TAYAG vs BENGUET CORP

FACTS:

 Idonah Slade Perkins died domiciled in New York on March 27, 1960;

 because she has properties both in New York and in the Philippines, a domiciliary
administrator was appointed in New York by the New York courts,

 August 12, 1960 Prospero Sanidad  an ancillary administrator was appointed in

the Philippines by the Philippine courts.

 Now then, to satisfy the legitimate claims of local creditors, the Philippine
ancillary administrator asked the New York administrator to surrender to the
former two stock certificates owned by the deceased in a Philippine corporation,
the Benguet Consolidated, Inc. Although said New York administrator had the
stock certificates, he refused to surrender them despite the order of the
Philippine court, prompting the court to consider said certificates as LOST for all
purposes in connection with the administration of the deceased’s Philippine
estate. The court then ordered the Benguet Consolidated, Inc. to cancel said
certificates and to issue new certificates deliverable either to the ancillary
administrator or to the Philippine probate court. The company refused to issue
the new certificates on the ground firstly, that after all, the old certificates still
really exist, although in the possession of the New York administrator; and
secondly, that in the future, the Company may be held liable for damages
because of the presence of conflicting certificates.

ISSUE: Should the company issue the new certificates?

HELD: Yes, the company must issue the new certificates because of the following
reasons: (a) While factually the old certificates still exist, the same may by judicial
fiction be considered as LOST — in view of the refusal of the New York administrator to
surrender them, despite a lawful order of our courts. To deny the remedy would be
derogatory to the dignity of the Philippine judiciary. The ancillary Philippine
administrator is entitled to the possession of said certificates so that he can perform his
duty as such administrator. A contrary finding by any foreign court or entity would be
inimical to the honor of our country. After all, an administrator appointed in one state
has no power over property matters in another state. (Leon and Ghessi v.
Manufacturer’s Life Ins. Co., 99 Phil. 459 [1951]). (b) The Company has nothing to fear
about contingent liability should the new certificates be issued. Its obedience to a lawful
court order certainly constitutes a valid defense.
INTERNATIONAL EXPRESS TRAVEL & TOUR SERVICES, INC., petitioner, vs.
HON. COURT OF APPEALS, HENRI KAHN, PHILIPPINE FOOTBALL
FEDERATION, respondents.,    

G.R. No. 119002

2000 Oct 19.

FACTS:

On June 30 1989, petitioner, through its managing director, wrote a letter to the
Philippine Football Federation (Federation), through its president private respondent
Henri Kahn, wherein the former offered its services as a travel agency to the latter. The
offer was accepted.
Petitioner secured the airline tickets for the trips of the athletes and officials of the
Federation to the South East Asian Games in Kuala Lumpur as well as various other
trips to China and Brisbane.  The total cost of the tickets amounted to P449,654.83.
The Federation made two partial payments, both in September of 1989, in the total
amount of P176,467.50.
On 4 October 1989, petitioner wrote the Federation, through the private respondent a
demand letter requesting for the amount of P265,894.33. On 30 October 1989, the
Federation, through the Project Gintong Alay, paid the amount of P31,603.00.
On 27 December 1989, Henri Kahn issued a personal check in the amount of P50,000
as partial payment for the outstanding balance of the Federation. No further payments
were made despite repeated demands.
Petitioner to filed a civil case before RTC- Manila.  Petitioner sued Henri Kahn in his
personal capacity and as President of the Federation and impleaded the Federation as
an alternative defendant.  Petitioner sought to hold Henri Kahn liable for the unpaid
balance for the tickets purchased by the Federation on the ground that Henri Kahn
allegedly guaranteed the said obligation.
Henri Kahn  averred that the petitioner has no cause of action against him either in his
personal capacity or in his official capacity as president of the Federation because he
did not guarantee payment but merely acted as an agent of the Federation which has a
separate and distinct juridical personality. The Federation failed to file its answer,
hence, was declared in default by the trial court.
The trial court ruled in favor of the petitioner and declared Henri Kahn  personally liable
for the unpaid obligation of the Federation. CA reversed the trial court. Hence this
Petition.
ISSUE: WON the doctrine of corporation by estoppel applies in this case.
RULING:

