XVI. Dissolution
INTIA
Buenaflor vs. Camarines Sur Industry
● Buenaflor filed his application together with another application to establish a
cold storage and refrigeration service.
● The Commission set the applications for hearing requiring Buenaflor to publish
them in two newspapers, and to serve the copy to Iñigo Daza and Camarines
Sur Industry Corporation (Camarines Corporation).
○ The two owned ice plants in neighboring municipalities and had been
apparently selling ice to Sabang’s inhabitants.
● After receiving a copy of Buenaflor’s application, the Camarines Corporation
submitted to the Commission its own two applications:
○ One for request of authority to construct and manage a 5-ton ice
plant, and
○ Two for opposition to Buenaflor’s proposed ice business, on the
ground that it was the pioneer distributor of the commodity in that
particular locality.
● A joint hearing of the four applications (2 from B, 2 from CSI) of both parties
was set. (Around October)
DURING HEARING
● Buenaflor’s attorneys presented a motion to dismiss the Camarines
Corporation’s applications,
○ Buenaflor challenged the personality of CC as corporate life had
expired in November 1953, in accordance with its own articles of
incorporation.
● The counsel of Camarines Corporation was surprised by such motion and
asked for time to answer (granted)
MEAT OF THE ISSUE
● The corporators of Camarines Corporation got busy and executed on 30
October 1957, and registered on 31 October 1957,
○ new articles of incorporation of Camarines Sur Industry Corporation,
○ and at the same time, notarized a deed of conveyance assigning to
the new corporation,
■ all the assets of the expired (old) corporation,
■ together with its existing certificates of public convenience
DE VERA.
ISSUE: WON the Camarines Sur Industry Corporation lost its standing as a juridical
entity upon the expiration/termination of its corporate life?
HELD: YES.
● A corporation is deemed to lose its status as a juridical entity upon the
expiration of its corporate life according to its articles of incorporation (absent
renewal). It cannot lawfully continue the business for which it had been
established. It could only continue to exist for three years for the purpose of
prosecuting and defending suits by or against it, and of enabling it gradually to
settle and close its affairs, to dispose and convey its property and to divide its
capital stock.
● Since 1953, the old Corporation had been illegally plying its business of selling
ice in Sabang because, under the Corporation Law, Section 77 (now Section
122 of the Corporation Code), after November 1953, it could not lawfully
continue the business for which it had been established (operate ice plant, sell
ice, etc).
○ After November 1953, it could only continue to exist for three years
for the purpose of prosecuting and defending suits by or against it,
and of enabling it gradually to settle and close its affairs, to dispose
and convey its property and to divide its capital stock.
○ It could not, without violating the law, continue to sell ice.
● When the old Corporation docketed its application on 1 October 1957, it had
no juridical personality, it had ceased to exist as a corporation and could not
sue nor apply for certificate, for it was incapable of receiving a grant.
○ It was not even a corporation de facto.
○ And then there is no application subscribed by the new Camarines
Corporation.
○ Far from being mere technicality, these points support a conclusion,
which appears to be just and equitable, not only for the reasons
already indicated, but also to compensate Buenaflor’s diligence and
courage in exposing the irregular practice of a “ghost” corporation
foisting its services upon the unsuspecting public of Sabang and
neighboring territory, enjoying a franchise without paying, perhaps
the corporate income tax and other burdens attached to corporate
existence.
1
 XVI. Dissolution DE VERA. INTIA

to operate ice factories in Naga and Magarao. ● Remembering the Camarines Corporatoin’s automatic cessation in November
● On 8 November 1957, the Camarines Corporation (new) answered the 1956 (3 years after November 1953), the Court must decline to regard the
motion to dismiss, by alleging, to the amazement of Buenaflor, its recent new Camarines Corporation (formed 30 October 1957) as a continuation of
incorporation, plus its acquisition of the assets and certificates of the old the old. At most, it is the transferee of the properties of the old corporation
Camarines Corporation with the Commission’s approval as above described. (or more property, the assets of the stockholders) plus the certificate of public
THE DECISION OF THE COMMISSION convenience to operate the ice plant in Naga and Magarao.
● And yet, as stated, the new corporation has not yet filed any application for
● Camarines Corporation is really the pioneer ice plant in Maragao since 1945. certificate of public convenience in Sabang, and has not published such
○ The Court believes, therefore, that applicant Camarines Corporation application.
has a better right than Buenaflor to the certificate for a 5-ton ice Buenaflor’s application for five tons, instead of one ton, subject to the usual conditions
plant in Sabang. imposed by the Public Service Commission on ice plant establishments was approved.
