit!te a derivative or representative s!it on behalf of the corporation wherein he holds stock in order to protect or vindicate corporate rights, whenever the officials of the corporation ref!se to s!e, or are the ones to be s!ed or hold the control of the corporation. The action he has bro!ght is a derivative one, e4pressl manifested to be for and in behalf of the *ep!blic /ank, beca!se it was f!tile to demand action b the corporation, since its <irectors were nominees and creat!res of defendant Pablo *oman. The fra!ds charged b plaintiff are fra!ds against the /ank that redo!nded to its prej!dice.

receiver and a j!dgment marking defendants jointl and severall liable for the damages. The motion for the appointment of a receiver was set for hearing and s!bse$!entl the co!rt entered the order for the appointment of a receiver. This is a petition for certiorari to review and set aside an order of the Manila, 0on. /ienvenido ,. Tan, presiding, in Civil Case )o. %#&=:, entitled 8Francisca *. 1!stiniani vs. (adh!mal <alamal, et al.8, appointing a receiver of the corporation *o4as?2alaw Te4tile Mills, 'nc. 'n said action, plaintiff 1!stiniani asks the co!rt to order the directors of the corporation, jointl and severall , to repair the damage ca!sed to the corporation, of which all the plaintiff and defendants are members. '..A3: (@) the co!rt committed an ab!se of discretion in appointing a receiver for the corporation, Fconsidering the petitioner claims that respondent 1!stiniani neither alleged nor proved the e4istence of an emergenc re$!iring the immediate appoinment of a receiver of the *o4as?2alaw Te4tile Mill, 'nc.G 03B<:

C,T,B'), *. *3+3. vs. 0O). /'3)K3)'<O ,. T,) F,CT.: The corporation, *o4as?2alaw Te4tile Mills, 'nc., was organiEed on 1!ne :, "6:% b defendants Cesar 2. *o4as, ,delia 2. *o4as, /enjamin M. *o4as, 1ose Ma. /arcelona and Morris (ilson9 that the plaintiff holds both Class , and Class / shares9 , the /oard of <irectors approved a resol!tion designating one <a aram as co?manager with the specific !nderstanding that he was to act as defendant (adh!mal <alamalHs designee, Morris (ilson was likewise designated as co?manager with responsibilities for the management of the factor onl , that an office in )ew +ork was opened for the p!rpose of s!pervising p!rchases, which p!rchases m!st have the !nanimo!s agreement of Cesar 2. *o4as, )ew +ork resident member of the board of directors, *obert /orn and (adh!mal <alamal or their respective representatives9 that several p!rchases aggregating L#76,5=7.75 were made in )ew +ork for raw materials s!ch as greige cloth, ra on and gre goods for the te4tile mill and shipped to the Philippines, which shipment were fo!nd o!t to consist not of raw materials b!t alread finished prod!cts ., for which reasons the Central /ank of the Philippines stopped all dollar allocations for raw materials for the corporation which necessaril led to the paral Eation of the operation of the te4tile mill and its b!siness9 that the s!pplier of the aforesaid finished goods was the Anited Commercial Compan of )ew +ork in which defendant <alamal had interests and the letter of credit for said goods were g!aranteed b the 'ndian Commercial Compan and the 'ndian Traders in which firms defendant <alamal likewise held interests9 that the resale of the finished goods was the b!siness of the 'ndian Commercial Compan of Manila, which compan co!ld not obtain dollar allocations for importations of finished goods !nder the Central /ank reg!lations9 that plaintiff and some members of the board of directors !rged defendants to proceed against <alamal, e4posing his offense to the Central /ank, and to initiate s!it against <alamal for his fra!d against the corporation9 that defendants ref!sed to proceed against <alamal and instead contin!ed to deal with the 'ndian Commercial Compan to the damage and prej!dice of the corporation. The pra er asks for the appointment of a

