China Banking Corp. vs.

CA (270 SCRA 503 [1997])

Facts:
China Banking Corporation made a 53% equity investment (P16,227,851.80) in the First CBC Capital
a Hongkong subsidiary engaged in financing and investment with deposit-taking function.
It was shown that CBC has become insolvent so China Banking wrote-off its investment as worthless
and treated it as a bad debt or as an ordinary loss deductible from its gross income.
CIR disallowed the deduction on the ground that the investment should not be classified as being
worthless. It also held that assuming that the securities were worthless, then they should be classified
as a capital loss and not as a bad debt since there was no indebtedness between China Banking and
CBC.
Issue:Whether or not the investment should be classified as a capital loss.
Held:
Yes. Section 29.d.4.B of the NIRC contains provisions on securities becoming worthless. It conveys
that capital loss normally requires the concurrence of 2 conditions:
a.

there is a sale or exchange

b.

the thing sold or exchanges is a capital asset.

When securities become worthless, there is strictly no sale or exchange but the law deems it to be a
loss. These are allowed to be deducted only to the extent of capital gains and not from any other
income of the taxpayer. A similar kind of treatment is given by the NIRC on the retirement of certificates
of indebtedness with interest coupons or in registered form, short sales and options to buy or sell
property where no sale or exchange strictly exists. In these cases, The NIRC dispenses with the
standard requirements.
There is ordinary loss when the property sold is not a capital asset.
In the case, CBC as an investee corporation, is a subsidiary corporation of China Banking whose
shares in CBC are not intended for purchase or sale but as an investment. An equity investment is a
capital asset of the investor. Unquestionably, any loss is a capital loss to the investor.
Additional notes:
*The loss cannot be deductible as bad debt since the shares of stock do not constitute a loan extended
by it to its subsidiary or a debt subject to obligatory repayment by the latter.
Salafranca vs. Philamlife (Pamplona) Village Homeowners Association (300 SCRA 469 [1998])
Must Not Impair Existing Rights
FACTS: In 1981, Enrique Salafranca was hired as an administrative officer by the Philamlife Village
Homeowners Associaiton, Inc. (PVHAI). Salafranca was tasked to manage the villages day to day
activities. His employment was originally for 6 months only but his contract was renewed multiple times
until 1983. But even after 1983, he was still allowed to continue work even without a renewed
contract. In 1987, PVHAI amended its by-laws. Among the amendment was a provision that the
administrative officer (Salafranca) shall have a tenure which is co-terminus with the Board of Directors
which appointed him. In
1992, the tenure of said Board of Directors expired and so Salafranca was terminated.
ISSUE: Whether or not Salafranca was illegally dismissed.

HELD: Yes. At that time, Salafranca already enjoys security of tenure because he is already a regular
employee. It is true that PVHAI has the right to amend its by-laws but such amendment must not impair
existing contracts or rights. In this case, the provision that Salafrancas position shall be co-terminus
with the appointing Board impairs his right to security of tenure which has already vested even prior to
the amendment of the by-laws in 1987.
PMI Colleges vs. NLRC (277 SCRA 462 [1997])

In 1991, PMI Colleges hired the services of Alejandro Galvan for the latter to teach in said institution.
However, for unknown reasons, PMI defaulted from paying the remunerations due to Galvan. Galvan
made demands but were ignored by PMI. Eventually, Galvan filed a labor case against PMI. Galvan got
a favorable judgment from the Labor Arbiter; this was affirmed by the National Labor Relations
Commission. On appeal, PMI reiterated, among others, that the employment of Galvan is void because
it did not comply with its by-laws. Apparently, the by-laws require that an employment contract must be
signed by the Chairman of the Board of PMI. PMI asserts that Galvans employment contract was not
signed by the Chairman of the Board.
ISSUE: Whether or not Galvans employment contract is void.
HELD: No. PMI Colleges never even presented a copy of the by-laws to prove the existence of such
provision. But even if it did, the employment contract cannot be rendered invalid just because it does
not bear the signature of the Chairman of the Board of PMI. By-Laws operate merely as internal rules
among the stockholders, they cannot affect or prejudice third persons who deal with the corporation,
unless they have knowledge of the same. In this case, PMI was not able to prove that Galvan knew of
said provision in the by-laws when he was employed by PMI.

Filipinas Port Services vs. Go (518 SCRA 453 [2007])

FACTS:
Sept 4 1992: Eliodoro C. Cruz, Filports president from 1968-1991, wrote a letter to the corporations
BOD questioning the creation and election of the following positions with a monthly remuneration of
P13,050.00 each. Cruz requested the board to take necessary action/actions to recover from those
elected to the aforementioned positions the salaries they have received.
Jun 4 1993: Cruz, purportedly in representation of Filport and its stockholders, among which is herein
co-petitioner Mindanao Terminal and Brokerage Services, Inc. (Minterbro), filed with the SEC a
derivative suit against Filport's BOD for acts of mismanagement detrimental to the interest of the
corporation and its shareholders at large.
Cruz prayed that the BOD be made to pay Filport, jointly and severally, the sums of money variedly
representing the damages incurred as a result of the creation of the offices/positions complained of and
the aggregate amount of the questioned increased salaries.
RTC: BOD have the power to create positions not in the by-laws and can increase salaries. But Edgar
C. Trinidad under the third and fourth causes of action to restore to the corporation the total amount of
salaries he received as assistant vice president for corporate planning; and likewise ordering Fortunato
V. de Castro and Arsenio Lopez Chua under the fourth cause of action to restore to the corporation the

salaries they each received as special assistants respectively to the president and board chairman. In
case of insolvency of any or all of them, the members of the board who created their positions are
subsidiarily liable.
Appealed: creation of the positions merely for accommodation purposes - GRANTED
ISSUES:
1.
2.