○ However, in light of the fact that the services rendered by Camarines
Corporation in this aspect may not necessarily be adequate, -- BUENAFLOR WON
Buenaflor is granted a certificate for one ton ice plant in Sabang.
● As to the cold storage service, Buenaflor has a better right to the certificate by
virtue of Buenaflor’s right of priority in the filing of his application and the fact
that he is as financially capable as the Camarines Corporation to install the
service, The Court believes that the certificate for the cold storage service in
Sabang should be granted to Buenaflor.
○ He is granted a certificate of 5,000 cubic feet cold storage service.
● Buenaflor appealed in so far as he was denied authority to erect a 5-ton ice
plant.

National Abaca vs. Pore L

Cebu Port Labor Union vs. State Marine C
Cebu Port Labor Union (CPLU), a duly registered labor association, represented by its
president, Alejo Cababajay, filed a petition with the CFI of Cebu for recognition of
stevedoring service and injunction against the States Marine Corporation (SMC),
Nicasio Pansacala, Andres Tura, Alfonso Villajas, and Perpetuo Regis.
● SMC → corporation duly organized and existing under the laws of the
Philippines + could be served with summons through Mr. J. Gotianuy, whereas
the other respondents are "capataces" (construction foreman) of a group of
laborers and/or stevedores;
● CPLU was awarded a contract (subject contract) for the exclusive right of
loading and unloading of the cargoes of the vessel M/V Bisayas formerly
ISSUE: WON the Courts can take cognizance over the person of SMC which according
to the records, appeared to be non-existent at the time of the petition
HELD: NO
● Respondents were able to present a certification from the SEC to effect that
on October 17, 1952, a resolution dissolving the SMC was duly registered in
said Office, so that when the petition against said corporation was filed on
September 12, 1953, the SMC was no longer in existence.
● Sections 1 and 2, Rule 3 of the Rules of Court province the following:
SECTION 1. WHO MAY BE PARTIES — Only natural or juridical persons may be
parties in a civil action
SEC. 2. PARTIES IN INTEREST. — Every action must be prosecuted in the name

2
 XVI. Dissolution
owned by Elizalde & Co., now currently owned by SMC
● It came to the knowledge of CPLU that the stevedoring work will be given by
SMC to the other respondents
○ This is violation of the agreement and/or between the Manager of
the respondent corporation and the President of the petitioner
Union;
○ That said act would deprive CPLU its right of loading and unloading
the cargoes of said boat and will and will cause CPLU irreparable
loss and injury.
● PRAYER OF CPLU: A writ of preliminary injunction be issued
○ To prevent SMC from giving the work of loading and unloading the
cargoes of the vessel M/V Bisayas to anyone other than them, and
○ To prevent SMC from molesting and preventing CPLU from peacefully
doing said loading and unloading work;
○ That after hearing, the injunction be made permanent;
○ CPLU → right to load + unload the cargoes, accdng to subject contract
CFI ORDER
● Ordered ex parte the issuance of the writ of preliminary injunction upon
CPLU's filing a bond in the sum of P1,000
● The Sheriff's return of service of the writ of injunction showed that
respondents Alfonso Villajas, Perpetuo Regis, Nicasio Pansacala and Andres
Tura were personally served with said order.
● On the left part of said return there was a note of this tenor: "States Marine
Corp. was dissolve on Oct. 17P 1952" followed by an illegible countersign.
(MEAT OF THE CASE)
Private respondents, through counsel, filed an ex-parte motion for dissolution (of the
writ of preliminary injunction)
● Said writ would cause great damage to them since the defunct SMC never
awarded any contract to CPLU and that likewise the present owners of the
vessel (M/V Bisayas) never entered into a contract with CPLU relative to
stevedoring work;
● Allegations of the petition → insufficient since the respondent corporation
was no longer existing;
● Granting that Elizalde & Co. and CPLU had a contract regarding the loading
and unloading of the cargoes of the M /V Bisayas, it cannot be maintained that
CPLU had any right to follow this vessel to whomsoever it may belong
DE VERA. INTIA
of the real party interest.
● Despite the fact that counsel for the other respondents called already the
attention of the Court that SMC was non-existing and suggested that proper
substitution or amendment of the petition be made, CPLY relied on the
provision of Section 77 of the Corporation Law in its stand to include the
said corporation as party respondent.
