Pena V CA

ROSITA PEÑA petitioner, vs. THE COURT OF APPEALS, SPOUSES RISING T.
YAP and Under Section 25 of the Corporation Code of the Philippines, the articles of
CATALINA YAP, PAMPANGA BUS CO., INC., JESUS DOMINGO, JOAQUIN BRIONES, incorporation or by-laws of the corporation may fix a greater number than the
SALVADOR BERNARDEZ, MARCELINO ENRIQUEZ and EDGARDO A. ZABAT, majority of the number of board members to constitute the quorum necessary for
respondents. the valid transaction of business. Any number less than the number provided in the
articles or by-laws therein cannot constitute a quorum and any act therein would not
G.R. No. 91478 February 7, 1991 bind the corporation; all that the attending directors could do is to adjourn.
GANCAYCO, J.:
Moreover, the records show that respondent PAMBUSCO ceased to operate for
Facts: about 25 years prior to the board meeting. Being a dormant corporation for several
years, it was highly irregular, for a group of three (3) individuals representing
Spouses Yap sought to recover the possession of the lots from Peña. The latter themselves to be the directors of respondent PAMBUSCO to pass a resolution
countered that she is now the legitimate owner of the subject lands for having disposing of the only remaining asset of the corporation in favor of a former
purchased the same in a foreclosure proceeding instituted by the DBP against corporate officer.
PAMBUSCO and no valid redemption having been effected within the period
provided by law. As a matter of fact, the three (3) alleged directors who attended the special meeting
on November 19, 1974 were not listed as directors of respondent PAMBUSCO in the
The defense was that since the deed of assignment executed by PAMBUSCO in favor latest general information sheet. Similarly, the latest list of stockholders of
of Enriquez was void ab initio for being an ultra vires act of its board of directors and respondent PAMBUSCO on file with the SEC does not show that the said alleged
for being without any valuable consideration, it could not have had any legal effect. directors were among the stockholders of respondent PAMBUSCO, in contravention
of the rule requiring a director to own one (1) share in their to qualify as director of
(It should be noted that the by-laws of PAMBUSCO provide that four out of five a corporation.
directors must be present in a special meeting of the board to constitute a quorum,
and that the corporation has already ceased to operate.) Further, under the Corporation Law, the sale or disposition of any and/or
substantially all properties of the corporation requires, in addition to a proper board
CFI ruled in favor of Petitioner Peña, but the same was overturned by the CA. resolution, the affirmative votes of the stockholders holding at least two-thirds (2/3)
of the voting power in the corporation in a meeting duly called for that purpose. This
Issue: W/N there Peña is entitled to the lots. was not complied with in the case at bar.
Ruling: Yes. At the time of the passage of the questioned resolution, respondent PAMBUSCO was
insolvent and its only remaining asset was its right of redemption over the subject
The by-laws of a corporation are its own private laws which substantially have the properties. Since the disposition of said redemption right of respondent PAMBUSCO
same effect as the laws of the corporation. They are in effect, written, into the by virtue of the questioned resolution was not approved by the required number of
charter. In this sense they become part of the fundamental law of the corporation stockholders, the said resolution, as well as the subsequent assignment and sale,
with which the corporation and its directors and officers must comply. were null and void.
Apparently, only three (3) out of five (5) members of the board of directors of Lastly, for lack of consideration, the assignment should be construed as a donation.
respondent PAMBUSCO convened by virtue of a prior notice of a special meeting. Under Article 725 of the Civil Code, in order to be valid, such a donation must be
There was no quorum to validly transact business since it is required under its by- made in a public document and the acceptance must be made in the same or in a
laws that at least four (4) members must be present to constitute a quorum in a separate instrument. In the latter case, the donor shall be notified of the acceptance
special meeting of the board of directors. in an authentic form and such step must be noted in both instruments. Since
assignment to Enriquez shows that there was no acceptance of the donation in the
same and in a separate document, the said deed of assignment is thus void ab initio.

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ROSITA PEÑA petitioner, vs. THE COURT OF APPEALS, SPOUSES RISING T.

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