This contention is not well fo!nded. The importation of te4tiles instead of raw materials, as well as the fail!re of the /oard of <irectors to take action against those directl responsible for the mis!se of dollar allocations constit!te fra!d, or consent thereto on the part of the directors. Therefore, a breach of tr!st was committed which j!stified the derivative s!it b a minorit stockholder on behalf of the corporation. 't is well settled in this j!risdiction that where corporate directors are g!ilt of a breach of tr!st D not of mere error of j!dgment or ab!se of discretion D and intracorporate remed is f!tile or !seless, a stockholder ma instit!te a s!it in behalf of himself and other stockholders and for the benefit of the corporation, to bring abo!t a redress of the wrong inflicted directl !pon the corporation and indirectl !pon the stockholders. The claim that respondent 1!stiniani did not take steps to remed the illegal importation for a period of two ears is also witho!t merit. <!ring that period of time respondent had the right to ass!me and e4pect that the directors wo!ld remed the anomalo!s sit!ation of the corporation bro!ght abo!t b their own wrong doing. Onl after s!ch period of time had elapsed co!ld respondent concl!de that the directors were remiss in their d!t to protect the corporation propert and b!siness. Co!nsel for petitioner claims that respondent 1!stiniani was treas!rer of the corporation for sometime and had control of f!nds and this notwithstanding, she had not taken the steps to remed the sit!ation. 'n answer we state that the fra!d consisted in importing finished te4tile instead of raw cotton for the te4tile mill9 the fra!d, therefore, was committed b the manager of the b!siness and was consented to b the directors, evidentl be ond reach of respondent. The directors permitted the fra!d!lent transaction to go !np!nished and nothing appears to have been done to remove the erring p!rchasing managers. 'n a wa the appointment of a receiver ma have been tho!ght of b the co!rt below so that the dollar allocation for raw material ma be revived and the te4tile mill placed on an

operating basis. 't is possible that if a receiver in which the Central /ank ma have confidence is appointed, the dollar allocation for raw material ma be restored. Claim is made that if a receiver is appointed, the Philippine )ational /ank to which the corporation owes considerable s!ms of mone might be led to foreclose the mortgage. Precisel the appointment of a receiver in whom the bank ma have had confidence might rehabilitate the b!siness and bring a restoration of the dollar allocation m!ch needed for raw material and an improvement in the b!siness and assets the corporation, th!s ins!ring the collection of the bankHs loan. Considering the above circ!mstances we are led to agree with the j!dge below that the appointment of a receiver was not onl e4pedient b!t also necessar to restore the faith and confidence of the Central /ank a!thorities in the administration of the affairs of the corporation, th!s !ltimatel leading to a restoration of the dollar allocation so essential to the operation of the te4tile mills. The assignment of error is, therefore, overr!led. R$(%- 6%&* of +"-%o( 3#. O)f!."% Facts: Felicisimo and 1!anita Ocfemia owned = parcels of land. The mortgaged said propert to petitioner bank. The were !nable to pa so it was foreclosed. : o!t of the = parcels of land were p!rchased b the parents of the respondent F*enato and Francisca OfemiaG. 0owever, the were not able to transfer the same to their names as there is a need have the doc!ment of sale registered with the *<. 'n order for the latter to effect registration, a board resol!tion from the bank, confirming the sale is needed. *espondent re$!ested the bank for the said doc!ment, after s!bmission of receipts evidencing the sale. Petitioner bank gave several alibi and so respondent s!ed in e4asperation, contending that the needed the propert to be transferred in their names beca!se the will mortgaged it for the medical e4penses of Francisca. 'ss!e: (@) the bank can be compelled to iss!e a board resol!tion, confirming the sale e4ec!ted b the bank manager witho!t prior a!thorit of the /O<s. 0eld: .C r!led in favor of the respondents, holding that the petitioner bank admitted the d!e e4ec!tion of the said contract since it failed to file its answer den ing !nder oath the deed of sale. F!rther, the bank manager previo!sl transacted b!siness on behalf of the bank, and the latter had acknowledged her a!thorit and so it is estopped from $!estioning the managerHs a!thorit to enter into the contract of sale. 'f a corporation knowingl permits one of its officers or an other agent to act within the scope of an apparent a!thorit , it holds the agent o!t to the p!blic as possessing the power to do those acts9 th!s, the corporation will, as against an one who has in good faith dealt with it thro!gh s!ch agent, be estopped from den ing the agentHs a!thorit .

