Corporation Law Case Digests 3C & 3S - Atty. Carlo Busmente

CORPORATION
LAW CASE DIGESTS

3C & 3S – ATTY. CARLO BUSMENTE
GRACE CHRISTIAN HIGH SCHOOL vs. CA Petitioner requested the chairman of the election committee to change
G.R. No. 108905 – October 23, 1997 the notice of election by following the procedure in previous elections,
claiming that the notice issued for the 1990 elections ran "counter to
FACTS: the practice in previous years" and was "in violation of the by-‐laws of
Petitioner Grace Christian High School is an educational institution at 1975" and "unlawfully deprived Grace Christian High School of its
the Grace Village in Quezon City. Private respondent Grace Village vested right to a permanent seat in the board."
Association, Inc. is an organization of lot and/or building owners,
lessees and residents at Grace Village, while private respondents The association denied its request, the school brought suit for
Alejandro G. Beltran and Ernesto L. Go were its president and chairman mandamus in the Home Insurance and Guaranty Corporation (HIGC).
of the committee on election, respectively. HIGC dismissed the suit because the amended by-‐laws was merely a
proposed by-‐laws which, although implemented in the past, had not yet
In 1968, the by-‐laws of the association states that the members shall been ratified by the members nor approved by competent authority
elect by plurality vote and by secret balloting, the Board of Directors, and that the directors declared the by-‐law dated December 20, 1975
composed of 11 members to serve for 1 year until their successors are null and void and the by-‐laws of December 17, 1968 as the prevailing
duly elected and have qualified. by-‐law. HIGC further rejected petitioner's contention that it had
acquired a vested right to a permanent seat in the board. He held that
On Dec. 20, 1975, a committee of the board prepared a draft of an past practice in election of directors could not give rise to a vested right
amendment to the by-‐laws that the candidates receiving the first 14 and that it deprived members of association of their right to elect or to
highest number of votes shall be declared and proclaimed elected until be voted in office, not to say that it was contrary to law and the
their successors are elected and qualified. GRACE CHRISTIAN HIGH registered by-‐laws of respondent association.
SCHOOL representative is a permanent Director of the
ASSOCIATION. Petitioner appealed to the CA. CA ruled that there was no valid
amendment of the association's by-‐laws because of failure to comply
This draft was never presented to the general membership for with the requirement of its existing by-‐laws, prescribing the affirmative
approval. Nevertheless, from 1975 up to 1990, petitioner was given a vote of the majority of the members of the association at a regular or
permanent seat in the board of directors of the association. special meeting called for the adoption of amendment to the by-‐laws.

In 1990, the association's committee on election informed James Tan, Petitioner argues that the members of the committee which prepared
principal of the school, that all directors should be elected by members the proposed amendment were duly authorized to do so and that
of the Association and that making the School representative as a because the members of the association thereafter implemented the
permanent director would deprive the right of voters to vote for 15 provision for 15 years, the proposed amendment for all intents and
members of the Board. Following this advice, notices were sent to the purposes should be considered to have been ratified by them.
members of the association that the provision on election of directors
of the 1968 by-‐laws of the association would be observed. ISSUE:
WON Grace Christian High School has a vested right in being a
permanent director in the Association as granted by the 1975 by-‐laws.
CORPO CASE DIGESTS 3C & 3S || 1

