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a) dissolution of the C
b) appointment of a receiver pendent lite
2) Defense:
HELD: The trail court had jurisdiction and properly entertained the
original case.
that its business interests required that immediate relief be given to the
corporation and to its thousands of stockholders; and
6) After some more motions filed, Solicitor General eventually filed a “Motion
for Dismissal of the Quo Warranto Proceedings” alleging that:
the only purpose of his motion for the dismissal of this quo warranto is to
take the State out of an unnecessary court litigation, so that the dismissal
of the case would result in the disposition solely of the quo warranto by
and between petitioner Republic of the Philippines and the respondents
named therein.
ISSUE: (The pivotal question in this case is) WON the lower court erred in
holding that the Solicitor General was vested with full power to manage and
control the Static's litigation, which includes the power to discontinue such
litigation if and when in his opinion this should be done?
HELD: Meeting squarely the issue of whether or not the Solicitor General
is vested with absolute and unlimited power to discontinue the State's litigation
and, accordingly to have the quo warranto petition dismissed, if and when in his
opinion this should be done, the general rule seems to be that the plaintiff may
do so with the approval of the court subject to well-defined exceptions (such as,
for example, where the answer sets up a counterclaim which cannot stand
independently of the main action).
3) The loan was payable from the 1980-1981 sugar crop, the amortization
payments to be remitted by the PHILSUCOM TO RPB. The deductions
complained of were made by the PHILSUCOM during the period from 1980 to
1984.
c) Hence, they had been deprived of property w/o due process of law
and that the abolition of PHILSUCOM and the transfer, of assets
from PHILSUCOM to respondent SRA, are unconstitutional and
ineffective.
RATIO 1: The termination of the life of a juridical entity does not by itself imply
the diminution or extinction of rights demandable against such juridical entity.
HELD 2: Petitioners have a CoA against SRA to the extent that they are
able to prove lawful claims against Philsucom, which claims Philsucom is
or may be unable to satisfy, and to the extent respondent SRA did, or does,
in fact take over all or some of the assets of Philsucom.
2) That the assets of the Philsucom must respond for payment of lawful
obligations of Philsucom, does not appear to require demonstration.
5) NLRC: since PCDP had been giving overtime pay during Muslim
holidays, it is estopped
But there are only 5 recognized Muslim holidays since the other
three are not even celebrated by Muslims.
6) PCDP filed an Motion for Partial Recon of NLRC decision. PCEWU also
filed a MR.
9) PDCP alleged that it had ceased to exist as a C on 24 July 1989 and that
it has winded up its corporate affairs in accordance with law. It is also now owned
by PCPPI.
The termination of the life of a corporate entity does not by itself cause the
extinction or diminution of the rights and liabilities of such entity. If the three year
extended life has expired w/o a trustee or receiver having been expressly
designated by said C, w/n that period, the BOD (or trustees) itself, may be
permitted to so continue as “trustees” by legal implication to complete the
corporate liquidation.
HELD: NO! The rule appears to be well settled, that, in the absence of
statutory provision to the contrary, pending actions by or against a C are abated
upon expiration of the period allowed by law for the liquidation of its affairs.
In fact, section 77 of said law provides that the corporation shall "be
continued as a body corporate for three (3) years after the time when it would have been ***
dissolved, for the purpose of prosecuting and defending suits by or against it ***, so that,
thereafter, it shall no longer enjoy corporate existence for such purpose. For this
reason, section 78 of the same law authorizes the corporation, "at any time during
said three years * * * to convey all of its property to trustees for the benefit of members,
stockholders, creditors and other interested" evidently for the purpose, among others, of
enabling said trustees to prosecute and defend suits by or against the
corporation begun before the expiration of said period.
6) 9 July ’30- GEORGE O'FARREL & CIE. (the C) BOD filed a “Petition for
its Dissolution” and for the appointment of its Pres/GM Gaston O'Farrell, as
receiver and liquidator to wind up the affairs of the corporation.
9) Michelin & Cie. (the appellee) filed its claim against C for the aforesaid
balance of P21,968.83 with a prayer that the claim be allowed as a preferred one
against the corporation on the ground that the said amount represented the
proceeds from the sale of a number of rubber tires which were on deposit with
and sold by the corporation. The attorney for the corporation gave his conformity
to the petition by signing at the foot.
10) No notice have been given to anybody else neither of the claim nor of the
hearing.
11) LC order: Michelin & Cie. (the appellee) is a preferred claim against C
and the receiver should pay the amount thereof out of any funds in his
possession.
Even admitting for the sake of argument that the merchandise which sale
price is the subject of appellee's claim was shipped to the corporation under a
commission agreement or any other agreement carrying the obligation to return
either the goods or its price, the fact is that the merchandise in the case at bar
was no longer in the corporation's possession nor could the appellee trace the
proceeds from its sale, and this is made manifest by the very fact of the written
agreement entered into between the appellee and the corporation whereby the
appellee accepted payment of the obligation by installments duly secured with a
mortgage of property to guarantee its payment. But such is not the case,
however, for the very agreement of May 31, 1930, mentioned in paragraph 5 of
appellee's claim, shows that the rubber tires consigned to the corporation were to
be sold by the latter "por orden, cuenta y riesgo de los Sres. M. Michelin & Cie."
and that the customers' accounts were opened "por orden, cuenta y riesgo de M.