LEE VS COUR4 OF APPEALS (Qualifications of directors or trustees) Facts: , complaint for a s!m of mone was filed b the 'nternational Corporate /ank, 'nc. against the private respondents F</PG who, in t!rn, filed a third part complaint against ,BF, and the petitioners. The </P claimed that it was not a!thoriEed to receive s!mmons on behalf of ,BF, since the </P had not taken over the compan which has a separate and distinct corporate personalit and e4istence. Petitioners filed a motion for reconsideration s!bmitting that *!le "%, section "& of the *evised *!les of Co!rt is not applicable since the were &o -o&'!( off")!(# of ALFA and that the private respondents sho!ld have availed of another mode of service !nder *!le "%, .ection "5 of the said *!les, i.e., thro!gh p!blication to effect proper service !pon ,BF,. Private respondents arg!ed that the voting tr!st agreement did not divest the petitioners of their positions as president and e4ec!tive vice?president of ,BF, so that service of s!mmons !pon ,BF, thro!gh the petitioners as corporate officers was proper. The petitioners moved for a reconsideration of the decision of the p!blic respondent which resolved to den the same. 0ence, the petitioners filed this certiorari petition imp!ting grave ab!se of discretion amo!nting to lack of j!risdiction on the part of the p!blic respondent in holding that there was proper service of s!mmons on ,BF, thro!gh the petitioners. 'ss!e: <id a director of the corporation cease to be s!ch !pon the creation of the voting tr!st agreementN *!ling: The petitioners can no longer be considered directors of ,BF,. 'n s!pport of their contention, the petitioners invoke section #& of the Corporation Code which provides, in part, that: 3ver director m!st own at least one F"G share of the capital stock of the corporation of which he is a director which share shall stand in his name on the books of the corporation. ,n director who ceases to be the owner of at least one F"G share of the capital stock of the corporation of which he is a director shall thereb cease to be director. Considering that the voting tr!st agreement between ,BF, and the </P transferred legal ownership of the stock covered b the agreement to the </P as tr!stee, the latter became the stockholder of record with respect to the said shares of stocks. 'n the

M34istence of s!ch a!thorit is established, b proof of the co!rse of b!siness, the !sages and practices of the compan and b the knowledge which the board of directors has, or m!st be pres!med to have, of acts and doings of its s!bordinates in and abo!t the affairs of the corporation.

absence of a showing that the </P had ca!sed to be transferred in their names one share of stock for the p!rpose of $!alif ing as directors of ,BF,, the petitioners can no longer be deemed to have retained their stat!s as officers of ,BF, which was the case before the e4ec!tion of the s!bject voting tr!st agreement. There appears to be no disp!te from the records that </P has taken over f!ll control and management of the firm. 7o*o&'2!" 9(., 3#. SEC (Qualifications of the Directors and Trustees) 76 .C*, &&5 ,pril "", "6=6 ,ntonio, 1. FAC4SC The instant petition for certiorari, mandam!s and inj!nction, with pra er for iss!ance of writ of preliminar inj!nction arose o!t of two cases filed b petitioner with the .ec!rities and 34change Commission as follows: .3C C,.3 )O. "&=: On October ##, "6=5, petitioner 1ohn >okongwei 1r., as stockholder of respondent .an Mig!el Corporation filed with the .3C a petition for the Odeclaration of n!llit of amended b ? laws, cancellation of certificate of filing of amended b ?laws, inj!nction and damages with pra er for a preliminar inj!nction Oagainst the majorit of .MCPs /oard of <irectors and .MC itself as an !nwilling petitioner. ,s a first ca!se of action, petitioner alleged that on .eptember "7, "6=5, individ!al respondents amended the b ?laws basing their a!thorit on a resol!tion of the stockholders adopted on March "&, "65", when the o!tstanding capital stock of .MC was onl P=;,"&6,=%;. ,t the time of the amendment, the o!tstanding and paid !p shares were alread P&;",#=;,%&;.;;. 't was contended that according to .ection ## of the Corporation Baw and ,rticle K''' of the b ?laws of the Corporation, the power to amend, modif , repeal or adopt new b ? laws ma be delegated to the /oard of <irectors onl b the affirmative vote of stockholders representing not less than #@& of the s!bscribed and paid !p capital stock of the corporation, which #@& sho!ld have been comp!ted on the basis of the capitaliEation at the time of the amendment. .ince the amendment was based on the "65" a!thoriEation, petitioner contended that the /oard acted witho!t a!thorit and in !s!rpation of the power of the stockholders. ,s a second ca!se of action, it was alleged that the a!thorit granted in "65" had alread been e4ercised in "65# and "65&, after which the a!thorit of the /oard ceased to e4ist. ,s a third ca!se of action, petitioner averred that the membership of the /oard of <irectors had changed since the a!thorit was given in "65", there being 5 new directors.

