I.

Caption

Title of the Case: MANUEL A. TORRES, JR., (Deceased) vs. COURT OF APPEALS, SECURITIES AND
EXCHANGE COMMISSION, TORMIL REALTY & DEVELOPMENT CORPORATION, ANTONIO P. TORRES, JR.,
MA. CRISTINA T. CARLOS, MA. LUISA T. MORALES and DANTE D. MORALES

Date: September 5, 1997

Citation: (278 SCRA 793) [G.R. No. 120138]

Petitioner: MANUEL A. TORRES, JR., (Deceased)

Respondents: COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION, TORMIL REALTY &
DEVELOPMENT CORPORATION, ANTONIO P. TORRES, JR., MA. CRISTINA T. CARLOS, MA. LUISA T.
MORALES and DANTE D. MORALES

Ponente: Kapunan, J

II. Facts

A. Tormil Realty & Development Corporation's principal owner was the late Manuel A. Torres, Jr.,
while the minority stockholders were private respondents who are the children of Judge Torres'
deceased brother Antonio A. Torres.
B. To save money on taxes, Judge Torres used an estate planning method which he assigned to
Tormil Realty & Development Corporation the different properties he owned in return for
225,972 Tormil Realty shares. Judge Torres also executed ten deeds of assignment.
C. As a result, the aforementioned properties were officially documented in Tormil Realty's
inventory of assets. Except for those in Makati and Pasay City, all of the assigned parcels of land
were registered with the name of Tormil Realty.
D. However, just 225,000 Tormil Realty shares remained unsubscribed at the time of the
assignments and exchange, all of which were lawfully issued to and received by Judge Torres.
E. On September 11, 1986, Judge Torres revoked the two (2) deeds of assignment covering the
properties in Makati and Pasay City due to the insufficient number of shares of stock issued to
Judge Torres and the refusal of private respondents to approve the needed increase in the
corporation's authorized capital stock (to cover the shortage of 972 shares due to Judge Torres
under the "estate planning" scheme).
F. Noticing the absence of the Makati and Pasay City properties from the corporation's inventory
of assets and financial records, private respondents filed a complaint with the SEC docketed as
SEC Case No. 3153 on March 31, 1987, to compel Judge Torres to deliver to Tormil corporation
the two (2) deeds of assignment covering the aforementioned Makati and Pasay City properties.
G. And because of that, Torres was forced to return the two deeds of assignment to the private
respondents.
H. Private Respondents alleged that Torres also had a partnership with the general manager and
legal counsel named the "Torres-Pabalan Realty and Development Corporation" and that as part
of Judge Torres' contribution to the new corporation, he executed in its favor a Deed of
Assignment conveying the same Makati and Pasay City properties he had earlier transferred to
Tormil.
 I. Tormil Corporation’s 1987 stockholder’s meeting and election of directors was scheduled on
March 25, 1987, in accordance with its by-law. As a result, Judge Torres assigned one share each
to petitioners from his own shares. These shares were classified as “qualifying shares” for the
primary purpose of complying for the legal obligation to elect Torres nominees to the Board of
Directors.
J. Moreover, every assigned share was covered by Tormil Stock Certificates, in which an inscription
states that all these nominees are just trustees of Judge Manuel Torres. It was then stated that
the purpose and intention of the deed of assignment dated March 6, 1987 was for the sole
purpose of qualifying him as a director. The reason behind the aforestated action was to remedy
the inequitable lopsided set-up obtaining in the corporation.It was made to overrule the
majority stockholder in the Board's Decision making function which was held and scheduled on
March 25,1987. However, everything that happened on March 25,1987 was narrated by Attys.
Benito Cataran and Bayani De los Reyes,the official representatives dispatched by the SEC to
observe the proceedings (upon request of the late Judge Torres) in their report dated March
27,1987.
K. Along with his stockholder-lawyers, Manuel Torres Jr. Visited Ma. Jacinta Torres’ residence in
San Miguel, Makati and Metro Manila. The signatories joined them since they still had a vote
and Manuel Torres, Jr., the person who had invited SEC observers, represented the majority of
the outstanding capital stock. Nine individuals were nominated and elected as directors at the
meeting’s resumption. Following the election, it was decided that the new board of directors
would meet and elect its officers.

