EVENER J. VILLASANTA, REX ROBERTS, EARL T. CONE, JR. AND BALER FOREST PRODUCTS, INC., PETITIONERS, VS. PEDRO D. BAUTISTA, RODOLFO BAUTISTA, BENJAMIN ALETA, COUNCILORS JUAN ORTIZ…

Original action for mandamus with preliminary
injunction.

Petitioners Villasanta, Roberts and
Cone as president, general manager and production manager, respectively, of
their co-petitioner, Baler Forest Products, Inc., instituted on August 21, 1969
the present action on behalf of said corporation as the holder of Ordinary
Timber License No. 039-71 covering a forest concession of about 21,600 hectares
in the provinces of Nueva Vizcaya,
Nueva Ecija and Quezon.  They averred
in their verified petition, supported by the affidavits of Cone, the
corporation’s assistant production manager, and its chief security officer that
in the afternoon of August 15, 1969, the principal respondent Pedro D. Bautista
(hereinafter simply referred to as Bautista) with his co-respondents and eight
other men, all heavily armed, entered the corporation’s logging area in Maria
Aurora, Quezon and through force and intimidation
stopped the corporation from proceeding with its logging and export
operations.  They further urged that
unless respondents’ illegal acts were restrained, great and irreparable injury
would result with the corporation’s machineries and logging equipment worth
more than P1.5 million and hundreds of cut logs in the area exposed to
deterioration and its being unable to meet its export commitments, particularly
a $190,000-shipment scheduled for loading on board a vessel arriving on August
22, 1969, since its appeals to the various government agencies proved
unavailing.

Upon petitioners’ filing of a P10,000-injunction bond, the Court
issued ex-parte on August 22, 1969 a writ of prelimi­nary
injunction restraining respondents from interfering with the exercise of the
individual petitioners’ rights as officers of the corporation and the latter’s
rights to cut and remove timber from its concession under its timber license.

Respondents, in their answer with supporting affidavits, while
denying the commission of any acts of force or harass­ment, admitted in
substance that they did enter the logging area on August 15, 1969, on which
occasion respondent Bautista, per his counter-affidavit,^[1]
“requested” Cone “to desist managing the logging operations of
the corporation in accordance with the letter-policy of the Bureau of
Forestry” and “to discontinue the illegal logging operation being
done under him.” Bautista averred that his co-respondent, Councilor Ortiz
of Maria Aurora, Quezon had at his request
“taken along a number of municipal policemen and a Philippine Constabulary
officer . . . for our safety and protection, considering that the logging area
of the corporation is an Ilongot region.”

The Forestry Bureau’s “letter policy” referred to by respondents
was that dated July 16, 1969 written in reply to Bautista’s query of July 14,
1969 on “the proposed inclusion of an American in our company as a
majority stockholder” that “the purchase by an American citizen or
any other person other (sic) than present members of the working unit of
majority shares of stock in your corporation cannot be allowed by this
office.”^[2]
The burden of respondents’ answer is that individual petitioners were
“irregularly elected” at the corporation’s annual stockholders’ meeting
of July 18, 1969 to their respective positions; that their election is contrary
to the existing laws and rules of the Forestry Bureau, and that, therefore,
their exercise of the powers of such corporate positions is “illegal”; and that
“the inclusion of petitioners Roberts and Cone, as majority stockholder
and production manager, respectively, of petitioner corporation is illegal and
contrary to law as shown by the (said) letter-policy of the Bureau of
Forestry”, since “petitioners Roberts and Cone are American citizens
and are legally disqualified from exercising the powers allegedly conferred
upon them as officers of petitioner corporation.”

