Prime White Cement Corp. vs IACIn July 1969, Zosimo Falcon and Justo Trazo entered into an agreement with Alejandro Te whereby it wasagreedthat rom19!"to19!6, Teshall bethesoledealer o #","""bags$rime%hitecement in&indanao' Falcon was the (resident o $rime %hite )ement )or(oration *$%))+ and Trazo was a boardmember thereo' Te was li,ewise a board member o $%))' It was agreed that the selling (rice or a bago cement shall be $9'!"'-eore the bags o cement can be deli.ered, Te already made ,nown to the (ublic that he is the soledealer o cements in &indanao' /arious hardwares then a((roached him to be his sub0dealers, hence, Teentered into .arious contracts with them'-ut then a((arently, Falcon and Trazo were not authorized by the -oard o $%)) to enter into suchcontract' 1e.ertheless, the -oard wished to retain the contract but they wanted some amendment whichincludestheincreaseo theselling(rice(erbagto$12'2"andthedecreaseo thetotal amount ocement bags rom #", to 3, only (lus the contract shall only be eecti.e or a (eriod o three months andnot 6 years'Te reused the counter0oer' $%)) then awarded the contract to someone else'Te then sued $%)) or damages' $%)) iled a counterclaim and in said counterclaim, it is claiming ormoral damages the basis o which is the claim that Te4s iling o a ci.il case against $%)) destroyed thecom(any4s goodwill' The lower court ruled in a.or Te'ISSUE: %hether or not the ruling o the lower court is correct'HELD:1o' Teiswhat canbecalledasasel0dealingdirector 5hedealsbusinesswiththesamecor(oration in which he is a director' There is nothing wrong (er se with that' 6owe.er, 7ec' 2# (ro.idesthat879)' 2#' :ealings o directors, trustees or oicers with the cor(oration' ;0 A contract o the cor(orationwith one or more o its directors or trustees or oicers is .oidable, at the o(tion o such cor(oration, unlessall the ollowing conditions are (resent81'That the (resence o such director or trustee in the board meeting in which the contract was a((ro.edwas not necessary to constitute a 'That in the case o an oicer, the contract with the oicer has been (re.iously authorized by the -oardo :irectors'In this (articular case, the 7u(reme )ourt ocused on the act that the contract between $%)) and Tethrough Falcon and Trazo was not reasonable' 6ence, $%)) has all the rights to .oid the contract andloo, or someone else, which it did' The contract is unreasonable because o the .ery low selling (rice'The $rice at that time was at least $12'"" (er bag and the original contract only sti(ulates $9'!"' Also,the originalcontract was or 6 years and there4s no clause in the contract which (rotects $%)) rominlation' Asadirector, Teinthistransactionshould(rotect thecor(oration4sinterest morethanhis(ersonal interest' 6is ailure to do so is disloyalty to the cor(oration'Anent the issue o moral damages, there is no