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Manuel Torres, Jr.

vs Court of Appeals The assignment of the shares of stocks did not

278 SCRA 793 – Business Organization – comply with procedural requirements. It did not
Corporation Law – Transfer of Shares of Stocks – comply with the by laws of TRDC nor did it comply
Corporate Records with Section 74 of the Corporation Code. Section
74 provides that the stock and transfer book
Judge Manuel Torres, Jr. owns about 81% of the should be kept at the principal office of the
capital stocks of Tormil Realty & Development corporation. Here, it was Judge Torres who was
Corporation (TRDC). TRDC is a small family owned keeping it and was bringing it with him. Further, his
corporation and other stockholders thereof include excuse of not ordering the secretary to make the
Judge Torres’ nieces and nephews. However, even entries is flimsy. The proper procedure is to order
though Judge Torres owns the majority of TRDC the secretary to make the entry of said assignment
and was also the president thereof, he is only in the book, and if she refuses, Judge Torres can
entitled to one vote among the 9-seat Board of come to court and compel her to make the entry.
Directors, hence, his vote can be easily overridden There are judicial remedies for this. Needless to
by minority stockholders. So in 1987, before the say, the subsequent election is invalid because the
regular election of TRDC officers, Judge Torres assignment of shares is invalid by reason of
assigned one share (qualifying share) each to 5 procedural infirmity. The Supreme Court also
“outsiders” for the purpose of qualifying them to emphasized: all corporations, big or small, must
be elected as directors in the board and thereby abide by the provisions of the Corporation Code.
strengthen Judge Torres’ power over other family Being a simple family corporation is not an
members. exemption. Such corporations cannot have rules
and practices other than those established by law.
However, the said assignment of shares were not
recorded by the corporate secretary, Ma. Christina
Carlos (niece) in the stock and transfer book of
TRDC. When the validity of said assignments were
questioned, Judge Torres ratiocinated that it is
impractical for him to order Carlos to make the
entries because Carlos is one of his opposition. So
what Judge Torres did was to make the entries
himself because he was keeping the stock and
transfer book. He further ratiocinated that he can
do what a mere secretary can do because in the
first place, he is the president.

Since the other family members were against the

inclusion of the five outsiders, they refused to take
part in the election. Judge Torres and his five
assignees then decided to conduct the election
among themselves considering that the 6 of them
constitute a quorum.

ISSUE: Whether or not the inclusion of the five

outsiders are valid. Whether or not the
subsequent election is valid.


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