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CORPO POWERS: POWER TO SUE AND BE SUED A corporation, such as the petitioner, has no powers except those

expressly conferred on it by the Corporation Code and those that


[G.R. No. 131214. July 27, 2000] are implied by or are incidental to its existence. In turn, a
BA SAVINGS BANK, petitioner, vs. ROGER T. SIA, TACIANA U. SIA corporation exercises said powers through its board of directors
and JOHN DOE, respondents. and/or its duly authorized officers and agents. Physical acts, like the
signing of documents, can be performed only by natural persons
On August 6, 1997, the Court of Appeals issued a Resolution denying duly authorized for the purpose by corporate bylaws or by a specific
due course to a Petition for Certiorari filed by BA Savings Bank, on act of the board of directors. All acts within the powers of a
the ground that the Certification on anti-forum shopping corporation may be performed by agents of its selection; and,
incorporated in the petition was signed not by the duly authorized except so far as limitations or restrictions which may be imposed
representative of the petitioner, but by its counsel. by special charter, by-law, or statutory provisions, the same
general principles of law which govern the relation of agency for a
A Motion for Reconsideration was subsequently filed by the
natural person govern the officer or agent of a corporation, of
petitioner, attached to which was a BA Savings Bank Corporate
whatever status or rank, in respect to his power to act for the
Secretary’s Certificate. The Certificate showed that the petitioners
corporation; and agents once appointed, or members acting in
Board of Directors approved a Resolution on May 21, 1996,
their stead, are subject to the same rules, liabilities and
authorizing the petitioners lawyers to represent it in any action or
incapacities as are agents of individuals and private persons.
proceeding before any court, tribunal or agency; and to sign,
execute and deliver the Certificate of Non-forum Shopping, among In the present case, the corporation’s board of directors issued a
others. Resolution specifically authorizing its lawyers to act as their agents.
The Resolution was sufficient to vest such persons with the
Such MR was denied, on the ground that Supreme Court Revised
authority to bind the corporation and was specific enough as to
Circular No. 28-91 requires that it is the petitioner, not the counsel,
the acts they were empowered to do.
who must certify under oath to all of the facts and undertakings
required therein. In the case of natural persons, Circular 28-91 requires the parties
themselves to sign the certificate of non-forum shopping. However,
ISSUE: WON Supreme Court Revised Circular No. 28-91 allows a
such requirement cannot be imposed on artificial persons, like
corporation to authorize its counsel to execute a certificate of non-
corporations, for the simple reason that they cannot personally do
forum shopping for and on its behalf.
the task themselves. As already stated, corporations act only
HELD: YES through their officers and duly authorized agents. In fact, physical
actions, like the signing and the delivery of documents, may be
performed, on behalf of the corporate entity, only by specifically securities owned by the petitioner to its stockholders in exchange
authorized individuals. for their shares in an equivalent amount in the corporation.

It is noteworthy that the Circular does not require corporate officers On August 22 1975, by yet another alleged stockholders' action, the
to sign the certificate. More important, there is no prohibition petitioner reduced its authorized capitalization from 267,366 shares
against authorizing agents to do so. It was prescribed by the to 110,085 shares, again, through the same scheme.
Supreme Court to prohibit and penalize the evils of forum shopping.
We see no circumvention of this rationale if the certificate was After the petitioner's failure to sit down with the respondent union,
signed by the corporations specifically authorized counsel, who had the latter, on August 28, 1974, commenced a complaint for unfair
labor practice. In due time, the petitioner filed its position paper,
personal knowledge of the matters required in the Circular.