CORPORATION LAW CASE DIGESTS
Nor can petitioner claim a vested right to sit in the board on the basis of
HELD: "practice." Practice, no matter how long continued, cannot give rise to
No. Sec. 23 of the Corporation code provides: any vested right if it is contrary to law.
§23. The Board of Directors or Trustees. — Unless otherwise provided
in this Code, the corporate powers of all corporations formed under **The case was not decided by the SEC but by the HIGC. The HIGC
this Code shall be exercised, all business conducted and all property of merely cited as authority for its ruling the opinion of the SEC chairman.
such corporations controlled and held by the board of directors or
trustees to be elected from among the holders of stocks, or where there JOHN GOKONGWEI JR. vs. SEC
is no stock, from among the members of the corporation, who shall hold G.R. No. L-‐45911 – April 11, 1979
office for one (1) year and until their successors are elected and
qualified. FACTS:
SEC Case No. 1375 (1st case:)
The law is clear. The board of directors of corporations must be elected Petitioner, as stockholder of respondent San Miguel Corporation, filed
from among the stockholders or members. There may be corporations with the Securities SEC a petition for "declaration of nullity of amended
in which there are unelected members in the board. In the case of by-‐laws, cancellation of certificate of filing of amended by-‐laws,
petitioner, there is no reason at all for its representative to be given a injunction and damages with prayer for a preliminary injunction"
seat in the board. Nor does petitioner claim a right to such seat by against the majority of the members of the Board of Directors and San
virtue of an office held. In fact it was not given such seat in the Miguel Corporation.
beginning. It was only in 1975 that a proposed amendment to the by-‐
laws sought to give it one. Petitioner alleged that respondents amended the by-‐laws of the
corporation in prescribing additional qualifications for its directors,
Further, the provision in question is contrary to law, the fact that for "that no person shall qualify or be eligible for nomination if he is
fifteen years it has not been questioned or challenged but have been engaged in any business which competes with that of the Corporation.”
implemented by the members of the association cannot forestall a later The board based their authority to do so on a resolution of the
challenge to its validity. Neither can it attain validity through stockholders adopted on March 13, 1961. It was contended that
acquiescence because, if it is contrary to law, it is beyond the power of according to Sec. 22 of the Corporation Law and Article VIII of the by-‐
the members of the association to waive its invalidity. laws of the corporation, the power to amend, modify, repeal or adopt
new by-‐laws may be delegated to the Board of Directors only by the
It is probable that the members of the association were not aware that affirmative vote of stockholders representing not less than 2/3 of the
this was contrary to law. It should be noted that they did not actually subscribed and paid up capital stock of the corporation, which 2/3
implement the provision in question except perhaps insofar as it should have been computed on the basis of the capitalization at the
increased the number of directors from 11 to 15, but certainly not the time of the amendment. Since the amendment was based on the 1961
allowance of petitioner's representative as an unelected member of the authorization, petitioner contended that the Board acted without
board of directors. It is more accurate to say that the members merely authority and in usurpation of the power of the stockholders.
tolerated petitioner's representative and tolerance cannot be
considered ratification.

