Republic of the Philippines
First Judicial Region
Regional Trial Court
Branch 61
Baguio City
JAMES BAND,
as represented by James Band Jr.
Plaintiff,
-versus-
CIVIL CASE NO. 7400-R
For: Specific Performance
with Damages
Wideland Realty Incorporated (WRI),
Defendant.
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MEMORANDUM
FOR PLAINTIFF
PLAINTIFF, through the undersigned counsel, unto this
Honorable Court most respectfully submit and present this
Memorandum in the above-titled case and aver that:
THE PARTIES
1. Plaintiff, James Band, is an American citizen, of legal age,
widower with address at #97, Beverly Hills, Los Angeles. Plaintiff is
herein represented by his attorney-in-fact, James Band, Jr., also of
legal age, married, Filipino, and with address at No. 123 Mordung
Road, Baguio City, by virtue of a special power of attorney executed
by plaintiff on February 10, 2015 attached in the complaint as “Annex
A”.;
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2. Defendant, Wideland Realty Incorporated (WRI for brevity),
is a corporation organized under Philippine Laws, engaged in the
business of developing, selling, and leasing real properties, with
primary
business address at No. 23 Mapukpukaw Street,
Dimasarakan City where he can be served with summons.
I.
STATEMENT OF THE CASE
Plaintiff, James Band filed this present case for Specific
Performance with Damages against defendant Wideland Realty
Incorporated (herein referred as WRI). Plaintiff’s cause of action
arises from the failure of the defendant’s duty to cause the transfer
and registration of properties subject of the board resolution.
Defendant on the other hand maintains that the board resolution
contemplated is not enforceable.
II.
PROCEDURAL BACKGROUND
On February 11, 2015, Plaintiff filed a Complaint for Specific
Performance with Damages against defendant;
On February 20, 2015, defendant received summons issued by
the Honorable Court to file an answer.
On March 14, 2016, defendant filed his answer against the
plaintiff.
On April 10, 2016, preliminary conference was held in the
presence of the plaintiff, defendant, and their respective counsels.
Accordingly, after presentation of evidences, the Honorable
Court ordered the parties to submit their respective Memoranda
fifteen days (15) days from notice, otherwise, the case is deemed
submitted for decision.
Hence, the filing of the instant Memorandum.
Page 2 of 13
III.
FACTUAL BACKGROUND
1) Plaintiff was a board member of the Board of Directors of
Wideland Realty Incorporated for the period 1995-2005
2) During the incumbency of plaintiff as a board member, he had
lent the corporation, to aid the latter in its operation,
the amount of Php7,500,000.00.
3) Plaintiff manifested and presented a list to WRI indicating that
as of March 20, 2005, his unpaid salaries amount to
Php10,000,000.00; and his account receivables receipts
amount to Php7, 500, 000.00.
4) After negotiations, and taking into account the liquidity of
the corporation, the plaintiff and WRI agreed that the
former be paid a discounted amount of Php15, 000, 000.00,
and to receive properties in lieu of cash as full and final
settlement of the aforesaid claims against the corporation.
5) On March 20, 2005, the Board of Directors of WRI issued
Board Resolution No.
02-0202 titled “APPROVING THE
SETTLEMENT OF ALL UNPAID SALARIES AND ACCOUNT
RECEIVABLES OF JAMES BAND AGAINST THE
CORPORATION” attached to this complaint as “Annex B”
conveying the following properties to plaintiff:
a. 5 corporate share of Pang-Ur Golf and Country
Club with an estimated value of Php5, 000, 000.00.
b. Units 1, 2, 3, 4, and 5 of Margaay Condominium with
Fair Market Value amounting to Php5, 000,000.00
c. 5 hectares agricultural land located in Liblib, Suli
covered by TCT no.2, the Fair Market Value of which is
Php5,000, 000.00
6) On March 21, 2005, plaintiff took possession of the agricultural
land and started the introduction of improvement although
registration of the said property in the name of plaintiff had not
been undertaken by WRI as of the present.