alleging operational losses. Pending the resolution of such case, the
CORPO POWERS: POWER TO INCREASE/DECREASE CAPITAL STOCK petitioner, in a letter, informed the Secretary of Labor that Rizal
Cement Co., Inc., "from which it derives income" "as the General
G.R. No. L-48237 June 30, 1987 Manager or Agent" had "ceased operating temporarily." In addition,
MADRIGAL & COMPANY, INC., petitioner, vs. HON. RONALDO B. "because of the desire of the stockholders to phase out the
ZAMORA, PRESIDENTIAL ASSISTANT FOR LEGAL AFFAIRS, THE operations of the Madrigal & Co., Inc. due to lack of business
HON. SECRETARY OF LABOR, and MADRIGAL CENTRAL OFFICE incentives and prospects, and in order to prevent further losses," it
EMPLOYEES UNION, respondents. had to reduce its capital stock on two occasions "As the situation,
therefore, now stands, the Madrigal & Co., Inc. is without
The petitioner was engaged in the management of Rizal Cement substantial income to speak of, necessitating a reorganization, by
Co., Inc. Admittedly, the petitioner and Rizal Cement Co., Inc. are way of retrenchment, of its employees and operations." The
sister companies. Both are owned by the same stockholders. On petitioner then requested that it "be allowed to effect said
December 28, 1973, respondent Madrigal Central Office Employees reorganization gradually." The letter, however, was not verified and
Union sought for the renewal of its CBA with the petitioner. neither was it accompanied by the proper supporting papers. For
Specifically, it proposed a wage increase of P200.00 a month, an this reason, the Department of Labor took no action on the
allowance of P100.00 a month, and other economic benefits. The petitioner's request.
petitioner, however, requested for a deferment in the negotiations.
On January 19, 1976, the labor arbiter rendered a decision in favor
On July 29, 1974, by an alleged resolution of its stockholders, the of the petitioner's employees. The arbiter specifically found that the
petitioner reduced its capital stock from 765,000 shares to 267,366 petitioner "had been making substantial profits in its operation"
shares. This was effected through the distribution of the marketable since 1972 through 1975. The petitioner appealed.
On January 29, 1976, the petitioner applied for clearance to pay the salaries of those employees whose services were sought to
terminate the services of a number of employees pursuant be terminated, until the resolution of its appeal with the NLRC, since
supposedly to its retrenchment program. On the same date, the anyway, if its planned retrenchment is found to be justifiable and
respondent union went to the Regional Office (No. IV) of the done in good faith, its only liability is to answer for the separation
Department of Labor to complain of illegal lockout against the pay provided by law. We agree with the Acting Secretary that,
petitioner. The Secretary of Labor found the dismissals "to be under the circumstances obtaining in this case, "respondent's action
contrary to law" and ordered the petitioner to reinstate some 40 [was] a systematic and deliberate attempt to get rid of
employees. Such was affirmed by the Office of the President. complainants because of their union activities.

In urging reversal of the appealed decision, appellant contends inter We do not also subscribe to appellant's argument that by reducing
alia that the individual appellees' dismissal had no relation to any its capital, it is made evident that it is phasing out its operations. On
union activities, but was the result of an honest-to-goodness the contrary, whatever may be the reason behind such reductions,
retrenchment policy occasioned by loss of income due to cessation it is indicative of an intention to keep the company a going concern.
of operation. So much so that until now almost four (4) years later, it is still very
much in existence and operational as before.
HELD:
What clearly emerges from the recorded facts is that the petitioner,
The individual appellees’ dismissal was an offshoot of the union's awash with profits from its business operations but confronted with
demand for a renegotiation of the then validly existing collective
the demand of the union for wage increases, decided to evade its
bargaining Agreement. responsibility towards the employees by a devised capital reduction.
The pattern of appellant's acts after the decision of the Labor While the reduction in capital stock created an apparent need for
Arbiter in the ULP case has convinced us that its sole objective was retrenchment, it was, by all indications, just a mask for the purge of
to render moot and academic the desire of the union to exercise its union members, who, by then, had agitated for wage increases. In
right to bargain collectively with management, especially so when it the face of the petitioner company's piling profits, the unionists had
is considered in the light of the fact that under the said decision the the right to demand for such salary adjustments.
demand by the union for wage increase and allowances was A clear scrutiny of the financial reports of the respondent [herein
granted. What renders appellant's motive suspect was its haste in petitioner] reveals that it had been making substantial profits in the
terminating the services of individual appellees, without waiting the operation.
outcome of its appeal in the said case. The amount involved by its
offer to pay double separation could very well have been used to
In 1972, when it still had 765,000 common shares, of which 305,000 had entered such earnings in its financial statements as profits,
were unissued and 459,000 outstanding capitalized at which it would not have done if they were not in fact profits.
P16,830,000.00, the respondent made a net profit of P2,403,211.58.
