PEOPLE'S AIRCARGO AND then Commissioner MIRIAM DEFENSOR-

WAREHOUSING CO. INC. VS. SANTIAGO.

COURT OF APPEALS
Meanwhile, Punsalan sold his shares in
FACTS: PAWCI and resigned as its president in
1987.
People's Aircargo and Warehousing Co. Inc.
(PAWCI) is a domestic Saño thereupon, filed a collection suit
corporation, organized in 1986 to operate a against PAWCI. He alleged that he had
customs bonded warehouse at the old Manila prepared an operations manual for PAWCI,
International Airport in Pasay City. conducted a seminar-workshop for its
employees and delivered to it a computer
Now, to obtain a license for the corporation program; but that, despite demand, PAWCI
from the Bureau of Customs, ANTONIO refused to pay him for his services.
PUNSALAN JR., the corporation president,
solicited a proposal from STEFANI SAÑO PAWCI, in its answer, denied that Saño had
for the preparation of a feasibility study. Saño prepared an operations manual and a
submitted a letter of proposal ("First computer program or conducted a seminar-
Contract") to Punsalan, for the project workshop for its employees. It further alleged
feasibility study (market, technical, and that THE LETTER-AGREEMENT WAS
financial feasibility) and preparation of SIGNED BY PUNSALAN WITHOUT
pertinent documentation requirements for the AUTHORITY, IN COLLUSION WITH
application, worth P350,000. SAÑO in order to unlawfully get some
money from PAWCI, and despite his
Initially, Cheng Yong, the majority knowledge that a group of employees of the
stockholder of PAWCI, objected to Saño's company had been commissioned by the
offer, as another company priced a similar board of directors to prepare an operations
proposal at only P15,000. However, Punsalan manual.
preferred Saño's services because of the
latter's membership in the task force, which RTC of Pasay City rendered a Decision
was supervising the transition of the Bureau declaring the Second Contract unenforceable
of Customs from the Marcos government to or simulated. However, since Saño had
the Aquino Administration. PAWCI, actually prepared the operations manual and
through Punsalan, sent Saño a letter conducted a training seminar for PAWCI and
confirming their agreement. Accordingly, its employees, the trial court awarded
Saño prepared a feasibility study for PAWCI P60,000 to the former, on the ground that no
which eventually paid him the balance of the one should be unjustly enriched at the
contract price. expense of another (Article 2142, Civil
Code). The trial Court determined the amount
Upon Punsalan's request, Saño sent PAWCI "in light of the evidence presented by
another letter-proposal ("Second Contract") defendant on the usual charges made by a
formalizing its proposal for consultancy leading consultancy firm on similar
services in the amount of P400,000. ANDY services."
VILLACEREN, vice president of PAWCI,
received the operations manual prepared by Upon appeal, the appellate court modified
Saño. PAWCI submitted said operations the decision of the trial court, and declared
manual to the Bureau of Customs in the Second Contract valid and binding on
connection with the former's application to PAWCI, which was held liable to Saño in the
operate a bonded warehouse where full amount of P400,000, representing
thereafter, the Bureau issued to it a license to payment of Saño services in preparing the
operate, enabling it to become one of the manual of operations and in the conduct of a
three public customs bonded warehouses at seminar for PAWCI.
the international airport. Saño also
conducted, in the warehouse of PAWCI, a PAWCI filed the Petition for Review.
three-day training seminar for the latter's
employees. ISSUE:

Thereafter, Saño joined the Bureau of Whether a single instance where the
Customs as special assistant to then corporation had previously allowed its
Commissioner ALEX PADILLA, a position president to enter into a contract with another
he held until he became technical assistant to without a board resolution expressly
authorizing him, has clothed its president
with apparent authority to execute the subject Furthermore, Saño prepared an operations
contract. manual and conducted a seminar for the
employees of PAWCI in accordance with
RULING: their contract. PAWCI accepted the
operations manual, submitted it to the Bureau
APPARENT AUTHORITY is derived not of Customs and allowed the seminar for its
merely from practice. Its existence may be employees. AS A RESULT OF ITS
ascertained through AFOREMENTIONED ACTIONS, PAWCI
WAS GIVEN BY THE BUREAU OF
(1) the general manner in which the CUSTOMS A LICENSE TO OPERATE A
corporation holds out an officer or agent as BONDED WAREHOUSE.