○ Said Section 77 of the Corporation Law reads as follows:
SEC. 77. Every corporation whose charter expires by its own limitation or is
annulled by forfeiture or otherwise, or whose corporate existence for other
purposes is terminated in any other manner, shall nevertheless be continued
as a body corporate for three years after the time when it would have been so
dissolved, for the purpose of prosecuting and defending suits by or against it
and of enabling it gradually to settle and close its affairs, to dispose of and
convey its property and to divide its capital stock, but not for the purpose of
continuing the business for which it was established.
○ The 3-year period allowed by the law is only for the purpose of
winding up its affairs.
● It appearing that SMC was already dissolved at the time said petition was
filed, and the vessel subject of the agreement having changed hands, it
cannot be compelled now to respect the subject contract specially considering
the fact that it cannot even be made a party to this suit (See. 1, Rule 3, of the
Rules of Court).
● CPLU contends that it seeks the enforcement of the agreement entered into
by Joseph Gotianuy as manager of the Royal Lines, Inc.
○ If this is so, the court bore in mind the provision of Section 7 of Rule
3, regarding indispensable parties, and that the Royal Lines, Inc., has
not made a party to this case.
○ The decision making the award in favor of the CPLU enforceable
against SMC cannot now be altered to suit CPLU's defense by
interpreting it to include those who should have been the real parties
in interest, after its attention was called by other than counsel for
respondents.
○ Moreover, as stated before, when the Sheriff tried to serve the
summons and the writ of preliminary injunction on respondent
States Marine Corporation, he found out that this corporation was
no longer in existence, a fact which was made to appear on the left
3
 XVI. Dissolution DE VERA. INTIA

Then PRs filed a motion to dismiss
● Court has no jurisdiction over the parties affected and the subject matter of
the action.
○ Alleged that the case involves an action of a labor union against
management and therefore falls within the exclusive jurisdiction of
the Court of Industrial Relations.
● Complaint states no cause of action.
○ Alleged that the petition mentions the exclusive right granted by
Elizalde & Co. to CPLU, but there was no showing that in the
transaction between EIizalde & Co. and the SMC, the contractual
obligation of the former to CPLU was considered in order that same
may deserve the respect of the new owner of the vessel.
● SMC has no legal capacity to sue or be sued
○ SMC has been dissolved on October 17, 1952, and therefore has no
personality enter or refuse to enter into any contract, much less of
threatening the petitioner as alleged in the petition.
CPLU filed its opposition refuting the grounds of the motion to dismiss
--- SMC + PRs WON
CFI ORDER /Judgement
side of the Sheriff's return of service of writ, followed by an illegible
countersign which is not even that of Joseph Gotianuy, as stated by
Tomas Cabrera, the person in charge of the wharf department of the
Royal Lines, Inc.
● After the Courts have come to the foregoing conclusions there seems to be
no need for the determination of the other matters raised by CPLU.
● Now, if petitioner CPLU’s complaint has to be dismissed as against respondent
States Marine Corporation because it has not been summoned in this case, it
has no legal existence nor capacity to sue and be sued, and for lack of
evidence to substantiate that it contracted any obligation towards the
petitioner, the Court does not see how the respondent laborers can be
compelled to decline or refuse the award that Gotianuy, the General Manager
of the Royal Lines, Inc., granted them in connection the job of loading and
unloading the cargo of the M/V MELLIZA as shown by the former's
certification, and much less to reimburse the members of CPLU the
corresponding wages that they would have failed to earn.

● Denied PRs motion to dismiss

● Ruled that it had jurisdiction over the case.
● Mr. Joseph Gotianuy, President of the Royal Lines (which is the company
operating the M/V Melliza, formerly the M/V Bisayas) agreed verbally to
award the stevedoring work to the union headed by Alejo Cababajay;
○ That such agreement was made orally because it was not the practice
to put such kind of agreement in writing
● Recognizing CPLU under Alejo Cababajay as the party with authority to
render such services of loading and unloading the cargoes on the M/V
Melliza while in the port of Cebu
SMC→ CA: SMC CORRECT | CPLU → SC

Gonzales vs. Sugar Regulatory Admin L

Sumera vs. Valencia ISSUES: WON the action against him, being filed on 1936, has already prescribed
● Devota de Nuestra Senora De La Correa: corporation organized in accordance considering the dissolution of the corporation happened in 1927

4
 XVI. Dissolution
with the laws of the PH
○ For the promotion of the filing industry or business for a period of
twenty years.