Moreover, it is incorrect to say that such profits — in the form of
Its total assets were P70,821,317.81.
dividends — are beyond the reach of the petitioner's creditors since
In 1973, based on the same capitalization, its profit increased to the petitioner had received them as compensation for its
P2,724,465.33. Its total assets increased to P83,240,473.73. management services in favor of the companies it managed as a
shareholder thereof. As such shareholder, the dividends paid to it
In 1974, although its capitalization was reduced from were its own money, which may then be available for wage
P16,830,000.00 to P11,230,459.36, its profits were further increments. It is not a case of a corporation distributing dividends in
increased to P2,922,349.70. Its assets were P78,842,175.75. favor of its stockholders, in which case, such dividends would be the
The reduction in its assets by P4,398,297.98 was due to the fact that absolute property of the stockholders and hence, out of reach by
its capital stock was reduced by the amount of P5,599,540.54. creditors of the corporation. Here, the petitioner was acting as
stockholder itself, and in that case, the right to a share in such
In 1975, for the period of only six months, the respondent reported dividends, by way of salary increases, may not be denied its
a net profit of P547,414.72, which when added to the surplus of employees.
P5,591.214.19, makes a total surplus of P6,138,628.91 as of June 30,
1975. Accordingly, this court is convinced that the petitioner's capital
reduction efforts were, to begin with, a subterfuge, a deception as it
The petitioner would, however, have us believe that it in fact were, to camouflage the fact that it had been making profits, and
sustained losses. Whatever profits it earned, so it claims were in the consequently, to justify the mass layoff in its employee ranks,
nature of dividends "declared on its shareholdings in other especially of union members. They were nothing but a premature
companies in the earning of which the employees had no and plain distribution of corporate assets to obviate a just sharing to
participation whatsoever." "Cash dividends," according to it, "are labor of the vast profits obtained by its joint efforts with capital
the absolute property of the stockholders and cannot be made through the years. It is an unfair labor practice.
available for disposition if only to meet the employees' economic
demands." The petitioner would claim that "the phasing out of its operations
which brought about the retrenchment of the affected employees
There is no merit in this contention. "[T]he dividends received by was mainly dictated be the necessity of its stockholders in their
the company are corporate earnings arising from corporate capacity as heirs of the late Don Vicente Madrigal to partition the
investment." Indeed, as found by the Commission, the petitioner estate left by him." It must be noted, however, it is not impossible
to partition the Madrigal estate — assuming that the estate is up for properties in question by redeeming the same on August 18, 1975
partition — without the petitioner's business closing shop and under an allegedly void deed of assignment executed in his favor on
inevitably, without the petitioner laying off its employees. March 18, 1975 by the original owners of the land in question, the
PAMBUSCO. The defense was that since the deed of assignment
CORPO POWERS: POWER TO SELL/DISPOSE/LEASE/ECUMBER executed by PAMBUSCO in favor of Enriquez was void ab initio for
ASSETS being an ultra vires act of its board of directors and, for being
G.R. No. 91478 February 7, 1991 without any valuable consideration, it could not have had any legal
effect; hence, all the acts which flowed from it and all the rights and
ROSITA PEÑA petitioner, vs. THE COURT OF APPEALS, SPOUSES obligations which derived from the aforesaid void deed are likewise
RISING T. YAP and CATALINA YAP, PAMPANGA BUS CO., INC., void and without any legal effect.
JESUS DOMINGO, JOAQUIN BRIONES, SALVADOR BERNARDEZ,
MARCELINO ENRIQUEZ and EDGARDO A. ZABAT, respondents. Further, it was alleged in the same Answer that plaintiffs are buyers
in bad faith because they have caused the titles of the subject
Plaintiffs-appellants, the spouses Rising T. Yap and Catalina Lugue, properties with the Register of Deeds to be issued in their names
are the registered owners of the lots in question. In the complaint despite an order from the then CFI, Br. III, Pampanga in Civil Case
filed on December 15, 1978, appellants sought to recover No. 4310, entitled Dante Gutierrez, et al. vs. Pampanga Bus
possession over the subject lands from defendants Rosita Peña and Company, Inc., et al., to desist from registering or noting in his
Washington Distillery on the ground that being registered owners, registry of property . . . any of the above-mentioned documents
they have to enforce their right to possession against defendants under contest, until further orders.
who have been allegedly in unlawful possession thereof.