1. CA cited RA 3135 (Revised Charter of the Philippine Amateur Athletic

Federation), and PD 604 as the laws from which said Federation derives its
existence. Both R.A. 3135 and P.D. No. 604 recognized the juridical existence
of national sports associations.  These laws granted to national sports
associations certain powers and functions which clearly indicate that these
entities may acquire a juridical personality.  Among these powers is the
power to purchase, sell, lease and encumber property which are acts that
may only be done by persons, whether natural or artificial, with juridical
capacity.  
However, while we agree with the appellate court that national sports associations may
be accorded corporate status, such does not automatically take place by the mere
passage of these laws. It is a basic postulate that before a corporation may acquire
juridical personality, the State must give its consent either in the form of a special law
or a general enabling act.  
We cannot agree with the view of the CA and the private respondent that the Philippine
Football Federation came into existence upon the passage of these laws.  Nowhere can
it be found in R.A. 3135 or P.D. 604 any provision creating the Philippine Football
Federation.  These laws merely recognized the existence of national sports associations
and provided the manner by which these entities may acquire juridical personality.  
The said laws require that before an entity may be considered as a national sports
association, such entity must be recognized by the accrediting organization, the
Philippine Amateur Athletic Federation under R.A. 3135, and the Department of Youth
and Sports Development under P.D. 604.  This fact of recognition, however, Henri Kahn
failed to substantiate.  In attempting to prove the juridical existence of the Federation,
Henri Kahn attached to his MR before the trial court a copy of the constitution and by-
laws of the Philippine Football Federation.  Unfortunately, the same does not prove that
said Federation has indeed been recognized and accredited by either the Philippine
Amateur Athletic Federation or the Department of Youth and Sports Development.  We
rule that the Philippine Football Federation is not a national sports association within the
purview of the aforementioned laws and does not have corporate existence of its own.
It follows that private respondent Henry Kahn should be held liable for the unpaid
obligations of the unincorporated Philippine Football Federation.  It is a settled principle
in corporation law that any person acting or purporting to act on behalf of a corporation
which has no valid existence assumes such privileges and becomes personally liable for
contract entered into or for other acts performed as such agent. As president of the
Federation, Henri Kahn  is presumed to have known about the corporate existence or
non-existence of the Federation.  
We do not agree with the position taken by the CA that even assuming that the
Federation was defectively incorporated, the petitioner cannot deny the corporate
existence of the Federation because it had contracted and dealt with the Federation in
such a manner as to recognize and in effect admit its existence. The doctrine of
corporation by estoppel is mistakenly applied by the respondent court to the petitioner.
The application of the doctrine applies to a third party only when he tries to
escape liability on a contract from which he has benefited on the irrelevant
ground of defective incorporation. In the case at bar, the petitioner is not trying to
escape liability from the contract but rather is the one claiming from the contract.
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE.  
 SME BANK v. De Guzman et al.

