FIRST DIVISION

[G.R. No. 51765. March 3, 1997.]

REPUBLIC PLANTERS BANK, Petitioner, v. HON. ENRIQUE A. AGANA, SR., as

Presiding Judge, Court of First Instance of Rizal, Branch XXVIII, Pasay City,
ROBES-FRANCISCO REALTY & DEVELOPMENT CORPORATION and ADALIA F.
ROBES, Respondents.

The Chief Legal Counsel and Dorado Sarmen Sarson Ian & Associates
for Petitioner.

Rodrigo P. Villaroman and Roberto Y Miranda for Private Respondents.

SYLLABUS

1. COMMERCIAL LAW; CORPORATION CODE; SHARES OF STOCK; PREFERRED

SHARES OF STOCK; NATURE THEREOF. — A preferred share of stock, on one hand,
is one which entitles the holder thereof to certain preferences over the holders of
common stock. The preferences are designed to induce persons to subscribe for
shares of a corporation. Preferred shares take a multiplicity of forms. The most
common forms may be classified into two: (1) preferred shares as to assets; and (2)
preferred shares as to dividends. The former is a share which gives the holder
thereof preference in the distribution of the assets of the corporation in case of
liquidation; the latter is a share the holder of which is entitled to receive dividends
on said share to the extent agreed upon before any dividends at all are paid to the
holders of common stock. There is no guaranty, however, that the share will receive
any dividends. Under the old Corporation Law in force at the time the contract
between the petitioner and the private respondents was entered into, it was
provided that "no corporation shall make or declare any dividend except from the
surplus profits arising from its business, or distribute its capital stock or property
other than actual profits among its members or stockholders until after the payment
of its debts and the termination of its existence by limitation or lawful dissolution."
Similarly, the present Corporation Code provides that the board of directors of a
stock corporation may declare dividends only out of unrestricted retained earnings.
The Code, in Section 43, adopting the change made in accounting terminology,
substituted the phrase "unrestricted retained earnings," which may be a more
precise term in place of "surplus profits arising from its business" in the former law.
Thus, the declaration of dividends is dependent upon the availability of surplus profit
or unrestricted retained earnings, as the case may be. Preferences granted to
preferred stockholders, moreover, do not give them a lien upon the property of the
corporation nor make them creditors of the corporation the right of the former being
always subordinate to the latter. Dividends are thus payable only when there are
profits earned by the corporation and as a general rule, even if there are existing
profits, the board of directors has the discretion to determine whether or not
dividends are to be declared. Shareholders, both common and preferred, are
considered risk takers who invest capital in the business and who can look only to
what is left after corporate debts and liabilities are fully paid.

2. ID.; ID.; ID.; ID.; REDEEMABLE SHARES. — Redeemable shares, on the other
hand, are shares usually preferred, which by, their terms are redeemable at a fixed
date, or at the option of either issuing corporation or the stockholder, or both at a
certain redemption price. A redemption by the corporation of its stock is, in a sense,
a repurchase of it for cancellation. The present Code allows redemption of shares
even if there are no unrestricted retained earnings on the books of the corporation.
This is a new provision which in effect qualifies the general rule that the corporation
cannot purchase its own shares except out of current retained earnings. However,
while redeemable shares may be redeemed regardless of the existence of
unrestricted retained earnings, this is subject to the condition that the corporation
has, after such redemption, assets in its books to cover debts and liabilities inclusive
of capital stock. Redemption, therefore, may not be made where the corporation is
insolvent or if such redemption will cause insolvency or inability of the corporation to
meet its debts as they mature.

3. ID.; ID.; ID.; ID.; WHILE THE STOCK CERTIFICATE IN CASE AT BAR DOES NOT
ALLOW REDEMPTION, THE OPTION TO DO SO WAS CLEARLY VESTED IN THE
PETITIONER BANK. — The petitioner argues that it cannot be compelled to redeem
the preferred shares issued to the private Respondent. We agree. Respondent judge,
in ruling that petitioner must redeem the shares in question, stated that: "On the
question of the redemption by the defendant of said preferred shares of stock, the
very wordings of the terms and conditions in said stock certificates clearly allows the
same." What respondent Judge failed to recognize was that while the stock
certificate does allow redemption, the option to do so was clearly vested in the
petitioner bank. The redemption therefore is clearly the type known as "optional."
Thus, except as otherwise provided in the stock certificate, the redemption rests
entirely with the corporation and the stockholder is without right to either compel or
refuse the redemption of its stock. Furthermore, the terms and conditions set forth
therein use the word "may." It is a settled doctrine in statutory construction that the
word "may" denotes discretion, and cannot be construed as having a mandatory
effect. We fail to see how respondent judge can ignore what, in his words, are the
"very wordings of the terms and conditions in said stock certificates" and construe
what is clearly a mere option to be his legal basis for compelling the petitioner to
redeem the shares in question.