,s a fo!rth co!rse of action, it was claimed that prior to the $!estioned amendment, petitioner had all the $!alifications to be a director of respondent corporation, being a s!bstantial stockholder thereof9 that as a stockholder, petitioner had ac$!ired rights inherent in stock ownership, s!ch as the right to vote and be voted !pon in the election of directors9 and that in amending the b ?laws, respondent p!rposel provided for petitionerPs dis$!alification and deprived him of vested right as afore?mentioned, hence the amended b ?laws are n!ll and void. ,s additional ca!ses of action, it was alleged: That corporation have no inherent power to dis$!alif a stockholder from being elected as a director and, therefore, the $!estioned act is !ltra vires and void9 That ,ndres M. .oriano, 1r. and@or 1ose M. .oriano, while representing other corporations, entered into contract Fspecificall a management contractG with respondent corporation, which was allowed beca!se the $!estioned amendment gave the /oard itself the prerogative of determining whether the or other persons are engaged in competitive or antagonistic b!siness9 That the portion of the amended b ?laws which states that in determining whether or not a person is engaged in competitive b!siness, the /oard ma consider s!ch factors as b!siness and famil relationship, is !nreasonable and oppressive and, therefore, void9 and That the portion of the amended b ?laws which re$!ires that Oall nominations for election of directors MMMM shall be s!bmitted in writing to the /oard of <irectors at least : working da s before the date of the ,nn!al Meeting is likewise !nreasonable and oppressive. 't was, therefore, pra ed that the amended b ?laws be declared n!ll and void and the certificate of filing thereof be cancelled, and that individ!al respondents be made to pa damages, in specified amo!nts, to petitioner. I##$!C (hether or not respondent .an Mig!el Corporation co!ld, as a meas!re of self? protection, dis$!alif a competitor from nomination and election to its /oard of <irectors. H!-dC 't is recogniEed b all a!thorities that Qever corporation has the inherent power to adopt b ?laws Qfor its internal government, and to reg!late the cond!ct and prescribe the rights and d!ties of its members towards itself and among themselves in reference to the management of its affairsP. ,t common law, the r!le was Othat the power to make and adopt b ?laws was inherent in ever corporation as one of its necessar and inseparable legal incidents. ,nd it is settled thro!gho!t the Anited .tates that in the absence of positive legislative provisions limiting it, ever private corporation has this inherent power as one of its necessar and inseparable legal incidents, independent of an specific enabling provision in its charter or in general law, s!ch power of self? government being essential to enable the corporation to accomplish the p!rposes of its creation.R