III. Issues

1. Whether the cancellation of deeds of assignment regarding the Makati and Pasay Properties is
lawful.
2. Whether or not the qualifying shares issued are valid, and whether or not the Palaban and
Corporation are stockholders and can be elected as board of directors of Tormil Realty &
Development

IV. Ruling

1. No. Article No. 1191 states that the injured party can choose either to fulfill or to rescind the
obligation once reciprocality in complying obligations between two parties happened.
However,in such cases where the obligation is impossible the injured party may seek rescission
even after choosing fulfillment.

Furthermore,Article No. 1355 of the Civil Code states that a contract can only be invalidated
once there's fraud, mistake or undue payments and not when cases specified by law,lesion or
inadequacy of cause occur.Thus in the case of Torres,the 972 shortage of shares is not a
substantial and fundamental breach because what specifically happened is inadequacy of cause
 basically it is considered as a slight or carnal breach that's why the recission of contract is not
permitted.

Consequently, the most logical course of action is to declare as null and void the deed of
revocation executed by respondent Torres.

2. No.In the absence of (any) provision to the contrary, the corporate secretary is the guardian of
corporate records, as such, Judge Torres maintains the stock and transfer book and makes all
necessary and appropriate entries therein, and any forms of alleged transfer of Judged Torres
will not be given any valid effect, hence Palaban and Corporation cannot be considered as
stockholders and be elected as Board of Directors of Tormil.

The fact that respondent Torres holds 81.28% of the outstanding capital stock of TORMIL is of
no moment and is not a license for him to arrogate unto himself a duty lodged to the corporate
secretary.

I. Caption

Title of the Case: COCA-COLA BOTTLERS PHILIPPINES, INC.,

vs.

THE HONORABLE COURT OF APPEALS (Fifth Division) and MS. LYDIA GERONIMO

Date: October 18, 1993

Citation: G.R. No. 110295

Petitioner: Angara, Abello, Concepcion, Regala & Cruz Law Offices

Respondents: THE HONORABLE COURT OF APPEALS (Fifth Division) and MS. LYDIA GERONIMO

Private Respondents: Alejandro M. Villamil

Ponente: DAVIDE, JR., J.

II. Facts

A. Private respondent was the proprietress of Kindergarten Wonderland Canteen in Dagupan City.
B. In August 1989, some parents of the students complained to her that the Coke and Sprite soft
drinks sold by her contained fiber-like matter and other foreign substances.
C. Lydia Geronimo brought the said bottles for examination to DOH and it was found out that the
soft drinks “are adulterated.” As a result, her per day sales of soft drinks severely plummeted
and she had to close her shop on 12 December 1989 for losses.
D. As a result, the complaint was filed in good time, according to the private respondent, who
claimed that the complaint is one for damages that does not involve an administrative action
 and that the plaintiff's cause of action is based on an injury to their right and can be brought
within four years in accordance with Article 1146 of the Civil Code.
E. She demanded damages, ordering the petitioner to pay her P5,000.00 as actual damages,
P72,000.00 as compensatory damages, P500,000.00 as moral damages, P10,000.00 as
exemplary damages, the amount equal to 30% of the damages awarded as attorney's fees, and
the costs. before the RTC which dismissed the same on motion by petitioner based on the
ground of Prescription. On appeal, the CA annulled the orders of the RTC.

III. Issue

1. Whether, the claim for damages won by the proprietress against the manufacturer of soft drinks
shall be deemed one for breach of implied guarantee under article 1561 of the Civil code, which
takes effect 6 months after delivery of the sold item.

IV. Ruling

1. No. The State Council agrees with the Courts of Justice's conclusion that the cause of action in
the situation at hand is based on quasi-delict under Article 1146 of the CC, which provides a
four-year limitation period, rather than breach of warranty under Article 1562 of the same code.
This is supported by the complaint's claims, which relate to the careless and negligent
manufacturing of "adulterated food items intended for public consumption.”