4. ID.; ID.; ID.; PAYMENT OF DIVIDENDS TO A STOCKHOLDER IS NOT A MATTER

OF RIGHT BUT A MATTER OF CONSENSUS. — The respondent judge also stated that
since the stock certificate granted the private respondents the right to receive a
quarterly dividend of One Per Centum (1%), cumulative and participating, it "clearly
and unequivocably (sic) indicates that the same are ‘interest bearing stocks’ or
stocks issued by a corporation under an agreement to pay a certain rate of interest
thereon. As such, plaintiffs (private respondents herein) become entitled to the
payment thereof as a matter of right without necessity of a prior declaration of
dividend." There is no legal basis for this observation. Both Sec. 16 of the
Corporation Law and Sec. 43 of the present Corporation Code prohibit the issuance
of any stock dividend without the approval of stockholders, representing not less
than two-thirds (2/3) of the outstanding capital stock at a regular or special meeting
duly called for the purpose. These provisions underscore the fact that payment of
dividends to a stockholder is not a matter of right but a matter of consensus.
Furthermore, "interest bearing stocks," on which the corporation agrees absolutely
to pay interest before dividends are paid to common stockholders, is legal only when
construed as requiring payment of interest as dividends from net earnings or surplus
only. Clearly, the respondent judge, in compelling the petitioner to redeem the
shares in question and to pay the corresponding dividends, committed grave abuse
of discretion amounting to lack or excess of jurisdiction in ignoring both the terms
and conditions specified in the stock certificate, as well as the clear mandate of the
law.

5. CIVIL LAW, PRESCRIPTION OF ACTIONS; THE CLAIM OF PRIVATE RESPONDENT

IS ALREADY BARRED BY PRESCRIPTION AS WELL AS LACHES. — This Court so holds
that the claim of private respondent is already barred by prescription as well as
laches. Art. 1144 of the New Civil Code provides that a right of action that is
founded upon a written contract prescribes in ten (10) years. The letter-demand
made by the private respondents to the petitioner was made only on January 5,
1979, or almost eighteen years after receipt of the written contract in the form of
the stock certificate. As noted earlier, this letter-demand, significantly, was not
formally offered in evidence, nor were any other evidence of demand presented.
Therefore, we conclude that the only time the private respondents saw it fit to assert
their rights, if any, to the preferred shares of stock, was after the lapse of almost
eighteen years. The same clearly indicates that the right of the private respondents
to any relief under the law has already prescribed. Moreover, the claim of the private
respondents is also barred by laches. Laches has been defined as the failure or
neglect, for an unreasonable length of time, to do that which by exercising due
diligence could or should have been done earlier, it is negligence or omission to
assert a right within a reasonable time, warranting a presumption that the party
entitled to assert it either has abandoned it or declined to assert it.

6. CONSTITUTIONAL LAW; BILL OF RIGHTS; THE DIRECTIVE ISSUED BY THE

CENTRAL BANK GOVERNOR PROHIBITING THE PETITIONER BANK FROM
REDEEMING ANY PREFERRED SHARE ON THE GROUND THAT SAID REDEMPTION
WOULD REDUCE THE ASSETS OF THE BANK TO THE PREJUDICE OF ITS
DEPOSITORS AND CREDITORS MAY BE CONSIDERED AS AN EXERCISE OF POLICE
POWER; IT DOES NOT CONSTITUTE AN IMPAIRMENT OF THE OBLIGATION OF
CONTRACTS; CASE AT BAR. — The redemption of shares in case at bar cannot be
allowed. As pointed out by the petitioner, the Central Bank made a finding that said
petitioner has been suffering from chronic reserve deficiency, and that such finding
resulted in a directive, issued on January 31, 1973 by then Gov. G. S. Licaros of the
Central Bank, to the President and Acting Chairman of the Board of the petitioner
bank prohibiting the latter from redeeming any preferred share, on the ground that
said redemption would reduce the assets of the Bank to the prejudice of its
depositors and creditors. Redemption of preferred shares was prohibited for a just
and valid reason. The directive issued by the Central Bank Governor was obviously
meant to preserve the status quo, and to prevent the financial ruin of a banking
institution that would have resulted in adverse repercussions, not only to its
depositors and creditors, but also to the banking industry as a whole. The directive,
in limiting the exercise of a right granted by law to a corporate entity, may thus be
considered as an exercise of police power. The respondent judge insists that the
directive constitutes an impairment of the obligation of contracts. It has, however,
been settled that the constitutional guaranty of non-impairment of obligations of
contract is limited by the exercise of the police power of the state, the reason being
that public welfare is superior to private rights.