W/N there was mismanagement - NO

W/N there is a proper derivative suit - YES

HELD: CA Affirmed
1. NO
Section 35 of the Corporation Code, the creation of an executive committee (as powerful as the BOD)
must be provided for in the bylaws of the corporation
Notwithstanding the silence of Filports bylaws on the matter, we cannot rule that the creation of the
executive committee by the board of directors is illegal or unlawful. One reason is the absence of a
showing as to the true nature and functions of executive committee
But even assuming there was mismanagement resulting to corporate damages and/or business losses,
respondents may not be held liable in the absence of a showing of bad faith in doing the acts
complained of. ("dishonestpurpose","some moral obliquity","conscious doing of a wrong", "partakes of
the nature of fraud")
determination of the necessity for additional offices and/or positions in a corporation is a management
prerogative which courts are not wont to review in the absence of any proof that such prerogative was
exercised in bad faith or with malice
2. YES
Besides, the requisites before a derivative suit can be filed by a stockholder: - present
a) the party bringing suit should be a shareholder as of the time of the act or transaction complained
of, the number of his shares not being material; - a stockholder of Filport
b) he has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of
directors for the appropriate relief but the latter has failed or refused to heed his plea; and
- he wrote a letter
c) the cause of action actually devolves on the corporation, the wrongdoing or harm having been, or
being caused to the corporation and not to the particular stockholder bringing the suit. - wrong
against the stockholders of the corporation generally
Boyer-Roxas vs. CA (211 SCRA 470 [1992])
FACTS OF THE CASE
When Eugenia V. Roxas died, her heirs formed a corporation under the name and style of Heirs of
Eugenia V. Roxas, Inc. using her estate as the capital of the corporation, the private respondent herein.
It was primarily engaged in agriculture business, however it amended its purpose to enable it to engage

in resort and restaurant business. Petitioners are stockholders of the corporation and two of the heirs of
Eugenia. By tolerance, they were allowed to occupy some of the properties of the corporation as their
residence. However, the board of directors of the corporation passed a resolution evicting the
petitioners from the property of the corporation because the same will be needed for expansion.
At the RTC, private respondent presented its evidence averring that the subject premises are owned by
the corporation. Petitioners failed to present their evidence due to alleged negligence of their counsel.
RTC handed a decision in favor of private respondent.
Petitioners appealed to the Court of Appeals but the latter denied the petition and affirmed the ruling of
the RTC. Hence, they appealed to the Supreme Court. In their appeal, petitioners argues that the CA
made a mistake in upholding the decision of the RTC, and that their occupancy of the subject premises
should be respected because they own an aliquot part of the corporation as stockholders, and that the
veil of corporate fiction must be pierced by virtue thereof.
ISSUE
1. Whether petitioners contention were correct as regards the piercing of the corporate veil.
2. Whether petitioners were correct in their contention that they should be respected as regards their
occupancy since they own an aliquot part of the corporation.
RULING
1.Petitioners contention to pierce the veil of corporate fiction is untenable. As aptly held by the court:
..The separate personality of a corporation may ONLY be disregarded when the corporation is used as
a cloak or cover for fraud or illegality, or to work injustice, or when necessary to achieve equity or when
necessary for the protection of creditors.
2. As regards petitioners contention that they should be respected on their occupancy by virtue of an
aliquot part they own on the corporation as stockholders, it also fails to hold water. The court held that
properties owned by a corporation are owned by it as an entity separate and distinct from its
members. While shares of stocks are personal property, they do not represent property of the
corporation. A share of stock only typifies an aliquot part of the corporations property, or the right to
share in its proceeds to that extent when distributed according to law and equity, but its holder is not
the owner of any part of the capital of the corporation. Nor is he entitled to the possession of any
definite portion of its property or assets. The holder is not a co-owner or a tenant in common of the
corporate property.

AF Realty & Development, Inc. vs Dieselman Freight Services, Co.

Commercial Law Corporation Law Power of the Board Ultra Vires Acts of Corporate Officers
Agency
FACTS: In 1988, Manuel Cruz, Jr., a board member of Dieselman Freight Services, Co. (DFS)
authorized CristetaPolintan to sell a 2,094 sq. m. parcel of land owned by DFS. Polintan in turn
authorized Felicisima Noble to sell the same lot. Noble then offered AF Realty & Development, Co.,

represented by ZenaidaRanullo, the land at the rate of P2,500.00 per sq. m. AF Realty accepted the
offer and issued a P300,000 check as downpayment.
However, it appeared that DFS did not authorize Cruz, Jr. to sell the said land. Nevertheless, Manuel
Cruz, Sr. (father) and president of DFS, accepted the check but modified the offer. He increased the
selling price to P4,000.00 per sq. m. AF Realty, in its response, did not exactly agree nor disagree with
the counter-offer but only said it is willing to pay the balance (but was not clear at what rate).
Eventually, DFS sold the property to someone else.
Now AF Realty is suing DFS for specific performance. It claims that DFS ratified the contract when it
accepted the check and made a counter-offer.
ISSUE: Whether or not the sale made through an agent was ratified.
HELD: No. There was no valid agency created. The Board of Directors of DFS never authorized Cruz,
Jr. to sell the land. Hence, the agreement between Cruz, Jr. and Polintan, as well as the subsequent
agreement between Polintan and Noble, never bound the corporation. Therefore the sale transacted by
Noble purportedly on behalf of Polintan and ultimately purportedly on behalf of DFS is void.
Being a void sale, it cannot be ratified even if Cruz, Sr. accepted the check and made a counter-offer.
(Cruz, Sr. returned the check anyway). Under Article 1409 of the Civil Code, void transactions can
never be ratified because they were void from the very beginning.
San Juan Structural and Steel Fabricators, Inc. vs Court of Appeals
296 SCRA 631 [GR No. 129459 September 29, 1998]
Facts: Plaintiff-appellant San Juan structural and steel fabricators Inc.s amended complaint alleged
that on February 14, 1989, plaintiff-appellant entered into an agreement with defendant-appellee
Motorich Sales Corporation for the transfer to it of a parcel of land identified as lot 30, Block 1 of the
Acropolis Greens Subdivision located in the district of Murphy, Quezon City, Metro Manila containing an
area of 414 sqm, covered by TCT no. 362909; that as stipulated in the agreement of February 14,
1i989, plaintiff-appellant paid the down payment in the sum of P100,000, the balance to be paid on or
before March 2, 19889; that on March 1, 1989,Mr. Andres T. Co, president of Plaintiff-appellant
corporation, wrote a letter to defendant-appellee Motorich Sales Corporation requesting a computation
for the balance to be paid; that said letter was coursed through the defendant-appellees broker. Linda
Aduca who wrote the computation of the balance; that on March 2, 1989, plaintiff-appellant was ready
with the amount corresponding to the balance, covered by Metrobank cashiers check no. 004223
payable to defendant-appellee Motorich Sales Corporation; that plaintiff-appellant and defendantappellee were supposed to meet in the plaintiff-appellants office but defendant-appellees treasurer,
Nenita Lee Gruenbeg did not appear; that defendant-appelle despite repeated demands and in utter
disregard of its commitments had refused to execute the transfer of rights/deed of assignment which is
necessary to transfer the certificate of title; that defendant ACL development corporation is impleaded
as a necessary party since TCT no. 362909 is still in the name of said defendant; while defendant VNM
Realty and Development Corporation is likewise impleaded as a necessary party in view of the fact that
it is the transferor of the right in favor of defendant-appellee Motorich Sales Corporation; that on April 6,
1989 defendant ACL Development Corporation and Motorich Sales Corporation entered into a deed of
absolute sale whereby the former transferred to the latter the subject property; that by reason of said
transfer; the registry of deeds of Quezon City issued a new title in the name of Motorich Sales
Corporation, represented by defendant-appellee Nenita Lee Gruenbeg and Reynaldo L. Gruenbeg,
under TCT no. 3751; that as a result of defendants-appellees Nenita and Motorichs bad faith in
refusing to execute a formal transfer of rights/deed of assignment, plaintiff-appellant suffered moral and
nominal damages which may be assessed against defendant-appellees in the sum of P500,000; that