● Corporation was already in operation when, on petition of various
stockholders thereof, an investigation into its financial condition was made
by the provincial auditor in which it was discovered that Eugenio Valencia,
manager of the corporation, had withdraw the amount of P600 from the
remaining assets of the corporation.
CFI PROCEEDINGS/DISSOLUTION
● A petition was filed for the voluntary dissolution of the corporation
● After the requirements prescribed by law had been complied with → the
court approved the voluntary dissolution in an order
○ Ordering the liquidation of the properties of the corporation and
appointing Damaso P. Nicolas assignee to take charge of sue
liquidation.
MEAT OF THE CASE
● In compliance with his duty as such assignee, Nicolas went on December 7 and
13, 1928 to the house of Eugenio Valencia and demanded of the latter the
payment of the amount of P600 belonging the corporation.
○ As he did not have any money, Valencia then promised to deliver the
amount on a certain day.
○ Upon being asked again to pay the amount, Valencia delivered to the
assignee, Nicolas, the sum of P200, leaving a balance of P400.
● Nicolas, who had resigned from the office of assignee, was substituted by the
appellant Tiburcio Sumera, who filed a motion with the court asking that
Valencia be ordered to deliver to him the P400 belonging to the funds of the
corporation.
● CFI: Denied said motion, reserving, however, to said assignee the right to bring
the proper action.
● Then, Sumera, in his capacity as assignee of the corporation, filed a complaint
(the present case) against Valencia for the recovery of the money Valencia
allegedly owned and the sum of P100 as indemnity.
○ Alleged that Valencia admitted having withdrawn P600 from the
funds of the corporation
● Valencia, answering the complaint
○ denied each and every fact alleged therein, and,
DE VERA. INTIA
HELD: NO.
● If the corporation carries out the liquidation of its assets through its own
officers and continues and defends the actions brought by or against it, its
existence shall terminate at the end of three years from the time of
dissolution; but if a receiver or assignee is appointed, as has been done in the
present case, with or without a transfer of its properties within three years,
the legal interest passes to the assignee, the beneficial interest remaining in
the members, stockholders, creditors and other interested persons; and said
assignee may bring an action, prosecute that which has already been
commenced for the benefit of the corporation, or defend the latter against
any other action already instituted or which may be instituted even outside of
the period of three years fixed for the offices of the corporation.
● When a corporation is dissolved and the liquidation of its assets is placed in
the hands of a receiver or assignee, the period of three years prescribed by
section 77 of Act No. 1459 known as the Corporation Law is not applicable,
and the assignee may institute all actions leading to the liquidation of the
assets of the corporation even after the expiration of three years.
---
● Justice Fisher, The Philippine Law of Stock Corporations, says the following:
● It is to be noted that the time during which the corporation, through its
own officers, may conduct the liquidation of its assets and sue and be
sued as a corporation is limited to three years from the time the period of
dissolution commences; but that there is no time limited within which
the trustees must complete a liquidation placed in their hands.
● It is provided only (Corp. Law, sec. 78) that the conveyance to
the trustees must be made within the three-year period.
● It may be found impossible to complete the work of liquidation
within the three-year period or to reduce disputed claims to
judgment.
● The authorities are to the effect that suits by or against a
corporation abate when the ceases to be an entity capable of
suing or being sued; but trustees to whom the corporate assets
have been conveyed pursuant to the authority of section 78 may
sue and be sued as such in all matters connected with the
liquidation.
● By the terms of the statute the effect of the conveyance is to
5
 XVI. Dissolution
○ special defense: alleged that if he has ever had any obligation with
the corporation, said obligation has already been fully
paidcounterclaim, prayed that he be paid the sum of P200 by way of
damages.
BEFORE , the parties submitted to the court the following stipulation of facts:
● Valencia admits the genuineness and due execution of the document (Exhibit
X) from which the complaint was based;
● Valencia likewise admits that he paid on account of the P600 mentioned in
Exhibit X the amount of P200 to Nicolas;
● The remaining sum of P400 has not been paid to date to the assignee of the
corporation in spite of the fact that he had been repeatedly asked to do so by
Sumera.
● The parties agreed that the only question on which the parties will adduce
evidence is whether or not defendant really invested the amount of P400
which he owes the corporation in fixing one of its fish ponds.
● They agreed that they will also present evidence on whether or not plaintiff's
action has already prescribed.
TC DECISION
● Valencia should pay the remaining P400 but also ruled that the action has
already prescribed by virtue of section 77 of Act No. 1459, the action should
have been brought within the three years following dissolution.
Gelano vs. CA L
Republic vs. Marsman Development
Marsman Devt. Corp was a timber license holder with concessions in Camarines
Norte.
