Strategic Alliance vs.

Radstock Securities

! Construction Development Corporation of the Philippines (CDCP) was incorporated in

1966. It was granted a franchise to construct, operate and maintain toll facilities in the North
and South Luzon Tollways and Metro Manila Expressway.

CDCP Mining Corporation, an affiliate of CDCP, obtained loans from Marubeni

Corporation of Japan. A CDCP official issued letters of guarantee for the loans although
there was no CDCP Board Resolution authorizing the issuance of such letters of guarantee.

! CDCP Mining secured the Marubeni loans when CDCP and CDCP Mining were still
privately owned and managed.

Later on, CDCPs name was changed to Philippine National Construction Corporation
(PNCC) in order to reflect that the Government already owned 90.3% of PNCC and only
9.70% is under private ownership.

! Meanwhile, the Marubeni loans to CDCP Mining remained unpaid.

PNCC Board passed Board Resolutions admitting PNCCs liability to Marubeni.

Previously, for two decades the PNCC Board consistently refused to admit any liability for
the Marubeni loans.

Later, Marubeni assigned its entire credit to Radstock Securities Limited (Radstock), a
foreign corporation. Radstock immediately sent a notice and demand letter to PNCC.

PNCC and Radstock entered into a Compromise Agreement. Under this agreement,
PNCC shall pay Radstock the reduced amount of P6,185,000,000.00 from
P17,040,843,968.00

! To satisfy its reduced obligation, PNCC undertakes to

(1) "assign to a third party assignee to be designated by Radstock all its rights and
interests" to the listed real properties of PNCC;
(2) issue to Radstock or its assignee common shares of the capital stock of PNCC; and
(3) assign to Radstock or its assignee 50% of PNCCs 6% share, for the next 27 years, in
the gross toll revenues of the Manila North Tollways Corporation.

Strategic Alliance Development Corporation (STRADEC) moved for reconsideration.

STRADEC alleged that it has a claim against PNCC as a bidder of the National
Governments shares, receivables, securities and interests in PNCC.

Issue
Whether or not the Compromise Agreement between PNCC (Board?) and Radstock is
valid

NO
Radstock is a private corporation incorporated in the British Virgin Islands. As a foreign
corporation, with unknown owners whose nationalities are also unknown, Radstock is not
qualified to own land in the Philippines.
Radstock is also disqualified to own the rights to ownership of lands and transfer rights to
ownership of lands in the Phils.

!DOCTRINE:

In this jurisdiction, the members of the board of directors have a three- fold duty: duty of
obedience, duty of diligence, and duty of loyalty.
Accordingly, the members of the board of directors
(1) shall direct the affairs of the corporation only in accordance with the purposes for
which it was organized;

 (2) shall not willfully and knowingly vote for or assent to patently unlawful acts of the
corporation or act in bad faith or with gross negligence in directing
the affairs of the corporation; and
(3) shall not acquire any personal or pecuniary interest in conflict with their duty as such directors
or trustees.