having the power to act or, in other words, the
apparent authority to act in general, with Granting arguendo then that the Second
which it clothes him; or Contract was outside the usual powers of the
president, PAWCI'S RATIFICATION OF
(2) the acquiescence in his acts of a particular SAID CONTRACT AND ACCEPTANCE
nature, with actual or constructive knowledge OF BENEFITS HAVE MADE IT
thereof, whether within or beyond the scope BINDING, NONETHELESS. The
of his ordinary powers. enforceability of contracts under Article
1403(2) is ratified "by the acceptance of
It requires presentation of evidence of similar benefits under them" under Article 1405.
act(s) executed either in its favor or in favor
of other parties.
It is not the quantity of similar acts which Gokongwei vs. SEC, 89 SCRA 336
establishes apparent authority, but the vesting
of a corporate officer with the power to bind (1979)
the corporation.

What happened here is that PAWCI, through Facts:

its president Antonio Punsalan Jr., entered
into the First Contract without first securing Petitioner, stockholder of San Miguel Corp.
board approval. Despite such lack of board filed a petition with the SEC for the
approval, PAWCI DID NOT OBJECT TO declaration of nullity of the by-laws etc.
OR REPUDIATE SAID CONTRACT, against the majority members of the BOD
THUS "CLOTHING" ITS PRESIDENT and San Miguel. It is stated in the by-laws
WITH THE POWER TO BIND THE
that the amendment or modification of the
CORPORATION. The grant of apparent
authority to Punsalan is evident in the by-laws may only be delegated to the BODs
testimony of Yong — senior vice president, upon an affirmative vote of stockholders
treasurer and major stockholder of PAWCI. representing not less than 2/3 of the
subscribed and paid uo capital stock of the
The First Contract was consummated, corporation, which 2/3 could have been
implemented and paid without a hitch. computed on the basis of the capitalization
Hence, Sano should not be faulted for
believing that Punsalan's conformity to the at the time of the amendment. Petitioner
contract in dispute was also binding on contends that the amendment was based
petitioner. IT IS FAMILIAR DOCTRINE on the 1961 authorization, the Board acted
THAT IF A CORPORATION without authority and in usurpation of the
KNOWINGLY PERMITS ONE OF ITS power of the stockholders n amending the
OFFICERS, OR ANY OTHER AGENT, TO by-laws in 1976. He also contends that the
ACT WITHIN THE SCOPE OF AN
1961 authorization was already used in
APPARENT AUTHORITY, IT HOLDS
HIM OUT TO THE PUBLIC AS 1962 and 1963. He also contends that the
POSSESSING THE POWER TO DO amendment deprived him of his right to
THOSE ACTS; AND THUS, THE vote and be voted upon as a stockholder
CORPORATION WILL, AS (because it disqualified competitors from
AGAINST ANYONE WHO HAS IN nomination and election in the BOD of
GOOD FAITH DEALT WITH IT SMC), thus the amended by-laws were null
THROUGH SUCH AGENT, BE
and void. While this was pending, the
ESTOPPED FROM DENYING THE
AGENT'S AUTHORITY. corporation called for a stockholder’s
meeting for the ratification of the
amendment to the by-laws. This prompted fiduciary relation to the corporation and its
petitioner to seek for summary judgment. shareholders, which is characterized as a
This was denied by the SEC. In another case trust relationship. An amendment to the
filed by petitioner, he alleged that the corporate by-laws which renders a
corporation had been using corporate funds stockholder ineligible to be director, if he be
in other corps and businesses outside the also director in a corporation whose
primary purpose clause of the corporation business is in competition with that of the
in violation of the Corporation Code. other corporation, has been sustained as
valid. This is based upon the principle that
Issue: Are amendments valid?
where the director is employed in the
Held: service of a rival company, he cannot serve
both, but must betray one or the other. The
The validity and reasonableness of a by-law
amendment in this case serves to advance
is purely a question of law. Whether the by-
the benefit of the corporation and is good.