For its part, defendant Washington Distillery stated that it has never
In their answer, defendants Rosita Peña and Washington Distillery occupied the subject lots hence they should not have been
denied the material allegations of the complaint and by way of an impleaded in the complaint.
affirmative and special defense asserted that Peña is now the
legitimate owner of the subject lands for having purchased the The defendants, therefore, prayed that the complaint be dismissed;
same in a foreclosure proceeding instituted by the DBP against that the deed of assignment executed in favor of Marcelino
PAMBUSCO and no valid redemption had been effected within the Enriquez, the certificate of redemption issued by the Provincial
period provided by law. It was contended that plaintiffs could not Sheriff also in favor of Marcelino Enriquez, and the deed of sale of
have acquired ownership over the subject properties under a deed these parcels of land executed by Marcelino Enriquez in favor of the
of absolute sale executed in their favor by one Marcelino B. plaintiffs herein be all declared null and void; and further, that the
Enriquez who likewise could not have become the owner of the TCTs covering these parcels issued in the plaintiffs name be
cancelled and, in lieu thereof, corresponding certificates of title over In order that the SEC can take cognizance of a case, the controversy
these same parcels be issued in the name of defendant Rosita Peña. must pertain to any of the following relationships (a) between the
corporation, partnership or association and the public; (b) between
Thereafter, the defendants filed a third-party complaint against the corporation, partnership or association and its stockholders,
PAMBUSCO, Jesus Domingo, Joaquin Briones, Salvador Bernardez partners, members, or officers; (c) between the corporation,
(as members of the Board of Directors of PAMBUSCO), Marcelino partnership or association and the state in so far as its franchise,
Enriquez, and Deputy Sheriff Edgardo Zabat of Pampanga. All these permit or license to operate is concerned; and (d) among the
third-party defendants, how ever, were declared as in default for
stockholders, partners or associates themselves.
failure to file their answer, except Edgardo Zabat who did file his
answer but failed to appear at the pre-trial. In this case, neither petitioner nor respondents Yap spouses are
stockholders or officers of PAMBUSCO. Consequently, the issue of
After trial, a decision was rendered by the court in favor of the the validity of the series of transactions resulting in the subject
defendants-appellees. CA reversed. The appellate court ordered properties being registered in the names of respondents Yap may
Peña to vacate the lands in question and pay the plaintiffs-
be resolved only by the regular courts.
appellants the accrued rentals.
As to the question of validity of the board resolution of respondent
HELD: PAMBUSCO adopted on November 19, 1974, Section 4, Article III of
The respondent court ruled that the trial court has no jurisdiction to the amended by-laws of respondent PAMBUSCO, provides as
annul the board resolution as the matter falls within the jurisdiction follows:
of the SEC and that petitioner did not have the proper standing to Sec. 4. Notices of regular and special meetings of the Board of
have the same declared null and void. Directors shall be mailed to each Director not less than five days
this Court held that it is the fact of relationship between the parties before any such meeting, and notices of special meeting shall state
that determines the proper and exclusive jurisdiction of the SEC to the purpose or purposes thereof Notices of regular meetings shall
hear and decide intra-corporate disputes; that unless the be sent by the Secretary and notices of special meetings by the
controversy has arisen between and among stockholders of the President or Directors issuing the call. No failure or irregularity of
corporation, or between the stockholders and the officers of the notice of meeting shall invalidate any regular meeting or proceeding
corporation, then the case is not within the jurisdiction of the SEC. thereat; Provided a quorum of the Board is present, nor of any
Where the issue involves a party who is neither a stockholder or special meeting; Provided at least four Directors are present.
officer of the corporation, the same is not within the jurisdiction of The trial court in finding the resolution void held as follows:
the SEC.
On the other hand, this Court finds merit in the position taken by amended by-laws hereinabove reproduced, at least four (4)
the defendants that the questioned resolution should be declared members must be present to constitute a quorum in a special
invalid it having been approved in a meeting attended by only 3 of meeting of the board of directors of respondent PAMBUSCO.
the 5 members of the Board of Directors of PAMBUSCO which
attendance is short of the number required by the by-laws of the Under Section 25 of the Corporation Code of the Philippines, the
corporation. articles of incorporation or by-laws of the corporation may fix a
greater number than the majority of the number of board members
In the meeting of November 19, 1974 when the questioned to constitute the quorum necessary for the valid transaction of
resolution was approved, the three members of the Board of business. Any number less than the number provided in the articles
Directors of PAMBUSCO who were present were Jesus Domingo, or by-laws therein cannot constitute a quorum and any act therein
Joaquin Briones, and Salvador Bernardez The remaining 2 others, would not bind the corporation; all that the attending directors
namely: Judge Pio Marcos and Alfredo Mamuyac were both absent could do is to adjourn.
therefrom.