Petitioners, in their reply to answer, supplemented the
allegations of their petition with numerous corporate documents and papers, as
follows:  that petitioner corporation was
organized in May, 1967 when respondents Bautista and Aleta
who originally held a timber license for 4,200 hectares secured the forestry
bureau’s approval for consolidation or merger of their area with that of
Silvestre Borja, Jr. for 17,400 hectares (and
subsequently with Angela Vda. de Sedeco’s
area of 3,000 hectares) for a total consolidated area of 24,600 hectares to be
operated by the corporation as the working unit pursuant to the presidential
directive of January 7, 1967 setting the minimum area of 20,000 hectares with a
minimum annual cut of 25,000 cubic meters for the grant or renewal of timber
licenses.  The corporation at the time of
organization bore the name of P. D. Bautista Enterprises, Inc., which was
amended later in the year to its present name of Baler Forest Products,
Inc.  Simultaneously with the
incorporation of the corporation, respondent Bautista, with the conformity of
the corporation represented by him as president thereof, executed an agreement
with petitioner Roberts for the latter to provide it with working capital,
machineries, equipment and facilities for the operation of the timber
concession, in return for which Roberts would subscribe to 1,500 shares or 75%
of the corporation’s P200,000.00 capital stock (2,000 shares with a par value
of P100.00 per share), “and will have full control and management of the
corporation and its operation.” Petitioner Roberts paid in P150,000.00 in full payment of his subscription and advanced
more than P400,000.00 to construct approximately 35 kilometers of roads on the
concession and to finance its operation. 
At special meetings of the corporation’s board of directors held on
March 16, 1968 and December 12, 1968, presided by respondent Bautista as
president and board chairman, petitioners Roberts and Cone were unanimously
named General Manager and Executive vice-president and production manager,
respectively, of the corporation.  At the
corporation’s annual stockholders’ meeting of May 18, 1969, said res­pondent
Bautista was not reelected as President nor board member of the corporation
allegedly for the reason that as president “he, through persons or logging
contractors whom he employed, tried to cut and remove logs from a distant
portion of the concession for his own personal account and benefit,” but
he was, however, appointed as second-vice-president of the corporation at the
board’s organization meeting of the same day.

Petitioners took issue with respondents in the latter’s
contention that petitioners Roberts and Cone as American citizens are legally
disqualified from exercising the powers of their posi­tions in the
corporation.  They countered that
“there is no law which prohibits said petitioners as American citizens
from so exercising said powers” and that the alleged
“letter-policy” of the forestry bureau “is completely erroneous,
said letter having been issued on wrong premises based on false allegations and
assumptions made by Pedro D. Bautista, and legally incorrect.” They
submitted the Securities & Exchange Commissioner’s ruling of September 26,
1969, after investigation, that Roberts’ “subscription to all the
unsubscribed and unissued shares of the corporation
was approved by a majority of members of the board of directors and a majority
of the subscribed capital stock” and “is, under the Corporation Law,
valid.”^[3]
The Securities & Exchange Commissioner’s ruling added “(H)owever, as to whether the subscription violates the rules
and regulations of the Bureau of Forestry thereby making the same void although
valid under the Corporation Law, the Commission is not compe­tent to
decide.”

Respondent Bautista, to refute the foregoing contentions of
petitioners, submitted in turn the Bureau of Forestry Acting Director’s letter
to his counsel of October 3, 1969, holding that Bautista’s agreement of May 11,
1967 with Roberts amounts to a virtual transfer of the timber license of the
corporation and the eventual separation of Bautista from the working unit, in
violation of conditions of the timber license as well as of the philosophy
underlying the presidential directive of January 7, 1967, such that the
agreement “cannot be accepted or approved by this office and as such the
same is without force and effect insofar as this office is concerned,”^[4] and
the Securities & Exchange Commissioner’s letter to him of October 23, 1969
that “if the opinion of the Director of Forestry dated October 3, 1969 is
correct, the subscription of Mr. Rex Roberts is without legal consideration
being contrary to Forestry rules and regulations and the directive of the
President, and although approved by the Board of Directors would be ultra vires.”^[5]

