Torres vs.

CA
Judge Manuel Torres, Jr. owns about 81% of the capital stocks of Tormil Realty &
Development Corporation (TRDC). TRDC is a small family owned corporation and other
stockholders thereof include Judge Torres nieces and nephews. However, even though
Judge Torres owns the majority of TRDC and was also the president thereof, he is only
entitled to one vote among the 9-seat Board of Directors, hence, his vote can be easily
overridden by minority stockholders. So in 1987, before the regular election of TRDC
officers, Judge Torres assigned one share (qualifying share) each to 5 outsiders for the
purpose of qualifying them to be elected as directors in the board and thereby
strengthen Judge Torres power over other family members.
However, the said assignment of shares were not recorded by the corporate secretary,
Ma. Christina Carlos (niece) in the stock and transfer book of TRDC. When the validity
of said assignments were questioned, Judge Torres ratiocinated that it is impractical for
him to order Carlos to make the entries because Carlos is one of his opposition. So
what Judge Torres did was to make the entries himself because he was keeping
thestock and transfer book. He further ratiocinated that he can do what a mere
secretary can do because in the first place, he is the president.
Since the other family members were against the inclusion of the five outsiders, they
refused to take part in the election. Judge Torres and his five assignees then decided to
conduct the election among themselves considering that the 6 of them constitute a
quorum.
ISSUE: Whether or not the inclusion of the five outsiders are valid. Whether or not the
subsequent election is valid.
HELD: No. The assignment of the shares of stocks did not comply with procedural
requirements. It did not comply with the by laws of TRDC nor did it comply with Section
74 of the Corporation Code. Section 74 provides that the stock and transfer book should
be kept at the principal office of the corporation. Here, it was Judge Torres who was
keeping it and was bringing it with him. Further, his excuse of not ordering the secretary
to make the entries is flimsy. The proper procedure is to order the secretary to make the
entry of said assignment in the book, and if she refuses, Judge Torres can come to
court and compel her to make the entry. There are judicial remedies for this. Needless
to say, the subsequent election is invalid because the assignment of shares is invalid by
reason of procedural infirmity. The Supreme Court also emphasized: all corporations,

big or small, must abide by the provisions of the Corporation Code. Being a simple
family corporation is not an exemption. Such corporations cannot have rules and
practices other than those established by law

Torres vs. CA
G.R. No. 120138; September 5, 1997

FACTS:
The late Manuel A. Torres, Jr. (Judge Torres for brevity) was the majority
stockholder of Tormil Realty & Development Corporation while private respondents who
are the children of Judge Torres, deceased brother Antonio A. Torres, constituted the
minority stockholders.
The 1987 annual stockholders meeting and election of directors of Tormil
corporation was scheduled in compliance with the provisions of its by-laws. Judge
Torres assigned from his own shares, one (1) share each to petitioners Tobias, Jocson,
Jurisprudencia, Azura and Pabalan. These assigned shares were in the nature of
qualifying shares, for the sole purpose of meeting the legal requirement to be able to
elect them (Tobias and company) to the Board of Directors as Torres nominees.
The annual stockholders meeting was held as scheduled. Two representatives of
the SEC were present in the meeting. Antonio Torres Jr. questioned the presence of the
SEC representatives holding that the subject meeting is for the family corporation and
private firm. The SEC representatives explained that it was merely in response to the
request of Manuel Torres, Jr. and that SEC has jurisdiction over all registered
corporations. The meeting resulted into chaos which in effect ousted Manuel Torres and
his group but nevertheless were able to elect the officers.
Consequently, private respondents instituted a complaint with the SEC praying in
the main, that the election of petitioners to the Board of Directors be annulled. Private
respondents alleged that the petitioners-nominees were not legitimate stockholders of
Tormil because the assignment of shares to them violated the minority stockholders
right of pre-emption as provided in the corporations articles and by-laws.

ISSUE:

WON the assignment of shares made by Judge Torres is valid despite being only
the signatory to the certificates issued.