DECISION
 HERMOSISIMA, JR., J.:

This is a petition for certiorari seeking the annulment of the Decision 1 of the then
Court of First Instance of Rizal 2 for having been rendered in grave abuse of
discretion. Private respondents Robes-Francisco Realty and Development
Corporation (hereafter, "the Corporation") and Adalia F. Robes filed in the court a
quo, an action for specific performance to compel petitioner to redeem 800 preferred
shares of stock with a face value of P8,000.00 and to pay 1% quarterly interest
thereon as quarterly dividend owing them under the terms and conditions of the
certificates of stock.

The court a quo rendered judgment in favor of private respondents; hence, this
instant petition.

Herein parties debate only legal issues, no issues of fact having been raised by them
in the court a quo. For ready reference, however, the following narration of pertinent
transactions and events is in order: chanrob1es v irt ual 1aw li bra ry

On September 18, 1961, private respondent Corporation secured a loan from

petitioner in the amount of P120,000.00. As part of the proceeds of the loan,
preferred shares of stocks were issued to private respondent Corporation, through
its officers then, private respondent Adalia F. Robes and one Carlos F. Robes. In
other words, instead of giving the legal tender totaling to the full amount of the
loan, which is P120,000.00, petitioner lent such amount partially in the form of
money and partially in the form of stock certificates numbered 3204 and 3205, each
for 400 shares with a par value of P10.00 per share, or for P4,000.00 each, for a
total of P8,000.00. Said stock certificates were in the name of private respondent
Adalia F. Robes and Carlos F. Robes, who subsequently, however, endorsed his
shares in favor of Adalia F. Robes.

Said certificates of stock bear the following terms and conditions: jgc:chanroble s.com.p h

"The Preferred Stock shall have the following rights, preferences, qualifications and
limitations, to wit: chanrob1es vi rtual 1aw lib rary

1. Of the right to receive a quarterly dividend of One Per Centum (1%), cumulative
and participating.

x x x

2. That such preferred shares may be redeemed, by the system of drawing lots, at
any time after two (2) years from the date of issue at the option of the Corporation.
. . ."
cralaw virtua 1aw lib rary

On January 31, 1979, private respondents proceeded against petitioner and filed a
complaint anchored on private respondents’ alleged rights to collect dividends under
the preferred shares in question and to have petitioner redeem the same under the
terms and conditions of the stock certificates. Private respondents attached to their
complaint, a letter-demand dated January 5, 1979 which, significantly, was not
formally offered in evidence.
Petitioner filed a Motion to Dismiss 3 private respondents’ Complaint on the following
grounds: (1) that the trial court had no jurisdiction over the subject-matter of the
action; (2) that the action was unenforceable under substantive law; and (3) that
the action was barred by the statute of limitations and/or laches.

Petitioner’s Motion to Dismiss was denied by the trial court in an order dated March
16, 1979. 4 Petitioner then filed its Answer on May 2, 1979. 5 Thereafter, the trial
court gave the parties ten (10) days from July 30, 1979 to submit their respective
memoranda after the submission of which the case would be deemed submitted for
resolution. 6

On September 7, 1979, the trial court rendered the herein assailed decision in favor
of private respondents. In ordering petitioner to pay private respondents the face
value of the stock certificates as redemption price, plus 1% quarterly interest
thereon until full payment, the trial court ruled:jgc:chanroble s.com. ph

"There being no issue of fact raised by either of the parties who filed their respective
memoranda delineating their respective contentions, a judgment on the pleadings,
conformably with an earlier order of the Court, appears to be in order.