Petitioners, in rejoinder, replied that said opinion of the
Director of Forestry “was rendered surreptitiously and without notice to
petitioners, much less giving them a chance to be heard.”^[6]
They asserted that Forestry rules contained only a general prohibition against
transfer of a timber license within three years after its issuance, inferring
that such prohibition is not applicable to transfers made pursuant to the
presidential directive of January 7, 1967; and that “the sale or trans­fer
of the shares of a licensee corporation is not prohibited by any law, rule or
regulation.  The technical and financial
capacity of the corporation itself and not that of the individual stockholders
are the ones considered in granting the license.”^[7]

1.  What clearly emerges
from the foregoing is that the conflicting contentions and arguments of the
parties as to the alleged irregularity and illegality of the election of the
individual petitioners as officers of the corporation and their legal disqualification
to be elected as such and to manage the corporation’s logging operations raise
collateral issues which may not be properly ventilated in the present special
action for mandamus with injunction. 
They involve questions of fact and of law which have to be duly tried
and heard on notice to all parties affected, and with the evidence adduced
before the proper administrative agencies, with reference to the question of
the legality and valid­ity of the individual petitioners joining the
corporation with Roberts as controlling stockholder, notwithstanding their not
being holders of timber licenses consolidated and transferred to the corporation
as the working unit and notwithstanding Roberts’ American citizenship.  As to the question of the legality of the
election of the individual petitioners as directors and officers of the
corporation, respondent Bautista asserts barely that he had protested the same,
notwithstanding the fact admitted by him that he himself nominated at the
stockholders’ meeting the entire ‘incumbent directors”, including Villasanta and Roberts, for re-election for another term,
and that petitioners control 90% of the corporation,^[8]
but he does not inform the Court of any action that he has taken to judicially
contest their election.  Such a question
is likewise beyond collateral attack in the present case, Bautista’s recourse
being to oust them by quo warranto proceedings under
Rule 66 or in an appropriate case, to enjoin them as alleged usurpers.

2.  The case at bar is a
special civil action of mandamus with injunction dealing solely with the
limited issue of whether or not the individual petitioners may exercise their
rights as officers of the corporation and as such conduct its logging and
export operations free from any physical restraint or force on the part of
respondents.  All other questions of fact
and law with respect to the legality or illegality of the individual petitioners’
election as officers and the discharge of their functions as such as well as of
the acquisition by Roberts of the controlling share in the corporation insofar
as they affect the timber license of the corporation, are questions that have
no bearing on the limited issue at bar and must be ventilated in separate and
independent actions, be they administrative or judicial as above indicated.^[9]

As a matter of fact, it is indicated in the record that the
Forestry Directors’ letter-ruling of October 3, 1969 against the
Bautista-Roberts agreement of May 11, 1967 granting Roberts virtual control of
the corporation is presently pending appeal before the Secretary of Agriculture
& Natural Resources.^[10]
This is the proper forum where the parties may properly thresh out the
pertinent facts as well as obtain an authoritative ruling on “the
philosophy underlying the promulgation of the January 7, 1967 presidential
directive”, claimed by the Forestry Director to be violated by said
agreement.  The status of the other
licensee-members of the working unit, viz Borja (17,400 hectares) and Sedeco
(3000 hectares) who appear to have sold out their holdings to Roberts under the
agreement, leaving Bautista with Aleta (4,300 has.)
as the only original licensees-shareholders in the corporation — about which
the parties have remained silent — may therein be brought into proper
focus.  Only after all the facts shall
have been properly determined and the Secretary as department head shall have
rendered his decision may the appropriate judicial review by the competent
court be availed of by the party who feels aggrieved thereby,^[11]
with the Secretary as the decision-making authority properly impleaded as an indispensable party.

3.  On the limited issue at
bar which is strictly an internal question between petitioners and respondents
Bautista and Aleta as majority and minority
shareholders, respectively, of petitioner corporation, the Court is satisfied
that petitioners are entitled to the writ and injunction prayed for,
restraining respondents from interfering by force with the exercise by
individual petitioners of their rights as officers of the corporation and the
latter’s rights to cut and remove timber from its concession under its timber
license.