law is in conflict with the law of the land, or
Corporate officers are also not permitted to
with the charter of the corporation or is in
use their position of trust and confidence to
legal sense unreasonable and therefore
further their private needs, and the act done in
unlawful is a question of law. However, this furtherance of private needs is deemed to be
is limited where the reasonableness of a by- for the benefit of the corporation. This is called
law is a mere matter of judgment, and one the doctrine of corporate opportunity.
upon which reasonable minds must
necessarily differ, a court would not be
warranted in substituting its judgment Valle Verde Country Club v. Africa
instead of the judgment of those who are
(2009)
authorized to make by-laws and who have
exercised authority. The Court held that a G.R. No. 151969 September 4, 2009
corporation has authority prescribed by law Lessons Applicable: Election of
to prescribe the qualifications of directors. Directors; Vacancy in the Board
It has the inherent power to adopt by-laws (Corporate Law)
for its internal government, and to regulate
the conduct and prescribe the rights and FACTS:
duties of its members towards itself and
among themselves in reference to the  February 27, 1996: Ernesto
management of its affairs. A corporation, Villaluna, Jaime C. Dinglasan
under the Corporation law, may prescribe in (Dinglasan), Eduardo Makalintal
its by-laws the qualifications, duties and (Makalintal), Francisco Ortigas
compensation of directors, officers, and III, Victor Salta, Amado M.
employees. Any person who buys stock in a Santiago, Jr., Fortunato Dee,
corporation does so with the knowledge Augusto Sunico, and Ray
that its affairs are dominated by a majority Gamboa were elected as BOD
of the stockholders and he impliedly during the Annual Stockholders’
contracts that the will of the majority shall Meeting of petitioner Valle
govern in all matters within the limits of the Verde Country Club, Inc.
acts of incorporation and lawfully enacted
(VVCC)
 1997 - 2001:
by-laws and not forbidden by law. Any
Requisite quorum could not be
corporation may amend its by-laws by the
obtained so they continued in a
owners of the majority of the subscribed
hold-over capacity
stock. It cannot thus be said that petitioners  September 1, 1998: Dinglasan
has the vested right, as a stock holder, to be resigned, BOD still constituting a
elected director, in the face of the fact that quorom elected Eric Roxas (Roxas)
the law at the time such stockholder's right  November 10, 1998: Makalintal
was acquired contained the prescription resigned
 on March 6, 2001: Jose Ramirez
that the corporate charter and the by-laws
(Ramirez) was elected by the
shall be subject to amendment, alteration
remaining BOD
and modification. A Director stands in a
 Respondent Africa (Africa), a  VVCC appealed in SC
member of VVCC, questioned the for certiorari being partially
election of Roxas and Ramirez as contrary to law and
members of the VVCC Board with
jurisprudence
the Securities and Exchange
Commission (SEC) and the Regional
Trial Court (RTC) as contrary to: ISSUES:
o Sec. 23. The board of 1. W/N there is an unexpired term - NO
directors or trustees. - Unless 2. W/N the remaining directors of a
otherwise provided in this corporation’s Board, still constituting a
Code, the corporate powers quorum, can elect another director to fill in a
of all corporations formed vacancy caused by the resignation of a hold-
under this Code shall be over director. - NO
exercised, all business
conducted and all property of
such corporations controlled HELD: Petition Denied. RTC
and held by the board of Affirmed.
directors or trustees to be
elected from among the 1. NO
holders of stocks, or where
there is no stock, from among  “term” time during which the officer
the members of the may claim to hold the office as of
corporation, who shall hold right
office for 1 year until their o not affected by the holdover
successors are elected and o fixed by statute and it does
qualified. not change simply because
o Sec. 29. Vacancies in the the office may have become
office of director or vacant, nor because the
trustee. - Any vacancy incumbent holds over in
occurring in the board of office beyond the end of the
directors or trustees other term due to the fact that a
than by removal by the successor has not been
stockholders or members or elected and has failed to
by expiration of term, may be qualify.
filled by the vote of at least a  “tenure”
majority of the remaining o term during which the
directors or trustees, if still incumbent actually holds
constituting a office.