HELD:
NO. It is the corporate secretarys duty and obligation to register valid transfers of
stocks and if said corporate officer refuses to comply, the transferor-stockholder may
rightfully bring suit to compel performance. In the absence of any provision to the
contrary, the corporate secretary is the custodian of corporate records. Corollarily, he
keeps the stock and transfer book and makes proper and necessary entries therein.
In the case at bar, the stock and transfer book of TORMIL was not kept by Ms.
Maria Cristina T. Carlos, the corporate secretary but by respondent Torres, the President
and Chairman of the Board of Directors of TORMIL. In contravention to the above cited
provision, the stock and transfer book was not kept at the principal office of the
corporation either but at the place of respondent Torres.
These being the obtaining circumstances, any entries made in the stock and
transfer book on March 8, 1987 by respondent Torres of an alleged transfer of nominal
shares to Pabalan and Co. cannot therefore be given any valid effect. Where the entries
made are not valid, Pabalan and Co. cannot therefore be considered stockholders of
record of TORMIL. Because they are not stockholders, they cannot therefore be elected
as directors of TORMIL

PSE VS CA
Puerto Azul Land, Inc. (PALI) is a corporation engaged in the real estate business. PALI
was granted permission by the Securities and Exchange Commission (SEC) to sell its
shares to the public in order for PALI to develop its properties.
PALI then asked the Philippine Stock Exchange (PSE) to list PALIs stocks/shares to
facilitate exchange. The PSE Board of Governors denied PALIs application on the
ground that there were multiple claims on the assets of PALI. Apparently, the Marcoses,
Rebecco Panlilio (trustee of the Marcoses), and some other corporations were claiming
assets if not ownership over PALI.

PALI then wrote a letter to the SEC asking the latter to review PSEs decision. The SEC
reversed PSEs decisions and ordered the latter to cause the listing of PALI shares in
the Exchange.
ISSUE: Whether or not it is within the power of the SEC to reverse actions done by the
PSE.
HELD: Yes. The SEC has both jurisdiction and authority to look into the decision of PSE
pursuant to the Revised Securities Act and for the purpose of ensuring fair
administration of the exchange. PSE, as a corporation itself and as a stock exchange is
subject to SECs jurisdiction, regulation, and control. In order to insure fair dealing of
securities and a fair administration of exchanges in the PSE, the SEC has the authority
to look into the rulings issued by the PSE. The SEC is the entity with the primary say as
to whether or not securities, including shares of stock of a corporation, may be traded or
not in the stock exchange.
HOWEVER, in the case at bar, the Supreme Court emphasized that the SEC may only
reverse decisions issued by the PSE if such are tainted with bad faith. In this case,
there was no showing that PSE acted with bad faith when it denied the application of
PALI. Based on the multiple adverse claims against the assets of PALI, PSE deemed
that granting PALIs application will only be contrary to the best interest of the general
public. It was reasonable for the PSE to exercise its judgment in the manner it deems
appropriate for its business identity, as long as no rights are trampled upon, and public
welfare is safeguarded

Private v. Public Corporation

BOY SCOUTS OF THE PHILIPPINES
vs.
COMMISSION ON AUDIT
G.R. No. 177131.June 7, 2011
FACTS:
The COA maintains that the functions of the BSP that include, among others, the
teaching to the youth of patriotism, courage, self-reliance, and kindred virtues, are
undeniably sovereign functions enshrined under the Constitution and discussed by the
Court in Boy Scouts of the Philippines v. National Labor Relations Commission. The
COA contends that any attempt to classify the BSP as a private corporation would be
incomprehensible since no less than the law which created it had designated it as a