FACTS:
Security of tenure is a constitutionally guaranteed right.1 Employees may
not be terminated from their regular employment except for just or authorized causes
under the Labor Code2 and other pertinent laws. A mere change in the equity
composition of a corporation is neither a just nor an authorized cause that would legally
permit the
dismissal of the corporation’s employees en masse.
Respondent employees Elicerio Gaspar (Elicerio), Ricardo Gaspar, Jr.
(Ricardo),
Eufemia Rosete (Eufemia), Fidel Espiritu (Fidel), Simeon Espiritu, Jr. (Simeon, Jr.), and
Liberato Mangoba (Liberato) were employees of Small and Medium Enterprise Bank,
Incorporated (SME Bank). Originally, the principal shareholders and corporate directors
of the bank were Eduardo M. Agustin, Jr. (Agustin) and Peregrin de Guzman, Jr. (De
Guzman). SME Bank experienced financial difficulties. To remedy the situation, the bank
officials proposed its sale to Abelardo Samson (Samson).
negotiations ensued, and a formal offer was made to Samson. Through his attorney-in-
fact, Tomas S. Gomez IV, Samson then sent formal letters (Letter Agreements) to
Agustin and De Guzman, demanding the following as preconditions for the sale of SME
Bank’s shares of stock: 1. You shall guarantee the peaceful turn over of all assets as
well as the peaceful
transition of management of the bank and shall terminate/retire the employees we
mutually agree upon, upon transfer
of shares in favor of our group’s nominees; 2. All retirement benefits, if any of the
above officers/stockholders/board of
directors are hereby waived upon cosummation [sic] of the above sale. The retirement
benefits of the rank and file
employees including the managers shall be honored by the new management in
accordance with B.R. No. 10, S. 1997
Agustin and De Guzman accepted the terms and conditions proposed by Samson and
signed the conforme portion of the Letter Agreements.Simeon Espiritu (Espiritu), then
the general manager of SME Bank, held a meeting with all the employees of the head
office and of the Talavera and Munoz branches of SME Bank and persuaded them tõ
tender their resignations,11 with the promise that they would be rehired
upon
reapplication. His directive was allegedly done at the behest of petitioner Olga Samson.
Relying on their representation All of them tendered their resignation , Eufemia first
tendered resignation then after tendered retirement.
Agustin and De Guzman signified their conformity to the Letter Agreements and sold
86.365% of the shares of stock of SME Bank to spouses Abelardo and Olga Samson.
Spouses Samson then became the principal shareholders of SME Bank, while Aurelio
Villaflor, Jr. was appointed bank president. As it turned out, respondent employees,
except for Simeon, Jr.,26 were not rehired. After a month in service, Simeon, Jr. again
resigned Respondent-employees demanded the payment of their respective separation
pays, but their requests were denied.
Aggrieved by the loss of their jobs, respondent employees filed a Complaint before
the National Labor Relations Commission (NLRC)– Regional Arbitration Branch No. III
and sued SME Bank, spouses Abelardo and Olga Samson and Aurelio Villaflor (the
Samson Group) for unfair labor practice; illegal dismissal; illegal
deductions;
underpayment; and nonpayment of allowances, separation pay and 13th month pay.
Subsequently, they amended their Complaint to include Agustin and De Guzman as
respondents to the case.
 the labor arbiter ruled that the buyer of an enterprise is not bound to absorb its
employees, unless there is an express stipulation to the contrary. However, he also
found
that respondent employees were illegally dismissed, because they had
involuntarily
executed their resignation letters after relying on representations that they would be
given
their separation benefits and rehired by the new management. Accordingly, the labor
arbiter decided the case against Agustin and De Guzman, but dismissed the Complaint
against the Samson Group. Thus ordering Agustin and De Guzman to pay separation
pay
to the employees.
respondent employees, Agustin and De Guzman brought separate appeals to the NLRC.
Respondent employees questioned the labor arbiter’s failure to award backwages, while
Agustin and De Guzman contended that they should not be held liable for the payment
of
the employees’ claims. The NLRC found that there was only a mere transfer of shares –
and therefore, a mere change of management – from Agustin and De Guzman to the
Samson Group. As the change of management was not a valid ground to terminate
respondent bank employees, the NLRC ruled that they had indeed been
illegally
dismissed. It further ruled that Agustin, De Guzman and the Samson Group should be
held jointly and severally liable for the employees’ separation pay and backwages, CA
affirming NLRC decision. Hence this appeal.

ISSUE: WON respondent employees were illegally dismissed and, if so, which of the
parties are liable for the claims of the employees and the extent of the reliefs that may
be
awarded to these employees.?