Investigations led to the discovery that certain taxes were due upon the Corporation.
● BIR assessed MDC 3 times for unpaid taxes.
● The assessments were acknowledged by Atty. Moya with demands for
specification and request for exemptions
● Defendants admit having received the final tax notices as shown by
corporation letters.
DE VERA. INTIA
make the trustees the legal owners of the property conveyed,
subject to the beneficial interest therein of creditors and
stockholders.
● Fletcher, in volume 8, page 9226, of his Encyclopedia of Private Corporations,
says:
● Effect of expiration of statutory extension of life. — In general. — The
qualified existence after dissolution, as provided for by statute,
terminates at the expiration of the time fixed, or, no time is fixed, at the
expiration of a reasonable time.
● Where the extreme limit to which the statute has extended the
life of a corporation after its dissolution has expired, it has no
offices which can bind it by agreement, but only has statutory
trustees.
● After the expiration of such time, it is generally held not only
that the corporation cannot sue or be sued but that actions
pending at such time are abated.
● But a statute authorizing the continuance of a corporation for
three years to wind up its affairs, does not preclude an action to
wind up brought after the three years.
ISSUE: WON ACTION CAN PROCEED AGAINST THE LIQUIDATOR WHO HAS NOT
LIQUIDATED THE ASSETS OF THE CORPORATION AFTER THE PROVISIONAL 3 YEAR
PERIOD --- YES
● While section 77 of the Corporation Law provides for a three-year period for
the continuation of the corporate existence of the corporation for purposes of
liquidation, there is nothing in said provision which bars an action for the
recovery of the debts of the corporation against the liquidator thereof, after
the lapse of the said three-year period.
● The stress given by appellants to the extinction of the corporate and juridical
personality as such of MDC by virtue of its extra-judicial dissolution which
6
 XVI. Dissolution
MDC protested the assessment of P45,541.66 and reiterated its request for
specification of the items disputing the assessment in question.
Finding no merit in the protests of the defendant corporation, the BIR issued a
warrant of distraint and levy against MDC
● This was again acknoweldged in writing by MDC with reiteration of its request
for a specification of the different items of the assessment, subject to the right
to contest the legality and validity of the same within 30 days after receipt of
said specifications.
The next communication is a demand from the CIR to MDC of the assessment of
P45,541.66 which has remained unpaid.
● Informed MDC that if they do not settle said tax obligation within five days
from receipt thereof, the BIR will be constrained to file an action in Court for
the collection thereof without further notice.
● To which MDC replied that it needed more time to go over the records and
vouchers, and requesting for an extension of 10 days plus reiterated its
previous request.
(Note: We could probably get away with reciting the facts more or less this way: MDC
is a timber license holder corporation … it had deficiencies with the BIR … because of
its non-compliance and with a prior warning from the BIR, the BIR proceeded to have
it extrajudicially dissolved.)
Basically, MDC ENDED UP GETTING JUDICIALLY DISSOLVED
● Burgess was appointed liquidator of the Marsman
● Although it was shown that MDC did indeed get extrajudicially dissolved, there
is no claim that the affairs of said corporation had already been finally
liquidated or settled.
● An amended complaint was instituted to include Burgess as a party in interest
in the case.
DE VERA. INTIA
admittedly took place on April 23, 1954 is misdirected.
● While Section 77 of the Corporation Law does provide that:
Every corporation whose charter expires by its own limitation or is annulled by
forfeiture or otherwise, or whose corporate existence for other purposes is
terminated in any other manner, shall nevertheless be continued as a body
corporate for three years after the time when it would have been so dissolved,
for the purpose of prosecuting and defending suits by or against it and of
enabling it gradually to settle and close its affairs, to dispose of and convey its
property and to divide its capital stock, but not for the purpose of continuing
the business for which it was established.
the next provision, Section 78, adds for clarification:
At any time during said three years said corporation is authorized and
empowered to convey all of its property to trustees for the benefit of
members, stock-holders, creditors, and others interested. From and after any
such conveyance by the corporation of its property in trust for the benefit of its
members, stockholders, creditors, and others in interest, all interest which the
corporation had in the property terminates, the legal interest vests in the
trustee, and the beneficial interest in the members, stockholders, creditors, or
other persons in interest.