as a result of an unjustified and unwarranted failure to execute the required transfer or formal deed of
sale in favor of plaintiff-appellant, defendant-appellees should be assessed exemplary damages in the
sum of P100,000; that by reason of the said bad faith in refusing to execute a transfer in favor of
plaintiff-appellant the latter lost opportunity to construct a residential building in the sum of P100,000
and that as a consequence of such bad faith, it has been constrained to obtain the services of counsel
at an agreed fee of P100,000 plus appearance fee of for every appearance in court hearings.
Issues:

Whether or not the corporations treasurer act can bind the corporation.
Whether or not the doctrine of piercing the veil of corporate entity is applicable.

RULING: No. Such contract cannot bind Motorich, because it never authorized or ratified such sale.
A corporation is a juridical person separate and distinct from its stockholders or members. Accordingly,
the property of the corporation is not the property of the corporation is not the property of its
stockholders or members and may not be sold by the stockholders or members without express
authorization from the corporations board of directors.
Section 23 of BP 68 provides the Board of Directors or Trustees Unless otherwise provided in this
code, the corporate powers of all corporations formed under this code shall be exercised, all business
conducted, and all property of such corporations controlled and held by the board of directors or
trustees to be elected from among the stockholders of stocks, or where there is no stock, from among
the members of the corporations, who shall hold office for 1 year and until their successors are elected
and qualified.
As a general rule, the acts of corporate officers within the scope of their authority are binding on the
corporation. But when these officers exceed their authority, their actions, cannot bind the corporation,
unless it has ratified such acts as is estopped from disclaiming them.
Because Motorich had never given a written authorization to respondent Gruenbeg to sell its parcel of
land, we hold that the February 14, 1989 agreement entered into by the latter with petitioner is void
under Article 1874 of the Civil Code. Being inexistent and void from the beginning, said contract cannot
be ratified.
The statutorily granted privilege of a corporate veil may be used only for legitimate purposes. On
equitable consideration,the veil can be disregarded when it is utilized as a shield to commit fraud,
illegality or inequity, defeat public convenience; confuse legitimate issues; or serve as a mere alter ego
or business conduit of a person or an instrumentality, agency or adjunct of another corporation.
The SC stressed that the corporate fiction should be set aside when it becomes a shield against liability
for fraud, or an illegal act on inequity committed on third person. The question of piercing the veil of
corporate fiction is essentially, then a matter of proof. In the present case, however, the court finds no
reason to pierce the corporate veil of respondent Motorich. Petitioner utterly failed to establish the said
corporation was formed, or that it is operated for the purpose of shielding any alleged fraudulent or
illegal activities of its officers or stockholders; or that the said veil was used to conceal fraud, illegality or
inequity at the expense of third persons like petitioner.
Philippine Association of Stock Transfer and Registry Agencies, Inc vs. CA
Facts:
Petitioner Philippine Association of Stock Transfer and Registry Agencies, Inc. is an association of
stock transfer agents principally engaged in the registration of stock transfers in the stock-and-transfer
book of corporations.

On May 10, 1996, petitioners Board of Directors unanimously approved a resolution allowing its
members to increase the transfer processing fee they charge their clients from P45 per certificate to
P75 per certificate, effective July 1, 1996; and eventually to P100 per certificate, effective October 1,
1996. The resolution also authorized the imposition of a processing fee for the cancellation of stock
certificates at P20 per certificate effective July 1, 1996. According to petitioner, the rates had to be
increased since it had been over five years since the old rates were fixed and an increase of its fees
was needed to sustain the financial viability of the association and upgrade facilities and services.
After a dialogue with petitioner, public respondent Securities and Exchange Commission (SEC) allowed
petitioner to impose the P75 per certificate transfer fee and P20 per certificate cancellation fee effective
July 1, 1996. But, approval of the additional increase of the transfer fees to P100 per certificate
effective October 1, 1996, was withheld until after a public hearing. The SEC issued a letterauthorization to this effect on June 20, 1996.
Thereafter, on June 24, 1996, the Philippine Association of Securities Brokers and Dealers, Inc.
registered its objection to the measure advanced by petitioner and requested the SEC to defer its
implementation. On June 27, 1996, the SEC advised petitioner to hold in abeyance the implementation
of the increases until the matter was cleared with all the parties concerned. The SEC stated that it was
reconsidering its earlier approval in light of the opposition and required petitioner to file comment.
Petitioner nonetheless proceeded with the implementation of the increased fees.
The SEC wrote petitioner on July 1, 1996, reiterating the directive of June 27, 1996. On July 2, 1996,
following a complaint from the Philippine Stock Exchange, the SEC again sent petitioner a second
letter strongly urging petitioner to desist from implementing the new rates in the interest of all
participants in the security market.
Petitioner replied on July 3, 1996 that it had no intention of defying the orders but stated that it could no
longer hold in abeyance the implementation of the new fees because its members had already put in
place the procedures necessary for their implementation. Petitioner also argued that the imposition of
the processing fee was a management prerogative, which was beyond the SECs authority to regulate
absent an express rule or regulation.

