GR 96551; (November, 1996) (Digest)
G.R. No. 96551 November 4, 1996
Premium Marble Resources, Inc. and Printline Corporation, petitioners, vs. The Court of Appeals and International Corporate Bank, respondents.
FACTS
Premium Marble Resources, Inc., represented by Atty. Arnulfo Dumadag, filed a complaint for damages against International Corporate Bank. The complaint alleged that the bank improperly accepted and cleared three checks payable to Premium, depositing them into the account of a different corporation, Intervest Merchant Finance, to Premium’s detriment. Printline Corporation, a sister company, filed a similar action, and the cases were consolidated.
Subsequently, Premium, this time represented by the Siguion Reyna, Montecillo and Ongsiako Law Office, filed a motion to dismiss its own complaint. The motion asserted that the filing of the case by Atty. Dumadag was unauthorized, as it lacked approval from Premium’s duly constituted board of directors. Atty. Dumadag countered that the individuals who signed the board resolution authorizing the motion to dismiss were former officers dismissed for irregularities and were not the legitimate directors.
ISSUE
Whether the complaint filed by Premium Marble Resources, Inc., through Atty. Dumadag, was instituted with proper corporate authority.
RULING
The Supreme Court denied the petition, affirming the dismissal of the complaint. The Court held that the authority to sue on behalf of a corporation is vested in its board of directors. The power of the corporation to sue is lodged with the board that exercises its corporate powers. In this case, the group represented by Atty. Dumadag failed to substantiate its claim of being the incumbent officers with authority to litigate. The Court emphasized the requirement under the Corporation Code (Section 26) to submit a report of election of officers to the Securities and Exchange Commission (SEC). The General Information Sheet on file with the SEC indicated that the set of officers elected in 1981, represented by the Siguion Reyna law firm, were the ones registered. In the absence of clear proof of a valid board resolution authorizing Atty. Dumadag to file the suit, the action was deemed filed without proper corporate authority. The intra-corporate dispute regarding the legitimate officers was a matter pending before the SEC, and until resolved, neither faction could definitively prosecute cases in the corporation’s name.