● 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 the first was before its dissolution and the last two not later
than six months after such dissolution.
o Thus, in whatever way the matter may be viewed, the
Government became the creditor of the corporation before the
completion of its dissolution by the liquidation of its assets.
o Appellant F.H. Burgess, whom it chose as liquidator, became in
law the trustee of all its assets for the benefit of all persons
enumerated in Section 78, including its creditors, among whom
is the Government, for the taxes herein involved.
● To assume otherwise would render the extra-judicial dissolution illegal and
void, since, according to Section 62 of the Corporation Law, such kind of
7
 XVI. Dissolution
Reyes vs. Blouse L
Edward vs. Nell Pacific Farms
● Edward J. Nell Company secured in a Civil Case in MTC-Manila a judgment of
P1,853.80 representing the unpaid balance of the price of a pump sold by
appellant to Insular Farm.
● After judgment had become final, a writ of execution was issued but returned
unsatisfied, stating that Insular Farms had no leviable property.
● Nov. 13, 1959: Appellant filed the present action with MTC-Manila against
Pacific Farms for collection of judgment against Insular, upon the theory that
Pacific Farms is the former’s alter ego.
○ Pacific Farms, Inc. denied.
MTC, RTC & CA JUDGMENT
MTC dismissed appellant's complaint.
● Appellant appealed to CFI, and subsequently to CA. à Both dismissed.
Record shows that Pacific Farms purchased 1,000 shares of stock of Insular Farms for
DE VERA. INTIA
dissolution is permitted only when it "does not affect the rights of any creditor
having a claim against the corporation.”
● 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.
● As to the allegation that appellant Burgess has not in fact received any
property or asset of the corporation, that is a matter that can well be taken
care of in the execution of the judgment which may be rendered herein, albeit
it seems some kind of fraud would be perceptible, if the corporation had been
dissolved without leaving any assets whatsoever with the liquidator.
--- MDC LOST
ISSUE: WON Pacific Farms is an alter ego of Insular Farms; thus, it can be liable for
said unpaid obligation of the Insular Farms. – NO.
SC agrees with CA that the facts do not prove that Pacific Farms is an alter ego of
Insular Farms, or is liable for its debts. The rule is set forth in Fletcher Cyclopedia
Corporations
FLETCHER CYCLOPEDIA CORPORATIONS
General Rule: Where one corporation sells or otherwise transfers all of its assets to
another corporation, the latter is not liable for the debts and liabilities of the
transferor.
Exception:
(1) where purchaser expressly or impliedly agrees to assume such debts;
(2) where transaction amounts to a consolidation or merger of corporations;
(3) where purchasing corporation is merely a continuation of selling corporation;
8
 XVI. Dissolution
P285,126.99
● Thereupon, Pacific Farms sold said shares of stock to certain individuals, who
forthwith reorganized said corporation
● BOD thereof, as reorganized, then caused its assets, including its leasehold
rights over a public land in Bolinao, Pangasinan, to be sold to herein appellee
for P10,000.00.
PETITIONER’S CONTENTION
Complaint was anchored upon the theory that Pacific Farms is an alter ego of Insular
Farms, for the reason that Pacific Farms had purchased the ff.:
● all or substantially all of the shares of stock,
● real and personal properties of the Insular Farms, including the pumping
equipment sold by Edward J. Nell Company to Insular Farms.
DE VERA. INTIA
(4) where transaction is entered into fraudulently to escape liability for such
debts.
IN THE CASE, there shows neither proof nor allegation of the ff.:
● That Pacific Farms had expressly or impliedly agreed to assume the debt of
Insular Farms in favor of The Edward J. Nell Company
● That the Pacific Farms is a continuation of lnsular Farms,
● That the sale of either the shares of stock or the assets of Insular Farms to
Pacific Farms has been entered into fraudulently, in order to escape liability
for the debt of the InsuIar Farms in favor of appellants.
SALE (March) → FILING (May) → JUDGMENT (October)
SC noted that sales took place some time in March 1958, which is not only over 6
months before rendition of judgment sought to be collected, but also, over a month
before filing of the case (May 29, 1958) in which said judgment was rendered.
Moreover, Pacific Farms purchased the shares of Insular Farms as the highest bidder at
an auction sale held at the instance of a bank to which said shares had been as security
for an obligation of Insular Farms.
· It has also been established that Pacific Farms had paid P285,126.99 for
said shares, apart from P10,000 it paid for other assets of Insular Farms.
MERGER OF 2 CORPORATIONS
Appellant's claim that the transactions between the 2 corporations have resulted in
their consolidation or merger is negated by its theory to the effect that one of the said
corporations is an alter ego of the other. For, a corporation cannot be its own alter ego
--- NEIL LOST