From a further perusal of the pleadings, it appears that the provision of the stock
certificates in question to the effect that the plaintiffs shall have the right to receive
a quarterly dividend of One Per Centum (1%), cumulative and participating, clearly
and unequivocably [sic] indicates that the same are ‘interest bearing stocks’ which
are stocks issued by a corporation under an agreement to pay a certain rate of
interest thereon (5 Thompson, Sec. 3439). As such, plaintiffs become entitled to the
payment thereof as a matter of right without necessity of a prior declaration of
dividend.

On the question of the redemption by the defendant of said preferred shares of

stock, the very wordings of the terms and conditions in said stock certificates clearly
allows the same.

To allow the herein defendant not to redeem said preferred shares of stock and/or
pay the interest due thereon despite the clear import of said provisions by the mere
invocation of alleged Central Bank Circulars prohibiting the same is tantamount to
an impairment of the obligation of contracts enshrined in no less than the
fundamental law itself.

Moreover, the herein defendant is considered in estoppel from taking shelter behind
a General Banking Act provision to the effect that it cannot buy its own shares of
stocks considering that the very terms and conditions in said stock certificates
allowing their redemption are its own handiwork.

As to the claim by the defendant that plaintiffs’ cause of action is barred by

prescription, suffice it to state that the running of the prescriptive period was
considered interrupted by the written extrajudicial demands made by the plaintiffs
from the defendant." 7

Aggrieved by the decision of the trial court, petitioner elevated the case before us
essentially on pure questions of law. Petitioner’s statement of the issues that it
submits for us to adjudicate upon, is as follows: jgc:chanrobles. com.ph
"A. RESPONDENT JUDGE COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR EXCESS OF JURISDICTION IN ORDERING PETITIONER TO PAY
RESPONDENT ADALIA F. ROBES THE AMOUNT OF P8,213.69 AS INTERESTS FROM
1961 To 1979 ON HER PREFERRED SHARES.

B. RESPONDENT JUDGE COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING

TO LACK OR EXCESS OF JURISDICTION IN ORDERING PETITIONER TO REDEEM
RESPONDENT ADALIA F. ROBES’ PREFERRED SHARES FOR P8,000.00

C. RESPONDENT JUDGE COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING

TO LACK OR EXCESS OF JURISDICTION IN DISREGARDING THE ORDER OF THE
CENTRAL BANK TO PETITIONER TO DESIST FROM REDEEMING ITS PREFERRED
SHARES AND FROM PAYING DIVIDENDS THEREON . . ..

D. THE TRIAL COURT ERRED IN NOT HOLDING THAT THE COMPLAINT DOES NOT
STATE A CAUSE OF ACTION.

E. THE TRIAL COURT ERRED IN NOT HOLDING THAT THE CLAIM OF RESPONDENT
ADALIA F. ROBES IS BARRED BY PRESCRIPTION OR LACHES." 8

The petition is meritorious.

Before passing upon the merits of this petition, it may be pertinent to provide an
overview on the nature of preferred shares and the redemption thereof, considering
that these issues lie at the heart of the dispute.

A preferred share of stock, on one hand, is one which entitles the holder thereof to
certain preferences over the holders of common stock. The preferences are designed
to induce persons to subscribe for shares of a corporation. 9 Preferred shares take a
multiplicity of forms. The most common forms may be classified into two: (1)
preferred shares as to assets; and (2) preferred shares as to dividends. The former
is a share which gives the holder thereof preference in the distribution of the assets
of the corporation in case of liquidation; 10 the latter is a share the holder of which
is entitled to receive dividends on said share to the extent agreed upon before any
dividends at all are paid to the holders of common stock. 11 There is no guaranty,
however, that the share will receive any dividends. Under the old Corporation Law in
force at the time the contract between the petitioner and the private respondents
was entered into, it was provided that "no corporation shall make or declare any
dividend except from the surplus profits arising from its business, or distribute its
capital stock or property other than actual profits among its members or
stockholders until after the payment of its debts and the termination of its existence
by limitation or lawful dissolution." 12 Similarly, the present Corporation Code 13
provides that the board of directors of a stock corporation may declare dividends
only out of unrestricted retained earnings. 14 The Code, in Section 43, adopting the
change made in accounting terminology, substituted the phrase unrestricted
retained earnings," which may be a more precise term, in place of "surplus profits
arising from its business" in the former law. Thus, the declaration of dividends is
dependent upon the availability of surplus profit or unrestricted retained earnings, as
the case may be. Preferences granted to preferred stockholders, moreover, do not
give them a lien upon the property of the corporation nor make them creditors of
the corporation, the right of the former being always subordinate to the latter.
Dividends are thus payable only when there are profits earned by the corporation
and as a general rule, even if there are existing profits, the board of directors has
the discretion to determine whether or not dividends are to be declared. 15
Shareholders, both common and preferred, are considered risk takers who invest
capital in the business and who can look only to what is left after corporate debts
and liabilities are fully paid. 16 chanroble svi rtual lawlib rary