Issue:
Whether or not SEC is correct in issuing the cease and desist order.
Ruling:
The regulatory and supervisory powers of the Commission under Section 40 of the then Revised
Securities Act, in our view, were broad enough to include the power to regulate petitioners fees. Indeed,
Section 47 gave the Commission the power to enjoin motuproprio any act or practice of petitioner
which could cause grave or irreparable injury or prejudice to the investing public. The intentional
omission in the law of any qualification as to what acts or practices are subject to the control and
supervision of the SEC under Section 47 confirms the broad extent of the SECs regulatory powers over
the operations of securities-related organizations like petitioner.
ISLAMIC DIRECTORATE OF THE PHILIPPINES, MANUEL F. PEREA and SECURITIES &
EXCHANGE COMMISSION, petitioners, vs.COURT OF APPEALS and IGLESIA NI CRISTO,
respondents.
G.R. No. 117897, 14 May 1997.
FACTS:
In 1971, the ISLAMIC DIRECTORATE OF THE PHILIPPINES ("IDP") was incorporated with the
primary purpose of establishing a mosque, school, and other religious infrastructures in Quezon

City.
IDP purchased a 49,652-square meter lot in TandangSora, QC, which was covered by TCT Nos.
RT-26520 (176616) and RT-26521 (170567).
When President Marcos declared martial law in 1972, most of the members of the 1971 Board of
Trustees ("Tamano Group")flew to the Middle East to escape political persecution.
Thereafter, two contending groups claiming to be the IDP Board of Trustees sprung: the Carpizo
group and Abbas group.
In a suit between the two groups, SEC rendered a decision in 1986 declaring both groups to be null
and void. SEC recommeded that the a new by-laws be approved and a new election be conducted
upon the approval of the by-laws. However, the SEC recommendation was not heeded.
In 1989, the Carpizo group passed a Board Resolution authorizing the sale of the land to Iglesia Ni
Cristo ("INC"), and a Deed of Sale was eventually executed.
In 1991, the Tamano Group filed a petition before the SEC questioning the sale.
Meanwhile, INC filed a suit for specific performance before RTC Branch 81 against the Carpizo
group. INC also moved to compel a certain Leticia Ligon (who is apparently the mortgagee of the
lot) to surrender the title.
The Tamano group sought to intervene, but the intervention was denied despite being informed of
the pending SEC case. In 1992, the Court subsequently ruled that the INC as the rightful owner of
the land, and ordered Ligon to surrender the titles for annotation. Ligon appealed to CA and SC, but
her appeals were denied.
In 1993, the SEC ruled that the sale was null and void . On appeal CA reversed the SEC ruling.
MAIN ISSUE: W/N the sale between the Carpizo group and INC is null and void.
RULING: YES.
Since the SEC has declared the Carpizo group as a void Board of Trustees, the sale it entered into
with INC is likewise void. Without a valid consent of a contracting party, there can be no valid
contract.
In this case, the IDP, never gave its consent, through a legitimate Board of Trustees, to the disputed
Deed of Absolute Sale executed in favor of INC. Therefore, this is a case not only of vitiated
consent, but one where consent on the part of one of the supposed contracting parties is totally
wanting. Ineluctably, the subject sale is void and produces no effect whatsoever.
Further, the Carpizo group failed to comply with Section 40 of the Corporation Code, which provides
that: " ... a corporation may, by a majority vote of its board of directors or trustees, sell, lease,
exchange, mortgage, pledge or otherwise dispose of all or substantially all of its property and
assets... when authorized by the vote of the stockholders representing at least two-thirds (2/3) of
the outstanding capital stock; or in case of non-stock corporation, by the vote of at least two-thirds
(2/3) of the members, in a stockholders' or members' meeting duly called for the purpose...."
The subject lot constitutes the only property of IDP. Hence, its sale to a third-party is a sale or
disposition of all the corporate property and assets of IDP. 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 in
the case at bar.

ANCILLARY ISSUE: W/N TheLigon ruling constitutes res judicata.

RULING: NO.
Section 49(b), Rule 39 enunciates the first concept of res judicata known as "bar by prior judgment,"
whereas, Section 49(c), Rule 39 is referred to as "conclusiveness of judgment."
There is "bar by former judgment" when, between the first case where the judgment was rendered,
and the second case where such judgment is invoked, there is identity of parties, subject matter and
cause of action. When the three identities are present, the judgment on the merits rendered in the
first constitutes an absolute bar to the subsequent action. But where between the first case wherein
judgment is rendered and the second case wherein such judgment is invoked, there is only identity
of parties but there is no identity of cause of action, the judgment is conclusive in the second case,
only as to those matters actually and directly controverted and determined, and not as to matters
merely involved therein. This is what is termed "conclusiveness of judgment."
Neither applies to the case at bar. There is no "bar by former judgment" since while there may be
identity of subject matter (IDP property) in both cases, there is no identity of parties. The principal
parties in the first case were Ligon and the Iglesia Ni Cristo. The IDP can not be considered
essentially a formal party thereto for the simple reason that it was not duly represented by a
legitimate Board of Trustees.
Res Judicata in the form of "conclusiveness of judgment" cannot likewise apply for the reason that
the primary issue in the first case is the possession of the titles, and not the sale of the land, as in
this case.
LEE vs. CA
G.R. No. 93695 February 4, 1992

FACTS: On November 15, 1985, a complaint for a sum of money was filed by the International
Corporate Bank, Inc. against the private respondents SACOBA MANUFACTURING CORP., PABLO
GONZALES, JR. and THOMAS GONZALES who, in turn, filed a third party complaint against ALFA and
the petitioners RAMON C. LEE and ANTONIO DM. LACDAO on March 17, 1986. On September 17,
1987, the petitioners filed a motion to dismiss the third party complaint which the Regional Trial Court of
Makati, Branch 58 denied in an Order dated June 27, 1988. Meanwhile, on July 12, 1988, the trial court
issued an order requiring the issuance of an alias summons upon ALFA through the DBP as a
consequence of the petitioner's letter informing the court that the summons for ALFA was erroneously
served upon them considering that the management of ALFA had been transferred to the DBP. On
August 16, 1988, the private respondents filed a Manifestation and Motion for the Declaration of Proper
Service of Summons which the trial court granted. On motion for reconsideration, petitioners contend
that Rule 14, section 13 of the Revised Rules of Court is not applicable since they were no longer
officers of ALFA and that the private respondents should have availed of another mode of service under
Rule 14, Section 16 of the said Rules, i.e., through publication to effect proper service upon ALFA. In
their Comment to the Motion for Reconsideration dated September 27, 1988, the private respondents
argued that the voting trust agreement dated March 11, 1981 did not divest the petitioners of their
positions as president and executive vice-president of ALFA so that service of summons upon ALFA
through the petitioners as corporate officers was proper. On January 2, 1989, the trial court upheld the
validity of the service of summons on ALFA through the petitioners. On second motion for
reconsideration, petitioners reiterate their stand that by virtue of the voting trust agreement they ceased
to be officers and directors of ALFA, hence, they could no longer receive summons or any court
processes for or on behalf of ALFA. On April 25, 1989, the trial court reversed itself by setting aside its
previous Order and declared that service upon the petitioners who were no longer corporate officers of
ALFA cannot be considered as proper service of summons on ALFA. On May 15, 1989, the private