7) Plaintiff later found out that Unit I of Maargay Corporation
turned out to be owned by another corporation and not of WRI
8) The occupants of Units 4 and 5 of Margaay Condominium
never vacated the premises and continued to pay WRI
Php50,000 each as monthly rentals.
9) The shares under Pang-Ur Golf and Country Club were
never transferred under plaintiff’s name.
Page 3 of 13
10) Plaintiff, a former natural born Filipino citizen, travelled to the
United States on March 10, 2006 and became a U.S citizen on
March 25, 2013.
11) On January 3, 2015, plaintiff returned to the Philippines.
12) Plaintiff, in several occasions, has been inquiring of the status
of the board resolution and demanding for its enforcement but
to no recourse.
13) On January 7, 2015, plaintiff sent a demand letter to WRI to
comply with the Board Resolution No. 02-0202 by having the
properties stated therein be transferred and registered under
his name until February 6, 2015.
14) No communication was made by WRI despite the
demand, thus plaintiff executed a Special Power of Attorney
authorizing James Band Jr. to file a case for and in his behalf.
15) Plaintiff suffered moral anxiety for which he is entitled for
Php50,000.00.
16) By reason of the foregoing circumstances, the plaintiff was
compelled to file this complaint engaging the services of
counsel in the amount of Php50, 000.00.
IV.
ISSUES OF THE CASE
1. WHETHER OR NOT THE BOARD RESOLUTION IS
ENFORCEABLE;
a. Whether plaintiff is entitled to the agricultural land;
b. Whether plaintiff can rightfully demand the delivery
and registration of the condominium units 2, 3, 4
and 5 of Margaay Condominium, including its
accrued rentals, especially condominium unit 1
considering that it is not owned by defendant;
c. Whether the shares of stocks of Pang-Ur Golf and
Country Club shall be delivered and registered in the
name of the plaintiff.
2. WHETHER WIDELAND REALTY INCORPORATED OR
JAMES BAND IS ENTITLED TO DAMAGES.
Page 4 of 13
V.
ARGUMENTS
1. The board resolution is enforceable;
a. Plaintiff is entitled to the agricultural land but only
limited to three hectares. The other 2 hectares shall
be converted to its equivalent monetary value and
shall be delivered to the plaintiff;
b. Plaintiff can rightfully demand the delivery and
registration of condominium units 2, 3, 4 and 5 of
Margaay Condominium including its accrued rentals.
With respect to condominium unit 1 considering that
it is not owned by defendant, the amount equivalent
to its value shall be delivered to plaintiff;
c. The shares of stocks of Pang-Ur Golf and Country
Club shall be delivered and registered in the name of
plaintiff.
2. Plaintiff James Band is entitled to moral damages,
attorneys fees and cost of litigation.
VI.
DISCUSSION
1. The Board Resolution issued by the defendant corporation
is enforceable.
Under the Corporation Code or Batas Pambansa Bilang No. 68 a
corporation has the power to act through its board members.
Section 23. The board of directors or trustees.
Unless otherwise provided in this Code, the corporate
powers of all corporations formed under this Code shall be
exercised, all business conducted and all property of such
corporations controlled and held by the board of directors or
trustees to be elected from among the holders of stocks, or where
there is no stock, from among the members of the corporation,
Page 5 of 13
who shall hold office for one (1) year until their successors are
elected and qualified. (28a)
One of the powers of the corporation is the power to dispose of its
corporate assets and properties. Section 40 of the Corporation Code
provides in part that:
Section 40. Sale or other disposition of assets.
“Subject to the provisions of existing laws on illegal
combinations and monopolies, a corporation may, by a
majority vote of its board of directors, or trustees,
sell, lease, exchange, mortgage, pledge or otherwise
dispose of all or substantially all of its property and
assets, including its goodwill, upon such terms and
conditions and for such consideration, which may be
money, stocks, bonds or other instruments for the
payment of money or other property or consideration, as
its board of directors or trustees may deem expedient,
when authorized by the vote of the stockholders
representing at least two-thirds (2/3) of the
outstanding capital stock; or in case of non-stock
corporation, by the vote of at least two-thirds (2/3) of
the members, in a stockholders or members meeting
duly called for the purpose. Written notice of the
proposed action and of the time and place of the meeting
shall be addressed to each stockholder or member at his
place of residence as shown on the books of the
corporation and deposited to the addressee in the post
office
with
postage
prepaid,
or
served
personally: Provided, That any dissenting stockholder
may exercise his appraisal right under the conditions
provided in this Code.