quorum; otherwise, said  Section 23 of the Corporation Code:
vacancies must be filled by term of BOD only 1 year - fixed and
the stockholders in a regular has expired (1 yr after 1996)
or special meeting called for
that purpose. A director or 2. NO
trustee so elected to fill a
vacancy shall be elected only  underlying policy of the Corporation
for the unexpired term of his Code is that the business and affairs
predecessor in office. xxx. of a corporation must be governed by
o Makalintal's term should a board of directors whose members
have expired after 1996 there have stood for election, and who
being have actually been elected by the
no unexpired term. The vac stockholders, on an annual basis.
ancy should have been filled Only in that way can the directors'
by the stockholders in a continued accountability to
regular or special meeting shareholders, and the legitimacy of
called for that purpose their decisions that bind the
 RTC: Favored Africa - Ramirez corporation's stockholders, be
as Makalintal's replacement = assured. The shareholder vote is
null and void critical to the theory that legitimizes
the exercise of power by the
 SEC: Roxas as Vice hold-pver
directors or officers over properties
director of Dinglasan = null and that they do not own.
void
  theory of delegated power of the assailed the Decision[1] dated 20 June 2005 of the
Court of Appeals in CA-G.R. SP No. 76624 for
board of directors reversing and setting aside the Resolution[2] of
 Section 29 contemplates a vacancy the National Labor Relations Commission (NLRC)
occurring within the director’s term dated 15 October 2002, thereby affirming the
of office (unexpired) Labor Arbiters Decision[3] dated 1 October 2001
finding herein respondent Alfredo M. Josons
 vacancy caused by Makalintal’s dismissal from employment as illegal. In the
leaving lies with the VVCC’s questioned Decision, the Court of Appeals upheld
stockholders, not the remaining the Labor Arbiters jurisdiction over the case on
members of its board of directors the basis that respondent was not an officer but
a mere employee of petitioner Marc II Marketing,
Inc., thus, totally disregarding the latters
allegation of intra-corporate controversy.
Marc II Marketing, Inc. vs. Alfredo M. Joson Nonetheless, the Court of Appeals remanded the
[GR No. 171993, December 12, 2011] case to the NLRC for further proceedings to
determine the proper amount of monetary
FACTS: Respondent Alfredo Joson was the awards that should be given to respondent.
General Manager, incorporator, director and
stockholder of Marc II Marketing (Petitioner
Corporation). Before Petitioner Corporation was
CASTILLO vs. BALINGHASAY
officially incorporated, respondent has already
been engaged by petitioner Lucila Joson, in her G.R. No. 150976 October 18, 2004
capacity as President of Marc Marketing Inc., to
work as the General Manager of Petitioner
Corporation through a management contract.

However, Petitioner Corporation decided to stop FACTS: Petitioners and the respondents are
and cease its operation wherein respondent's stockholders of MCPI, with the former holding
services were then terminated. Feeling aggrieved,
respondent filed a Complaint for Reinstatement Class "B" shares and the latter owning Class "A"
and Money Claim against petitioners before the shares. MCPI is a domestic corporation. It was
Labor Arbiter which ruled in favor of respondent. organized sometime in September 1977. At the
The National Labor and Relations Commission time of its incorporation, Act No. 1459, the old
(NLRC) reversed said decision. The Court of
Appeals (CA) however, upheld the ruling of the
Corporation Law was still in force and effect. On
Labor Arbiter. Hence, this petition. September 9, 1992, Article VII was again
amended. It states that “Except when otherwise
ISSUE: Whether or not the Labor Arbiter has provided by law, only holders of Class "A" shares
jurisdiction over the controversy at bar have the right to vote and the right to be elected
RULING: Yes. While Article 217(a) 229 of the Labor as directors or as corporate officers.” The SEC
Code, as amended, provides that it is the Labor Arbiter approved the foregoing amendment on
who has the original and exclusive jurisdiction over September 22, 1993. On February 9, 2001, the
cases involving termination or dismissal of workers shareholders of MCPI held their annual
when the person dismissed or terminated is a
stockholders’ meeting and election for directors.
corporate officer, the case automatically falls within
the province of the Regional Trial Court (RTC). The During the course of the proceedings,
dismissal of a corporate officer is always regarded as a respondent Rustico Jimenez, citing Article VII, as
corporate act and/or an intra-corporate controversy. amended, and notwithstanding MCPI’s history,
declared over the objections of herein
In conformity with Section 25 of the Corporation Code,
whoever are the corporate officers enumerated in the by- petitioners, that no Class "B" shareholder was
laws are the exclusive officers of the corporation and the qualified to run or be voted upon as a director.
