Gg.docx

SY CHIM and FELICIDAD CHAN SY v SY SIY HO & SONS, INC.

Sometime in 2003, an intra-corporate dispute ensued between Sy Chim and his wife, on the one hand, and their son Sy Tiong Shiou, on the other. Mar 24, 2003, a special meeting of the BoD was held with the Sps Sy Tiong Shiou and Juanita Tan Sy and their sons Charlie, Romer and Jesse James Tan in attendance. In two separate resolutions, Juanita Tan Sy was removed as corporate treasurer and relieved of all responsibilities; the Sps Sy Chim were held accountable for the undeposited money.

WON the RTC committed GAD amounting to excess or lack of jurisdiction in (a) creating a management committee;

Held: Yes a and c but not b. (a) S1, R9 of the Interim Rules provides: SECTION 1. Creation of a management committee. As an incident to any of the cases filed under these Rules or the Interim Rules on Corporate Rehabilitation, a party may apply for the appointment of a management committee for the corporation, partnership or association, when there is imminent danger of: (1) Dissipation, loss, wastage or destruction of assets or other properties; and (2) Paralyzation of its business operations which may be prejudicial to the interest of the minority stockholders, parties-litigants or the general public. A reading of the aforecited legal provision reveals that for a minority stockholder to obtain the appointment of an interim management committee, he must do more than merely make a prima facie showing of a denial of his right to share in the concerns of the corporation; he must show that the corporate property is in danger of being wasted and destroyed; that the business of the corporation is being diverted from the purpose for which it has been organized; and that there is serious paralyzation of operations all to his detriment.

Pacific Rehouse Corporation v. Court of Appeals, G.R. No. 199687, March 24, 2014.

Facts: A complaint was instituted with the Makati City Regional Trial Court (RTC), Branch 66, against EIB Securities Inc. (E– Securities) for unauthorized sale of 32,180,000 DMCI shares of Pacific Rehouse Corporation, Pacific Concorde Corporation, Mizpah Holdings, Inc., Forum Holdings Corporation, and East Asia Oil Company, Inc. In its October 18, 2005 Resolution, the RTC rendered judgment on the pleadings, directing the E–Securities to return to the petitioners 32,180,000 DMCI shares, as of judicial demand. When the Writ of Execution was returned unsatisfied, petitioners moved for the issuance of an alias writ of execution to hold Export and Industry Bank, Inc. liable for the judgment obligation as E–Securities is “a wholly–owned controlled and dominated subsidiary of Export and Industry Bank, Inc., and is[,] thus[,] a mere alter ego and business conduit of the latter. E–Securities opposed the motion[,] arguing that it has a corporate personality that is separate and distinct from the respondent. Issue; Whether or not E-Securities is merely an alter ego of Export Bank so that “piercing the veil of corporate fiction” is proper. Held: NO. An alter ego exists where one corporation is so organized and controlled and its affairs are conducted so that it is, in fact, a mere instrumentality or adjunct of the other. The control necessary to invoke the alter ego doctrine is not majority or even complete stock control but such domination of finances, policies and practices that the controlled corporation has, so to speak, no separate mind, will or existence of its own, and is but a conduit for its principal. The Court has laid down a three–pronged control test to establish when the alter ego doctrine should be operative: Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; Such control must have been used by the defendant to commit fraud or wrong, to perpetuate the violation of a statutory or other positive legal duty, or dishonest and unjust act in contravention of plaintiff’s legal right; and The aforesaid control and breach of duty must [have] proximately caused the injury or unjust loss complained of. The absence of any one of these elements prevents ‘piercing the corporate veil’ in applying the ‘instrumentality’ or ‘alter ego’ doctrine, the courts are concerned with reality and not form, with how the corporation operated and the individual defendant’s relationship to that operation. Hence, all three elements should concur for the alter ego doctrine to be applicable.

Ramirez vs Orientalist Co. (1918)

Facts: Orientalist Company was engaged in the business of maintaining and conducting a theatre in the city of Manila for the exhibition of cinematographic films. engaged in the business of marketing films for a manufacturer or manufacturers, there engaged in the production or distribution of cinematographic material. In this enterprise the plaintiff was represented in the city of Manila by his son, Jose Ramirez. The directors of the Orientalist Company became apprised of the fact that the plaintiff in Paris had control of the agencies for two different marks of films, namely, the “Eclair Films” and the “Milano Films;” and negotiations were begun with said officials of the Orientalist Company by Jose Ramirez, as agent of the plaintiff. The defendant Ramon J. Fernandez, one of the directors of the Orientalist Company and also its treasure, was chiefly active in this matter. Ramon J. Fernandez had an informal conference with all the members of the company’s board of directors except one, and with approval of those with whom he had communicated, addressed a letter to Jose Ramirez, in Manila, accepting the offer contained in the memorandum the exclusive agency of the Eclair films and Milano films. In due time the films began to arrive in Manila, it appears that the Orientalist Company was without funds to meet these obligations. Action was instituted by the plaintiff to Orientalist Company, and Ramon J. Fernandez for sum of money. Issue: WON the Orientalist Co. is liable for the acts of its treasurer, Fernandez? Held: Yes. It will be observed that Ramon J. Fernandez was the particular officer and member of the board of directors who was most active in the effort to secure the films for the corporation. The negotiations were conducted by him with the knowledge and consent of other members of the board; and the contract was made with their prior approval. In the light of all the circumstances of the case, we are of the opinion that the contracts in question were thus inferentially approved by the company’s board of directors and that the company is bound unless the subsequent failure of the stockholders to approve said contracts had the effect of abrogating the liability thus created.