respondents moved for a reconsideration of the above Order which was affirmed by the court in its
Order dated August 14, 1989 denying the private respondent's motion for reconsideration. On
September 18, 1989, a petition for certiorari was belatedly submitted by the private respondent before
the public respondent. Meanwhile, the trial court, not having been notified of the pending petition
for certiorari with public respondent issued an Order declaring as final the Order dated April 25, 1989.
The filed petition for certiorari before the CA was given due course setting aside the orders of
respondent judge dated April 25, 1989 and August 14, 1989. Motion for reconsideration was likewise
denied. Hence, this petition for certiorari.
ISSUE: Whether or not the creation of voting trust agreement divests the petitioners of their positions
as president and executive vice-president of ALFA.
RULING: A voting trust agreement results in the separation of the voting rights of a stockholder from
his other rights such as the right to receive dividends, the right to inspect the books of the corporation,
the right to sell certain interests in the assets of the corporation and other rights to which a stockholder
may be entitled until the liquidation of the corporation. However, in order to distinguish a voting trust
agreement from proxies and other voting pools and agreements, it must pass three criteria or tests,
namely: (1) that the voting rights of the stock are separated from the other attributes of ownership; (2)
that the voting rights granted are intended to be irrevocable for a definite period of time; and (3) that the
principal purpose of the grant of voting rights is to acquire voting control of the corporation.
Both under the old and the new Corporation Codes there is no dispute as to the most immediate effect
of a voting trust agreement on the status of a stockholder who is a party to its execution from legal
titleholder or owner of the shares subject of the voting trust agreement, he becomes the equitable or
beneficial owner.
Under the old Corporation Code, the eligibility of a director, strictly speaking, cannot be adversely
affected by the simple act of such director being a party to a voting trust agreement inasmuch as he
remains owner (although beneficial or equitable only) of the shares subject of the voting trust
agreement pursuant to which a transfer of the stockholder's shares in favor of the trustee is required
(section 36 of the old Corporation Code). No disqualification arises by virtue of the phrase "in his own
right" provided under the old Corporation Code.
With the omission of the phrase "in his own right" the election of trustees and other persons who in fact
are not beneficial owners of the shares registered in their names on the books of the corporation
becomes formally legalized. Hence, this is a clear indication that in order to be eligible as a director,
what is material is the legal title to, not beneficial ownership of, the stock as appearing on the books of
the corporation.
The facts of this case show that the petitioners, by virtue of the voting trust agreement executed in
1981 disposed of all their shares through assignment and delivery in favor of the DBP, as trustee.
Consequently, the petitioners ceased to own at least one share standing in their names on the books of
ALFA as required under Section 23 of the new Corporation Code. They also ceased to have anything to
do with the management of the enterprise. The petitioners ceased to be directors. Hence, the transfer
of the petitioners' shares to the DBP created vacancies in their respective positions as directors of
ALFA. The transfer of shares from the stockholder of ALFA to the DBP is the essence of the subject
voting trust agreement.

58. Premium Marble Resources v. CA (G.R. No. 96551)

Facts:Ayala Investment and Development Corporation issued three checks payable to petitioner and
drawn against Citibank, but former officers of petitioner headed by Saturnino G. Belen, Jr., without any
authority whatsoever deposited the abovementioned checks to the current account of his conduit
corporation, Intervest Merchant Finance (Intervest, for brevity) which the latter maintained with the

defendant. Although the checks were clearly payable to petitioner and crossed on their face and for
payees account only, defendant bank accepted the checks to be deposited to the current account of
Intervest and thereafter presented the same for collection from the drawee bank which subsequently
cleared the same thus allowing Intervest to make use of the funds. Petitioner herein, assisted by Atty.
Arnulfo Dumadag as counsel, filed an action for damages against International Corporate Bank.
Printline Corporation, a sister company of Premium also filed an action for damages against
International Corporate Bank. Thereafter, both civil cases were consolidated. In its Answer International
Corporate Bank alleged, inter alia, that Premium has no capacity/personality/authority to sue in this
instance and the complaint should, therefore, be dismissed for failure to state a cause of action.
Meantime, the same corporation, i.e., Premium, but this time represented by Siguion Reyna,
Montecillio and Ongsiako Law Office as counsel, filed a motion to dismiss on the ground that the filing
of the case was without authority from its duly constituted board of directors as shown by the excerpt of
the minutes of the Premiums board of directors meeting.
In its opposition to the motion to dismiss, Premium thru Atty. Dumadag contended that the persons who
signed the board resolution namely Belen, Jr., Nograles& Reyes, are not directors of the corporation
and were allegedly former officers and stockholders of Premium who were dismissed for various
irregularities and fraudulent acts; that Siguion Reyna Law office is the lawyer of Belen and Nograles
and not of Premium and that the Articles of Incorporation of Premium shows that Belen, Nograles and
Reyes are not majority stockholders.
On the other hand, Siguion Reyna Law firm as counsel of Premium in a rejoinder, asserted that it is the
general information sheet filed with the Securities and Exchange Commission, among others, that is
the best evidence that would show who are the stockholders of a corporation and not the Articles of
Incorporation since the latter does not keep track of the many changes that take place after new
stockholders subscribe to corporate shares of stocks.
The lower court concluded that the officers represented by Atty. Dumadag do not as yet have the legal
capacity to sue for and in behalf of the plaintiff corporation and/or the filing of the present action. On
appeal, the Court of Appeals affirmed the trial courts Order. Hence, this petition.
Issue:Whether or not the filing of the case for damages against private respondent was authorized by
a duly constituted Board of Directors of the petitioner corporation.
Ruling:We find the petition without merit.
We agree with the finding of public respondent Court of Appeals, that in the absence of any board
resolution from its board of directors the authority to act for and in behalf of the corporation, the present
action must necessarily fail. The power of the corporation to sue and be sued in any court is lodged
with the board of directors that exercises its corporate powers. Thus, the issue of authority and the
invalidity of plaintiff-appellants subscription which is still pending is a matter that is also addressed,
considering the premises, to the sound judgment of the Securities & Exchange Commission.
By the express mandate of the Corporation Code (Section 26), all corporations duly organized pursuant
thereto are required to submit within the period therein stated (30 days) to the Securities and Exchange
Commission the names, nationalities and residences of the directors, trustees and officers elected.
Evidently, the objective sought to be achieved by Section 26 is to give the public information, under
sanction of oath of responsible officers, of the nature of business, financial condition and operational
status of the company together with information on its key officers or managers so that those dealing
with it and those who intend to do business with it may know or have the means of knowing facts
concerning the corporations financial resources and business responsibility.
The claim, therefore, of petitioners as represented by Atty. Dumadag, that Zaballa, et al., are the
incumbent officers of Premium has not been fully substantiated. In the absence of an authority from the

