[G.R. No. L-23428. November 29, 1968.

DETECTIVE & PROTECTIVE BUREAU, INC., Petitioner, v. THE HONORABLE GAUDENCIO CLORIBEL, in his
capacity as Presiding Judge of Branch VI, Court of First Instance of Manila, and FAUSTO S.
ALBERTO, Respondents.

Crispin D. Baizas & Associates and Jose S. Sarte for Petitioner.

Gaudencio T. Bocobo for Respondents.

SYLLABUS

CORPORATION LAW; DIRECTOR; STOCK; TO QUALIFY AS A DIRECTOR OF A CORPORATION, ONE MUST

OWN AT LEAST ONE SHARE OF STOCK THEREIN. — Every director must own in his own right at least one
share of the capital stock of the stock corporation of which he is a director, which stock shall stand in
his name on the books of the corporation (Sec. 30, Corporation Law). So that, if the By-Laws of the
Corporation provides that "The manager shall be elected by the Board of Directors from among its
members," one could not be a managing director of said corporation unless he owns at least one
share of stock thereof.

ID.; ID.; DISPUTE AS TO WHO OWNS THE CONTROLLING INTEREST IN THE CORPORATION; PARTY IN
CONTROL OR IN POSSESSION OF THE CONTROLLING INTEREST IS PRESUMED TO HAVE THE BETTER RIGHT
TO THE POSITION OF MANAGING CORPORATE DIRECTOR. — Where ownership of the controlling
interest in the corporation is in dispute, the party in control or in possession of the disputed interest is
presumed to have the better right (to the position of managing corporate director) until the contrary
is adjudged, and hence, that party should not be deprived of the control or possession until the court
is prepared to adjudicate the controverted right in favor of the other party (Gordillo, Et. Al. v. Del
Rosario, Et Al., 39 Phil. 829). Relevant here is: "The rule that a court should not, by means of a
preliminary injunction, transfer property in litigation from the possession of one party to another is
more particularly applicable where the legal title is in dispute and the party having possession asserts
ownership in himself" (Gordillo, Et. Al. v. Del Rosario, supra; Rodulfa v. Alfonso, Et Al., 79 Phil. 225).

Facts: The complaint, in Civil Case No. 56949 of the Court of First Instance of Manila, dated May 4, 1964,
filed by Detective and Protective Bureau, Inc., therein plaintiff (petitioner herein) against Fausto S. Alberto,
therein defendant (respondent herein), for accounting with preliminary injunction and receivership,
alleged that plaintiff was a corporation duly organized and existing under the laws of the Philippines; that
defendant was managing director of plaintiff corporation from 1952 until January 14, 1964; that in June
1963, defendant illegally seized and took control of all the assets as well as the books, records, vouchers
and receipts of the corporation from the accountant-cashier, concealed them illegally and refused to
allow any member of the corporation to see and examine the same; that on January 14, 1964, the
stockholders, in a meeting, removed defendant as managing director and elected Jose de la Rosa in his
stead; that defendant not only had refused to vacate his office and to deliver the assets and books to
Jose de la Rosa, but also continued to perform unauthorized acts for and in behalf of plaintiff corporation.
Plaintiff prayed that a preliminary injunction ex-parte be issued restraining defendant from exercising the
functions of managing director and from disbursing and disposing of its funds; that Jose M. Barredo be
appointed receiver; that, after judgment, the injunction be made permanent and defendant be ordered
to render an accounting.

On June 18, 1964, respondent Judge granted the writ of preliminary injunction prayed for, conditioned
upon plaintiff’s filing a bond of P5,000.00. Plaintiff filed the bond, but while the same was pending
approval, defendant Fausto S. Alberto filed, on July 1, 1964, a motion to admit a counter-bond for the
purpose of lifting the order granting the writ of preliminary injunction. In spite of the opposition filed by
plaintiff, respondent Judge issued, on August 5, 1964, an order admitting the counter-bond and setting
aside the writ of preliminary injunction.

This Court gave due course to the petition but did not issue a preliminary injunction.

In his answer, now respondent Fausto S. Alberto traversed the material allegations of the petition, justified
the order complained of, and prayed for the dismissal of the petition.
Issue: Whether Alberto could be compelled to vacate his office and cede the same to de la Rosa?

Held: No. There is in the record no showing that Jose de la Rosa owned a share of stock in the
corporation. If he did not own any share of stock, certainly he could not be a director pursuant to the
mandatory provision of Section 30 of the Corporation Law, which in part provides:j

"Sec. 30. Every director must own in his own right at least one share of the capital stock of the stock
corporation of which he is a director, which stock shall stand in his name on the books of the
corporation.."ry

If he could not be a director, he could also not be a managing director of the corporation, pursuant to
Article V, Section 3 of the By-Laws of the Corporation which provides that:
"The manager shall be elected by the Board of Directors from among its members . . ." (Record, p. 48)

If the managing director-elect was not qualified to become managing director, respondent Fausto
Alberto could not be compelled to vacate his office and cede the same to the managing director-elect
because the by-laws of the corporation provides in Article IV, Section 1 that "Directors shall serve until the
election and qualification of their duly qualified successor." virtua1aw library

It being our considered view that respondent Judge had not committed grave abuse of discretion in
issuing the order dated August 5, 1964 lifting the writ of preliminary injunction which had previously been
granted in the order dated June 18, 1964, and the herein petition for certiorari having been filed without
previously complying with a well settled procedural requirement, there is no alternative for this Court but
to order its dismissal.

WHEREFORE, the instant petition for certiorari with preliminary injunction is dismissed, with costs against the
petitioner. IT IS SO ORDERED.