Moreover, the records show that respondent PAMBUSCO ceased to
As it becomes clear that the resolution approved on November 19, operate as of November 15, 1949 as evidenced by a letter of the
1974 is null and void it having been approved by only 3 of the SEC to said corporation dated April 17, 1980. Being a dormant
members of the Board of Directors who were the only ones present corporation for several years, it was highly irregular, if not
at the said meeting, the deed of assignment subsequently executed anomalous, for a group of three (3) individuals representing
in favor of Marcelino Enriquez pursuant to this resolution also themselves to be the directors of respondent PAMBUSCO to pass a
becomes null and void. resolution disposing of the only remaining asset of the corporation
in favor of a former corporate officer.
The by-laws of a corporation are its own private laws which
substantially have the same effect as the laws of the corporation. As a matter of fact, the three (3) alleged directors who attended the
They are in effect, written, into the charter. In this sense they special meeting on November 19, 1974 were not listed as directors
become part of the fundamental law of the corporation with which of respondent PAMBUSCO in the latest general information sheet of
the corporation and its directors and officers must comply. PAMBUSCO filed with the SEC. Similarly, the latest list of
stockholders of respondent PAMBUSCO on file with the SEC does
Apparently, only three (3) out of five (5) members of the board of not show that the said alleged directors were among the
directors of respondent PAMBUSCO convened on November 19, stockholders of respondent PAMBUSCO.
1974 by virtue of a prior notice of a special meeting. There was no
quorum to validly transact business since, under Section 4 of the
Under Section 30 of the then applicable Corporation Law, only valid, such a donation must be made in a public document and the
persons who own at least one (1) share in their own right may acceptance must be made in the same or in a separate instrument.
qualify to be directors of a corporation. Further, under Section 28 In the latter case, the donor shall be notified of the acceptance in an
1/2 of the said law, the sale or disposition of an and/or substantially authentic form and such step must be noted in both instruments.
all properties of the corporation requires, in addition to a proper Non-compliance with this requirement renders the donation null
board resolution, the affirmative votes of the stockholders holding and void. Since undeniably the deed of assignment dated March 8,
at least two-thirds (2/3) of the voting power in the corporation in a 1975 in question, shows that there was no acceptance of the
meeting duly called for that purpose. No doubt, the questioned donation in the same and in a separate document, the said deed of
resolution was not confirmed at a subsequent stockholders meeting assignment is thus void ab initio and of no force and effect.
duly called for the purpose by the affirmative votes of the
stockholders holding at least two-thirds (2/3) of the voting power in G.R. No. 117897. May 14, 1997
the corporation. The same requirement is found in Section 40 of the ISLAMIC DIRECTORATE OF THE PHILIPPINES, MANUEL F. PEREA and
present Corporation Code. SECURITIES & EXCHANGE COMMISSION, petitioners, vs. COURT OF
It is also undisputed that at the time of the passage of the APPEALS and IGLESIA NI CRISTO, respondents.
questioned resolution, respondent PAMBUSCO was insolvent and Petitioner IDP-Tamano Group alleges that sometime in 1971, Islamic
its only remaining asset was its right of redemption over the subject leaders of all Muslim major tribal groups in the Philippines headed
properties. Since the disposition of said redemption right of by Dean Cesar Adib Majul organized and incorporated the ISLAMIC
respondent PAMBUSCO by virtue of the questioned resolution was DIRECTORATE OF THE PHILIPPINES (IDP), the primary purpose of
not approved by the required number of stockholders under the which is to establish an Islamic Center in Quezon City for the
law, the said resolution, as well as the subsequent assignment construction of a Mosque (prayer place), Madrasah (Arabic School),
executed on March 8, 1975 assigning to respondent Enriquez the and other religious infrastructures so as to facilitate the effective
said right of redemption, should be struck down as null and void. practice of Islamic faith in the area.
