Corpo 7-14 Digest
Corpo 7-14 Digest
Corpo 7-14 Digest
Ruling: COURT FINDS NO MERIT. Under Ruling: COURT FINDS NO MERIT. There is
subsection 5 of section 13 of the Corporation no provision of law making it a misdemeanor
Law, every corporation has the power to to incorporate an invalid provision in the by-
purchase, hold and lease such real property laws of a corporation; and if there were such,
as the transaction of the lawful business of the hazards incident to corporate effort would
the corporation may reasonably and be largely increased.
necessarily require. The law expressly
declares that corporations may acquire such
real estate as is reasonably necessary to 5) Art. 61 of El Hogar’s by-laws states
enable them to carry out the purposes for that “attendance in person or by proxy by
shareholders owning one-half plus one of the is “unconscionable, excessive and out of
shareholders shall be necessary to proportion to the services rendered”
constitute a quorum for the election of
Ruling: COURT FINDS NO MERIT. The
directors” is contrary to Sec. 31 of the Corpo
mere fact that compensation is in excess of
Law which provides that owners of the
what may be considered appropriate is not a
majority of the subscribed capital stock
proper consideration for the court to resolve.
entitled to vote must be present either in
That El Hogar is in contact with its promoter
person or by proxy at all elections of
did not affect the association’s legal
directors.
character. The court is of the opinion that the
Ruling: COURT FINDS NO MERIT. traditional respect for the sanctity of the
Corporation is not at fault for failure of the contract obligation should prevail over the
shareholders to attend the annual meetings radical and innovating tendencies.
and their non-attendance in meeting is not to
be interpreted as their assent to the way the
corporation is being handled. Mere failure of 8) That Art. 70 of El Hogar’s by-laws,
a corporation to elect officers does not requiring persons elected as board of
terminate the terms of existing officers nor directors to be holders of shares of the paid
dissolve the corporation. The general rule is up value of P5,000 which shall be held as
to allow the officer to holdover until his security, is objectionable since a poor
successor is duly qualified. member or wage earner cannot serve as a
director irrespective of other qualifications
Ruling: COURT FINDS NO MERIT.
6) That the directors of El Hogar,
Corporation Law expressly gives the power
instead of receiving nominal pay or serving
to the corporation to provide in its by-laws for
without pay, have been receiving large
the qualification of its directors and the
compensation, varying in amount from time
requirement of security from them for the
to time, out of respondents’ profits – Ruling:
proper discharge of the duties of their office
COURT FINDS NO MERIT. With the growth
in the manner prescribed in Art. 70 is highly
of the corporation, the amount paid as
prudent and in conformity with good practice.
compensation to the directors has increased
beyond what would probably – this cant be
corrected in this court. Nor can it properly be
made a basis for depriving respondent of its 9) That respondent abused its franchise
franchise or enjoining it from compliance with in issuing “special” shares alleged to be
the provisions of its own by-laws. If a mistake illegal and inconsistent with the plan and
has been made, the remedy is to lie rather in purposes of building and loan associations
publicity and competition. Ruling: COURT FINDS NO MERIT. The said
special shares are generally known as
advance payment shares which were
7) That the promoter and organizer of El evidently created for the purpose of meeting
Hogar was Mr. Antonio Melian and that in the the condition caused by the prepayment of
early stages of the organization of the dues that is permitted. Sec. 178 of Corpo
association, the board of directors authorized Law allows payment of dues or interest to be
the association to make a contract with him paid in advance but the corporation shall not
and that the royalty given to him as founder allow interest on advance payment grater
than 6% per annum nor for a period longer
than one year. The amount is satisfied by had conducted its affairs poorly that it only
applying a portion of the shareholder’s retained a fund barely sufficient to pay its
participation in the annual earnings. The present liabilities and was in a condition
mission of special shares does not involve where any change by the reduction of
any violation of the principle that the shares interest upon or depreciation in the value of
must be sold at par. securities or increase of mortality would
render it insolvent and subject to be placed
in the hands of a receiver.