board of directors, no person, not even the officers of the corporation, can validly bind the corporation.
We find no reversible error in the decision sought to be reviewed.
Accordingly, for lack of merit, the petition is denied.

NECTARINA S. RANIEL versusAUSTRIA-MARTINEZ,CALLEJO, SR.,

FACTS:
Petitioners, together with respondents Paul Jochico (Jochico), John Steffens and Surya Viriya,
were incorporators and directors of Nephro, with Raniel acting as Corporate Secretary and
Administrator.
The conflict started when petitioners questioned respondents' plan to enter into a joint venture
with the Butuan Doctors' Hospital and College, Inc. sometime in December 1997.
Because of this, petitioners claim that respondents tried to compel them to waive and assign
their shares with Nephro but they refused.
Thereafter, Raniel sought an indefinite leave of absence due to stress, but Jochico, as
Nephro President, denied this. Raniel, nevertheless, did not report for work, causing Jochico to
demand an explanation from her why she should not be removed as Administrator and Corporate
Secretary. Raniel replied, expressing her sentiments over the disapproval of her request for leave and
respondents' decision with regard to the Butuan venture.
On January 30, 1998, Jochico issued a Notice of Special Board Meeting on February 2,
1998. Despite receipt of the notice, petitioners did not attend the board meeting.
In said meeting, the Board passed several resolutions ratifying the disapproval of Raniel's
request for leave, dismissing her as Administrator of Nephro, declaring the position of
Corporate Secretary vacant, appointing Otelio Jochico as the new Corporate Secretary and authorizing
the call of a Special Stockholders' Meeting on February 16, 1998 for the purpose of the removal of
petitioners as directors of Nephro.
Otelio Jochico issued the corresponding notices for the Special Stockholders' Meeting to be held
on February 16, 1998 , which were received by petitioners on February 2, 1998. Again, they did not
attend the meeting. The stockholders who were present removed the petitioners as directors of
Nephro.
In the present petition, petitioners raised basically the same argument they had before the SEC
and the CA, i.e., their removal from Nephro was not valid.
ISSUE: whether or not the removal of the petitioners as directors was valid?
Petitioners Raniel and Pag-ong's removal as members of Nephro's Board of Directors was valid.

Th court ruled that Only stockholders or members have the power to remove the directors or
trustees elected by them, as laid down in Section 28 of the Corporation Code,[16] which provides in part:
Any director or trustee of a corporation may be removed from office by a vote of the
stockholders holding or representing at least two-thirds (2/3) of the outstanding capital stock,
Removal may be with or without cause: Provided, That removal without cause may not be used to
deprive minority stockholders or members of the right of representation to which they may be entitled
under Section 24 of this Code. (Emphasis supplied)
Petitioners do not dispute that the stockholders' meeting was held in accordance
with Nephro's By-Laws. The ownership of Nephro's outstanding capital stock is distributed as follows:
Jochico - 200 shares; Steffens - 100 shares; Viriya - 100 shares; Raniel - 75 shares; and Pag-ong - 25
shares,[17] or a total of 500 shares. A two-thirds vote of Nephro's outstanding capital stock would be
333.33 shares, and during the Stockholders' Special Meeting held on February 16, 1998, 400 shares
voted for petitioners' removal. Said number of votes is more than enough to oust petitioners from their
respective positions as members of the board, with or without cause.

PAUL LEE TAN, ANDREW LIUSON, ESTHER WONG, STEPHEN CO, JAMES TAN, JUDITH TAN,
ERNESTO TANCHI JR., EDWIN NGO, VIRGINIA KHOO, SABINO PADILLA JR., EDUARDO P.
LIZARES and GRACE CHRISTIAN HIGH SCHOOL, Petitioners,vs.PAUL SYCIP and MERRITTO
LIM, Respondents.
FACTS: Grace Christian High School (GCHS) is a nonstock, non-profit educational corporation with 15
regular members, who also constitute the board of trustees. During the annual members meeting,
there were only 11 living member-trustees, as 4 have already died. Out of the 11, 7 attended the
meeting through their respective proxies. The meeting was convened and chaired by Atty. Sabino
Padilla Jr. over the objection of Atty. Antonio C. Pacis, who argued that there was no quorum. In the
meeting, Petitioners Ernesto Tanchi, Edwin Ngo, Virginia Khoo, and Judith Tan were voted to replace
the four deceased member-trustees. The controversy reached SEC and the petitioners maintained that
the deceased member-trustees should not be counted in the computation of the quorum because, upon
their death, members automatically lost all their rights (including the right to vote) and interests in the
corporation. SEC declared the meeting null and void and ruled that the phrase entitled to vote under
Sec 24 should be read with Sec 89 of Corpo Code.
ISSUE: In a non-stock corporation, should dead members still be counted in determination of quorum
for purposed of conducting the Annual Members Meeting?
HELD: For stock corporations, the "quorum" referred to in Section 52 of the Corporation Code is based
on the number of outstanding voting stocks. For nonstock corporations, only those who are actual,
living members with voting rights shall be counted in determining the existence of a quorum during
members meetings. Dead members shall not be counted.
One of the most important rights of a qualified shareholder or member is the right
to vote -- either personally or by proxy -- for the directors or trustees who are to manage the corporate
affairs. The right to vote is inherent in and incidental to the ownership of corporate stocks. In nonstock
corporations, the voting rights attach to membership. The principle for determining the quorum for
stock corporations is applied by analogy to nonstock corporations, only those who are actual members
with voting rights should be counted. Under Section 52, the majority of the members representing the
actual number of voting rights, not the number or numerical constant that may originally be specified in
the articles of incorporation, constitutes the quorum.