Board has no power to create other officers without In the past, MCPI had seen holders of Class "B"
amending first the corporate by-laws. However, the Board shares voted for and serve as members of the
may create appointive positions other than the positions of
the corporate officers, but the persons occupying such
corporate board and some Class "B" share
positions are not considered as corporate officers within owners were in fact nominated for election as
the meaning of Section 25 of the Corporation Code and are board members. Nonetheless, Jimenez went on
not empowered to exercise the functions of the corporate to announce that the candidates holding Class
officers, except those functions lawfully delegated to them. "A" shares were the winners of all seats in the
Their functioning and duties are to be determined by the
Board of Directors/Trustees. corporate board. The petitioners protested,
In the case at bar, the respondent was not a corporate claiming that Article VII was null and void for
officer of Petitioner Corporation because his position as depriving them, as Class "B" shareholders, of
General Manager was not specifically mentioned in the their right to vote and to be voted upon, in
roster of corporate officers in its corporate by-laws. Thus
respondent, can only be regarded as its employee or
violation of the Corporation Code (Batas
subordinate official. Accordingly, respondent's dismissal as Pambansa Blg. 68), as amended. On March 22,
Petitioner Corporation’s General Manager did not amount 2001, after their protest was given short shrift,
to an intra-corporate controversy. Jurisdiction therefore herein petitioners filed a Complaint for
properly belongs with the Labor Arbiter and not with the Injunction, Accounting and Damages before the
RTC.
RTC of Parañaque City, Branch 258. In finding for
In this Petition for Review on Certiorari under the respondents, the trial court ruled that
Rule 45 of the Rules of Court, herein petitioners corporations had the power to classify their
Marc II Marketing, Inc. and Lucila V. Joson shares of stocks, such as "voting and non-voting"
shares, conformably with Section 67 of the Cebu Country Club, Inc. (CCCI) et al., v.
Corporation Code of the Philippines. It pointed Elizagaque, G.R. No. 160273, January
out that Article VII of both the original and
18, 2008.
amended Articles of Incorporation clearly
provided that only Class "A" shareholders could
vote and be voted for to the exclusion of Class FACTS
"B" shareholders, the exception being in
instances provided by law, such as those Cebu Country Club, Inc. (CCCI), petitioner,
enumerated in Section 6, paragraph 6 of the is a domestic corporation operating as a non-
Corporation Code. The RTC found merit in the profit and non-stock private membership
respondents’ theory that the Articles of club, having its principal place of business in
Incorporation, which defines the rights and Banilad, Cebu City. Petitioners herein are
limitations of all its shareholders, is a contract members of its Board of Directors. In 1996,
between MCPI and its shareholders. It is thus the respondent filed with CCCI an application
law between the parties and should be strictly for proprietary membership. The application
enforced as to them. Hence this petition. was indorsed by CCCI’s two (2) proprietary
members, namely: Edmundo T. Misa and
ISSUE: Whether or not holders of Class "B" Silvano Ludo. As the price of a proprietary
shares of the MCPI may be deprived of the right share was around the P5 million range,
to vote and be voted for as directors in MCPI. Benito Unchuan, then president of CCCI,
offered to sell respondent a share for only
RULING: The law referred to in the amendment P3.5 million. Respondent, however,
to Article VII refers to the Corporation Code and purchased the share of a certain Dr. Butalid
no other law. At the time of the incorporation of for only P3 million. Consequently, on
MCPI in 1977, the right of a corporation to September 6, 1996, CCCI issued Proprietary
classify its shares of stock was sanctioned by Ownership Certificate No. 1446 to
Section 5 of Act No. 1459. The law repealing Act respondent.