10) That in making purchases at
foreclosure sales constituting as security for
54 of the loans, El Hogar bids the full amount 12) That the board of directors has
after deducting the withdrawal value, alleged settled upon the unlawful policy of paying a
to be pursuing a policy of depreciating at the straight annual dividend of 10 percent per
rate of 10 percent per annum, the value of centum regardless of losses suffered and
the real properties it acquired and that this profits made by the corporation, in
rate is excessive. contravention with the requirements of Sec.
188 of the Corporation law.
Ruling: COURT FINDS NO MERIT. The
board of directors possesses discretion in Ruling: COURT FINDS NO MERIT. As
this matter. There is no provision of law provided in the previous cause of action, the
prohibiting the association from writing off a board of directors shall determine the profits
reasonable amount for depreciation on its and losses and this means that they shall
assets for the purpose of determining its real exercise the usual discretion of good
profits. Art. 74 of its by-laws expressly businessmen in allocating a portion of the
authorizes the board of directors to annual profits to purposes needful of the
determine each year the amount to be written welfare of the association. The law
down upon the expenses for the installation contemplates distribution of earnings and
and the property of the corporation. The losses after legitimate obligations have been
court cannot control the discretion of the met.
board of directors about an administrative
matter as to which they have no legitimate
power of action. 13) That El Hogar has made loans to the
knowledge of its officers which were
intended to be used by the borrowers for
other purposes than the building of homes
and no attempt has been made to control the
borrowers with respect to the use made of
the borrowed funds.
11) That respondent maintains excessive Ruling: COURT FINDS NO MERIT. There is
reserve funds no statute expressly declaring that loans may
be made by these associations SOLELY for
Ruling: COURT FINDS NO MERIT. The the purpose of building homes. The building
function of this fund is to insure stockholders of homes in Sec. 171 of Corporation Law is
against losses. When the reserves become only one among several ends which building
excessive, the remedy is in the hands of the and loan associations are designed to
Legislature. No prudent person would be promote and Sec. 181 authorizes the board
inclined to take a policy in a company which
of directors of the association to fix the Ruling:COURT FINDS NO MERIT. Sec. 173
premium to be charged. of Corporation Law declares that “any
person” may become a stockholder in
building and loan associations. The phrase
14) That the loans made by defendant for ANY PERSON does not prevent a finding
purposes other than building or acquiring that the phrase may not be taken in its proper
homes have been extended in extremely and broad sense of either a natural or
large amounts and to wealthy persons and artificial person.
large companies
Ruling: COURT FINDS NO MERIT. The
17) That in disposing real estate
question of whether the making of large
purchased by it, some of the properties were
loans constitutes a misuser of the franchise
sold on credit and the persons and entities to
which would justify the court in depriving the
which it was sold are not members nor
association of its corporate life; is a matter
shareholders nor were they made members
confided to the discretion of the board of
or shareholders, contrary to the provision of
directors. The law states no limit as to the
Corporation Law requiring loans to be
size of the loans to be made by the
stockholders only
association. Resort should be had to the
legislature because it is not a matter Ruling: COURT FINDS NO MERIT. The law
amenable to judicial control does not prescribe that the property must be
sold for cash or that the purchaser shall be a
shareholder in the corporation. Such sales
15) That when the franchise expires, can be made upon the terms and conditions
supposing the corporation is not approved by the parties.
reorganized, upon final liquidation of the
corporation, a reserve fund may exist which
is out of all proportion to the requirements 12
that may fall upon it in the liquidation of the
13 Fermin Caram Jr. vs Court of Appeals
company
Ruling: COURT FINDS NO MERIT. This
matter may be left to the discretion of the FACTS: A certain Barretto initiated the
board of directors or to legislative action if it incorporation of a company called Filipinas
should be deemed expedient to require the Orient Airways (FOA). Barretto was referred
gradual suppression of reserve funds as the to as the “moving spirit” of said corporation
time for dissolution approaches. It is no because it was through his effort that it was
matter for judicial interference and much less created. Before FOA’s creation though,
could the resumption of the franchise be Barretto contracted with a third party, Alberto
justified on this ground. Arellano, for the latter to prepare a project
study for the feasibility of creating a
corporation like FOA. The project study was
16) That various outstanding loans have then presented to the would-be incorporators
been made by the respondent to and investors. On the basis of said project
corporations and partnerships and such study, Fermin Caram, Jr. and Rosa Caram
entities subscribed to respondents’ shares agreed to be incorporators of FOA. Later
for the sole purpose of obtaining such loans however, Arellano filed a collection suit
against FOA, Barretto, and the Carams. stockholders of the corporation, including
Arellano claims that he was not paid for his those who came in later, and regardless of
work on the project study. the amount of their shareholdings, would be
equally and personally liable also with the
petitioners for the claims of the private
ISSUE: Whether or not the Carams are respondent.