'n this j!risdiction, !nder .ection #" of the Corporation Baw, a corporation ma prescribe in its b ?laws Othe $!alifications, d!ties and compensation of directors, officers and emplo ees MMM.R This m!st necessaril refer to a $!alification in addition to that specified b .ection &; of the Corporation Baw, which provides that Oever director m!st own in his right at least one share of the capital stock of the stock corporation of which he is a director MMM.R D!t!)t"3! G P(ot!)t"3! 6$(!%$ 3#. C-o("0!F%)t#C Plaintiff Corporation filed an action to enjoin the defendant Fa!sto ,lberto from e4ercising the f!nctions of a managing director. 't is alleged that the latter illegall seiEed and took control of all the assets as well as the books, records , vo!chers and receipts of the corporation from the acco!ntant9 that he concealed said records and ref!se to allow an member of the corporation to e4amine the same9 that he ref!sed to vacate the office and s!rrender to the newl elected director, 1ose <ela *osa. I##$!C (@) ,lberto can be compelled to vacate the office in favor of 1ose <ela *osa. H!-dC .C held that ,lberto cannot be compelled to vacate the office since it was fo!nd that 1ose <ela *osa co!ld not be elected as managing director beca!se he did not own an stock in the corporation p!rs!ant to .ec. &; of the Corporation Code and .ec. & of the compan Hs b ?laws F3ver director m!st own at least " share in the capital stock of the corporation of which he is a directorG. 't f!rther held that if the managing director? elect was not $!alified to become as s!ch, ,lberto co!ld not be compelled to vacate his office and cede the same to the managing director?elect. The b ?laws of the corporation provided that O<irectors shall serve !ntil the election and $!alification of their d!l $!alified s!ccessorsR. 7(%)! C ("#t"%& HS 3#. CA Facts: >race ChristianHs representative, 1ames Tan has been sitting in the /O<s of >race Killage ,ssociation as a permanent director thereof for ": ears, p!rs!ant to the amended b ?laws of the association in "6=:. The committee on election of >K, notified Tan and the members that the "657 b ?laws regarding election of /O<s wo!ld be observed. Petitioner Tan filed an action to compel the /O<s of >K, to recogniEed its right to a permanent seat in the /oard, p!rs!ant to the b ?laws9 that he ac$!ired vested right to the same9 that "6=: amended b ?laws is valid and binding8 and that the association was estopped from $!estioning the same. 'ss!e: (@) the incl!sion of >C0.Hs representative Tan as a permanent member of the /O< of >K, witho!t the benefit of election is valid. 0eld: .C affirmed the 0'>C and C,Hs decision in favor of the association holding that aside from the fact that there was no valid amendment of the associationHs "657 b ? laws beca!se of fail!re to compl with the re$!irement of its e4isting b ?laws, prescribing the affirmative vote of the majorit of the members of the association at a

reg!lar or special meeting called for the adoption of amendment to the b ?laws9 The Corporation Baw clearl provides that the /O<s of Corporation m!st be elected from among its stockholders or members. There ma be a corporations in which there are !nelected members in the board, b!t s!ch !nelected members sit onl as e4?officio members i.e. b virt!e of and for as long as the hold a partic!lar office. DO+IN7O PONCE AND 6UHAE L. PONCE, petitioners, vs. DE+E4RIO 6. ENCARNACION, 9$d'! of t ! Co$(t of F"(#t I&#t%&)! of +%&"-%, 6(%&) I, %&d PO4ENCIANO 7APOL, respondents. F%)t#: The petitioners claim that the <ag!ho 3nterprises, 'nc., in a /O,*< meeting, called the vol!ntar dissol!tion of the corporation and the appointment of Potenciano >apol as receiver. 'nstead of filing the petition for vol!ntar dissol!tion of the of the corporation as agreed !pon, the respondent Potenciano >apol, who is the largest stockholder, changed his mind and filed a complaint to compel the petitioners to render an acco!nting of the f!nds and assets of the corporation that have been misspent, misapplied, missappropriated and converted b the petitioner <omingo Ponce to his own !se and benefit. *espondent Potenciano >apol also filed a motion pra ing that the petitioners be removed as members of the board of directors which was denied b the co!rt. 0e also filed a petition pra ing for an order directing him to a call a meeting of the stockholders of the corporation and to preside at s!ch meeting9 The lower granted >apolPs motion. The petitioners claimed that the learned onl of this order of the co!rt when the /ank of ,merica ref!sed to recogniEe the new board of directors elected at s!ch meeting and ret!rned the checks drawn !pon it b the said board of directors. I##$!C (hether !nder and p!rs!ant to section #5 of ,ct )o. "%:6, known as the Corporation law, the respondent co!rt ma iss!e the order complained of. .aid section provides: D (henever, from an ca!se, there is no person a!thoriEed to call a meeting, or when the officer a!thoriEed to do so ref!ses, fails or neglects to call a meeting, an j!dge of a Co!rt of First 'nstance on the showing of good ca!se therefor, ma iss!e an order to an stockholder or member of a corporation, directing him to call a meeting of the corporation b giving the proper notice re$!ired b this ,ct or b ?laws9 and if there be no person legall a!thoriEed to preside at s!ch meeting, the j!dge of the Co!rt of First 'nstance ma direct the person calling the meeting to preside at the same !ntil a majorit of the members or stockholders representing a majorit of the stock members or stockholders presenting a majorit of the stock present and permitted b law to be voted have chosen one of their n!mber to act as presiding officer for the p!rposes of the meeting. R$-"&':