The mere fact that Bautista claims that he protested the results
of the corporation’s annual stockholders’ meeting of May 18, 1969, wherein he
was not reelected as president nor board member does not warrant nor justify
his interference with the individual petitioners’ exercise of their functions
as the duly elected executive officers of the corporation, nor his anomalous
action of holding himself out to the public and to the government agencies
concerned as still the president of the corporation.  Even if he had instituted quo warranto proceedings to question the said election — and
the record does not show that he has in fact instituted such action — he would
not be en­titled, pendente lite, to a preliminary injunction to prevent peti­tioners
from discharging their offices and to restore him in office as corporate
president.^[12]
The Rules of Court^[13]
provide for the proper judgment to be rendered in such cases, in the event he
makes out his case, such as the holding of a new election.

As to respondents’ interference with the corporation’s logging
operations, it is obvious that respondent Bautista and his co-respondents had
no authority in law to enter the corporation’s logging area with “a number
of municipal policemen and a Philippine Constabulary officer” to
“request” Cone “to desist managing the logging operations of the
corporation in accordance with the letter-policy of the Bureau of
Forestry.” The proper office to enforce said “letter-policy” is
that of the Director of Forestry and his district foresters and assistants, not
respondent Bautista who had no official capacity but a mere private interest in
the corporation as a minority shareholder. 
Neither did the muni­cipal policemen nor the P. C. officer have any
authority to intervene in the matter, in the absence of any official mission,
request or order from the Forestry Bureau or their superior officers, much less
to deploy themselves in the concession area and with threats, stop the
corporation’s employees from working in the area, as charged in the verified
petition and supporting affidavits.

The actual presence of armed men in the area tending to interfere
with the corporation’s operations is further borne out by the letter-request
for investigation to the Chief of Police of Maria Aurora, Quezon,
of August 25, 1969 of the Court’s deputy sheriff, Eduardo Corpuz,
noting the presence of “two men displaying two high powered firearms, one thompson and one greasegun inside
the log-pond of the (corporation)” at the time that he served the Court’s
writ of preliminary injunction in the afternoon of August 22, 1969.^[14]

4.  The writ and injunction
herein issued are but in enforcement of the Rule of Law.  For so long as individual petitioners appear
in the corporate records to be the duly elected executive officers of the
corporation, and have not been administratively or judicially enjoined from
discharging their functions, respondents led by Bautista are bound to refrain
from interfering with the exercise of their rights and the corporation’s
operation of its concession which would redound to the benefit of all its
stockholders, including Bautista. 
Bautista has been free, notwithstanding the pendency
of this case, and remains free, after this decision, to avail of and pursue any
and all remedies, administrative, intra-corporate and judicial, in connection
with his claims against the validity and legality of his agreement of May, 1967
with Roberts, of the election of individual petitioners as the corporation’s
executive officers, of Roberts’ and Cone’s management of the corporation, as
well as his latest fears expressed in his various “urgent motions for
early decision” that “continuing violations of Forestry Rules and
Regulations by those presently in charge of petitioner corporation would even­tually
lead to the probable cancellation of the ordinary timber license.”
Bautista labors under the erroneous premise that an adverse decision against
petitioners on these questions would restore him as president of the
corporation, oblivious of the separate corporate personality of the corporation
wherein indi­vidual petitioners have a 90% control and of the fact that his ori­ginal
license for 4,200 hectares has already been transferred with two others totalling 20,400 hectares to the corporation which is now
the licensee of all merged areas in compliance with the presidential directive
of January 7, 1967.  But these questions
are all extraneous and collateral and cannot be resolved in the case at
bar.  This case in no manner inhibits the
forestry office from exercising its authority of supervision and ordering the
temporary suspension “to protect the interest of all parties concerned —
(of) logging operations within the working unit” per the Forestry
Director’s letter of February 5, 1970, nor the Department Head from acting on
and deciding the corporation’s pending appeal, subject to appropriate judicial
review by the competent court, as already stated above.