public corporation and its statutory mandate embraces performance of sovereign

functions. The COA claims that the only reason why the BSP employees fell within the
scope of the Civil Service Commission even before the 1987 Constitution was the fact
that it was a government-owned or controlled corporation; that as an attached agency of
the Department of Education, Culture and Sports (DECS), the BSP is an agency of the
government; and that the BSP is a chartered institution under Section 1(12) of the
Revised Administrative Code of 1987, embraced under the term government
instrumentality. The COA concludes that being a government agency, the funds and
property owned or held by the BSP are subject to the audit authority of the COA
pursuant to Section 2(1), Article IX (D) of the 1987 Constitution.
BSP claims that it has a unique characteristic which "neither classifies it as a
purely public nor a purely private corporation"; that it is not a quasi-public corporation;
and that it may belong to a different class altogether.
ISSUE:
Whether or not the BSP is public corporation.
RULING:
YES.
BSP is a public corporation and its funds are subject to the COAs audit
jurisdiction. It is a public corporation or a government agency or instrumentality with
juridical personality, which does not fall within the constitutional prohibition in Article XII,
Section 16, notwithstanding the amendments to its charter. Not all corporations, which
are not government owned or controlled, are ipso facto to be considered private
corporations as there exist another distinct class of corporations or chartered institutions
which are otherwise known as "public corporations." These corporations are treated by
law as agencies or instrumentalities of the government which are not subject to the tests
of ownership or control and economic viability but to different criteria relating to their
public purposes/interests or constitutional policies and objectives and their
administrative relationship to the government or any of its Departments or Offices.
Note that the Administrative Code of 1987 designates the BSP as one of the
attached agencies of the Department of Education, Culture and Sports ("DECS"). An
"agency of the Government" is defined as referring to any of the various units of the
Government including a department, bureau, office, and instrumentality, governmentowned or -controlled corporation, or local government or distinct unit therein. BSP still
remains an instrumentality of the national government. It is a public corporation created
by law for a public purpose, attached to the DECS pursuant to its Charter and the
Administrative Code of 1987. It is not a private corporation which is required to be
owned or controlled by the government and be economically viable to justify its
existence under a special law.

VITALIANO N. AGUIRRE II AND FIDEL N. AGUIRRE v. FQB+7, INC., NATHANIEL

BOCOBO, et al.
G.R. No. 170770, 9 January 2013, SECOND DIVISION (Del Castillo, J.)
A cause of action involving an intra-corporate controversy remains and must be filed as
an intra-corporate dispute despite the subsequent dissolution of the corporation.
Vitaliano Aguirre was a director and a shareholder of FQB+7 Inc. Sometime in
April, he discovered a General Information Sheet (GIS) submitted in the SEC. He found
out that there was a discrepancy between the directors and shareholders as contained
in the GIS and the "real" board as contained in the Articles of Incorporation. Apparently,
the GIS included Nathaniel and Priscila Bocobo as officers and directors of the
corporation but the two were not included in the original list. Also, Aguirre was deleted in
the list of directors and shareholders. He filed an intra-corporate dispute in the RTC for
injunction and for inspection of corporate books and records. Aguirre sought to enjoin
the alleged "usurpers" from representing the corporation and to declare himself as a
shareholder.
Bocobo, et al. claimed that the SEC already revoked FQB+7 certificate of
registration for failure to comply with SEC reportorial requirements. Aguirre did not
dispute such fact. However, Bocobo, et al now contends that since the corporation is
already dissolved, Aguirre cannot anymore file for a complaint geared towards the
continuation of the corporation's business.
ISSUES
1. Was the complaint an intra-corporate dispute cognizable by the RTC notwithstanding
the dissolution of the corporation?
2. Was the complaint a continuation of the business?
RULING
1. Intra-corporate disputes remain even when the corporation is dissolved.
To be considered as an intra-corporate dispute, the case: (a) must arise out of intracorporate or partnership relations, and (b) the nature of the question subject of the
controversy must be such that it is intrinsically connected with the regulation of the
corporation or the enforcement of the parties rights and obligations under the
Corporation Code and the internal regulatory rules of the corporation. So long as these
two criteria are satisfied, the dispute is intra-corporate and the RTC, acting as a special
commercial court, has jurisdiction over it.