HELD: Petition was partially granted.

Petitioner bank also argues that, there being a transfer of the business establishment,
the innocent transferees no longer have any obligation to continue employing
respondent employees,56 and that the most that they can do is to give preference to
the qualified separated employees; hence, the employees were validly dismissed. The
argument is misleading and unmeritorious. Contrary to petitioner bank’s argument,
there was no transfer of the business establishment to speak of, but merely a change in
the new majority shareholders of the corporation.

There are two types of corporate acquisitions: asset sales and stock sales. In asset
sales, the corporate entity sells all or substantially all of its assets to another entity. In
stock sales, the individual or corporate shareholders sell a controlling block of stock to
new or existing shareholders.
In asset sales, the rule is that the seller in good faith is authorized to dismiss the
affected employees, but is liable for the payment of separation pay under the law.The
buyer in good faith, on the other hand, is not obliged to absorb the employees affected
by the sale,nor is it liable for the payment of their claims. The most that it may do, for
reasons of public policy and social justice, is to give preference to the qualified
separated personnelof the selling firm.

In contrast with asset sales, in which the assets of the selling corporation are
transferred to another entity, the transaction in stock sales takes place at the
shareholder level.

Because the corporation possesses a personality separate and distinct from that of its
shareholders, a shift in the composition of its shareholders will not affect its existence
and continuity. Thus, notwithstanding the stock sale, the corporation continues to be
the employer of its people and continues to be liable for the payment of their just
claims. Furthermore, the corporation or its new majority shareholders are not entitled to
lawfully dismiss corporate employees absent a just or authorized cause.

In the case at bar, the Letter Agreements show that their main object is the
acquisition by the Samson Group of 86.365% of the shares of stock of SME Bank.66
Hence, this case involves a stock sale, whereby the transferee acquires
the controlling shares of stock of the corporation. Thus, following the rule in stock
sales, respondent employees may not be dismissed except for just or authorized causes
under the Labor Code.

The rule should be different in Manlimos, as this case involves a stock sale. It is
error to even discuss transfer of ownership of the business, as the business did not
actually change hands. The transfer only involved a change in the equity
composition of the corporation. To reiterate, the employees are not transferred to a
new employer, but remain with the original corporate employer, notwithstanding an
equity shift in its majority shareholders. This being so, the employment status of the
employees should not have been affected by the stock sale. A change in the equity
composition of the corporate shareholders should not result in the
automatic termination of the employment of the corporation’s employees. Neither
should it give the new majority shareholders the right to legally dismiss the
corporation’s employees, absent a just or authorized cause.

The right to security of tenure guarantees the right of employees to continue in their
employment absent a just or authorized cause for termination. This guarantee
proscribes a situation in which the corporation procures the severance of the
employment of its employees – who patently still desire to work for the corporation –
only because new majority stockholders and a new management have come into the
picture. This situation is a clear circumvention of the employees’ constitutionally
guaranteed right to security of tenure, an act that cannot be countenanced by this
Court.

We therefore see it fit to expressly reverse our ruling in Manlimos insofar as it upheld
that, in a stock sale, the buyer in good faith has no obligation to retain the employees
of the selling corporation; and that the dismissal of the affected employees is lawful,
even absent a just or authorized cause.
G.R. No. 152542             July 8, 2004

MONFORT HERMANOS AGRICULTURAL DEVELOPMENT CORPORATION, as represented by

MA. ANTONIA M. SALVATIERRA, petitioner,
vs.
ANTONIO B. MONFORT III, MA. LUISA MONFORT ASCALON, ILDEFONSO B. MONFORT,
ALFREDO B. MONFORT, CARLOS M. RODRIGUEZ, EMILY FRANCISCA R. DOLIQUEZ,
ENCARNACION CECILIA R. PAYLADO, JOSE MARTIN M. RODRIGUEZ and COURT OF
APPEALS, respondents.