personally and solidarily liable considering
that the project study was contracted before
FOA became a corporation. 14 Palay, Inc. vs. Jacobo C. Clave
Facts: On March 28, 1965, petitioner Palay,
Inc., through its President, Albert Onstott
HELD: No. The Carams cannot be solidarily
executed in favor of private respondent,
liable with FOA. The FOA is now a bona fide
Nazario Dumpit, a Contract to Sell a parcel
corporation. As such, FOA alone should be
of Land owned by said corporation.
liable for its corporate acts as duly authorized
Paragraph 6 of the contract provided for
by its officers and directors. This includes
automatic extrajudicial rescission upon
acts which ultimately led to its incorporation
default in payment of any monthly installment
i.e., the project study made by Arellano. FOA
after the lapse of 90 days from the expiration
has a separate and distinct personality from
of the grace period of one month, without
its incorporators. It is not justified to make the
need of notice and with forfeiture of all
Carams, as principal stockholders, to be
installments paid.
responsible for FOA’s obligations.
Respondent Dumpit paid the downpayment
There was no showing that the Filipinas
and several installments amounting to
Orient Airways was a fictitious corporation
P13,722.50. The last payment was made on
and did not have a separate juridical
December 5, 1967 for installments up to
personality, to justify making the petitioners,
September 1967.
as principal stockholders thereof,
responsible for its obligations. As a bona fide On May 10, 1973, or almost six (6) years
corporation, the Filipinas Orient Airways later, Nazario Dumpit wrote petitioner
should alone be liable for its corporate acts offering to update all his overdue accounts
as duly authorized by its officers and with interest, and seeking its written consent
directors. to the assignment of his rights to a certain
Lourdes Dizon. Replying, petitioners
In the light of these circumstances, we hold
informed respondent that his Contract to Sell
that the petitioners cannot be held personally
had long been rescinded pursuant to
liable for the compensation claimed by the
paragraph 6 of the contract, and that the lot
private respondent for the services
had already been resold.
performed by him in the organization of the
corporation. To repeat, the petitioners did not
contract such services, It was only the results
Questioning the validity of the rescission of
of such services that Barretto and Garcia
the contract, respondent filed a letter
presented to them and which persuaded
complaint with the National Housing
them to invest in the proposed airline. The
Authority (NHA) for reconveyance with an
most that can be said is that they benefited
altenative prayer for refund (Case No. 2167).
from such services, but that surely is no
In a Resolution, dated July 10, 1979, the
justification to hold them personally liable
NHA, finding the rescission void in the
therefor. Otherwise, all the other
absence of either judicial or notarial demand, Issue 2: Whether or not petitioner Onstott is
ordered Palay, Inc. and Alberto Onstott in his solidarily liable with Palay, Inc. for the refund
capacity as President of the corporation,
jointly and severally, to refund immediately to
Nazario Dumpit the amount of P13,722.50
with 12% interest from the filing of the
complaint on November 8, 1974. Held: No. No sufficient proof exists on record
that said petitioner used the corporation to
defraud private respondent. He cannot,
therefore, be made personally liable just
Issue 1: Whether the doctrine of piercing the
because he "appears to be the controlling
veil of corporate fiction has application to the
stockholder". Mere ownership by a single
case at bar.
stockholder or by another corporation is not
of itself sufficient ground for disregarding the
separate corporate personality.