Jose Ricafort et al v.

Hon Judge Felix Moya et al

The case stemmed from a deed of absolute sale executed on April 18 1978 between Daniel Aguinaldo as vendor and
Ricaforte and Calalang as vendees. Both had failed to fulfil their obligations in the deed which worsened as cases have
been filed against each party. After a number of suits filed, Ricafort et al filed for Preliminary injunction against Aguinaldo
to prohibit him from representing himself as controlling stockholder of NADECOR and attempting to sell that corporations
so-called Kingking Mining claims. This was granted by the Court. Ricafort and Calalang believed that they and SAICOR
are to be excluded by Aguinaldo and group from the management of NADECOR as Aguinaldo had refused to convoke the
stockholders annual meeting for the year 1981 which should have been called on third Monday of August, in the by-laws.

Stockholders elected as directors Calalang, Ricafort and 5 others. The stockholders rejected the aforesaid operating
agreement in March 25 1981 between NADECOR as represented by Aguinaldo and the consortium of Black Mountain
Corp et al and instead approved the proposed operating agreement with Benguet Corporation. The Certificate attesting to
these events was filed with SEC. NADECOR, represented by new officers entered into an Operating Agreement with
Benguet Corporation for the operation by the latter of the KINGKING MINES.

ISSUE: Whether the Operating Agreement with the Black Mountain Consortium of March 25, 1981 is valid

HELD: NO.

The Operating Agreement with the Black Mountain Consortium was never ratified by the NADECOR stockholders; indeed,
it was explicitly rejected by said stockholders. Considering that the Kingking Mines comprise all or substantially the assets
of NADECOR, the operating agreement of March 25 1981 had to be ratified by the stockholders in order to be valid and
effective. This, in accordance with Section 44 of the Corporation Code. That no such ratification was ever given
constitutes yet another reason to invalidate such.

The agreement executed on March 25 1981 was entered into in defiance of valid orders of a court of competent
jurisdiction and was in fact subsequently nullified by it; it was entered into against the wishes of the majority of the
stockholders and directors and in truth, was not only not ratified by the majority of the said stockholders as required by the
Corporation Code, but explicitly rejected and disowned by them at a meeting duly convoked, said stockholders thereafter
approving an operation agreement with Benguet Corporation; the agreement was sought to be vindicated and enforced by
individuals who no longer represented the majority of the stockholders of NADECOR, over the objection and against the
wishes of the legitimate majority; the authority granted to the consortium to implement the agreement of March 25 1981
was rescinded and revoked by the Office of the President and one of the companies in said consortium is now no longer
capable on account of bankruptcy of complying with its contractual commitments-it is impossible to accord the agreement
any validity or effect whatsoever.

NOTA BENE: NOT ALL FACTS ARE STATED HEREIN

On April 18, 1978, a deed of sale was executed by Daniel Aguinaldo and DR Aguinaldo Corporation (DRACOR) as
vendors, and Jose Ricafort and Conrado Calalang as vendees. In the deed, Aguinaldo and DRACOR sold to Ricafort and
Calalang all their shares of stocks and subscriptions in three corporations: ADECOR (Aguinaldo Devt Corp),
MARBLECORP(Phil. Marble Corp) and NADECOR (Nationwide Devt Corp) Aguinaldo bound himself to convey 9 parcels
of rice land in Saug, Davao del Norte held in trust by him, to the real or beneficial owner ADECOR. Ricafort and Calalang
pledged to Aguinaldo all shares of stocks in the 3 corporations subject of sale and the 9 Saug lots as security for payment
of balance price.

August 18 1980- Shareholders of NADECOR elected Aguinaldo, Aytona, Calalang, Ricafort and 5 others as directors.
Aytona, Aguinaldo and Borsoto as Chairman, President and Secretary respectively

Sept 26 1980- Aguinaldo executed a deed of reconveyance of 9 Saug lots in favour of ADECOR as called for by the April
18 1978 stipulation which was not complied with by Ricafort and Calalang (on the mortgaged lots) because the deed of
reconveyance of the Saug lots executed by Aguinaldo in favour of ADECOR was fatally defective as it did not bear the
signature of Aguinaldos wife, Helen Leontovich. No remedy done to the omission until controversy between parties has
worsened

FIRST CASE: Oct 6 1980

Ricafort and Calalang filed before the CFI of Rizal due to breach of contract of April 18 1978 by Aguinaldos failure to
transfer the 9 Saug lots with prayer that Aguinaldos obligation to make conveyance be deemed waived and that Ricafort
and Calalang be discharged from their obligationAguinaldo reacted by instructing a notary public, Neis to conduct Auction
Sale of pledged stock of DRACOR, ADECOR AND NADECOR

Ricafort and Calalang brought suit against Aguinaldo and Neis to be stopped from proceeding with the auction sale and
applied for preliminary injunction

TRO issued by Judge Maddela enjoining the auction sale.

Three more amendments were made by Ricafort. Reformation of contract of sale to include all stocks in NADECOR of
Aguinaldo and DRACOR. Preliminary injunction against Aguinaldo to prohibit him from representing himself as controlling
stockholder of NADECOR and attempting to sell that corporations so-called Kingking Mining claims. These amendments
were allowed by court order. Third amendment added averments of fraud relative to the transfer by Aguinaldo to himself of
ADECOR shares in a foreign company.

Preliminary injunctions by Manila CFI. Injunctive orders issued against Aguinaldo and his group by the trial court as
regards Kingkings mining claims and Operating Agreement involving Kingking between Aguinaldo in representation of
NADECOR and a consortium made up of Black Mountain Inc, Tetra Management Corp, and Energy Corporation.

Court enjoined NADECOR in ratifying the Operating Management

Court stopped the auction sale which was rescheduled by Neis and; Aguinaldo in representing himself as controlling
stockholder of NADECOR offering its Kingking claims for sale

Court order prohibiting Aguinaldo from selling the ADECOR shares in Sawyer-Adecor International Corporation(SAICOR)
which he had caused to be transferred in his name

Ricafort and Calalang believed that they and SAICOR are to be excluded by Aguinaldo and group from the management
of NADECOR as Aguinaldo had refused to convoke the stockholders annual meeting for the year 1981 which should have
been called on third Monday of August, in the by-laws.

Stockholders elected as directors Calalang, Ricafort and 5 others. The stockholders rejected the aforesaid operating
agreement in March 25 1981 between NADECOR as represented by Aguinaldo and the consortium of Black Mountain
Corp et al and instead approved the proposed operating agreement with Benguet Corporation. The Certificate attesting to
these events was filed with SEC

NADECOR, represented by new officers entered into an Operating Agreement with Benguet Corporation for the operation
by the latter of the KINGKING MINES.

SEC CASE: NADECOR, represented by its newly elected directors and officers filed against Aguinaldo and group for
continuingly fraudulently representing themselves as the legitimate officers of NADECOR.

CIVIL CASE no. 143: the consortium of Black Mountain Inc et al filed a complaint against Benguet Corporation and

NADECOR and the directors of NADECOR (Ricafort and Calalang included) enjoining them from interfering with Black
Mountains possession of NADECORs Kingking Mines and recover damages.

Ricafort et al moved to dismiss the complaint for failure to state a cause of action, that NADECORs agreement with Black
Mountain Inc for the operation of the Kingking mining claims had never been approved by the NADECOR stockholders
owning the majority of the capital stock. Rtc denied the MTD.