09 Aurbach vs. Sanitary Wares Manufacturing Corporation
09 Aurbach vs. Sanitary Wares Manufacturing Corporation
09 Aurbach vs. Sanitary Wares Manufacturing Corporation
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ing of joint ventures is not consistent with fair dealing to say the
least. To the extent that such subversive actions can be lawfully
prevented, the courts should extend protection especially in
industries where constitutional and legal requirements reserve
controlling ownership to Filipino citizens.
Same Same Same Legal concept of joint venture A
corporation cannot enter into a partnership contract but may
engage in a joint venture with others.The ASI Groups argument
is correct within the context of Section 24 of the Corporation Code.
The point of query, however, is whether or not that provision is
applicable to a joint venture with clearly defined agreements:
The legal concept of a joint venture is of common law origin. It
has no precise legal definition, but it has been generally
understood to mean an organization formed for some temporary
purpose. (Gates v. Megargel, 266 Fed. 811 [1920] It is in fact
hardly distinguishable from the partnership, since their elements
are similarcommunity of interest in the business, sharing of
profits and losses, and a mutual right of control. (Blackner v.
McDermott, 176 F. 2d. 498, [1949] Carboneau v. Peterson, 95 P.
2d. 1043 [1939] Buckley v. Chadwick, 45 Cal. 2d. 183, 288 P. 2d.
12 289 P. 2d. 242 [1955]). The main distinction cited by most
opinions in common law jurisdictions is that the partnership
contemplates a general business with some degree of continuity,
while the joint venture is formed for the execution of a single
transaction, and is thus of a temporary nature. (Tufts v. Mann.
116 Cal. App. 170,2 P. 2d. 500 [1931] Harmon v. Martin, 395 Ill.
595, 71 NE 2d. 74 [1947] Gates v. Megargel 266 Fed. 811 [1920]).
This observation is not entirely accurate in this jurisdiction, since
under the Civil Code, a partnership may be particular or
universal, and a particular partnership may have for its object a
specific undertaking. (Art. 1783, Civil Code). It would seem
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5. Management
(a) The management of the Corporation shall be vested in a
Board of Directors, which shall consist of nine individuals. As long
as AmericanStandard shall own at least 30% of the outstanding
stock of the Corporation, three of the nine directors shall be
designated by AmericanStandard, and the other six shall be
designated by the other stockholders of the Corporation, (pp. 51 &
53, Rollo of 75875)
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DEPRIVING
PETITIONERS
AND
THE
CORPORATION THEY REPRESENT OF THEIR
PROPERTY RIGHTS WITHOUT DUE PROCESS
OF LAW.
III. THE
COURT
OF
APPEALS
IMPOSES
CONDITIONS AND READS PROVISIONS INTO
THE AGREEMENT OF THE PARTIES WHICH
WERE NOT THERE, WHICH ACTION IT
CANNOT LEGALLY DO. (p. 17, Rollo75875)
Petitioner Luciano E. Salazar in G.R. Nos. 7597576 assails
the amended decision on the following grounds:
11.1 That Amended Decision would sanction the CAs disregard
of binding contractual agreements entered into by stockholders
and the replacement of the conditions of such agreements with
terms never contemplated by the stockholders but merely dictated
by the CA.
11.2 The Amended decision would likewise sanction the
unlawful deprivation of the property rights of stockholders
without due process of law in order that a favored group of
stockholders may be illegally benefitted and guaranteed a
continuing monopoly of the control of a corporation. (pp. 1415,
Rollo7597576)
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evidence presented
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Saniwares, namely ASI, which owns 40% of the capital stock and
the Philippine National stockholders who own the balance of 60%,
and that 2) ASI is given certain protections as the minority
stockholder.
Premises considered, we believe that under the Agreement
there are two groups of stockholders who established a
corporation with
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voting rights.
Sec. 100. Agreements by stockholders.xxx
2. An agreement between two or more stockholders, if in
writing and signed by the parties thereto, may provide that in
exercising any voting rights, the shares held by them shall be
voted as therein provided, or as they may agree, or as determined
in accordance with a procedure agreed upon by them.
Appellants contend that the above provision is included in the
Corporation Codes chapter on close corporations and Saniwares
cannot be a close corporation because it has 95 stockholders.
Firstly, although Saniwares had 95 stockholders at the time of the
disputed stockholders meeting, these 95 stockholders are not
separate from each other but are divisible into groups
representing a single identifiable interest. For example, ASI, its
nominees and lawyers count for 13 of the 95 stockholders. The
Young/Yutivo family count for another 13 stockholders, the Cham
family for 8 stockholders, the Santos family for 9 stockholders, the
Dy family for 7 stockholders, etc. If the members of one family
and/or business or interest group are considered as one (which, it
is respectfully submitted, they should be for purposes of
determining how closely held Saniwares is), there were as of 8
March 1983, practically only 17 stockholders of Saniwares.
(Please refer to discussion in pp. 5 to 6 of appellees Rejoinder
Memorandum dated 11 December 1984 and Annex A thereof).
Secondly, even assuming that Saniwares is technically not a
close corporation because it has more than 20 stockholders, the
undeniable fact is that it is a closeheld corporation. Surely,
appellants cannot honestly claim that Saniwares is a public issue
or a widely held corporation.
In the United States, many courts have taken a realistic
approach to joint venture corporations and have not rigidly
applied principles of corporation law designed primarily for public
issue corporations. These courts have indicated that express
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