Having thus determined that the quorum in a members meeting is to be reckoned as the actual number
of members of the corporation, the next question to resolve is what happens in the event of the death
of one of them. In stock corporations, the executor or administrator duly appointed by the Court is
vested with the legal title to the stock and entitled to vote it. Until a settlement and division of the estate
is effected, the stocks of the decedent are held by the administrator or executor. On the other hand,
membership in and all rights arising from a nonstock corporation are personal and non-transferable,
unless the articles of incorporation or the bylaws of the corporation provide otherwise. In other words,
the determination of whether or not "dead members" are entitled to exercise their voting rights (through
their executor or administrator), depends on those articles of incorporation or bylaws.
Under the By-Laws of GCHS, membership in the corporation shall, among others, be terminated by the
death of the member. Applying Section 91, dead members who are dropped from the membership
roster in the manner and for the cause provided for in the By-Laws of GCHS are not to be counted in
determining the requisite vote in corporate matters or the requisite quorum for the annual members
meeting. With 11 remaining members, the quorum in the present case should be 6. Therefore, there
being a quorum, the annual members meeting was valid.
Expertravel& Tours Inc. vs. Court of Appeals, etc. G.R. No. 152392, 26 May 2005
Facts:
Korean Airlines (KAL) is a corporation established and registered in the Republic of South Korea and
has been granted license to do business in the Philippines. On 6 September 1999, KAL, through its
legal counsel, Atty. Mario Aguinaldo filed a complaint against ETI with the Regional Trial Court (RTC) of
Manila, for the collection of sum of money totaling PhP260,150.00 plus attorney's fees and exemplary
damages. The complaint was attached with verification and certificate of non-forum shopping wherein
indicated that Atty. Aguinaldo is the agent and legal counsel of KAL and had caused the preparation of
the said complaint.
ETI filed a motion to dismiss the complaint on the ground that Atty. Aguinaldo was not authorized to
execute the above-mentioned verification and non-forum shopping as required by Section 5, Rule 7 of
the Rules of Court. KAL, thereafter, opposed the motion contending that Atty. Aguinaldo was its resident
agent and was registered as such with the Securities and Exchange Commission (SEC). It was also
alleged that Atty. Aguinaldo also served as the company's corporate secretary.
During the hearing, Atty Aguinaldo claimed that he had been authorized to file the complaint through
the resolution approved by the KAL Board of Directors during a special meeting held on June 25, 1999.
Thereafter. KAL submitted an Affidavit executed by its General Manager Suk Kyoo Kim, alleging that
the board of directors conducted a special teleconference which he and Atty. Aguinaldo attended. It was
also averred that in that Teleconference, the board of directors approved a resolution authorizing Atty.
Aguinaldo to execute the certificate of non-forum shopping and to file the said complaint. Furthermore,
Su Kyoo Kim alleged that the corporation had no written copy of the aforesaid resolution.
Trial Court issued an order denying the motion to dismiss, giving credence to the claims of Atty.
Aguinaldo and Su Kyoo Kim. ETI filed a motion for reconsideration of the said order alleging that it is
inappropriate for the court to take judicial notice of the said teleconference without any prior hearing.
CA rendered judgment dismissing the petition and ruling that the verification and certificate of nonforum shopping executed by Atty. Aguinaldo was sufficient compliance with the Rules of Court.
Hence, this petition.
Issue:
Is the petitioner correct in assailing that until and after teleconferencing is recognized as a legitimate
means of conducting meetings, gathering quorum of board of directors, such cannot be taken judicial
notice of by the court.

Held:
The petition is meritorious.
It is settled that the requirement to file a certificate of non-forum shopping is mandatory and that the
failure to comply with this requirement cannot be excused. The certification is a peculiar and personal
responsibility of the party, an assurance given to the court or other tribunal that there are no other
pending cases involving basically the same parties, issues and causes of action. Hence, the
certification must be accomplished by the party himself because he has actual knowledge of whether or
not he has initiated similar actions or proceedings in different courts or tribunals. Even his counsel may
be unaware of such facts. Hence, the requisite certification executed by the plaintiffs counsel will not
suffice.
In a case where the plaintiff is a private corporation, the certification may be signed, for and on behalf
of the said corporation, by a specifically authorized person, including its retained counsel, who has
personal knowledge of the facts required to be established by the documents.
Generally speaking, matters of judicial notice have three material requisites:
(1) the matter must be one of common and general knowledge;
(2) it must be well and authoritatively settled and not doubtful or uncertain; and
(3) it must be known to be within the limits of the jurisdiction of the court.
The principal guide in determining what facts may be assumed to be judicially known is that of
notoriety. Hence, it can be said that judicial notice is limited to facts evidenced by public records and
facts of general notoriety. Moreover, a judicially noticed fact must be one not subject to a reasonable
dispute in that it is either:
(1) generally known within the territorial jurisdiction of the trial court; or
(2) capable of accurate and ready determination by resorting to sources whose accuracy cannot
reasonably be questionable.
In this age of modern technology, the courts may take judicial notice that business transactions may be
made by individuals through teleconferencing. Teleconferencing is interactive group communication
(three or more people in two or more locations) through an electronic medium. In general terms,
teleconferencing can bring people together under one roof even though they are separated by
hundreds of miles.
This type of group communication may be used in a number of ways, and have three basic types:
(1) video conferencing - television-like communication augmented with sound;
(2) computer conferencing - printed communication through keyboard terminals, and
(3) audio-conferencing-verbal communication via the telephone with optional capacity for telewriting or
telecopying.
The Court agrees with the RTC that persons in the Philippines may have a teleconference with a group
of persons in South Korea relating to business transactions or corporate governance.
Even given the possibility that Atty. Aguinaldo and Suk Kyoo Kim participated in a teleconference along
with the respondents Board of Directors, the Court is not convinced that one was conducted; even if
there had been one, the Court is not inclined to believe that a board resolution was duly passed
specifically authorizing Atty. Aguinaldo to file the complaint and execute the required certification
against forum shopping.
The Court is, thus, more inclined to believe that the alleged teleconference on June 25, 1999 never
took place, and that the resolution allegedly approved by the respondents Board of Directors during the
said teleconference was a mere concoction purposefully foisted on the RTC, the CA and this Court, to
avert the dismissal of its complaint against the petitioner.
Petition granted.
CENTRAL COOPERATION EXCHANGE, INC., plaintiff-appellant,
vs.
NICOLAS T. ENCISO, and THE HONORABLE COURT OF APPEALS, defendant-appellee.
FACTS:

