Bert Osmena & Associates v.

CA, 120 SCRA 395

G.R. No. L-56545 January 28, 1983

BERT OSMEÑA & ASSOCIATES, petitioners, vs. THE COURT OF APPEALS and SPOUSES
PEDRO QUIMBO and LEONADIZA QUIMBO, respondents.

FACTS: In 1971, a Contract of Sale over Lots 1 and 2 for a total price of P15, 200 was
executed in favor of the Quimbo spouses; the sellers were Bert Osmeña & Associates, the
developer of the subdivision, and Carmen and Helena Siguenza, owners of the property.
Antonio Osmeña signed the contract on behalf of the company and one C. Siguenza as the
witness. On the pretext that a road would traversed the said lots, Helena Siguenza proposed
to exchange the said lots to Lot 409, which the spouses hesitatingly agreed. After a few
years, no title was given to the spouses, and later found out that the said lots were sold to
another person. Seeking for damages, the spouses Quimbo filed a suit for Damages in RTC,
which ruled in favor of the spouses. The CA, likewise, affirmed the judgment, hence this
case.

ISSUE: Whether Osmeña & Associates is an agent of the Siguenza in the sale of the said
lots?

RULING: No, the Petitioner's plea for exception from liability for damages on the ground
that it was a mere agent of the Siguenzas is untenable. The contract of sale describes
petitioner as seller together with the Siguenzas. In fact, petitioner was the lone signatory for
the sellers in said contract. As held by respondent Court: The contract ... is clear that
appellant is one of the Seller-of the lots in question. We will not allow a variation of the
terms of the written contract by parole evidence, for there is never an allegation in the
appellant's answer that Osmeña does not express the true intent of the parties or that it is
suffering from a vice or mistake or imperfection. Further, appellant never asserted in its
Answer that it is a mere agent of its co-defendant Helena. Indeed, the tenor of its Answer is
one which shows its admission that it is a co-seller of all lots in subdivision which it is
developing. We take particular attention to appellant's admission in its Answer to the
allegations of appellees' complaint, which show that appellant was not an agent but a co-
seller of the lots.

W. G. PHILPOTTS vs. PHILIPPINE MANUFACTURING COMPANY and F. N.

BERRY G.R. No. L-15568 November 8, 1919

FACTS:

Petitioner, W. G. Philpotts, a stockholder in the Philippine Manufacturing

Company, one of the respondents herein, seeks by this proceeding to obtain a writ
of mandamus to compel the respondents to permit the plaintiff, in person or by
some authorized agent or attorney, to inspect and examine the records of the
business transacted by said company since January 1, 1918. The respondent
corporation has refused to allow the petitioner himself to examine anything relating
to the affairs of the company, and the petition prays for a peremptory order
commanding the respondents to place the records of all business transactions of
the company. Petitioner further desires to exercise said right through an agent or
attorney. It is conceded by counsel for the respondents that there is a right of
examination in the stockholder granted under section 51 of the Corporation Law,
but it is insisted that this right must be exercised in person.

ISSUE:

whether the right which the law concedes to a stockholder to inspect the records
can be exercised by a proper agent or attorney of the stockholder as well as by the
stockholder in person
RULING: YES. The right of inspection given to a stockholder in the provision above
quoted can be exercised either by himself or by any proper representative or
attorney in fact, and either with or without the attendance of the stockholder. This
is in conformity with the general rule that what a man may do in person he may do
through another; and we find nothing in the statute that would justify us in
qualifying the right in the manner suggested by the respondents. Second paragraph
of section 51 of Act No. 1459 states that: "The record of all business transactions of
the corporation and the minutes of any meeting shall be open to the inspection of
any director, member or stockholder of the corporation at reasonable hours." This
provision is to be read of course in connecting with the related provisions of
sections 51 and 52, defining the duty of the corporation in respect to the keeping of
its records.
This conclusion is supported by the undoubted weight of authority in the United
States, where it is generally held that the provisions of law conceding the right of
inspection to stockholders of corporations are to be liberally construed and that
said right may be exercised through any other properly authorized person. As was
said in Foster vs. White (86 Ala., 467), "The right may be regarded as personal, in
the sense that only a stockholder may enjoy it; but the inspection and examination
may be made by another. Otherwise it would be unavailing in many instances."

