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In September 7, 1956, SAN JOSE PETROLEUM filed with

the Philippine Securities and Exchange Commission a
sworn registration statement, for the registration and
licensing for sale in the Philippines Voting Trust
Certificates representing 2,000,000 shares of its
capital stock of a par value of $0.35 a share, at P1.00
per share. It was alleged that the entire proceeds of
the sale of said securities will be devoted or used
exclusively to finance the operations of San Jose Oil
Company, Inc. (a domestic mining corporation
hereafter to be referred to as SAN JOSE OIL) which has
14 petroleum exploration concessions covering an
area of a little less than 1,000,000 hectares, located in
the provinces of Pangasinan, Tarlac, Nueva Ecija, La
Union, Iloilo, Cotabato, Davao and Agusan.


of the corporation is a party to or has an interest in, such contract or transaction,

or has in anyway connected with such other person or persons, firm, association
or partnership; and finally, that all and any of the persons who may become
director or officer of the corporation shall be relieved from all responsibility for
which they may otherwise be liable by reason of any contract entered into with
the corporation, whether it be for his benefit or for the benefit of any other
person, firm, association or partnership in which he may be interested.
that any and all persons who may become directors or officers of this
company are hereby relieved of all responsibility which they would
otherwise incur by reason of any contract entered into which this company
either for their own benefit, or for the benefit of any person, firm,
association or corporation in which they may be interested.
The impact of these provisions upon the traditional judiciary relationship
between the directors and the stockholders of a corporation is too obvious to
escape notice by those who are called upon to protect the interest of
investors. The directors and officers of the company can do anything, short
of actual fraud, with the affairs of the corporation even to benefit
themselves directly or other persons or entities in which they are interested,
and with immunity because of the advance condonation or relief from
responsibility by reason of such acts. This and the other provision which
authorizes the election of non-stockholders as directors, completely
disassociate the stockholders from the government and management of the
business in which they have invested.

(1) the directors of the Company need not be shareholders;

(2) that in the meetings of the board of directors, any director may be represented
and may vote through a proxy who also need not be a director or stockholder;
(3) that no contract or transaction between the corporation and any other
association or partnership will be affected, except in case of fraud, by the fact
that any of the directors or officers of the corporation is interested in, or is a
director or officer of, such other association or partnership, and that no such
contract or transaction of the corporation with any other person or persons, firm,
association or partnership shall be affected by the fact that any director or officer

To cap it all on April 17, 1957, admittedly to assure continuity of the

management and stability of SAN JOSE PETROLEUM, OIL
INVESTMENTS, as holder of the only subscribed stock of the former
corporation and acting "on behalf of all future holders of voting trust
certificates," entered into a voting trust agreement

And these are the voting trust certificates that are offered to investors as
authorized by Security and Exchange Commissioner. It can not be
doubted that the sale of respondent's securities would, to say the least,
work or tend to work fraud to Philippine investors.