ASSIGNMENT 4
John Gokongwei vs SEC, Andres Soriano [Link].
G.R. No. L-45911 April 11, 1979
[Link]
ISSUE: Whether or not the amended by-laws of SMC disqualifying a competitor from nomination or
election to the Board of Directors of SMC are valid and reasonable
Yes, the validity or reasonableness by-law of a corporation is purely a question of law. Whether the by-
law is in conflict with the land, or with the corporation, it is unreasonable and unlawful is a question of
law. However, the rule is subject to the limitation, which is where the reasonableness of a by-law is a
matter of judgement. Reasonable minds that needs to change means that the court would not be
warranted in replacing its judgement, instead of judgement of those who are approved to do by-laws
and have used their authority. It is recognized by authorities that every corporation has the power to
implement by-laws for its government. Also to regulate the conduct and duties of its members towards
among themselves. In law, the rule implemented was essential in every corporation as one of its
necessary and inseparable legal occurences. It is settled that in the absence of positive judicial
requirements retraining it, every corporation has this power as a necessary and inseparable indidents.
In the absence of any legal prohibition or overriding public policy, a wide opportunity may be rendered
to the corporation in adopting measures to protect legitimate corporate interests. Wherein the
reasonableness of a by-law is a mere matter of judgement, and upon which reasonableness minds must
necessarily differ, a court would not be warranted in substituting its judgement instead of the
judgement of those who are authorized to make by-laws and who have expressed their authotiry.
Yes. Petitioner claims that the
amended by-laws are invalid and
unreasonable because they were
tailored to
suppress the minority and prevent
them from having representation in
the Board", at the same time
depriving
petitioner of his "vested right" to
be voted for and to vote for a
person of his choice as director.
Upon the other hand, respondents
Andres M. Soriano, Jr., Jose M.
Soriano and San Miguel
Corporation content that
ex. conclusion of a competitor
from the Board is legitimate
corporate purpose, considering that
being a competitor,
petitioner cannot devote an
unselfish and undivided Loyalty to
the corporation; that it is
essentially a preventive
measure to assure stockholders of
San Miguel Corporation of
reasonable protective from the
unrestrained self-
interest of those charged with the
promotion of the corporate
enterprise; that access to
confidential information by a
competitor may result either in the
promotion of the interest of the
competitor at the expense of the
San Miguel
Corporation, or the promotion of
both the interests of petitioner and
respondent San Miguel
Corporation, which may,
therefore, result in a combination
or agreement in violation of
Article 186 of the Revised Penal
Code by destroying
free competition to the detriment
of the consuming public
Yes. Petitioner claims that the
amended by-laws are invalid and
unreasonable because they were
tailored to
suppress the minority and prevent
them from having representation in
the Board", at the same time
depriving
petitioner of his "vested right" to
be voted for and to vote for a
person of his choice as director.
Upon the other hand, respondents
Andres M. Soriano, Jr., Jose M.
Soriano and San Miguel
Corporation content that
ex. conclusion of a competitor
from the Board is legitimate
corporate purpose, considering that
being a competitor,
petitioner cannot devote an
unselfish and undivided Loyalty to
the corporation; that it is
essentially a preventive
measure to assure stockholders of
San Miguel Corporation of
reasonable protective from the
unrestrained self-
interest of those charged with the
promotion of the corporate
enterprise; that access to
confidential information by a
competitor may result either in the
promotion of the interest of the
competitor at the expense of the
San Miguel
Corporation, or the promotion of
both the interests of petitioner and
respondent San Miguel
Corporation, which may,
therefore, result in a combination
or agreement in violation of
Article 186 of the Revised Penal
Code by destroying
free competition to the detriment
of the consuming public
Yes. Petitioner claims that the amended by-laws are invalid and unreasonable because they were
tailored to suppress the minority and prevent them from having representation in the Board", at the
same time deprivingpetitioner of his "vested right" to be voted for and to vote for a person of his choice
as [Link] the other hand, respondents Andres M. Soriano, Jr., Jose M. Soriano and San Miguel
Corporation content thatex. conclusion of a competitor from the Board is legitimate corporate purpose,
considering that being a competitor,petitioner cannot devote an unselfish and undivided Loyalty to the
corporation; that it is essentially a preventivemeasure to assure stockholders of San Miguel Corporation
of reasonable protective from the unrestrained self-interest of those charged with the promotion of the
corporate enterprise; that access to confidential information by acompetitor may result either in the
promotion of the interest of the competitor at the expense of the San MiguelCorporation, or the
promotion of both the interests of petitioner and respondent San Miguel Corporation, which
may,therefore, result in a combination or agreement in violation of Article 186 of the Revised Penal
Code by destroyingfree competition to the detriment of the consuming public