Redeemable shares, on the other hand, are shares usually preferred, which by their
terms are redeemable at a fixed date, or at the option of either issuing corporation,
or the stockholder, or both at a certain redemption price. 17 A redemption by the
corporation of its stock is, in a sense, a repurchase of it for cancellation. 18 The
present Code allows redemption of shares even if there are no unrestricted retained
earnings on the books of the corporation. This is a new provision which in effect
qualifies the general rule that the corporation cannot purchase its own shares except
out of current retained earnings. 19 However, while redeemable shares may be
redeemed regardless of the existence of unrestricted retained earnings, this is
subject to the condition that the corporation has, after such redemption, assets in its
books to cover debts and liabilities inclusive of capital stock. Redemption, therefore,
may not be made where the corporation is insolvent or if such redemption will cause
insolvency or inability of the corporation to meet its debts as they mature. 20

We come now to the merits of the case. The petitioner argues that it cannot be
compelled to redeem the preferred shares issued to the private Respondent. We
agree. Respondent judge, in ruling that petitioner must redeem the shares in
question, stated that:jgc:chanrob les. com.ph

"On the question of the redemption by the defendant of said preferred shares of
stock, the very wordings of the terms and conditions in said stock certificates clearly
allows the same." 21

What respondent Judge failed to recognize was that while the stock certificate does
allow redemption, the option to do so was clearly vested in the petitioner bank. The
redemption therefore is clearly the type known as "optional." Thus, except as
otherwise provided in the stock certificate, the redemption rests entirely with the
corporation and the stockholder is without right to either compel or refuse the
redemption of its stock. 22 Furthermore, the terms and conditions set forth therein
use the word "may." It is a settled doctrine in statutory construction that the word
"may" denotes discretion, and cannot be construed as having a mandatory effect.
We fail to see how respondent judge can ignore what, in his words, are the "very
wordings of the terms and conditions in said stock certificates" and construe what is
clearly a mere option to be his legal basis for compelling the petitioner to redeem
the shares in question.

The redemption of said shares cannot be allowed. As pointed out by the petitioner,
the Central Bank made a finding that said petitioner has been suffering from chronic
reserve deficiency, 23 and that such finding resulted in a directive, issued on
January 31, 1973 by then Gov. G. S. Licaros of the Central Bank, to the President
and Acting Chairman of the Board of the petitioner bank prohibiting the latter from
redeeming any preferred share, on the ground that said redemption would reduce
the assets of the Bank to the prejudice of its depositors and creditors. 24
Redemption of preferred shares was prohibited for a just and valid reason. The
directive issued by the Central Bank Governor was obviously meant to preserve the
status quo, and to prevent the financial ruin of a banking institution that would have
resulted in adverse repercussions, not only to its depositors and creditors, but also
to the banking industry as a whole. The directive, in limiting the exercise of a right
granted by law to a corporate entity, may thus be considered as an exercise of
police power. The respondent judge insists that the directive constitutes an
impairment of the obligation of contracts. It has, however, been settled that the
Constitutional guaranty of non-impairment of obligations of contract is limited by the
exercise of the police power of the state, the reason being that public welfare is
superior to private rights.25cralaw:red

The respondent judge also stated that since the stock certificate granted the private
respondents the right to receive a quarterly dividend of one Per Centum (1%),
cumulative and participating, it "clearly and unequivocably (sic) indicates that the
same are ‘interest bearing stocks’ or stocks issued by a corporation under an
agreement to pay a certain rate of interest thereon. As such, plaintiffs (private
respondents herein) become entitled to the payment thereof as a matter of right
without necessity of a prior declaration of dividend." 26 There is no legal basis for
this observation. Both Sec. 16 of the Corporation Law and Sec. 43 of the present
Corporation Code prohibit the issuance of any stock dividend without the approval of
stockholders, representing not less than two-thirds (2/3) of the outstanding capital
stock at a regular or special meeting duly called for the purpose. These provisions
underscore the fact that payment of dividends to a stockholder is not a matter of
right but a matter of consensus. Furthermore, "interest bearing stocks", on which
the corporation agrees absolutely to pay interest before dividends are paid to
common stockholders, is legal only when construed as requiring payment of interest
as dividends from net earnings or surplus only. 27 Clearly, the respondent judge, in
compelling the petitioner to redeem the shares in question and to pay the
corresponding dividends, committed grave abuse of discretion amounting to lack or
excess of jurisdiction in ignoring both the terms and conditions specified in the stock
certificate, as well as the clear mandate of the law.