A sale or other disposition shall be deemed to cover
substantially all the corporate property and assets, if
thereby the corporation would be rendered incapable
of continuing the business or accomplishing the
purposes for which it was incorporated.
xxxx
Section 40 of the Corporation Code contemplates a disposition of
all or substantially all of corporate properties. And the requirement for
such disposition is the vote of the stockholders representing at least
two-thirds (2/3) of the outstanding capital stock; or in case of nonPage 6 of 13
stock corporation, by the vote of at least two-thirds (2/3) of the
members, in a stockholders or members meeting duly called for the
purpose.
Considering the fact that what was disposed is not all or
substantially all of the corporations property the requisite vote of the
stockholders representing at least two-thirds (2/3) of the outstanding
capital stock need not be obtained.
The allegation that what has been disposed is all or substantially
of the corporations assets, it is refuted by the General Information
Sheet (GIS)1 issued by the defendant corporation’s secretary in the
person of Jonalyn Jones. It was issued the very same day the board
resolution was issued on March 20, 2005.
The GIS shows that the corporate assets the time the board
resolution was issued is not only more than the amount to which
plaintiff is entitled, but it is more than enough for the corporation to
continue its ordinary course of business without any financial difficulty.
Since what was disposed is only a part of the corporate assets the
only vote needed is a majority vote of the board of directors.
During the meeting specifically called for purpose of issuing the
board resolution for the disposition of properties in favor of plaintiff, all
the board members were present hence there is quorum. It is
bolstered by the fact that all the members of the board signed the
Board Resolution No. 02-0202 titled “APPROVING THE
SETTLEMENT OF ALL UNPAID SALARIES AND ACCOUNT
RECEIVABLES
OF
JAMES
BAND
AGAINST
THE
CORPORATION”2.
Further the board resolution also states that it was unanimously
adopted by all of them. Therefore the quorum and voting requirement
is satisfied.
Hence it cannot be said that the board resolution is deemed
ineffective for not meeting the quorum and voting requirement of the
stockholders representing at least two-thirds (2/3) of the outstanding
capital stock. Because in this case only the majority vote of the board
is needed for the valid and effective disposition of the corporate
properties.
1 Exhibit “E” – General Information Sheet
2 Exhibit “A” – Board Resolution No. 02-0202 dated March 20, 2005
Page 7 of 13
a. Plaintiff is entitled to 3 hectares of agricultural land. The
other 2 hectares shall be converted to its equivalent
monetary value and shall be delivered to the plaintiff.
In the board resolution issued by the defendant corporation,
plaintiff is entitled to 5 hectares agricultural land located in Liblib,
Suli. During that time plaintiff is still a Filipino citizen. Plaintiff
immediately occupied the same and introduced improvements
thereon. However there was still no registration and transfer of such
property in his name.
On March 25, 2013 plaintiff became an American citizen. Since
plaintiff only filed this case on February 11, 2015 when he is already
an American citizen he is now covered by the limitation imposed by
the law on acquisition of property by former-natural born Filipino
citizens.
Under Section 8, Article XII of the 1987 Constitution it provides:
Section 7. Save in cases of hereditary succession, no private
lands shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold
lands of the public domain.
Section 8. Notwithstanding the provisions of Section 7 of this
Article, a natural-born citizen of the Philippines who has
lost his Philippine citizenship may be a transferee of
private lands, subject to limitations provided by law.
The limitation in accordance with the law is provided in Section
5 of Republic Act (R.A.) No. 8179, which provides that:
Section 5. The Foreign Investments Act is further
amended by inserting a new section designated as Section 10
to read as follows:
“Section 10. Other Rights of Natural Born Citizen Pursuant to
the provisions of Article XII, Section 8 of the Constitution.