No. 1459, B.P. Blg. 68, retained the same grant of
right of classification of stock shares to During the meetings dated April 4, 1997 and
corporations, but with a significant change. May 30, 1997 of the CCCI Board of
Under Section 6 of B.P. Blg. 68, the requirements Directors, action on respondent’s application
and restrictions on voting rights were explicitly for proprietary membership was deferred. In
provided for, such that "no share may be another Board meeting held on July 30, 1997,
deprived of voting rights except those classified respondent’s application was voted upon. As
and issued as "preferred" or "redeemable" shown by the records, the Board adopted a
shares, unless otherwise provided in this Code" secret balloting known as the “black ball
and that "there shall always be a class or series system” of voting wherein each member will
of shares which have complete voting rights."
drop a ball in the ballot box. A white ball
Section 6 of the Corporation Code being deemed
represents conformity to the admission of an
written into Article VII of the Articles of
applicant, while a black ball means
Incorporation of MCPI, it necessarily follows that
disapproval. Pursuant to Section 3(c), as
unless Class "B" shares of MCPI stocks are clearly
amended, cited above, a unanimous vote of
categorized to be "preferred" or "redeemable"
shares, the holders of said Class "B" shares may
the directors is required. When respondent’s
not be deprived of their voting rights. Note that application for proprietary membership was
there is nothing in the Articles of Incorporation voted upon during the Board meeting on July
nor an iota of evidence on record to show that 30, 1997, the ballot box contained one (1)
Class "B" shares were categorized as either black ball. Thus, for lack of unanimity, his
"preferred" or "redeemable" shares. The only application was disapproved.
possible conclusion is that Class "B" shares fall
under neither category and thus, under the law, On August 6, 1997, Edmundo T. Misa, on
are allowed to exercise voting rights. behalf of respondent, wrote CCCI a letter of
reconsideration. As CCCI did not answer,
There is no merit in respondents’ position that respondent, on October 7, 1997, wrote
Section 6 of the Corporation Code cannot apply another letter of reconsideration. Still, CCCI
to MCPI without running afoul of the non- kept silent. On November 5, 1997,
impairment clause of the Bill of Rights. Section respondent again sent CCCI a letter inquiring
148 of the Corporation Code expressly provides whether any member of the Board objected to
that it shall apply to corporations in existence at his application. Again, CCCI did not reply.
the time of the effectivity of the Code.  Consequently, on December 23, 1998,
respondent filed with the Regional Trial
Court (RTC), Branch 71, Pasig City a
complaint for damages against petitioners
ISSUE designated by San Miguel Corporation as a
special non-proprietary member of CCCI, he
Whether in disapproving respondent’s should have been treated by petitioners with
application for proprietary membership with courtesy and civility. At the very least, they
CCCI, petitioners are liable to respondent for should have informed him why his
damages, and if so, whether their liability is application was disapproved.
joint and several.
The exercise of a right, though legal by itself,
RULING must nonetheless be in accordance with the
proper norm. When the right is exercised
YES. arbitrarily, unjustly or excessively and results
in damage to another, a legal wrong is
In rejecting respondent’s application for committed for which the wrongdoer must be
proprietary membership, we find that held responsible.
petitioners violated the rules governing
human relations, the basic principles to be Section 31 of the Corporation Code provides:
observed for the rightful relationship between
human beings and for the stability of social SEC. 31. Liability of directors, trustees or
order. The trial court and the Court of officers. — Directors or trustees who
Appeals aptly held that petitioners committed willfully and knowingly vote for or assent to
fraud and evident bad faith in disapproving patently unlawful acts of the corporation or
respondent’s applications. This is contrary to who are guilty of gross negligence or bad
morals, good custom or public policy. Hence, faith in directing the affairs of the
petitioners are liable for damages pursuant to corporation or acquire any personal or
Article 19 in relation to Article 21 of the same pecuniary interest in conflict with their duty
Code. as such directors, or trustees shall be liable
jointly and severally for all damages
It bears stressing that the amendment to resulting therefrom suffered by the
Section 3(c) of CCCI’s Amended By-Laws corporation, its stockholders or members and
requiring the unanimous vote of the directors other persons. (Emphasis ours)
present at a special or regular meeting was
not printed on the application form The challenged Decision and Resolution of
respondent filled and submitted to CCCI. the Court of Appeals are AFFIRMED with
What was printed thereon was the original modification in the sense that (a) the award of
provision of Section 3(c) which was silent on moral damages is reduced
the required number of votes needed for fromP2,000,000.00 to P50,000.00; (b) the
admission of an applicant as a proprietary award of exemplary damages is reduced from
member. P1,000,000.00 toP25,000.00; and (c) the
award of attorney’s fees and litigation
Petitioners explained that the amendment expenses is reduced from P500,000.00
was not printed on the application form due andP50,000.00 to P50,000.00 and
to economic reasons. We find this excuse P25,000.00, respectively.