Respondent court, in upholding the questioned deed of assignment, Towards this end, that is, in the same year, the Libyan government
which appears to be without any consideration at all, held that the donated money to the IDP to purchase land at Culiat, Tandang Sora,
consideration thereof is the liberality of the respondent PAMBUSCO Quezon City, to be used as a Center for the Islamic populace.
in favor of its former corporate officer, respondent Enriquez, for
services rendered. Assuming this to be so, then as correctly argued According to the petitioner, in 1972, after the purchase of the land
by petitioner, it is not just an ordinary deed of assignment, but is in by the Libyan government in the name of IDP, Martial Law was
fact a donation. Under Article 725 of the Civil Code, in order to be declared by the late President Ferdinand Marcos. Most of the
members of the 1971 Board of Trustees flew to the Middle East to On April 20, 1989, without having been properly elected as new
escape political persecution. Thereafter, two Muslim groups sprung, members of the Board of Trustees of IDP, the Carpizo Group caused
the Carpizo Group, headed by Engineer Farouk Carpizo, and the to be signed an alleged Board Resolution of the IDP, authorizing the
Abbas Group, led by Mrs. Zorayda Tamano and Atty. Firdaussi sale of the subject two parcels of land to the INC for a consideration
Abbas. Both groups claimed to be the legitimate IDP. of P22,343,400.00.

Significantly, on October 3, 1986, the SEC, in a suit between these On May 30, 1991, the petitioner 1971 IDP Board of Trustees headed
two contending groups, came out with a Decision declaring the by former Senator Mamintal Tamano, or the Tamano Group, filed a
election of both the Carpizo Group and the Abbas Group as IDP petition before the SEC, seeking to declare null and void the Deed of
board members to be null and void for being violative of the Articles Absolute Sale signed by the Carpizo Group and the INC since the
of Incorporation of IDP. SEC further ruled that, before any election group of Engineer Carpizo was not the legitimate Board of Trustees
of the members of the Board of Trustees could be conducted, there of the IDP.
must be an approved by-laws to govern the internal government of
the association including the conduct of election. And since the Meanwhile, INC filed an action for Specific Performance with
election of both petitioners and respondents have been declared Damages against the vendor Carpizo Group with the RTC to compel
null and void, a vacuum is created as to who should adopt the by- said group to clear the property of squatters and deliver complete
laws and certify its adoption. To remedy this, the members of IDP and full physical possession thereof to INC.
were authorized by SEC to prepare and adopt their by-laws for The IDP-Tamano Group, on June 11, 1991, sought to intervene in
submission to the Commission. Once approved, an election of the Civil Case No. Q-90-6937 averring, inter alia:
members of the Board of Trustees shall immediately be called
pursuant to the approved by-laws. 2. That the Intervenor has filed a case before the SEC against
Carpizo, et, al., who, through false schemes and machinations,
Neither group, however, took the necessary steps prescribed by the succeeded in executing the Deed of Sale between the IDP and INC;
SEC, and, thus, no valid election of the members of the Board of
Trustees of IDP was ever called. Although the Carpizo Group 3. That main issue of which is whether or not the aforesaid Deed of
attempted to submit a set of by-laws, the SEC found that, aside Sale between IDP and INC is null and void;
from Engineer Farouk Carpizo and Atty. Musib Buat, those who
4. That, furthermore, Intervenor herein is the duly constituted body
prepared and adopted the by-laws were not bona fide members of
which can lawfully and legally represent the Islamic Directorate of
the IDP, thus rendering the adoption of the by-laws likewise null
the Philippines;
and void.
INC opposed the motion arguing, inter alia, that the issue sought to INC elevated the SEC Case to the CA by way of a special civil action
be litigated by way of intervention is an intra-corporate dispute for certiorari. Accordingly, the portion of the SEC Decision in which
which falls under the jurisdiction of the SEC. declared the sale of the 2 lots in question to INC as void was set
aside. Thus, the IDP-Tamano Group brought the instant petition.
RTC denied petitioners motion to intervene on the ground of lack of
juridical personality of the IDP-Tamano Group and that the issues ISSUE: WON the CA erred in setting aside the SEC’s Decision which
being raised by way of intervention are intra-corporate in nature, declared the sale of the 2 parcels of land in question null and void?
jurisdiction thereto properly pertaining to the SEC.