+es. On the showing of good ca!se therefor, the co!rt ma a!thoriEe a stockholder to call a meeting and to preside threat !ntil the majorit stockholders representing a majorit a majorit of the stock present and permitted to be voted shall have chosen one among them to preside it. ,nd this showing of good ca!se therefor e4ists when the co!rt is apprised of the fact that the b ?laws of the corporation re$!ire the calling of a general meeting of the stockholders to elect the board of directors b!t call for s!ch meeting has not been done. ,rticle 6 of the b ?laws of the <ag!ho 3nterprises, 'nc., provides: The /oard of <irectors shall compose of five F:G members who shall be elected b the stockholders in a general meeting called for that p!rpose which shall be held ever even ear d!ring the month of 1an!ar . ,rticle #; of the b ?laws in part provides: . . . *eg!lar general meetings are those which shall be called for ever even ear, . . . . The re$!irement that 8on the showing of good ca!se therefor,8 the co!rt ma grant to a stockholder the a!thorit to call s!ch meeting and to preside thereat does not mean that the petition m!st be set for hearing with notice served !pon the board of directors. The respondent co!rt was satisfied that there was a showing of good ca!se for a!thoriEing the respondent Potenciano >apol to call a meeting of the stockholders for the p!rpose of electing the board of directors as re$!ired and provided for in the b ? laws, beca!se the chairman of the board of directors called !pon to do so had failed, neglected, or ref!sed to perform his d!t . 't ma be likened to a writ of preliminar inj!nction or of attachment which ma be iss!ed ex-parte !pon compliance with the re$!irements of the r!les and !pon the co!rt being satisfied that the same sho!ld be iss!e. .!ch provisional reliefs have not been deemed and held as violative of the d!e process of law cla!se of the Constit!tion. (ith persistenc petitioners claim that the have been deprived of their right witho!t d!e process of law. The had no right to contin!e as directors of the corporation !nless reflected b the stockholders in a meeting called for that p!rpose ever even ear. The had no right to a hold?over bro!ght abo!t b the fail!re to perform the d!t inc!mbent !pon one of them. The petition is denied, with costs against the petitioners. Ro8%# V. D!-% Ro#% /inalbagan 3state, 'nc., is a corporation having its principal plant in Occidental )egros where it is engaged in the man!fact!re of raw s!gar from canes grown !pon farms accessible to its central. 'n 1!l , "6#%, the possessors of a majorit of the shares of the /inalbagan 3state, 'nc., formed a voting tr!st composed of three members, namel , .alvador Bag!na, .eg!nda Monteblanco, and ,rth!r F. Fisher, as tr!stee. / the doc!ment constit!ting this voting tr!st the tr!stees were a!thoriEed to represent and vote the shares pertaining to their constit!ents, and to this end the shareholders !ndertook to assign their shares to the tr!stees on the books of the compan . The total

