You are on page 1of 6

Renato Tayag vs Benguet Consolidated, Inc.

FACTS:
In March 1960, Idonah Perkins died in New York. She left behind properties here
and abroad. One property she left behind were two stock certificates covering 33,002
shares of stocks of the Benguet Consolidated, Inc (BCI). Said stock certificates were in
the possession of the Country Trust Company of New York (CTC-NY). CTC-NY was the
domiciliary administrator of the estate of Perkins (obviously in the USA). Meanwhile, in
1963, Renato Tayag was appointed as the ancillary administrator (of the properties of
Perkins she left behind in the Philippines).
A dispute arose between CTC-NY and Tayag as to who between them is entitled to
possess the stock certificates. A case ensued and eventually, the trial court ordered
CTC-NY to turn over the stock certificates to Tayag. CTC-NY refused. Tayag then filed
with the court a petition to have said stock certificates be declared lost and to compel
BCI to issue new stock certificates in replacement thereof. The trial court granted
Tayag’s petition.
BCI assailed said order as it averred that it cannot possibly issue new stock certificates
because the two stock certificates declared lost are not actually lost; that the trial court
as well Tayag acknowledged that the stock certificates exists and that they are with
CTC-NY; that according to BCI’s by laws, it can only issue new stock certificates, in lieu
of lost, stolen, or destroyed certificates of stocks, only after court of law has issued a
final and executory order as to who really owns a certificate of stock.
ISSUE:
Whether or not the arguments of Benguet Consolidated, Inc. are correct.
HELD:
No. Benguet Consolidated is a corporation who owes its existence to Philippine
laws. It has been given rights and privileges under the law. Corollary, it also has
obligations under the law and one of those is to follow valid legal court orders. It is not
immune from judicial control because it is domiciled here in the Philippines. BCI is a
Philippine corporation owing full allegiance and subject to the unrestricted jurisdiction of
local courts. Its shares of stock cannot therefore be considered in any wise as immune
from lawful court orders. Further, to allow BCI’s opposition is to render the court order
against CTC-NY a mere scrap of paper. It will leave Tayag without any remedy simply
because CTC-NY, a foreign entity refuses to comply with a valid court order. The final
recourse then is for our local courts to create a legal fiction such that the stock
certificates in issue be declared lost even though in reality they exist in the hands of
CTC-NY. This is valid. As held time and again, fictions which the law may rely upon in
the pursuit of legitimate ends have played an important part in its development.
Further still, the argument invoked by BCI that it can only issue new stock certificates in
accordance with its bylaws is misplaced. It is worth noting that CTC-NY did not appeal
the order of the court – it simply refused to turn over the stock certificates hence
ownership can be said to have been settled in favor of estate of Perkins here. Also,
assuming that there really is a conflict between BCI’s bylaws and the court order, what
should prevail is the lawful court order. It would be highly irregular if court orders would
yield to the bylaws of a corporation. Again, a corporation is not immune from judicial
orders.

Philippine Stock Exchange vs Court of Appeals


FACTS:
Puerto Azul Land, Inc. (PALI) is a corporation engaged in the real estate
business. PALI was granted permission by the Securities and Exchange Commission
(SEC) to sell its shares to the public in order for PALI to develop its properties.
PALI then asked the Philippine Stock Exchange (PSE) to list PALI’s stocks/shares to
facilitate exchange. The PSE Board of Governors denied PALI’s application on the
ground that there were multiple claims on the assets of PALI. Apparently, the Marcoses,
Rebecco Panlilio (trustee of the Marcoses), and some other corporations were claiming
assets if not ownership over PALI.
PALI then wrote a letter to the SEC asking the latter to review PSE’s decision. The SEC
reversed PSE’s decisions and ordered the latter to cause the listing of PALI shares in
the Exchange.

ISSUE:
Whether or not it is within the power of the SEC to reverse actions done by the
PSE.
HELD:
Yes. The SEC has both jurisdiction and authority to look into the decision of PSE
pursuant to the Revised Securities Act and for the purpose of ensuring fair
administration of the exchange. PSE, as a corporation itself and as a stock exchange is
subject to SEC’s jurisdiction, regulation, and control. In order to insure fair dealing of
securities and a fair administration of exchanges in the PSE, the SEC has the authority
to look into the rulings issued by the PSE. The SEC is the entity with the primary say as
to whether or not securities, including shares of stock of a corporation, may be traded or
not in the stock exchange.
HOWEVER, in the case at bar, the Supreme Court emphasized that the SEC may only
reverse decisions issued by the PSE if such are tainted with bad faith. In this case,
there was no showing that PSE acted with bad faith when it denied the application of
PALI. Based on the multiple adverse claims against the assets of PALI, PSE deemed
that granting PALI’s application will only be contrary to the best interest of the general
public. It was reasonable for the PSE to exercise its judgment in the manner it deems
appropriate for its business identity, as long as no rights are trampled upon, and public
welfare is safeguarded.

MONFORT HERMANOS AGRICULTURAL DEVELOPMENT


CORPORATION v. ANTONIO B. MONFORT III, GR No. 152542 &
155472, 2004-07-08
FACTS:
Monfort Hermanos Agricultural Development Corporation, a domestic private
corporation, is the registered owner of a farm, fishpond and sugar cane plantation
known as Haciendas San Antonio II, Marapara, Pinanoag and Tinampa-an, all situated
in Cadiz City.

It also owns one unit of motor vehicle and two units of tractors.[4] The same allowed
Ramon H. Monfort, its Executive Vice President, to breed and maintain fighting cocks in
his personal capacity at Hacienda San Antonio.