Anent the issue of prescription, this Court so holds that the claim of private
respondent is already barred by prescription as well as laches. Art. 1144 of the New
Civil Code provides that a right of action that is founded upon a written contract
prescribes in ten (10) years. The letter-demand made by the private respondents to
the petitioner was made only on January 5, 1979, or almost eighteen years after
receipt of the written contract in the form of the stock certificate. As noted earlier,
this letter-demand, significantly, was not formally offered in evidence, nor were any
other evidence of demand presented. Therefore, we conclude that the only time the
private respondents saw it fit to assert their rights, if any, to the preferred shares of
stock, was after the lapse of almost eighteen years. The same clearly indicates that
the right of the private respondents to any relief under the law has already
prescribed. Moreover, the claim of the private respondents is also barred by laches.
Laches has been defined as the failure or neglect, for an unreasonable length of
time, to do that which by exercising due diligence could or should have been done
earlier; it is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has abandoned it
or declined to assert it. 28

Considering that the terms and conditions set forth in the stock certificate clearly
indicate that redemption of the preferred shares may be made at any time after the
lapse of two years from the date of issue, private respondents should have taken it
upon themselves, after the lapse of the said period, to inquire from the petitioner
the reason why the said shares have not been redeemed. As it is, not only two years
had lapsed, as agreed upon, but an additional sixteen years passed before the
private respondents saw it fit to demand their right. The petitioner, at the time it
issued said preferred shares to the private respondents in 1961, could not have
known that it would be suffering from chronic reserve deficiency twelve years later.
Had the private respondents been vigilant in asserting their rights, the redemption
could have been effected at a time when the petitioner bank was not suffering from
any financial crisis.

WHEREFORE, the instant petition, being impressed with merit, is hereby GRANTED.
The challenged decision of respondent judge is set aside and the complaint against
the petitioner is dismissed.

Costs against the private respondents.

SO ORDERED.

Bellosillo, Vitug and Kapunan, JJ., concur.

Padilla, J., concurs in the result.

Endnotes:

1. Promulgated on September 7, 1979 in Civil Case No. 6965-P, penned by District

Judge Enrique A. Agana, Sr.; Rollo, pp. 57-59.

2. Branch XXVIII, Seventh Judicial District, Pasay City.

3. Dated February 12, 1979.

4. Rollo, p. 37.

5. Rollo, pp. 38-40.

6. Order dated July 30, 1979; Rollo, p. 43.

7. Decision dated September 7, 1979, pp. 2-3; Rollo, pp. 58-59.

8. Petition, pp. 10-11; Rollo, pp. 11-12.

9. DE LEON, The Corporation Code of the Philippines, p. 62 (1989 ed.).

10. Id.

11. DE LEON, p. 69, citing 2 Fletcher, p. 44.

12. Act No. 1459, Sec. 16, as amended.

13. Effective May 1, 1980.

14. The Corporation Code, Sec. 16.

15. CAMPOS, THE CORPORATION CODE, p. 9 [1990 ed.].

16. DE LEON, p. 69, citing SEC Opinion, February 10, 1969.

17. Id., at p. 75.

18. Id., at p. 77.

19. CAMPOS, p. 33.

20. DE LEON, p. 76, citing SEC Opinion of January 23, 1985.

21. Decision dated September 7, 1979 in Civil Case No. 6965-P penned by Judge
Enrique A. Agana, Sr., pp. 2-3; Rollo, pp. 58-59.

22. DE LEON, pp. 76-77, citing Section 8 of the Corporation Code.

23. Rollo, p. 12.

24. Rollo, p. 8.

25. Philippine National Bank v. Remigio, G.R. No. 78508, March 21, 1994.

26. Rollo, p. 58.

27. DE LEON, p. 62, citing Sec. 43 of the Corporation Code.

28. Olizon v. Court of Appeals, Et Al., G.R. 107075, September 1, 1994.