“Any natural born citizen who has the legal capacity to
enter into a contract under the Philippine laws may be a
transferee of a private land up to a maximum area of
five thousand (5,000) square meters in the case of
urban land or three (3) hectares in the case of rural
land to be used by him for business or other
purposes. In the case of married couples, one of them
Page 8 of 13
may avail of the privilege herein granted: provided, that if
both shall avail of the same, the total area acquired shall
not exceed the maximum herein fixed.”
Plaintiff in this case is a natural born Filipino citizen but lost his
Filipino citizenship on March 25, 2013 and became an American
citizen. Since this case is filed only on February 11, 2015 when
plaintiff is already a American citizen he is covered by the limitation
imposed by the law.
Since the subject agricultural property is located in Liblib, Suli a
rural area, plaintiff is entitled to three (3) hectares of rural land to be
used by him for business or other purposes as provided by law.
The residue of 2 hectares cannot validly be transferred and
registered in the name of the plaintiff, however considering the
liquidity of the defendant corporation the latter should deliver to
plaintiff the equivalent monetary value of the 2 hectares of the rural
land.
With respect to the land already occupied by plaintiff and to which
he already introduced improvements this shall form part of the 3
hectares by which plaintiff is entitled to have under the law.
b. Plaintiff can rightfully demand the delivery and registration
of
condominium units 2, 3, 4 and 5 of Margaay
Condominium including its accrued rentals. With respect
to condominium unit 1 considering that it is not owned by
defendant, the amount equivalent to its value shall be
delivered to plaintiff
With respect to the condominium unit 1 in Maargay Condominiums
it turned out that it is not owned by defendant but by another
corporation.
It is a time honored principle that one cannot give away that which
he does not have nemo dat quod non habit. A person cannot alienate
a property not belonging to him. Applying the same in this case, there
is no way defendant WRI can validly dispose condominium unit 1.
Since unit 1 cannot be validly transferred, defendant shall deliver
to plaintiff the equivalent value in money of unit 1 as originally agreed
upon by the parties.
In the case of units 2 and 3, considering the fact that it has been
unoccupied it shall only be transferred and registered under the name
of plaintiff without any accrued rentals to be delivered.
Page 9 of 13
As stated under the board resolution, units 4 and 5 of Margaay
Condominium shall be delivered and registered under the plaintiff’s
name when the occupants thereof shall leave. However such
occupants never vacated the premises and continued to pay WRI
Php 50,000 each as monthly rentals.
Although defendant has not yet ousted the occupants of the units
4 and 5, defendant shall still cause the registration and transfer of
units 4 and 5 in favor of plaintiff. For the ousting of the occupants is
immaterial, this only involves a transfer of interest in favor of plaintiff,
and there is no need for the ousting if the occupants for a valid
transfer to occur.
In the event that the occupants will not still leave the premises of
units 4 and 5, the proper party to file a case for their ousting is
already plaintiff because there is already a transfer of interest in his
favor when the contract of lease has expired on March 19, 2005.
With respect to the rentals that has accrued, plaintiff is entitled to
the rentals which the occupants paid when the latter’s contract of
lease with defendant WRI has already expired. Since the contract of
lease of the occupants expired on March 19, 2005, the rentals paid
by the occupants from March 20, 2005 until the present shall be
delivered to plaintiff.
c. The shares of stocks of Pang-Ur Golf and Country
Club shall be delivered and registered in the name
of plaintiff.
Under Section 36 of the Corporation Code, corporations have the
power and capacity to deal with its real and personal properties.
Section 36. Corporate powers and capacity. – Every
corporation incorporated under this Code has the power and
capacity:
xxx...
7.) To purchase, receive, take or grant, hold, convey, sell,
lease, pledge, mortgage and otherwise deal with such real
and personal property, including securities and bonds of other
corporations, as the transaction of lawful business of the
corporation may reasonably and necessarily require, subject to
the limitations prescribed by the law and constitution;
xxx...