Gelano v. CA
G.R. No. L-39050
February 24, 1981

Facts:
Private respondent Insular Sawmill, Inc. is a corporation with a corporate life
of up to September 17, 1995, with the primary purpose of carrying on a general
lumber and sawmill business. To carry on this business, private respondent leased
the paraphernal property of petitioner-wife Guillermina M. Gelano at Paco, Manila
for P1,200.00 a month. While private respondent was leasing the aforesaid
property, its officers and directors had come to know petitioner-husband Carlos
Gelano received from the corporation cash advances of P25,950.00 on account of
rentals to be paid by the corporation on the land. The said sum was taken and
received by petitioner Carlos Gelano on the agreement that private respondent
could deduct the same from the monthly rentals of the leased premises until said
cash advances are fully paid. Sadly, petitioner Carlos Gelano was able to pay only
P5,950.00 thereby leaving an unpaid balance of P20,000.00 which he refused to
pay despite repeated demands by private respondent. Petitioner Guillermina M.
Gelano also refused to pay on the ground that said amount was for the personal
account of her husband asked for by, and given to him, without her knowledge and
consent and did not benefit the family. On May 4, 1948 to September 11, 1949,
petitoners purchased lumber materials from private respondent on credit leaving
P946.46 unpaid. Then, to accommodate and help petitioners renew previous loans
obtained by them from the China Banking Corporation, private respondent,
through Joseph Tan Yoc Su, executed a joint and several promissory note with
Carlos Gelano in favor of said bank in the amount of P8,000.00. Carlos Gelano to
pay the promissory note upon maturity, thus, the bank collected from the
respondent corporation the amount of P9,106.00 including interests, by debiting it
from the corporation's current account with the bank. Petitioner Carlos Gelano was
able to pay private respondent the amount of P5,000.00 but the balance of
P4,106.00 remained unsettled. Guillermina M. Gelano refused to pay on the
ground that she had no knowledge about said accommodation.

On May 29, 1959 the corporation, thru Atty. German Lee, filed a complaint for
collection against herein petitioners before the Court of First Instance of Manila. At
the stage of submitting memorandum, Atty. Lee retired from active law practice and
Atty. Eduardo F. Elizalde took over and prepared the memorandum. In the
meantime, private respondent amended its Articles of Incorporation to shorten its
term of existence up to December 31, 1960 only. The amended Articles of
Incorporation was filed with, and approved by the Securities and Exchange
Commission, but the trial court was not notified of the amendment shortening the
corporate existence and no substitution of party was ever made. On November 20,
1964 and almost four (4) years after the dissolution of the corporation, the trial
court rendered a decision in favor of private respondent. Both parties appealed to
the Court of Appeals which rendered a decision modifying the judgment of the trial
court by holding petitioner spouses jointly and severally liable on private
respondent's claim and increasing the award to P8,160.00. Petitioners found out
that the Insular Sawmill Inc. was dissolved way back December 31, 1960 after
receiving a copy of the decision. Hence, petitioners filed a motion to dismiss the
case and/or reconsideration of the decision of the Court of Appeals on grounds that
the case was prosecuted even after dissolution of private respondent as a
corporation and that a defunct corporation cannot maintain any suit for or against
it without first complying with the requirements of the winding up of the affairs of
the corporation and the assignment of its property rights within the required
period. Incidentally, after receipt of petitioners' motion to dismiss and/or
reconsideration, private respondent thru its former directors filed a Petition for
Receivership before the Court of First Instance of Manila which is still pending
before said court. Private respondent filed a comment on the motion to dismiss and
or reconsideration; the Court of Appeals denied the aforesaid motion after the
parties have filed reply and rejoinder. Hence, this petition for review.

Issue: Whether a corporation, whose corporate life had ceased by the expiration of
its term of existence, could still continue prosecuting and defending suits after its
dissolution and beyond the period of three years provided for under Act No. 1459,
otherwise known as the Corporation law, to wind up its affairs, without having
undertaken any step to transfer its assets to a trustee or assignee?

Ruling:
Yes. A corporation, whose corporate life had ceased by the expiration of its
term of existence, could still continue prosecuting and defending suits after its
dissolution and beyond the period of three years provided for under Act No. 1459,
otherwise known as the Corporation law, to wind up its affairs, without having
undertaken any step to transfer its assets to a trustee or assignee.