G.R. No. 155472             July 8, 2004

ANTONIO B. MONFORT III, MA. LUISA MONFORT ASCALON, ILDEFONSO B. MONFORT,

ALFREDO B. MONFORT, CARLOS M. RODRIGUEZ, EMILY FRANCISCA R. DOLIQUEZ,
ENCARNACION CECILIA R. PAYLADO, JOSE MARTIN M. RODRIGUEZ, petitioners,
vs.
HON. COURT OF APPEALS, MONFORT HERMANOS AGRICULTURAL DEVELOPMENT
CORPORATION, as represented by MA. ANTONIA M. SALVATIERRA, and RAMON H.
MONFORT, respondents.

DECISION

YNARES-SANTIAGO, J.:

Before the Court are consolidated petitions for review of the decisions of the Court of Appeals in the
complaints for forcible entry and replevin filed by Monfort Hermanos Agricultural Development
Corporation (Corporation) and Ramon H. Monfort against the children, nephews, and nieces of its
original incorporators (collectively known as "the group of Antonio Monfort III").

The petition in G.R. No. 152542, assails the October 5, 2001 Decision of the Special Tenth Division
1 

of the Court of Appeals in CA-G.R. SP No. 53652, which ruled that Ma. Antonia M. Salvatierra has
no legal capacity to represent the Corporation in the forcible entry case docketed as Civil Case No.
534-C, before the Municipal Trial Court of Cadiz City. On the other hand, the petition in G.R. No.
155472, seeks to set aside the June 7, 2002 Decision rendered by the Special Former Thirteenth
2 

Division of the Court of Appeals in CA-G.R. SP No. 49251, where it refused to address, on
jurisdictional considerations, the issue of Ma. Antonia M. Salvatierra's capacity to file a complaint for
replevin on behalf of the Corporation in Civil Case No. 506-C before the Regional Trial Court of
Cadiz City, Branch 60.

Monfort Hermanos Agricultural Development Corporation, a domestic private corporation, is the

registered owner of a farm, fishpond and sugar cane plantation known as Haciendas San Antonio II,
Marapara, Pinanoag and Tinampa-an, all situated in Cadiz City. It also owns one unit of motor
3 

vehicle and two units of tractors. The same allowed Ramon H. Monfort, its Executive Vice President,
4 

to breed and maintain fighting cocks in his personal capacity at Hacienda San Antonio. 5

In 1997, the group of Antonio Monfort III, through force and intimidation, allegedly took possession of
the 4 Haciendas, the produce thereon and the motor vehicle and tractors, as well as the fighting
cocks of Ramon H. Monfort.
In G.R. No. 155472:

On April 10, 1997, the Corporation, represented by its President, Ma. Antonia M. Salvatierra, and
Ramon H. Monfort, in his personal capacity, filed against the group of Antonio Monfort III, a
complaint for delivery of motor vehicle, tractors and 378 fighting cocks, with prayer for injunction and
6 

damages, docketed as Civil Case No. 506-C, before the Regional Trial Court of Negros Occidental,
Branch 60.

The group of Antonio Monfort III filed a motion to dismiss contending, inter alia, that Ma. Antonia M.
Salvatierra has no capacity to sue on behalf of the Corporation because the March 31, 1997 Board
Resolution authorizing Ma. Antonia M. Salvatierra and/or Ramon H. Monfort to represent the
7 

Corporation is void as the purported Members of the Board who passed the same were not validly
elected officers of the Corporation.

On May 4, 1998, the trial court denied the motion to dismiss. The group of Antonio Monfort III filed a
8 

petition for certiorari with the Court of Appeals but the same was dismissed on June 7, 2002. The 9 

Special Former Thirteenth Division of the appellate court did not resolve the validity of the March 31,
1997 Board Resolution and the election of the officers who signed it, ratiocinating that the
determination of said question is within the competence of the trial court.