flimsy and unconvincing. Such amendment,
aside from being extremely significant, was Aurbach vs. Sanitary Wares
introduced way back in 1978 or almost (Partnership; Joint Venture; Foreign and
twenty (20) years before respondent filed his Domestic Corp)
application. We cannot fathom why such a
prestigious and exclusive golf country club, FACTS:
like the CCCI, whose members are all
affluent, did not have enough money to cause This consolidated petition assailed the decision
the printing of an updated application form.
of the CA directing a certain MANNER OF
ELECTION OF OFFICERS IN THE BOARD OF
It is thus clear that respondent was left
DIRECTORS
groping in the dark wondering why his
application was disapproved. He was not *There are two groups in this case, the
even informed that a unanimous vote of the Lagdameo group composed of Filipino investors
Board members was required. When he sent and the American Standard Inc. (ASI) composed
a letter for reconsideration and an inquiry of foreign investors.
whether there was an objection to his The ASI Group and petitioner Salazar (G.R. Nos.
application, petitioners apparently ignored 75975-76) contend that the actual intention of
him. Certainly, respondent did not deserve the parties should be viewed strictly on the
this kind of treatment. Having been "Agreement" dated August 15,1962 wherein it is
clearly stated that the parties' intention was to in fact hardly distinguishable from the
form a corporation and not a joint venture. partnership, since their elements are
similar community of interest in the
ISSUE: business, sharing of profits and losses,
and a mutual right of control.
The main issue hinges on who were the duly  The main distinction cited by most opinions
elected directors of Saniwares for the year 1983
in common law jurisdictions is that the
during its annual stockholders' meeting held on
partnership contemplates a general
March 8, 1983. To answer this question the
business with some degree of continuity,
following factors should be determined:
*(1) the nature of the business established by while the joint venture is formed for the
the parties whether it was a joint venture or a execution of a single transaction, and is
corporation and thus of a temporary nature.

HELD:
 While certain provisions of the
Agreement would make it appear that
the parties thereto disclaim being
partners or joint venturers such
disclaimer is directed at third parties and
is not inconsistent with, and does not
preclude, the existence of two distinct
groups of stockholders in Saniwares one
of which (the Philippine Investors) shall
constitute the majority, and the other
ASI shall constitute the minority
stockholder. In any event, the evident
intention of the Philippine Investors and
ASI in entering into the Agreement is to
enter into a joint venture enterprise
 An examination of the Agreement
shows that certain provisions were
inccuded to protect the interests of ASI
as the minority. For example, the vote
of 7 out of 9 directors is required in
certain enumerated corporate acts. ASI
is contractually entitled to designate a
member of the Executive Committee
and the vote of this member is required
for certain transactions
 The Agreement also requires a 75%
super-majority vote for the amendment
of the articles and by-laws of Saniwares.
ASI is also given the right to designate
the president and plant manager .The
Agreement further provides that the
sales policy of Saniwares shall be that
which is normally followed by ASI and
that Saniwares should not export
"Standard" products otherwise than
through ASI's Export Marketing
Services. Under the Agreement, ASI
agreed to provide technology and
know-how to Saniwares and the latter
paid royalties for the same.
 The legal concept of a joint venture is of
common law origin. It has no precise
legal definition but it has been generally
understood to mean an organization
formed for some temporary purpose. It is