Further, petitioner claimed that prior to the questioned amendment, stockholders in his bid to secure a seat because he was engaged in a
petitioner had all the qualifications to be a director of respondent competitive business.
corporation, being a Substantial stockholder thereof; that as a
stockholder, petitioner had acquired rights inherent in stock In connection with the above case, Petitioner filed with the SEC an
ownership, such as the rights to vote and to be voted upon in the "Urgent Motion for Production and Inspection of Documents", alleging
election of directors; and that in amending the by-‐laws, respondents that the Secretary of respondent corporation refused to allow him to
purposely provided for petitioner's disqualification and deprived him inspect its records despite request for production of certain documents
of his vested right as afore-‐mentioned hence the amended by-‐laws are and that respondent corporation had been attempting to suppress
null and void. information from its stockholders despite a negative reply by the SEC to
its query regarding their authority to do so. Among the documents
Respondents SMC, Conde, Ortigas and Prieto denied the allegations and requested to be copied were (a) minutes of the stockholder's meeting
by way of affirmative defenses that "the action taken by the Board of field on March 13, 1961, (b) copy of the management contract between
Directors resulting in the amendments is valid and legal because the San Miguel Corporation and A. Soriano Corporation (ANSCOR); (c)
power to amend, modify, repeal or adopt new By-‐laws delegated to said latest balance sheet of San Miguel International, Inc.; (d) authority of
Board and long prior thereto has never been revoked of SMC. Secondly, the stockholders to invest the funds of respondent corporation in San
the petition is premature because petitioner has not availed of his Miguel International, Inc.; and (e) lists of salaries, allowances, bonuses,
intra-‐corporate remedy for the nullification of the amendment, which is and other compensation, if any, received by Andres M. Soriano, Jr.
to secure its repeal by vote of the stockholders, as provided in the by-‐ and/or its successor-‐in-‐interest.
laws and Sec. 22 of the Corporation law. Lastly, that respondent
corporation should not be precluded from adopting protective SEC ordered respondents to produce and permit the inspection,
measures to minimize or eliminate situations where its directors might copying and photographing of the minutes of the stockholders'
be tempted to put their personal interests over that of the corporation meeting of the respondent San Miguel Corporation held on March 13,
and that the questioned amended by-‐laws is a matter of internal policy 1961 but denied petitioner's request for the production of the Balance
and the judgment of the board should not be interfered with. Sheet of San Miguel International, Inc. as well as the list of salaries,
allowances, bonuses, compensation and/or remuneration received by
Respondents Andres M. Soriano, Jr. and Jose M. Soriano answered that respondent Jose M. Soriano, Jr. and Andres Soriano from San Miguel
the Universal Robina Corporation (Robina), a corporation engaged in International, Inc. and/or its successors-‐in-‐ interest, since petitioner is
business competitive to that of respondent corporation, began not a stockholder of San Miguel International, Inc.
acquiring shares therein and that Consolidated Foods Corporation
(CFC) likewise began acquiring shares in respondent corporation Meanwhile, respondent corporation issued a notice of special
wherein petitioner is the president and controlling shareholder of both stockholders' meeting for the purpose of ratification and confirmation
closed corporations. thereafter, in behalf of himself, CFC and Robina, of the amendment to the By-‐laws, setting such meeting for February 10,
he conducted malevolent and malicious publicity campaign against 1977. This prompted petitioner to ask respondent Commission for a
SMC" to generate support from the stockholder "in his effort to secure a summary judgment for the alleged reason that by calling a special
seat in the Board of Directors of SMC." Further, respondents alleged stockholders' meeting for the aforesaid purpose, private respondents
that in the stockholders' meeting, petitioner was rejected by the admitted the invalidity of the amendments of September 18, 1976.

Pending action on the motion, petitioner filed an "Urgent Motion for the default and an opposition ad abundantiorem cautelam (For a great
Issuance of a Temporary Restraining Order" which was denied. After abundance of caution) were filed by petitioner.
receipt of the order of denial, respondents conducted the special
stockholders' meeting wherein the amendments to the by-‐laws were Respondents then issued notices of the annual stockholders' meeting,
ratified. Petitioner then filed a consolidated motion for contempt and including in the Agenda thereof, the following:
for nullification of the special stockholders' meeting.
6. Re-‐affirmation of the authorization to the Board of Directors by the
The annual stockholders' meeting of respondent corporation had been stockholders at the meeting on March 20, 1972 to invest corporate
scheduled for May 10, 1977. Petitioner filed with the Commission a funds in other companies or businesses or for purposes other than the
Manifestation stating that he intended to run for the position of main purpose for which the Corporation has been organized, and
director of respondent corporation. Thereafter, respondents filed a ratification of the investments thereafter made pursuant thereto.
Manifestation with respondent Commission, submitting a Resolution of
the Board of Directors disqualifying and precluding petitioner from By reason of the foregoing, petitioner filed with the SEC an urgent
being a candidate for director unless he could submit evidence that he motion for the issuance of a writ of preliminary injunction to restrain
does not come within the disqualifications specified in the amendment private respondents from taking up Item 6 of the Agenda at the annual
to the by-‐laws. By reason thereof, petitioner filed a manifestation and stockholders' meeting, requesting that the same be set for hearing on
motion to resolve pending incidents in the case and to issue a writ of May 3, 1977, the date set for the second hearing. Respondent
injunction, alleging that private respondents were seeking to nullify Commission, however, cancelled the dates of hearing originally
and render ineffectual the exercise of jurisdiction by the respondent scheduled and reset the same to May 16 and 17, 1977, or after the
Commission, to petitioner's irreparable damage and prejudice, scheduled annual stockholders' meeting. For the purpose of urging the
Allegedly despite a subsequent Manifestation to prod respondent Commission to act, petitioner filed an urgent manifestation on May 3,
Commission to act, petitioner was not heard prior to the date of the 1977, but this notwithstanding, no action has been taken up to the date
stockholders' meeting. of the filing of the instant petition.