The motion for reconsideration filed by the group of Antonio Monfort III was denied. Hence, they
10 

instituted a petition for review with this Court, docketed as G.R. No. 155472.

In G.R. No. 152542:

On April 21, 1997, Ma. Antonia M. Salvatierra filed on behalf of the Corporation a complaint for
forcible entry, preliminary mandatory injunction with temporary restraining order and damages
against the group of Antonio Monfort III, before the Municipal Trial Court (MTC) of Cadiz City. It 11 

contended that the latter through force and intimidation, unlawfully took possession of the 4
Haciendas and deprived the Corporation of the produce thereon.

In their answer, the group of Antonio Monfort III alleged that they are possessing and controlling the
12 

Haciendas and harvesting the produce therein on behalf of the corporation and not for themselves.
They likewise raised the affirmative defense of lack of legal capacity of Ma. Antonia M. Salvatierra to
sue on behalf of the Corporation.

On February 18, 1998, the MTC of Cadiz City rendered a decision dismissing the complaint. On 13 

appeal, the Regional Trial Court of Negros Occidental, Branch 60, reversed the Decision of the
MTCC and remanded the case for further proceedings. 14

Aggrieved, the group of Antonio Monfort III filed a petition for review with the Court of Appeals. On
October 5, 2001, the Special Tenth Division set aside the judgment of the RTC and dismissed the
complaint for forcible entry for lack of capacity of Ma. Antonia M. Salvatierra to represent the
Corporation. The motion for reconsideration filed by the latter was denied by the appellate court.
15  16

Unfazed, the Corporation filed a petition for review with this Court, docketed as G.R. No. 152542
which was consolidated with G.R. No. 155472 per Resolution dated January 21, 2004. 17

The focal issue in these consolidated petitions is whether or not Ma. Antonia M. Salvatierra has the
legal capacity to sue on behalf of the Corporation.

The group of Antonio Monfort III claims that the March 31, 1997 Board Resolution authorizing Ma.
Antonia M. Salvatierra and/or Ramon H. Monfort to represent the Corporation is void because the
purported Members of the Board who passed the same were not validly elected officers of the
Corporation.

A corporation has no power except those expressly conferred on it by the Corporation Code and
those that are implied or incidental to its existence. In turn, a corporation exercises said powers
through its board of directors and/or its duly authorized officers and agents. Thus, it has been
observed that the power of a corporation to sue and be sued in any court is lodged with the board of
directors that exercises its corporate powers. In turn, physical acts of the corporation, like the signing
of documents, can be performed only by natural persons duly authorized for the purpose by
corporate by-laws or by a specific act of the board of directors. 18

Corollary thereto, corporations are required under Section 26 of the Corporation Code to submit to
the SEC within thirty (30) days after the election the names, nationalities and residences of the
elected directors, trustees and officers of the Corporation. In order to keep stockholders and the
public transacting business with domestic corporations properly informed of their organizational
operational status, the SEC issued the following rules:
 xxx      xxx      xxx

2. A General Information Sheet shall be filed with this Commission within thirty (30) days
following the date of the annual stockholders' meeting. No extension of said period shall be
allowed, except for very justifiable reasons stated in writing by the President, Secretary,
Treasurer or other officers, upon which the Commission may grant an extension for not more
than ten (10) days.

2.A. Should a director, trustee or officer die, resign or in any manner, cease to hold
office, the corporation shall report such fact to the Commission with fifteen (15) days
after such death, resignation or cessation of office.

3. If for any justifiable reason, the annual meeting has to be postponed, the company should
notify the Commission in writing of such postponement.