n!mber of o!tstanding shares of the corporation is somewhat over :,:;;, while the n!mber of shares controlled b the voting tr!st is less than &,;;;. 1. P. 0eilbronn appeared as representative of the voting tr!st, his a!thorit being recogniEed b the holders of all the other shares, he was able to nominate and elect all directors and s!bse$!entl this directors elected the president, vice president and all other officers of the corporation. Petitioners Fmembers of the tr!stee !nder KT,G seeks to remove all the directors nominated and elected b 1.P 0eilbron. The respondent 1!dge iss!ed an inj!nction. 0ence this petition. 'ss!e: (hether or not the petitioners has the right to remove the said directorsN 0eld: respondent j!dge acted within his legitimate powers in making the order against which relief is so!ght. 'n order to e4pose the tr!e inwardness of the sit!ation before !s it is necessar to take not of the fact that !nder the law the directors of a corporation can onl be removed from office b a vote of the stockholders representing at least two?thirds of the s!bscribed capital stock entitled to vote F,ct )o. "%:6, sec. &%G9 while vacancies in the board, when the e4ist, can be filled b mere majorit vote, F,ct )o. "%:6, sec. #:G. Moreover, the law re$!ires that when action is to be taken at a special meeting to remove the directors, s!ch p!rpose shall be indicated in the call F,ct )o. "%:6, sec. &%G. )ow, !pon e4amining into the n!mber of shares controlled b the voting tr!st, it will be seen that, while the tr!st controls a majorit of the stock, it does not have a clear two?thirds majorit . 't was therefore impolitic for the petitioners, in forcing the call for the meeting of ,!g!st "5, to come o!t frankl and sa in the notice that one of the p!rpose of the meeting was to removed the directors of the corporation from office. 'nstead, the call was limited to the election of the board of directors, it being the evident intention of the voting tr!st to elect a new board as if the directorate had been then vacant. EHPER4RAVEL G 4OURS, INC., 3#. CA F,CT.: 2orean ,irlines F2,BG is a corporation established and registered in the *ep!blic of .o!th 2orea and licensed to do b!siness in the Philippines. 'ts general manager in the Philippines is .!k 2 oo 2im, while its appointed co!nsel was ,tt . Mario ,g!inaldo and his law firm. On .eptember 5, "666, 2,B, thro!gh ,tt . ,g!inaldo, filed a Complaint against 3T' with the *egional Trial Co!rt F*TCG of Manila, for the collection of the principal amo!nt of P#5;,":;.;;, pl!s attorne Ps fees and e4emplar damages. The verification and certification against for!m shopping was signed b ,tt . ,g!inaldo, who indicated therein that he was the resident agent and legal co!nsel of 2,B and had ca!sed the preparation of the

complaint.