SEC CASE NO. 1423 (2nd case): SC issued a temporary restraining order restraining private
Petitioner alleges that, having discovered that respondent corporation respondents from disqualifying or preventing petitioner from running
has been investing corporate funds in other corporations and or from being voted as director of respondent corporation and from
businesses outside of the primary purpose clause of the corporation, in submitting for ratification or confirmation or from causing the
violation of Sec. 17 of the Corporation Law, he filed with respondent ratification or confirmation of Item 6 of the Agenda of the annual
Commission, a petition seeking to have private respondents Andres M. stockholders' meeting on May 10, 1977, or from Making effective the
Soriano, Jr. and Jose M. Soriano, as well as the respondent corporation amended by-‐laws of respondent corporation, until further orders from
declared guilty of such violation, and ordered to account for such this Court or until the Securities and Ex-‐change Commission acts on the
investments and to answer for damages. matters complained of in the instant petition.

Motions to dismiss were filed by private respondents, to which a
consolidated motion to strike and to declare individual respondents in

ISSUE: of incorporation by a vote or written assent of the stockholders

WON the provisions of the amended by-‐laws of respondent representing at least two-‐thirds of the subscribed capital stock of the
corporation, disqualifying a competitor from nomination or election to corporation. If the amendment changes, diminishes or restricts the
the Board of Directors are valid and reasonable; rights of the existing shareholders, then the dissenting minority has
only one right, viz.: "to object thereto in writing and demand payment
HELD: for his share." Under section 22 of the same law, the owners of the
It is recognized by an authorities that 'every corporation has the majority of the subscribed capital stock may amend or repeal any by-‐
inherent power to adopt by-‐laws 'for its internal government, and to law or adopt new by-‐laws. It cannot be said, therefore, that petitioner
regulate the conduct and prescribe the rights and duties of its members has a vested right to be elected director, in the face of the fact that the
towards itself and among themselves in reference to the management law at the time such right as stockholder was acquired contained the
of its affairs. prescription that the corporate charter and the by-‐law shall be subject
to amendment, alteration and modification.
In this jurisdiction, under section 21 of the Corporation Law, (Sec. 47 of
Corp. Code) a corporation may prescribe in its by-‐laws "the A corporation is authorized to prescribe qualifications of its directors;
qualifications, duties and compensation of directors, officers and such is not invalid, provided, however that before such nominee is
employees ... " This must necessarily refer to a qualification in addition disqualified, he should be given due process to show that he is not
to that specified by Sec. 30 of the Corporation Law (Sec. 23 of the Corp. covered by such disqualification. A director stands in fiduciary relation
Code), which provides that "every director must own in his right at to the corporation and its stockholders. The disqualification of a
least one share of the capital stock of the stock corporation of which he competition from being elected to the board of directors is a reasonable
is a director ... " exercise of corporate authority. Sound principles of corporate
management counsel against sharing sensitive information with a
Any person "who buys stock in a corporation does so with the director whose fiduciary duty to loyalty may require that he discloses
knowledge that its affairs are dominated by a majority of the this information to a competitive rival.
stockholders and that he impliedly contracts that the will of the
majority shall govern in all matters within the limits of the act of The doctrine of "corporate opportunity" is precisely a recognition by
incorporation and lawfully enacted by-‐laws and not forbidden by law." the courts that the fiduciary standards could not be upheld where the
To this extent, therefore, the stockholder may be considered to have fiduciary was acting for two entities with competing interests. This
"parted with his personal right or privilege to regulate the disposition doctrine rests fundamentally on the unfairness, in particular
of his property which he has invested in the capital stock of the circumstances, of an officer or director taking advantage of an
corporation, and surrendered it to the will of the majority of his fellow opportunity for his own personal profit when the interest of the
incorporators. corporation justly calls for protection.