HELD: YES.
Apprised of the pendency of the SEC Case involving the
controverted status of the IDP-Carpizo Group but without waiting There can be no question as to the authority of the SEC to pass
upon the issue as to who among the different contending groups is
for the outcome of said case, the RTC rendered Partial Judgment
ordering the IDP-Carpizo Group to comply with its obligation under the legitimate Board of Trustees of the IDP since this is a matter
the Deed of Sale of clearing the subject lots of squatters and of properly falling within the original and exclusive jurisdiction of the
delivering the actual possession thereof to INC. Thereupon, RTC SEC by virtue of Sections 3 and 5(c) of Presidential Decree No. 902.
Judge Reyes in another Order, treated INC as the rightful owner of If the SEC can declare who is the legitimate IDP Board, then by
the real properties. parity of reasoning, it can also declare who is not the legitimate IDP
In the meantime, the SEC, on July 5, 1993, finally came out with a Board. This is precisely what the SEC did when it adjudged the
Decision in SEC Case No. 4012 in this wise: election of the Carpizo Group to the IDP Board of Trustees to be null
and void. By this ruling, the SEC in effect made the unequivocal
1. Declaring the by-laws submitted by the Carpizo Group as finding that the IDP-Carpizo Group is a bogus Board of Trustees.
unauthorized, and hence, null and void. Consequently, the Carpizo Group is bereft of any authority
whatsoever to bind IDP in any kind of transaction including the sale
2. Declaring the sale of the two parcels of land in Quezon City or disposition of IDP property. Nothing thus becomes more settled
entered into by INC and IDPnull and void. than that the IDP-Carpizo Group with whom private respondent INC
3. Declaring the election of the Board of Directors of the contracted is a fake Board.
corporation from 1986 to 1991 as null and void; Premises considered, all acts carried out by the Carpizo Board,
4. Declaring the acceptance of the respondents, except Farouk particularly the sale of the Tandang Sora property, allegedly in the
Carpizo and Musnib Buat, as members of the IDP null and void. name of the IDP, have to be struck down for having been done
without the consent of the IDP thru a legitimate Board of Trustees.
Consent is essential for the existence of a contract, and where it is Furthermore, the Court observed that the INC bought the
wanting, the contract is non-existent. In this case, the IDP, owner questioned property from the Carpizo Group without even seeing
of the subject parcels of land, never gave its consent, thru a the owners duplicate copy of the titles covering the property. This is
legitimate Board of Trustees, to the disputed Deed of Absolute very strange considering that the subject lot is a large piece of real
Sale executed in favor of INC. This is, therefore, a case not only of property in Quezon City worth millions, and that under the Torrens
vitiated consent, but one where consent on the part of one of the System of Registration, the minimum requirement for one to be a
supposed contracting parties is totally wanting. Ineluctably, the good faith buyer for value is that the vendee at least sees the
subject sale is void and produces no effect whatsoever. owners duplicate copy of the title and relies upon the same. INC,
presumably knowledgeable on the aforesaid working of the Torrens
The Carpizo Group-INC sale is further deemed null and void ab initio System, did not take heed of this and nevertheless went through
because of the Carpizo Groups failure to comply with Section 40 of with the sale with undue haste. The unexplained eagerness of INC
the Corporation Code pertaining to the disposition of all or to buy this valuable piece of land in Quezon City without even being
substantially all assets of the corporation. presented with the owners copy of the titles casts very serious
The Tandang Sora property, it appears from the records, doubt on the rightfulness of its position as vendee in the
constitutes the only property of the IDP. Hence, its sale to a third- transaction.
party is a sale or disposition of all the corporate property and
assets of IDP falling squarely within the contemplation of the
foregoing section. For the sale to be valid, the majority vote of the
legitimate Board of Trustees, concurred in by the vote of at least
2/3 of the bona fide members of the corporation should have
been obtained. These twin requirements were not met as the
Carpizo Group which voted to sell the Tandang Sora property was a
fake Board of Trustees, and those whose names and signatures
were affixed by the Carpizo Group together with the sham Board
Resolution authorizing the negotiation for the sale were, from all
indications, not bona fide members of the IDP as they were made to
appear to be. Apparently, there are only 15 official members of the
petitioner corporation including the 8 members of the Board of
Trustees.