The General Information Sheet shall state, among others, the names of the elected
directors and officers, together with their corresponding position title… (Emphasis
supplied)

In the instant case, the six signatories to the March 31, 1997 Board Resolution authorizing Ma.
Antonia M. Salvatierra and/or Ramon H. Monfort to represent the Corporation, were: Ma. Antonia M.
Salvatierra, President; Ramon H. Monfort, Executive Vice President; Directors Paul M. Monfort,
Yvete M. Benedicto and Jaqueline M. Yusay; and Ester S. Monfort, Secretary. However, the names
19 

of the last four (4) signatories to the said Board Resolution do not appear in the 1996 General
Information Sheet submitted by the Corporation with the SEC. Under said General Information Sheet
the composition of the Board is as follows:

1. Ma. Antonia M. Salvatierra (Chairman);

2. Ramon H. Monfort (Member);

3. Antonio H. Monfort, Jr., (Member);

4. Joaquin H. Monfort (Member);

5. Francisco H. Monfort (Member) and

6. Jesus Antonio H. Monfort (Member). 20

There is thus a doubt as to whether Paul M. Monfort, Yvete M. Benedicto, Jaqueline M. Yusay and
Ester S. Monfort, were indeed duly elected Members of the Board legally constituted to bring suit in
behalf of the Corporation.
21

In Premium Marble Resources, Inc. v. Court of Appeals, the Court was confronted with the similar
22 

issue of capacity to sue of the officers of the corporation who filed a complaint for damages. In the
said case, we sustained the dismissal of the complaint because it was not established that the
Members of the Board who authorized the filing of the complaint were the lawfully elected officers of
the corporation. Thus –

The only issue in this case is 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.

Petitioner, through the first set of officers, viz., Mario Zavalla, Oscar Gan, Lionel Pengson,
Jose Ma. Silva, Aderito Yujuico and Rodolfo Millare, presented the Minutes of the meeting of
its Board of Directors held on April 1, 1982, as proof that the filing of the case against private
respondent was authorized by the Board. On the other hand, the second set of officers, viz.,
Saturnino G. Belen, Jr., Alberto C. Nograles and Jose L.R. Reyes, presented a Resolution
dated July 30, 1986, to show that Premium did not authorize the filing in its behalf of any suit
against the private respondent International Corporate Bank.

Later on, petitioner submitted its Articles of Incorporation dated November 6, 1979 with the
following as Directors: Mario C. Zavalla, Pedro C. Celso, Oscar B. Gan, Lionel Pengson, and
Jose Ma. Silva.

However, it appears from the general information sheet and the Certification issued by the
SEC on August 19, 1986 that as of March 4, 1981, the officers and members of the board of
directors of the Premium Marble Resources, Inc. were:
 Alberto C. Nograles — President/Director

Fernando D. Hilario — Vice President/Director

Augusto I. Galace — Treasurer

Jose L.R. Reyes — Secretary/Director

Pido E. Aguilar — Director

Saturnino G. Belen, Jr. — Chairman of the Board.

While the Minutes of the Meeting of the Board on April 1, 1982 states that the newly elected
officers for the year 1982 were Oscar Gan, Mario Zavalla, Aderito Yujuico and Rodolfo
Millare, petitioner failed to show proof that this election was reported to the SEC. In fact, the
last entry in their General Information Sheet with the SEC, as of 1986 appears to be the set
of officers elected in March 1981.

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 [sic] 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-appellant's 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.

Sec. 26 of the Corporation Code provides, thus:

"Sec. 26. Report of election of directors, trustees and officers. — Within thirty (30)
days after the election of the directors, trustees and officers of the corporation, the
secretary, or any other officer of the corporation, shall submit to the Securities and
Exchange Commission, the names, nationalities and residences of the directors,
trustees and officers elected. xxx"

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 corporation's 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.

In the case at bar, the fact that four of the six Members of the Board listed in the 1996 General
Information Sheet are already dead at the time the March 31, 1997 Board Resolution was issued,
23  24 

does not automatically make the four signatories (i.e., Paul M. Monfort, Yvete M. Benedicto,
Jaqueline M. Yusay and Ester S. Monfort) to the said Board Resolution (whose name do not appear
in the 1996 General Information Sheet) as among the incumbent Members of the Board. This is
because it was not established that they were duly elected to replace the said deceased Board
Members.