It cannot therefore be justly said that the contract, express or implied, It is not denied that a member of the Board of Directors of the San
between the corporation and the stockholders is infringed by any act of Miguel Corporation has access to sensitive and highly confidential
the former which is authorized by a majority." Pursuant to section 18 of information. It is obviously to prevent the creation of an opportunity
the Corporation Law, (Sec. 48) any corporation may amend its articles for an officer or director of San Miguel Corporation, who is also the

officer or owner of a competing corporation, from taking advantage of September 30, 1978 being prepared by Sycip, Gorres, Velayo (SGV)...
the information which he acquires as director to promote his individual that the Minimum Guaranteed Net Worth of FARMACOR as of
or corporate interests to the prejudice of San Miguel Corporation and September 30, 1978 shall be 12 Million…
its stockholders, that the questioned amendment of the by-‐laws was
made. Certainly, where two corporations are competitive in a The Agreement, as amended, provided that pending submission by SGV
substantial sense, it would seem improbable, if not impossible, for the of FARMACOR’s audited financial statements, private respondent may
director, if he were to discharge effectively his duty, to satisfy his retain the sum of P7.5 Million out of the stipulated purchase price of
loyalty to both corporations and place the performance of his 19.5 Million; that from this retained amount of 7.5 Million, private
corporation duties above his personal concerns. respondent may deduct any shortfall on the Minimum Guaranteed Net
Worth of 12 Million; and that if the amount retained is not sufficient to
DOCTRINE OF "CORPORATE OPPORTUNITY". — Corporate officers are make up for the deficiency in the Minimum Guaranteed Net Worth,
not permitted to the use their position of trust and confidence to petitioner shall pay the difference within 5 days from the date of
further their interests. The doctrine of "corporate opportunity" is receipt of the audited financial statements.
precisely a recognition by the courts that the fiduciary standards could
not be upheld where the fiduciary was acting for two entities with Respondent paid petitioner a total amount of 12 Million.
competing interests. This doctrine rests fundamentally of the
unfairness, in particular circumstances, of an officer or director taking It appeared later that FARMACOR had a net worth deficiency of 1.2
advantage of an opportunity for his own personal profit when the Million. The guaranteed net worth shortfall thus amounted to 13.2
interest of the corporation justly calls for protection. Million after adding the net worth deficiency of the Minimum
Guaranteed Net Worth of 12 Million. The adjusted contract price,
INTER-‐ASIA INVESTMENTS INDUSTRIES INC., VS. CA therefore, amounted to 6.2 Million which is the difference between the
G.R. NO. 125778 -‐ June 10, 2003 contract price of 19.5 Million and the guaranteed net worth of 13.2
Million. Private respondent having already paid petitioner 12 Million, it
FACTS: was entitled to a refund of 5.8 Million.
Inter-‐Asia Industries, Inc. (petitioner), by a Stock Purchase
Agreement (the Agreement), sold to Asia Industries, Inc. (private Petitioner thereafter proposed by letter signed by its president, that
respondent) for and in consideration of the sum of P19,500,000.00 all private respondent’s claim for refund be reduced to P4.8 Million, it
its right, title and interest in and to all the outstanding shares of stock promising to pay the cost of the Northern Cotabato Industries, Inc.
of FARMACOR, INC. (FARMACOR). The Agreement was signed by (NOCOSII) superstructures in the amount P759,570.00. To the proposal
Leonides P. Gonzales and Jesus J. Vergara, presidents of petitioner and respondent agreed. Petitioner, however welched on its promise.
private respondent, respectively. Petitioner’s total liability thus stood at P4.8 Million. Private respondent
filed a complaint for the recovery of the said amount.
Under paragraph 7 of the Agreement, petitioner as seller made
warranties and representations among which the audited financial Petitioner argues that the letter-‐proposal (for the reduction of private
statements of FARMACOR at and for the year ended December 31, respondent's claim for refund upon petitioner's promise to pay the cost
1977… and the audited financial statements of FARMACOR as of of NOCOSII superstructures in the amount of P759,570.00) which was