Examining the case before us in relation to these two criteria, the Court finds and so
holds that the case is essentially an intra-corporate dispute. It obviously arose from the
intra-corporate relations between the parties, and the questions involved pertain to their
rights and obligations under the Corporation Code and matters relating to the regulation
of the corporation. We further hold that the nature of the case as an intra-corporate
dispute was not affected by the subsequent dissolution of the corporation.
It bears reiterating that Section 145 of the Corporation Code protects, among others, the
rights and remedies of corporate actors against other corporate actors. The statutory
provision assures an aggrieved party that the corporations dissolution will not impair,
much less remove, his/her rights or remedies against the corporation, its stockholders,
directors or officers. It also states that corporate dissolution will not extinguish any
liability already incurred by the corporation, its stockholders, directors, or officers. In
short, Section 145 preserves a corporate actors cause of action and remedy against
another corporate actor. In so doing, Section 145 also preserves the nature of the
controversy between the parties as an intra-corporate dispute.
The dissolution of the corporation simply prohibits it from continuing its business.
However, despite such dissolution, the parties involved in the litigation are still corporate
actors. The dissolution does not automatically convert the parties into total strangers or
change their intra-corporate relationships. Neither does it change or terminate existing
causes of action, which arose because of the corporate ties between the parties. Thus,
a cause of action involving an intra-corporate controversy remains and must be filed as
an intra-corporate dispute despite the subsequent dissolution of the corporation.
2. The complaint does not seek for the continuation of the business
The Court fails to find in the prayers [of Aguirre] above any intention to continue the
corporate business of FQB+7. The Complaint does not seek to enter into contracts,
issue new stocks, acquire properties, execute business transactions, etc. Its aim is not
to continue the corporate business, but to determine and vindicate an alleged
stockholders right to the return of his stockholdings and to participate in the election of
directors, and a corporations right to remove usurpers and strangers from its affairs.
The Court fails to see how the resolution of these issues can be said to continue the
business of FQB+7.
Neither are these issues mooted by the dissolution of the corporation. A corporations
board of directors is not rendered functus officio by its dFissolution. Since Section 122
allows a corporation to continue its existence for a limited purpose, necessarily there
must be a board that will continue acting for and on behalf of the dissolved corporation
for that purpose. In fact, Section 122 authorizes the dissolved corporations board of

directors to conduct its liquidation within three years from its dissolution. Jurisprudence
has even recognized the boards authority to act as trustee for persons in interest
beyond the said three-year period. 43 Thus, the determination of which group is the bona
fide or rightful board of the dissolved corporation will still provide practical relief to the
parties involved.
The same is true with regard to Vitalianos shareholdings in the dissolved corporation. A
partys stockholdings in a corporation, whether existing or dissolved, is a property
right44 which he may vindicate against another party who has deprived him thereof. The
corporations dissolution does not extinguish such property right.

Vitaliano N. Aguirre II and Fidel N. Aguirre vs. FQB, Inc., Nathaniel D. Bocobo et al. (G.R. No. 170770; January 9,
2013), the Philippine Supreme Court found that the board of directors of a dissolved corporation may continue to
exercise its powers and act in behalf of the corporation for the limited purpose of winding up and liquidating its
corporate affairs. For this reason, issues raised by the stockholder of the dissolved corporation against the board are
still covered by the summary rules on intra-corporate disputes.
The case arose when Vitaliano Aguirre discovered substantive discrepancies in the General Information Sheet
(GIS) of FQB+7 Inc. (FQB), a dissolved corporation. These changes include the designation of Nathaniel Bocobo and
Priscila Bocobo as directors and subscribers in place of their deceased father Francisco Bocobo. Aguirre, who was
one of the original subscribers of FQB, was also no longer listed as a subscriber or even stockholder of the
corporation.
Aguirre asked the original members of the board of directors to rectify the entries in the GIS and allow him to
inspect the corporate books and records. When Aguirres requests went unheeded, he filed a complaint with the
special commercial court on behalf of FQB.
FQBs board countered, among others, that the commercial court has no jurisdiction over the case as the
registration of FQB had already been revoked.
The Supreme Court declared that the dissolution of the corporation does not render the corporations board of
directors functus officio. The board of directors still has actual legal authority to direct the affairs of the corporation
with respect to the winding up and liquidation of corporate affairs.
The High Court explained that Section 122 of the Corporation Code allows the corporation to continue its
existence for these limited purposes. It is necessary that the corporation retains the board which should continue to
act in its behalf while winding up its business and liquidating its remaining assets, if any, within three (3) years from
dissolution.
Given that the board of a dissolved corporation acts as the trustee for persons in interests including its
creditors, the determination of the composition of the board is a practical relief which a stockholder can still raise. In
this case, Aguirre still has the right to question the validity of the appointment of the board which would have
conducted the liquidation of FQB.
The Court elaborated that an intra-corporate case exists (a) if the issue arose out of intra-corporate or
partnership relations; and (b) if the controversy is intrinsically connected with the regulation of the corporation or the
enforcement of the parties rights and obligations under the Corporation Code and the internal regulatory rules of the
corporation. The Court held that these two elements exist in this case even though FQB had been dissolved