When Insular Sawmill, Inc. was dissolved on December 31, 1960, under
Section 77 of the Corporation Law, it still has the right until December 31, 1963 to
prosecute in its name the present case. After the expiration of said period, the
corporation ceased to exist for all purposes and it can no longer sue or be sued.

However, a corporation that has a pending action and which cannot be terminated
within the three-year period after its dissolution is authorized under Section 78 to
convey all its property to trustees to enable it to prosecute and defend suits by or
against the corporation beyond the three-year period although private respondent
(did not appoint any trustee, yet the counsel who prosecuted and defended the
interest of the corporation in the instant case and who in fact appeared in behalf of
the corporation may be considered a trustee of the corporation at least with respect
to the matter in litigation only. Said counsel had been handling the case when the
same was pending before the trial court until it was appealed before the CA and
finally to the SC. The SC holds that there was a substantial compliance with
Section 78 of the Corporation Law and as such, private respondent Insular
Sawmill, Inc. could still continue prosecuting the present case even beyond the
period of three (3) years from the time of its dissolution.

From the commentary of Justice Fisher, the trustee may commence a suit which
can proceed to final judgment even beyond the three-year period. No reason can be
conceived why a suit already commenced by the corporation itself during its
existence, not by a mere trustee who, by fiction, merely continues the legal
personality of the dissolved corporation should not be accorded similar treatment
allowed — to proceed to final judgment and execution thereof. The word "trustee"
as used in the corporation statute must be understood in its general concept which
could include the counsel to whom was entrusted in the instant case, the
prosecution of the suit filed by the corporation. The purpose in the transfer of the
assets of the corporation to a trustee upon its dissolution is more for the protection
of its creditor and stockholders. Debtors like the petitioners herein may not take
advantage of the failure of the corporation to transfer its assets to a trustee,
assuming it has any to transfer which petitioner has failed to show, in the first
place. To sustain petitioners' contention would be to allow them to enrich
themselves at the expense of another, which all enlightened legal systems
condemn.

Lanuza v De Leon

IN RE: PETITION FOR CONSOLIDATION OF TITLE IN THE VENDEES OF A HOUSE AND

THE RIGHTS TO A LOT. MARIA BAUTISTA VDA. DE REYES, ET AL., vendeespetitioners-
appellees.  RODOLFO LANUZA, vendor, vs. MARTIN DE LEON, intervenor-appellant.

GR#L-22331 June 6, 1967

Facts:
Rodolfo Lanuza and his wife Belen sold their house, leasehold rights to the lot,
television set and a refrigerator to Reyes and Navarro in consideration of a sum of
P3,000. It was executed under a “Deed of Sale with Right to Repurchase.” The
parties extended the term for the redemption when the original expired.
Subsequently, the Lanuzas mortgaged the property to the intervenor, De Leon
recorded in the Register of Deeds in Manila. And upon failure to pay of the former,
the latter filed in the sheriff’s office petition for extrajudicial foreclosure. De Leon
then won as the sole bidder.
On the other hand, the petitioners Reyes and Navarro filed a petition for
consolidation of ownership of the house on the ground that the vendees failed to
redeem their property upon the expiration of the redemption period. Consequently,
De Leon argued that the pacto de retro sale could not affect his right as a third
party.
The lower court decided the case in favor of Reyes and Navarro on the ground that
the Lanuzas lose the right to mortgage their property because they were not the
absolute owners of the property that time.

Issue: Who has a better right?

Held:

De Leon has a better right.

Art 2088 of the New Civil Code states that the creditor cannot appropriate the
things given by way of pledge or mortgage, or dispose of them. Any stipulation to
the contrary is null and void. There were no transmission of ownership between the
Lanuzas and Reyes and Navarro. In truth, there was a provision regarding
automatic transfer of ownership which was a Pactum Commisorium and it is
prohibited under the law. Hence, the intention of the parties was deemed as a
mortgage rather than of a sale.
The court held that it was in reality an equitable mortgage and the claims of De
Leon is preferred because his mortgage was registered under art. 2125 of the New
Civil Code - In addition to the requisites stated in article 2085, it is indispensable,
in order that a mortgage may be validly constituted, that the document in which it
appears be recorded in the Registry of Property. If the instrument is not recorded,
the mortgage is nevertheless binding between the parties.