signed by its president has no legal force and effect against it as it was
not authorized by its board of directors, it citing the Corporation Law xxx xxx xxx
which provides that unless the act of the president is authorized by the
board of directors, the same is not binding on it. [A]pparent authority is derived not merely from practice. Its existence
may be ascertained through (1) the general manner in which the
ISSUE: corporation holds out an officer or agent as having the power to act or,
WON the letter signed by petitioner’s president is valid and binding. in other words the apparent authority to act in general, with which it
clothes him; or (2) the acquiescence in his acts of a particular nature,
HELD: with actual or constructive knowledge thereof, within or beyond the
Yes. The general rule is that, in the absence of authority from the board of scope of his ordinary powers. It requires presentation of evidence of
directors, no person, not even its officers, can validly bind a corporation. similar acts executed either in its favor or in favor of other parties. It is
Sec. 23 provides: Unless otherwise provided in this Code, the corporate not the quantity of similar acts which establishes apparent authority,
powers of all corporations formed under this Code shall be exercised, but the vesting of a corporate officer with the power to bind the
all business conducted and all property of such corporations controlled corporation.
and held by the board of directors or trustees . . ..
As correctly argued by private respondent, an officer of a corporation
Under this provision, the power and responsibility to decide whether who is authorized to purchase the stock of another corporation has the
the corporation should enter into a contract that will bind the implied power to perform all other obligations arising therefrom, such
corporation is lodged in the board, subject to the articles of as payment of the shares of stock. By allowing its president to sign the
incorporation, bylaws, or relevant provisions of law. However, just as a Agreement on its behalf, petitioner clothed him with apparent capacity
natural person may authorize another to do certain acts for and on his to perform all acts which are expressly, impliedly and inherently stated
behalf, the board of directors may validly delegate some of its functions therein.
and powers to officers, committees or agents. The authority of such
individuals to bind the corporation is generally derived from law, NACPIL VS. INTERNATIONAL BROADCASTING CORPORATION
corporate bylaws or authorization from the board, either expressly or G.R. NO. 144767 – March 21, 2002
impliedly byhabit, custom or acquiescence in the general course of
business, viz: FACTS:
Petitioner was the Assistant General Manager for
A corporate officer or agent may represent and bind the corporation in Finance/Administration and Comptroller of private respondent
transactions with third persons to the extent that [the] authority to do Intercontinental Broadcasting Corporation (IBC). Upon his assumption
so has been conferred upon him, and this includes powers as, in the of the IBC Presidency, Emiliano Templo allegedly harassed and
usual course of the particular business, are incidental to, or may be pressured petitioner into resigning until the latter was forced to retire.
implied from, the powers intentionally conferred, powers added by However, Templo refused to pay him his retirement benefits and
custom and usage, as usually pertaining to the particular officer or refused to recognize petitioner's employment. Hence, petitioner filed
agent, and such apparent powers as the corporation has caused person with the Labor Arbiter a complaint for illegal dismissal and non-‐
dealing with the officer or agent to believe that it has conferred payment of benefits. The Labor Arbiter ruled in favor of petitioner. IBC