Michelin & Cie.", and so much is this true that the uncollected accounts were
turned over to and received by the appellee, M. Michelin & Cie. Under such
circumstances the amount of appellee's claim appears to be in the nature of a
balance of a current account between the two firms more than anything else.
The record in this case shows that Gaston O'Farrell, the receiver herein,
besides being the principal promoter of the corporation and the holder of the
largest number of shares was elected president and general manager and that
he held the said offices ever since the organization of the corporation and his
conduct in executing a mortgage on his own house and giving a pledge on his
shares of stock and on those of Rosario Sanchez represented by him as attorney
in fact, in favor of the appellee to guarantee the latter's claim, lends itself to a
serious suspicion. The facts appearing of record leave no room for doubt that his
administration of the business of the corporation left much to be desired and that
he alone ought to be blamed for the shortage claimed by the appellee, but to
save himself from personal liability he made the corporation shoulder the burden
of the obligation in exchange for a simulated conveyance of his house to the
corporation. No sooner had the corporation become delinquent in the payment of
the obligation under the terms of the written agreement than he resorted to a
judicial proceeding of voluntary dissolution in an attempt to settle appellee's claim
and to free himself from all harm, but fearing that the alleged preference of
appellee's claim might be defeated, in collusion with the appellee they had the
claim allowed summarily as a preferred claim ignoring the rest of the world.
REPUBLIC OF THE PHILIPPINES v. MARSMAN DEV. CO. (
(BIR sued for taxes beyond the 3-year period of winding up)
1) 15 October ’53- Collector of Internal Revenue demanded the payment of
taxes (May ’50- September ‘53) from MARSMAN DEV. CO.
5) 8 September ’58- BIR filed a complaint for collection of taxes (of the 3
assessments) against MARSMAN DEV. CO.
6) Defense:
It is immaterial that the present action was filed after the expiration of
three years after April 23, 1954, for at the very least, and assuming that judicial
enforcement of taxes may not be initiated after said three years despite the fact
that the actual liquidation has not been terminated and the one in charge thereof
is still holding the assets of the corporation, obviously for the benefit of all the
creditors thereof, the assessment aforementioned, made within the three years,
definitely established the Government as a creditor of the corporation for whom
the liquidator is supposed to hold assets of the corporation. And since the suit at
bar is only for the collection of taxes finally assessed against the corporation
within the three years invoked by appellants, their fourth assignment of error
cannot be sustained.
RATIO: It is to be recalled that the assessments against appellant
corporation for deficiency taxes due for its operations since 1947 were made by
the Bureau of Internal Revenue on October 15, 1953, September 13, 1954 and
November 8, 1954, such that Company the first was before its dissolution and
the last two not later than six months after such dissolution.
4) Petitioners argue
(d) that considering that the Collector instituted the present action on
September 23, 1954 when he filed his answer to the appeal of petitioners,
said action was already barred by prescription pursuant to Sections 77
and 78 of the Corporation Law which allows corporations to continue as a
body corporate only for three years from its dissolution; and
(e) that assuming that petitioners are liable to pay the tax, their liability is
not solidary, but only limited to the benefits derived by them from the
corporation.
Considering that the Central Syndicate realized from the sale of the
surplus goods a net profit of P229,073.83, and that the sale of said goods was
the only transaction undertaken by said syndicate, there being no evidence to the
contrary, the conclusion is that said net profit remained intact and was distributed
among the stockholders when the corporation liquidated and distributed its
assets on August 15, 1948, immediately after the sale of the said surplus goods.
Petitioners are therefore the beneficiaries of the defunct corporation and as such
should be held liable to pay the taxes in question. However, there being no
express provision requiring the stockholders of the corporation to be solidarily
liable for its debts which liability must be express and cannot be presumed,
petitioners should be held to be liable for the tax in question only in proportion to
their shares in the distribution of the assets of the defunct corporation. The
decision of the trial court should be modified accordingly.
RATIO:
The dissolution of a corporation does not extinguish the debts due or owing to it.
And it has been stated, with reference to the effect of dissolution upon taxes due
from a corporation, "that the hands of the government cannot, of course, collect
taxes from a defunct corporation, it loses thereby none of its rights to assess
taxes which had been due from the corporation, and to collect them from
persons, who by reason of transactions with the corporation, hold property
against which the tax can be enforced and that the legal death of the corporation
no more prevents such action than would the physical death of an individual
prevent the government from assessing taxes against him and collecting them
from his administrator, who holds the property which the decedent had formerly
possessed" (Wonder Bakeries Co. vs. U. S. [1934] Ct. Cl, 6 F. Supp. 228).
Bearing in mind that our corporation law is of American origin, the foregoing
authorities have persuasive effect in considering similar cases in this jurisdiction.
This must have been taken into account when in G. R. No. L-8800 this Court said
that petitioners could be held personally liable for the taxes in question as
successors-in-interest of the defunct corporation.