Page 10 of 13
Under Section 36 of the Corporation Code the corporation through
its board of directors may convey or otherwise deal with the real or
personal properties of the corporation. The voting requirement
considering that it does not involve all or substantially all of the
corporate assets need not be concurred by the two-thirds (2/3) vote
of the stockholders.
Since the board resolution issued by defendant WRI was
unanimously adopted by the board and signed by all of them, there is
a valid disposition of the shares made in favor of plaintiff.
Since from the stipulation of facts no factual issues or questions of
law has been raised to question the validity of the disposition of
shares it is now deemed admitted by the adverse party that plaintiff is
entitled.
2. Plaintiff is entitled to the award of moral damages,
attorney’s fees and cost of suit.
Under the civil code a person may recover moral damages under
the circumstances mentioned in Article 2217 of the Civil Code.
Art. 2217. Moral damages include physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and
similar injury. Though incapable of pecuniary computation,
moral damages may be recovered if they are the proximate
result of the defendant's wrongful act for omission.
In this case plaintiff suffered mental anguish, serious anxiety and
sleepless nights. Considering the amount of money involved and the
properties needed to be delivered to him, plaintiff was not able to
have peace of mind and had sleepless nights.
On several instances he repetitively inquired about the status of
the transfer and registration of the subject properties but defendant
never updated plaintiff.
Plaintiff is very sickly, the failure of defendant to transfer and
register the properties involved made it even harder for him to have
peace of mind. He was also neglected by defendant corporation
despite his repetitive efforts to inquire about the status of such
properties by mail or through call which caused him serious anxiety.
Plaintiff is also entitled to Php 50,000 as attorney fees and Php
20,000 as litigation costs for he was compelled to litigate this matter
Page 11 of 13
hence incurring expenses just to defend and protect his rights and
interest.
CONCLUSION
Considering all of the discussions of the pertinent laws above,
plaintiff through his counsel believes that the board resolution is
enforceable and effective. Hence all of the provisions therein except
those where it is constricted by reason of law shall be complied with
by the defendant. Defendant shall now cause the registration and
transfer of the above mentioned properties in the name of plaintiff in
pursuant to the board resolution issued by defendant.
PRAYER
WHEREFORE, premises considered, it is respectfully prayed
before this Honorable Court that Plaintiff’s prayer for the specific
performance of defendant in transferring and registering the
properties in his name be GRANTED constituting of the following acts
to be satisfied:
1. The transfer and registration under the name of plaintiff the
following properties:
a) Three (3) hectares of the agricultural land
located in Liblib, Suli.
b) Five (5) corporate shares of Pang-Ur Golf and
Country Club
c) Units 2, 3, 4, and 5 of Margaay Condominium.
2. Deliver to plaintiff cash or any property equivalent to the
value of the following:
a) Unit 1 of Margaay Condominium
b) Two (2) hectares of the agricultural land in Liblib, Suli
3. Deliver to plaintiff the accrued rent earned from Units 4 and
5 for the period reckoning from March 20 up to the present.
It likewise prayed for that moral damages in the amount of
Php50,000.00, attorney’s fees in the amount of Pph50,000.00 and
cost of the litigation in the amount of Php20,000.00 be awarded to
plaintiff.
Page 12 of 13
Other just and equitable relief under the foregoing are likewise
being prayed for.
Respectfully submitted.
Baguio City, Philippines. April 28, 2016.
DE GUZMAN, GACOD, MACARIMPAS,
SAVELLANO, SOLDA and TACTAY Law Office
COUNSEL FOR PLAINTIFF
01 Bahay Kubo Building, Blue Road
Baguio City, 2600 Philippines
By:
ATTY. ZOE SIAGO GACOD
IBP Lifetime No. 12324616;
5/10/2015
PTR No. 157825; 1/10/2014
Roll of Attorney No. 2014424666
MCLE Compliance No. III –
123456
Copy Furnished:
PFACCT Law Firm
COUNSEL FOR DEFENDANT
13/F Tibay Building, Dimahanaphanap Street,
Brgy. Kasuluksulukan, Baguio City, 2600 Philippines
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