To correct the alleged error in the General Information Sheet, the retained accountant of the
Corporation informed the SEC in its November 11, 1998 letter that the non-inclusion of the lawfully
elected directors in the 1996 General Information Sheet was attributable to its oversight and not the
fault of the Corporation. This belated attempt, however, did not erase the doubt as to whether an
25 

election was indeed held. As previously stated, a corporation is mandated to inform the SEC of the
names and the change in the composition of its officers and board of directors within 30 days after
election if one was held, or 15 days after the death, resignation or cessation of office of any of its
director, trustee or officer if any of them died, resigned or in any manner, ceased to hold office. This,
the Corporation failed to do. The alleged election of the directors and officers who signed the March
31, 1997 Board Resolution was held on October 16, 1996, but the SEC was informed thereof more
than two years later, or on November 11, 1998. The 4 Directors appearing in the 1996 General
Information Sheet died between the years 1984 – 1987, but the records do not show if such demise
26 

was reported to the SEC.

What further militates against the purported election of those who signed the March 31, 1997 Board
Resolution was the belated submission of the alleged Minutes of the October 16, 1996 meeting
where the questioned officers were elected. The issue of legal capacity of Ma. Antonia M. Salvatierra
was raised before the lower court by the group of Antonio Monfort III as early as 1997, but the
Minutes of said October 16, 1996 meeting was presented by the Corporation only in its September
29, 1999 Comment before the Court of Appeals. Moreover, the Corporation failed to prove that the
27 

same October 16, 1996 Minutes was submitted to the SEC. In fact, the 1997 General Information
Sheet submitted by the Corporation does not reflect the names of the 4 Directors claimed to be
28 

elected on October 16, 1996.

Considering the foregoing, we find that Ma. Antonia M. Salvatierra failed to prove that four of those
who authorized her to represent the Corporation were the lawfully elected Members of the Board of
the Corporation. As such, they cannot confer valid authority for her to sue on behalf of the
corporation.

The Court notes that the complaint in Civil Case No. 506-C, for replevin before the Regional Trial
Court of Negros Occidental, Branch 60, has 2 causes of action, i.e., unlawful detention of the
Corporation's motor vehicle and tractors, and the unlawful detention of the of 387 fighting cocks of
Ramon H. Monfort. Since Ramon sought redress of the latter cause of action in his personal
capacity, the dismissal of the complaint for lack of capacity to sue on behalf of the corporation
should be limited only to the corporation's cause of action for delivery of motor vehicle and tractors.
In view, however, of the demise of Ramon on June 25, 1999, substitution by his heirs is proper.
29 

WHEREFORE, in view of all the foregoing, the petition in G.R. No. 152542 is DENIED. The October
5, 2001 Decision of the Special Tenth Division of the Court of Appeals in CA-G.R. SP No. 53652,
which set aside the August 14, 1998 Decision of the Regional Trial Court of Negros Occidental,
Branch 60 in Civil Case No. 822, is AFFIRMED.

In G.R. No. 155472, the petition is GRANTED and the June 7, 2002 Decision rendered by the
Special Former Thirteenth Division of the Court of Appeals in CA-G.R. SP No. 49251, dismissing the
petition filed by the group of Antonio Monfort III, is REVERSED and SET ASIDE.

The complaint for forcible entry docketed as Civil Case No. 822 before the Municipal Trial Court of
Cadiz City is DISMISSED. In Civil Case No. 506-C with the Regional Trial Court of Negros
Occidental, Branch 60, the action for delivery of personal property filed by Monfort Hermanos
Agricultural Development Corporation is likewise DISMISSED. With respect to the action filed by
Ramon H. Monfort for the delivery of 387 fighting cocks, the Regional Trial Court of Negros
Occidental, Branch 60, is ordered to effect the corresponding substitution of parties.

No costs.

SO ORDERED.