Petitioner Central Cooperative Exchange, Inc. is the National Federation of Farmers'

Cooperative Marked Association (FACOMA) in the Philippines. Its single major stockholder is a
government entity, the Agricultural Credit and Cooperative Financing Administration (ACCFA) now
Agricultural Credit Administration (ACA), as reorganized under the Land Reform Code.
Respondent Nicolas T. Enciso was then member of the Board of Governors of ACCFA and
concurrently a member of petitioner's (CCE) Board of Directors from August 1, 1958 to January, 1960.
The ACCFA took over the management of the affairs of CCE by virtue of a resolution of the latter's
board of directors and ACCFA removed the general manager of CCE and on January 22, 1960,
designated Eugenio V. Mendoza, one of ACCFA's staff officers, as Officer-in-Charge of petitioner (CCE)
corporation.

In various meetings, the Board of Directors of the CCE unanimously adopted several Resolutions
appropriating funds of the corporation for per diems, transportation allowance and discretionary funds
for the members of its Board of Directors
Nicolas T. Enciso, as director of said Exchange, received as compensation in the form of
commutable per diem, per them Facoma visitations, kilometrage allowance, commutable discretionary
funds and representation expenses in the total amount of P10,967.85 for the period 1958 to 1960.
On October 22, 1960, CCE filed a complaint verified by its Officer-in-Charge, against Nicolas T.
Enciso for the recovery of said amount, the same having been collected and received by Enciso in
violation of Section 8, Article V of CCE's By-Laws, which reads:

Section 8. Compensation. The compensation, if any, and the per diems for attendance at meetings
of the members of the Board of Directors shall be determined by the members of any annual meeting
or special meeting of the Exchange called for the purpose, and of the resolution adopted by the
stockholders in their annual meeting on January 31, 1956, that the "members of the board of Directors
attending the CCE (plaintiff) board meetings be entitled to actual transportation expenses plus the per
them of P30.00 and actual expenses, while waiting."
Otherwise stated petitioner claims it is the stockholders not the board of directors who can fix the
compensation per diem, and allowances of the members of the Board of Directors.

Respondent stated that he was a director of petitioner and that the amount of compensation and per
diems of the directors was fixed by stockholders in their annual meeting. He averred that:
(1) plaintiff corporation has neither the legal personality to institute the action; nor to question the
legality of the resolutions enacted by the Board of which he is a member;
(2) plaintiff corporation is guilty of laches;
The lower court rendered judgment in favor of defendant (private respondent herein) and dismissed
plaintiff s complaint as well as defendant's counterclaim with costs against plaintiff
On appeal to the Court of Appeals affirmed the lower courts decision. Petitioner's motion for
reconsideration of the said decision was denied.
Hence this appeal.

ISSUE:

whether or not the said board of directors of the petitioner had the power and authority to adopt the
resolutions which appropriated funds of the corporation for per diems, transportation allowance and
discretionary funds for the members of its Board of Directors

The petitioner contends that the resolutions in question enacted by the Board of Directors are contrary
to the By-Laws of the federation and, therefore, not within the power of the board of directors to enact
as specifically ruled by this court in Central Cooperative Exchange, Inc. vs. ConcordioTibe, Sr. and the
Court of Appeals.
It is further argued by the petitioner that the said board resolutions are illegal per se for the reason that:
(1) the directors are not entitled to compensation even without the express reservation of the power to
grant the same unto the stockholders;
(2) the resolutions were already declared contrary to the by-laws' and 'not within the power of the board
of directors to enact; and
(3) the board resolutions were enacted in violation of the express prohibition in the by-laws they having
been found to be "specifically withheld from the board of directors, and reserved to the stockholders."
The exercise of such withheld power by the board renders the act resulting therefrom illegal and void.
On the other hand, the private respondent maintains that the questioned resolutions are all valid and
legal, as resolved pursuant to Section 8, Article V of the petitioner's By-Laws by its stockholders on
January 31, 1956, that "members of the Board of Directors attending the CCE Board Meeting entitled to
actual transportation expenses plus the per diems of P30.00 and actual expenses while waiting." It was
inferred from this resolution that the stockholders intended to allow the members" actual transportation
expenses and actual expenses while waiting, without limitations.
The private respondent also argued that the discretionary funds cannot be considered as
compensation because the meaning of the term "compensation" as applied to officers is remunerations
in whatever form it may be given, whether it be in salaries and fees, or both combined, whereas the
amounts drawn as discretionary funds are actually spent by the directors in carrying negotiations with
third persons which are necessary in managing the affairs of the corporation.

HELD:
The petition is impressed with merit.

In an earlier case, Central Cooperative Exchange, Inc. v. Tibe, Sr. (33 SCRA 596-597 [1970], the
legality of the same resolutions, involving the same corporation as petitioner and another Board
Member, who received the same allowances and benefits thereunder, under the same circumstances
and set of facts as the case at bar, was resolved by this Court, holding that the questioned resolutions
are contrary to the By-Laws of the federation and, therefore, not within the power of the board of
directors to enact. It will be noted that in interpreting the same Section 8 of the By-Laws likewise
invoked in the previous case as in the case at bar, this Court held that the right of the stockholders to
determine the compensation of the Board of Directors was explicitly reserved and even without said
reservation, the directors are not entitled to compensation. Moreover, this Court declared that the law is
well settled that directors of corporations presumptively serve without compensation so that while the
directors, in assigning themselves additional duties acted within their power, they nonetheless acted in
excess of their authority by voting for themselves compensation for such additional duties.
Laches was also ruled out by this Court in the same case the tribunal holding that the board of directors
under the By-Laws of the Corporation, had the control of the affairs of the corporation and it is not to be

expected that the board would sue its members to recover the sums of money voted by and for
themselves. Thus, under the circumstances, where the corporation was virtually immobilized from
commencing suit against its directors, laches does not begin to attach against the corporation until the
directors cease to be such.
Almost all the issues raised in the case at bar have already been resolved in Central Cooperative
Exchange, Inc. v. Tibe, Sr. (supra) and there appears to be no logical reason why the ruling in said
case which has long become final, should not apply to the instant case.