individ!al, he m!st be of good moral character and of so!nd financial standing. .3C. "#7. &esident a"ent' service of process. - The .ec!rities and 34change Commission shall re$!ire as a condition precedent to the iss!ance of the license to transact b!siness in the Philippines b an foreign corporation that s!ch corporation file with the .ec!rities and 34change Commission a written power of attorne designating some persons who m!st be a resident of the Philippines, on whom an s!mmons and other legal processes ma be served in all actions or other legal proceedings against s!ch corporation, and consenting that service !pon s!ch resident agent shall be admitted and held as valid as if served !pon the d!l ?a!thoriEed officers of the foreign corporation as its home office."% Ander the law, ,tt . ,g!inaldo was not specificall a!thoriEed to e4ec!te a certificate of non?for!m shopping as re$!ired b .ection :, *!le = of the *!les of Co!rt. This is beca!se while a resident agent ma be aware of actions filed against his principal Fa foreign corporation doing b!siness in the PhilippinesG, s!ch resident ma not be aware of actions initiated b its principal, whether in the Philippines against a domestic corporation or private individ!al, or in the co!ntr where s!ch corporation was organiEed and registered, against a Philippine registered corporation or a Filipino citiEen. The petition is >*,)T3<. BES4ERN INS4I4U4E OF 4ECHNOLO7E V, SALAS FAC4SC Private respondents *icardo, .alvador, .oledad, ,ntonio and *ichard all s!rnamed .alas were the majorit and controlling members of the /oard of Tr!stees of (estern 'nstit!te of Technolog , 'nc. F('T for brevit G. ,ccording to petitioners, the minorit stockholders of ('T, a .pecial /oard Meeting was held wherein the passed *esol!tion %7 granting monthl compensation to the respondents as corporate officers retroactive ;" 1!ne "67:. , few ears later, petitioners herein filed # criminal informations, one for falsification of p!blic doc!ment and estafa against private respondents. /oth complaints were dismissed. 0ence, this petition. ISSUEC (O) the *esol!tion %7 granting compensation to private respondents is valid. RULIN7C The .!preme Co!rt held that *esol!tion %7 granted monthl compensation to private respondents not in their capacit as members of the board, b!t rather as officers of the corporation, more partic!larl as Chairman, Kice?Chairman, Treas!rer and .ecretar of ('T. The prohibition with respect to granting compensation to corporate directors@tr!stees as s!ch !nder .ection &; is not violated in this partic!lar case. Ander .ection &; of the Corporation Code, there are two wa s b which members of the board can be granted compensation apart from reasonable per diems: F"G when there is provision in the b ?laws fi4ing their compensation9 and F#G when the stockholders representing a majorit of the o!tstanding capital stock at a reg!lar or special stockholdersP meeting agree to give it to them.

3T' filed a motion to dismiss the complaint on the gro!nd that ,tt . ,g!inaldo was not a!thoriEed to e4ec!te the verification and certificate of non?for!m shopping as re$!ired b .ection :, *!le = of the *!les of Co!rt. 2,B opposed the motion, contending that ,tt . ,g!inaldo was its resident agent and was registered as s!ch with the .ec!rities and 34change Commission F.3CG as re$!ired b the Corporation Code of the Philippines. 't was f!rther alleged that ,tt . ,g!inaldo was also the corporate secretar of 2,B. ,ppended to the said opposition was the identification card of ,tt . ,g!inaldo, showing that he was the law er of 2,B. <!ring the hearing of 1an!ar #7, #;;;, ,tt . ,g!inaldo claimed that he had been a!thoriEed to file the complaint thro!gh a resol!tion of the 2,B /oard of <irectors approved d!ring a special meeting held on 1!ne #:, "666. Apon his motion, 2,B was given a period of "; da s within which to s!bmit a cop of the said resol!tion. The trial co!rt granted the motion. ,tt . ,g!inaldo s!bse$!entl filed other similar motions, which the trial co!rt granted. Finall , 2,B s!bmitted on March 5, #;;; an ,ffidavit & of even date, e4ec!ted b its general manager .!k 2 oo 2im, alleging that the board of directors cond!cted a special teleconference on 1!ne #:, "666, which he and ,tt . ,g!inaldo attended. 't was also averred that in that same teleconference, the board of directors approved a resol!tion a!thoriEing ,tt . ,g!inaldo to e4ec!te the certificate of non?for!m shopping and to file the complaint. .!k 2 oo 2im also alleged, however, that the corporation had no written cop of the aforesaid resol!tion. '..A3: (@) ,tt . ,g!inaldo who is a resident agent of 2,B corporation can validl e4ec!te a verification and certificate of non?for!m shopping as re$i!red b .ec. :, *!le = of the *!les of Co!rtN *AB')>: (hile ,tt . ,g!inaldo is the resident agent of the respondent in the Philippines, this does not mean that he is a!thoriEed to e4ec!te the re$!isite certification against for!m shopping. Ander .ection "#=, in relation to .ection "#7 of the Corporation Code, the a!thorit of the resident agent of a foreign corporation with license to do b!siness 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 s!ch corporation, th!s: .3C. "#=. Who a! be a resident a"ent# $ , resident agent ma either be an individ!al residing in the Philippines or a domestic corporation lawf!ll transacting b!siness in the Philippines: %rovided, That in the case of an