5.  Finally, a word on
respondents’ insistence on their contention, citing inapplicable appellate
court decisions, that ‘a pleading which lacks the required verification is
fatal (sic) and does not confer jurisdiction.”^[15]
Respondents’ contention that petitioner Villasanta’s
(the corporation’s president) verification of the petition “that the
allegations therein contained are true and correct” is “insufficient”
for non-compliance with the Rule’s requirement that affiant state that the
allegations are “true of his own knowledge”^[16]
is untenable.  The Court has consistently
held that the reglementary phrase “true of his
own knowledge” is not a talismanic formula, the use of which would insure
the granting of a petition and non-use whereof would result in a decree of
dismissal.  It has ruled absence of
verification not to be fatally defective in meritorious cases.^[17]
What is important is that the object of the Rule, to insure good faith and
veracity in the material averments of the petition, be complied with, so that
the court may properly act on the case.^[18]
Here, the petition has complied with the requirement in form and in
substance.  Villasanta
in effect certified of his own knowledge to the truth of the petition as a
whole, but with reference to the averments in paragraph 8 of the petition as to
respondents’ acts of intrusion and coercion at the concession area on August
15, 1969, specifically submitted with the petition the affidavits of on-scene
witnesses Cone and two other company officials attesting thereto of their own
knowledge.

ACCORDINGLY, subject to the Court’s observations as
above-stated, particularly in paragraphs 3 and 4 hereof, the writ prayed for is
hereby granted.  The writ of preliminary
injunction heretofore issued is hereby made permanent, likewise without
prejudice to any remedies, administrative intra-corporate and judicial as may
be availed of by respondents, who are ordered jointly and severally to pay the
costs of suit.

Concepcion, C.J., Reyes, J.B.L., Makalintal, Ruiz Castro, and
Barredo, JJ., concur.

Fernando, J., in the result.

Zaldivar and Villamor, JJ.,
took no part.

Dizon and
Makasiar, JJ., on leave.

^[1] Annex 6, Answer.

^[2] Annexes A and B of Annex 6, Answer.

^[3]
Annex “L”.

^[4]
Annex “11″.

^[5]
Annex “12”.

^[6] Petitioners’ memorandum, Rollo, p.
200.

^[7]
Petitioners’ memorandum, Rollo, pp. 206-207;
emphasis copied.

^[8] Respondents’ reply memorandum, Rollo,
pp. 243-257.

^[9] See
Silen vs. Vera, 64 Phil. 868 (1937); Castillo vs.
Ramos, 78 Phil. 809 (1947); Flordeliza vs. Flordeliza, 91 Phil. 548 (1952); Luna vs. Encarnacion, 91 Phil. 532 (1952); Staples vs. Buenaflor, 101 Phil. 1244 (1957); Bautista vs.
Peralta, 18 SCRA 223 (Sept. 29, 1966).

^[10] Annex
B, Respondents’ third urgent petition for early deci­sion dated June 29, 1970.

^[11]
See Macailing vs. Andrada,
31 SCRA 126 (Jan. 31, 1970) and cases cited.

^[12]
See Silen vs. Vera, Supra, fn.
9.

^[13]
Rule 66, Section 11.

^[14]
Respondents’ Annex 5, Rollo, p. 78.

^[15] Respondents’ motion to dissolve writ, Rollo,
p. 51; Respondents’ memorandum, p. 35.

^[16]
Rule 7, section 6.

^[17] Macailing vs. Andrada, supra,
fn. 11; See Guerra Enterprises Co. , Inc. vs. CFI, 32 SCRA 314 (April
17, 1970) Cajefe vs. Fernandez, 109 Phil. 743
(1960); Madrigal vs. Rodas, 80 Phil. 252
(1948).

^[18] Phil. Bank of Commerce vs. Macadaeg,
109 Phil. 98, (1960).