appealed to the NLRC, but the same was dismissed. IBC then filed with not specifically indicated in the roster of corporate offices in the by-‐
the Court of Appeals a petition for certiorari under Rule 65, which laws of a corporation, the board of directors may also be empowered
petition was granted by the appellate court and the decisions of the under the by-‐laws to create additional officers as may be necessary.
Labor Arbiter and the NLRC were reversed and set aside. Petitioner
then filed this instant petition. An "office" has been defined as a creation of the charter of a
corporation, while an "officer" as a person elected by the directors or
ISSUE: stockholders. On the other hand, an "employee" occupies no office and
WON the Labor Arbiter had jurisdiction over the case for illegal is generally employed not by action of the directors and stockholders
dismissal and non-‐payment of benefits filed by petitioner. but by the managing officer of the corporation who also determines the
compensation to be paid to such employee.
HELD:
No. The Court has consistently held that there are two elements to be As petitioner's appointment as comptroller required the approval and
considered in determining whether the SEC has jurisdiction over the formal action of the IBC's Board of Directors to become valid, it is clear
controversy, to wit: (1) the status or relationship of the parties; and (2) therefore holds that petitioner is a corporate officer whose dismissal
the nature of the question that is the subject of their controversy. may be the subject of a controversy cognizable by the SEC under
Petitioner argues that he is not a corporate officer of the IBC but an Section 5(c) of P.D. 902-‐A which includes controversies involving both
employee thereof since he had not been elected nor appointed as election and appointment of corporate directors, trustees, officers, and
Comptroller and Assistant Manager by the IBC's Board of Directors. He managers. Had petitioner been an ordinary employee, such board
points out that he had actually been appointed as such on January 11, action would not have been required.
1995 by the IBC's General Manager, Ceferino Basilio. In support of his
argument, petitioner underscores the fact that the IBC's By-‐Laws does Since complainant's appointment was approved unanimously by the
not even include the position of comptroller in its roster of corporate Board of Directors of the corporation, he is therefore considered a
officers. He therefore contends that his dismissal is a controversy corporate officer and his claim of illegal dismissal is a controversy that
falling within the jurisdiction of the labor courts. falls under the jurisdiction of the SEC as contemplated by Section 5 of
P.D. 902-‐A. The rule is that dismissal or non-‐appointment of a
Petitioner's argument is untenable. Even assuming that he was in fact corporate officer is clearly an intra-‐corporate matter and jurisdiction
appointed by the General Manager, such appointment was over the case properly belongs to the SEC, not to the NLRC.
subsequently approved by the Board of Directors of the IBC. That the
position of Comptroller is not expressly mentioned among the officers As to petitioner's argument that the nature of his functions is
of the IBC in the By-‐Laws is of no moment, because the IBC's Board of recommendatory thereby making him a mere managerial officer, the
Directors is empowered under Section 25 of the Corporation Code and Court has previously held that the relationship of a person to a
under the corporation's By-‐Laws to appoint such other officers as it corporation, whether as officer or agent or employee is not determined
may deem necessary. by the nature of the services performed, but instead by the incidents of
the relationship as they actually exist.
The Court has held that in most cases the "by-‐laws may and usually do
provide for such other officers," and that where a corporate office is

It is likewise of no consequence that petitioner's complaint for illegal

dismissal includes money claims, for such claims are actually part of the
perquisites of his position in, and therefore linked with his relations
with, the corporation. The inclusion of such money claims does not
convert the issue into a simple labor problem. Clearly, the issues raised
by petitioner against the IBC are matters that come within the area of
corporate affairs and management, and constitute a corporate
controversy in contemplation of the Corporation Code.


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CORPORATION

LAW CASE DIGESTS

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ISSUE: of incorporation by a vote or written assent of the stockholders

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It is likewise of no consequence that petitioner's complaint for illegal

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