Tayag vs. Benguet Consolidated, Inc.

In March 1960, Idonah Perkins died in New York. She left behind properties here and
abroad. One property she left behind were two stock certificates covering 33,002 shares
of stocks of the Benguet Consolidated, Inc (BCI). Said stock certificates were in the
possession of the Country Trust Company of New York (CTC-NY). CTC-NY was the
domiciliary administrator of the estate of Perkins (obviously in the USA). Meanwhile, in
1963, Renato Tayag was appointed as the ancillary administrator (of the properties of
Perkins she left behind in the Philippines).
A dispute arose between CTC-NY and Tayag as to who between them is entitled to
possess the stock certificates. A case ensued and eventually, the trial court ordered
CTC-NY to turn over the stock certificates to Tayag. CTC-NY refused. Tayag then filed
with the court a petition to have said stock certificates be declared lost and to compel
BCI to issue new stock certificates in replacement thereof. The trial court granted
Tayags petition.
BCI assailed said order as it averred that it cannot possibly issue new stock certificates
because the two stock certificates declared lost are not actually lost; that the trial court
as well Tayag acknowledged that the stock certificates exists and that they are with
CTC-NY; that according to BCIs by laws, it can only issue new stock certificates, in lieu
of lost, stolen, or destroyed certificates of stocks, only after court of law has issued a
final and executory order as to who really owns a certificate of stock.
ISSUE: Whether or not the arguments of Benguet Consolidated, Inc. are correct.
HELD: No. Benguet Consolidated is a corporation who owes its existence to Philippine
laws. It has been given rights and privileges under the law. Corollary, it also has
obligations under the law and one of those is to follow valid legal court orders. It is not
immune from judicial control because it is domiciled here in the Philippines. BCI is a
Philippine corporation owing full allegiance and subject to the unrestricted jurisdiction of
local courts. Its shares of stock cannot therefore be considered in any wise as immune
from lawful court orders. Further, to allow BCIs opposition is to render the court order
against CTC-NY a mere scrap of paper. It will leave Tayag without any remedy simply
because CTC-NY, a foreign entity refuses to comply with a valid court order. The final
recourse then is for our local courts to create a legal fiction such that the stock
certificates in issue be declared lost even though in reality they exist in the hands of

CTC-NY. This is valid. As held time and again, fictions which the law may rely upon in
the pursuit of legitimate ends have played an important part in its development.
Further still, the argument invoked by BCI that it can only issue new stock certificates in
accordance with its bylaws is misplaced. It is worth noting that CTC-NY did not appeal
the order of the court it simply refused to turn over the stock certificates hence
ownership can be said to have been settled in favor of estate of Perkins here. Also,
assuming that there really is a conflict between BCIs bylaws and the court order, what
should prevail is the lawful court order. It would be highly irregular if court orders would
yield to the bylaws of a corporation. Again, a corporation is not immune from judicial
orders.

