Practice question
After reviewing relevant financial information and alternatives, a disinterested board in good faith chooses one lawful supplier over another. The contract is within its powers and all required approvals are obtained. An unselected supplier later offers a lower price, and a shareholder seeks judicial replacement of the board's choice solely because the alternative now looks cheaper. No breach, fraud, bad faith or gross negligence is shown. Which answer is best?
- A later cheaper offer automatically makes the original decision illegal.
- The shareholder's preference itself proves fiduciary misconduct.
- The court ordinarily should not substitute its commercial preference on these stipulated facts.
- The supplier automatically becomes a director.
- The board must guarantee that no cheaper offer ever appears.
Legal references
- Montelibano v. Bacolod-Murcia Milling Co., G.R. No. L-15092, 18 May 1962, https://www.lawphil.net/judjuris/juri1962/may1962/gr_l-15092_1962.html
- Teng v. Teng, G.R. No. 277015, 17 February 2025, main decision, https://lawphil.net/judjuris/juri2025/feb2025/gr_277015_2025.html
- Revised Corporation Code, RA 11232, sections 22, 30 and 39, https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/2/86463
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