1.) Charles Mead vs E. C.

McCullough
Facts: Charles Mead, Edwin McCullough and three others organized the corporation called The
Philippine Engineering and Construction Company (PECC). The 4 organizers, except Mead, contributed to
the majority of the capital stock of PECC, the remaining shares were offered to the public. Mead
contributed some personal properties. Mead was assigned as a manager but he resigned as such when
he accepted an engineering job in China. But even so, he remained as one of the five directors (the
organizers).
At that time, PECC was already incurring losses. McCullough, the president, proposed that he shall buy
the assets of the corporation. The three other directors then voted in favor of this proposal hence the
assets were transferred to McCullough. Mead learned of this and so he opposed it because the personal
properties he contributed were also transferred to McCullough.
Mead also argued that under the articles of incorporation of PECC, the board of directors only have
ordinary powers; that the authorization made by the three directors to allow the sale of company assets
to McCullough constitutes an act of agency which is invalid at that because no express commission was
made, i.e., no power of attorney was made in favor of the directors. The requirement for a commission
can be inferred from Article 1713 of the Civil Code which provides:
An agency stated in general terms only includes acts of administration.
In order to compromise, alienate, mortgage, or execute any other act of strict ownership an express
commission is required. (Emphasis supplied).
Mead also insists that under their charter, no resolution affecting the administration of the affairs of
PECC should be binding upon the corporation unless the unanimous consent of the entire board was
first obtained
ISSUE: Whether or not the three directors had the authority to allow the sale/transfer of the company
assets to McCullough.
HELD: Yes. Several factors have to be considered. First is the fact that Mead abandoned his post when
he took the job offer to work in China. He knew for a fact that the nature of the job offered is
permanent. Second, a close reading of the articles of incorporation of PECC shows that there is no such
intention for unanimity when it comes to votes affecting matters of administration. The only
requirement is that At least three of said board must be present in order to constitute a legal meeting.
Which was complied with when the other four directors were present when the decision to transfer the
company assets was made.
Third is the fact that PECC was in a downhill situation. A corporation is essentially a partnership, except
in form. The directors are the trustees or managing partners, and the stockholders are the cestui que
trust and have a joint interest in all the property and effects of the corporation. McCullough as a
director himself and the president can be considered an agent but not the agent contemplated in
Article 1713 of the Civil Code. Article 1713 deals with the broad aspect of agency and in ordinary cases

but not in the case of a corporation and its directors. In the case at bar, the more appropriate analogy is
that PECC, being a losing corporation, has its directors as the trustees. The trustees-directors hold the
company assets in trust for the beneficiaries, which are the creditors. As trustees, they decided that it is
beneficial to sell the company assets to McCullough to at least recover some cash equivalents in the
winding up of the corporate affairs. Besides, there is no prohibition against the selling of company assets
to one of its directors either from law or from PECCs articles of incorporation.
2.) Philippine Products Company vs Primateria Societe Anonyme Pour Le Commerce Exterieur
15 SCRA 301 Business Organization Corporation Law Liability of Foreign Corporations and their
Agents
FACTS: Primateria Societe Anonyme Pour Le Commerce Exterieur (Primateria Zurich, a sociedad
anonima formed in Zurich), through Alexander Baylin, entered into an agreement with Philippine
Products Company (PPC) whereby it was agreed that from 1951 to 1953, PPC shall ship copra products
abroad.
Apparently, Primateria Zurich was not licensed by the Securities and Exchange Commission to do
business in the Philippines. Primateria Zurich also failed to pay its obligations amounting to P31,009.71.
PPC sued Primateria Zurich and it impleaded Baylin, Primateria Philippines, and one Jose Crame, the
latter three being impleaded as agents of Primateria Zurich.
The lower court ruled in favor PPC but it absolved Baylin, Crame, and Primateria Philippines.
PPC appealed as it insists that Baylin et al should be liable as agents because under Section 68 and 69 of
the Corporation Law, the agents of foreign corporations not licensed to transact in the Philippines shall
be personally liable for contracts made in their (foreign corporations) behalf.
ISSUE: Whether or not PPC is correct.
HELD: No. PPC was not able to prove that Primateria Zurich, a sociedad anonima, is a foreign
corporation. And as a sociedad anonima, Primateria Zurich is not a corporation under our Corporation
Law. As such, Sections 68 and 69 cannot be invoked in order to make the alleged agents of Primateria
Zurich be liable. PPC will have to enforce the judgment against Primateria Zurich alone.
3.) Fred Harden vs Benguet Consolidated Mining Company