PRESIDENTIAL DECREE No. 902-A

REORGANIZATION OF THE SECURITIES AND EXCHANGE COMMISSION WITH ADDITIONAL
POWER AND PLACING THE SAID AGENCY UNDER THE ADMINISTRATIVE SUPERVISION OF
THE OFFICE OF THE PRESIDENT
Section 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange
Commission over corporations, partnerships and other forms of associations registered with it as
expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to
hear and decide cases involving.
a) Devices or schemes employed by or any acts, of the board of directors, business
associates, its officers or partnership, amounting to fraud and misrepresentation which may
be detrimental to the interest of the public and/or of the stockholder, partners, members of
associations or organizations registered with the Commission.
b) Controversies arising out of intra-corporate or partnership relations, between and among
stockholders, members, or associates; between any or all of them and the corporation,
partnership or association of which they are stockholders, members or associates,

respectively; and between such corporation, partnership or association and the state insofar
as it concerns their individual franchise or right to exist as such entity;
c) Controversies in the election or appointments of directors, trustees, officers or managers
of such corporations, partnerships or associations.

REPUBLIC ACT NO. 8799

THE SECURITIES REGULATION CODE
Section 5. Powers and Functions of the Commission. 5.1. The commission shall act with
transparency and shall have the powers and functions provided by this code, Presidential Decree
No. 902-A, the Corporation Code, the Investment Houses law, the Financing Company Act and other
existing laws. Pursuant thereto the Commission shall have, among others, the following powers and
functions:
(a) Have jurisdiction and supervision over all corporations, partnership or associations who
are the grantees of primary franchises and/or a license or a permit issued by the
Government;
(b) Formulate policies and recommendations on issues concerning the securities market,
advise Congress and other government agencies on all aspect of the securities market and
propose legislation and amendments thereto;
(c) Approve, reject, suspend, revoke or require amendments to registration statements, and
registration and licensing applications;
(d) Regulate, investigate or supervise the activities of persons to ensure compliance;
(e) Supervise, monitor, suspend or take over the activities of exchanges, clearing agencies
and other SROs;
(f) Impose sanctions for the violation of laws and rules, regulations and orders, and issued
pursuant thereto;
(g) Prepare, approve, amend or repeal rules, regulations and orders, and issue opinions and
provide guidance on and supervise compliance with such rules, regulation and orders;
(h) Enlist the aid and support of and/or deputized any and all enforcement agencies of the
Government, civil or military as well as any private institution, corporation, firm, association
or person in the implementation of its powers and function under its Code;
(i) Issue cease and desist orders to prevent fraud or injury to the investing public;

(j) Punish for the contempt of the Commission, both direct and indirect, in accordance with
the pertinent provisions of and penalties prescribed by the Rules of Court;
(k) Compel the officers of any registered corporation or association to call meetings of
stockholders or members thereof under its supervision;
(l) Issue subpoena duces tecum and summon witnesses to appear in any proceedings of the
Commission and in appropriate cases, order the examination, search and seizure of all
documents, papers, files and records, tax returns and books of accounts of any entity or
person under investigation as may be necessary for the proper disposition of the cases
before it, subject to the provisions of existing laws;
(m) Suspend, or revoke, after proper notice and hearing the franchise or certificate of
registration of corporations, partnership or associations, upon any of the grounds provided
by law; and
(n) Exercise such other powers as may be provided by law as well as those which may be
implied from, or which are necessary or incidental to the carrying out of, the express powers
granted the Commission to achieve the objectives and purposes of these laws.
5.2. The Commissions jurisdiction over all cases enumerated under section 5 of Presidential Decree
No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial
Court: Provided, That the Supreme Court in the exercise of its authority may designate the Regional
Trial Court branches that shall exercise jurisdiction over the cases. The Commission shall retain
jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution which
should be resolved within one (1) year from the enactment of this Code. The Commission shall
retain jurisdiction over pending suspension of payment/rehabilitation cases filed as of 30 June 2000
until finally disposed