The group of Antonio Monfort III, through force and intimidation, allegedly took
possession of the 4 Haciendas, the produce thereon and the motor vehicle and tractors,
as well as the fighting cocks of Ramon H. Monfort.

The Corporation, represented by its President, Ma. Antonia M. Salvatierra, and Ramon
H. Monfort, in his personal capacity, filed against the group of Antonio Monfort III, a
complaint for delivery of motor vehicle, tractors and 378... fighting cocks, with prayer for
injunction and damages

The group of Antonio Monfort III filed a motion to dismiss contending, inter alia, that Ma.
Antonia M. Salvatierra has no capacity to sue on behalf of the Corporation because the
March 31, 1997 Board Resolution[7] authorizing Ma. Antonia M.
Salvatierra and/or Ramon H. Monfort to represent the Corporation is void as the
purported Members of the Board who passed the same were not validly elected officers
of the Corporation.
The trial court denied the motion to dismiss.[8] The group of Antonio Monfort III filed a
petition for certiorari with the Court of Appeals but the same was dismissed on June 7,
2002.
The motion for reconsideration filed by the group of Antonio Monfort III was denied.

On April 21, 1997, Ma. Antonia M. Salvatierra filed on behalf of the Corporation a
complaint for forcible entry, preliminary mandatory injunction with temporary restraining
order and damages against the group of Antonio Monfort III, before the Municipal Trial
Court (MTC) of Cadiz City. It contended that the latter through force and intimidation,
unlawfully took possession of the 4 Haciendas and deprived the Corporation of the
produce thereon.
The group of Antonio Monfort III alleged that they are possessing and controlling the
Haciendas and harvesting the produce therein on behalf of the corporation and not for
themselves. They likewise raised the affirmative defense... of lack of legal capacity of
Ma. Antonia M. Salvatierra to sue on behalf of the Corporation.

MTC of Cadiz City rendered a decision dismissing the complaint.

The Regional Trial Court of Negros Occidental, Branch 60, reversed the Decision of the
MTCC

Aggrieved, the group of Antonio Monfort III filed a petition for review with the Court of
Appeals.
Special Tenth Division set aside the judgment of the RTC and dismissed the complaint
for forcible entry for lack of capacity of Ma. Antonia M. Salvatierra to represent the
Corporation.
Unfazed, the Corporation filed a petition for review with this Court

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 the same
were not validly elected officers... of the Corporation.
ISSUES:
The focal issue in these consolidated petitions is whether or not Ma. Antonia M.
Salvatierra has the legal capacity to sue on behalf of the Corporation.
RULING:
A corporation has no power except those expressly conferred on it by the
Corporation Code and those that are implied or incidental to its existence. In turn, a
corporation exercises said powers through its board of directors and/or its duly
authorized officers and... agents. Thus, it has been observed that the power of a
corporation to sue and be sued in any court is lodged with the board of directors that
exercises its corporate powers. In turn, physical acts of the corporation, like the signing
of documents, can be performed... only by natural persons duly authorized for the
purpose by corporate by-laws or by a specific act of the board of directors.

There is thus a doubt as to whether Paul M. Monfort, Yvete M. Benedicto, Jaqueline M.


Yusay and Ester S. Monfort, were indeed duly elected Members of the Board legally
constituted to bring suit in behalf of the Corporation.

We find that Ma. Antonia M. Salvatierra failed to prove that four 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 valid authority for her to... sue on behalf of
the corporation.

International Express Travel & Tour Services, Inc. vs Court of


Appeals
FACTS:
In 1989, International Express Travel & Tour Services, Inc. (IETTI), offered to the
Philippine Football Federation (PFF) its travel services for the South East Asian Games.
PFF, through Henri Kahn, its president, agreed. IETTI then delivered the plane tickets to
PFF, PFF in turn made a down payment. However, PFF was not able to complete the
full payment in subsequent installments despite repeated demands from IETTI. IETTI
then sued PFF and Kahn was impleaded as a co-defendant.
Kahn averred that he should not be impleaded because he merely acted as an
agent of PFF which he averred is a corporation with separate and distinct personality
from him. The trial court ruled against Kahn and held him personally liable for the said
obligation (PFF was declared in default for failing to file an answer). The trial court ruled
that Kahn failed to prove that PFF is a corporation. The Court of Appeals however
reversed the decision of the trial court. The Court of Appeals took judicial notice of the
existence of PFF as a national sports association; that as such, PFF is empowered to
enter into contracts through its agents; that PFF is therefore liable for the contract
entered into by its agent Kahn. The CA further ruled that IETTI is in estoppel; that it
cannot now deny the corporate existence of PFF because it had contracted and dealt
with PFF in such a manner as to recognize and in effect admit its existence.
ISSUE: Whether or not the Court of Appeals is correct.
HELD:
No. PFF, upon its creation, is not automatically considered a national sports
association. It must first be recognized and accredited by the Philippine Amateur
Athletic Federation and the Department of Youth and Sports Development. This fact
was never substantiated by Kahn. As such, PFF is considered as an unincorporated
sports association. And under the law, any person acting or purporting to act on behalf
of a corporation which has no valid existence assumes such privileges and becomes
personally liable for contract entered into or for other acts performed as such agent.
Kahn is therefore personally liable for the contract entered into by PFF with IETTI.
There is also no merit on the finding of the CA that IETTI is in estoppel. The application
of the doctrine of corporation by estoppel applies to a third party only when he tries to
escape liability on a contract from which he has benefited on the irrelevant ground of
defective incorporation. In the case at bar, IETTI is not trying to escape liability from the
contract but rather is the one claiming from the contract.

You might also like