September 2010 Philippine Supreme Court Decisions on Commercial Law

Here are selected September 2010 rulings of the Supreme Court of the Philippines on commercial law:

Corporation;  dissolution.  Under Section 122 of the Corporation Code, a dissolved corporation shall nevertheless continue as a body corporate for three (3) years for the purpose of prosecuting and defending suits by or against it and enabling it to settle and close its affairs, to dispose and convey its property and to distribute its assets, but not for the purpose of continuing the business for which it was established.  Within those three (3) years, the corporation may appoint a trustee or receiver who shall carry out the said purposes beyond the three (3)-year winding-up period.  Thus, a trustee of a dissolved corporation may commence a suit which can proceed to final judgment even beyond the three (3)-year period of liquidation.

In the same manner, during and beyond the three (3)-year winding-up period of RMC, the Board of Trustees of RMCPRF may do no more than settle and close the affairs of the Fund.  The Board retains its authority to act on behalf of its members, albeit,in a limited capacity.  It may commence suits on behalf of its members but not continue managing the Fund for purposes of maximizing profits.  Here, the Board’s act of issuing the Resolution authorizing petitioner to release the Fund to its beneficiaries is still part of the liquidation process, that is, satisfaction of the liabilities of the Plan, and does not amount to doing business.  Hence, it was properly within the Board’s power to promulgate.  Metropolitan Bank & trust Company, Inc. vs. The Board of Trustees of Riverside Mills Corp. Provident and Retirement Fund, et al., G.R. No. 176959, September 8, 2010.

Corporation; liability of officers and directors.  Doctrine dictates that a corporation is invested by law with a personality separate and distinct from those of the persons composing it, such that, save for certain exceptions, corporate officers who entered into contracts in behalf of the corporation cannot be held personally liable for the liabilities of the latter.  Personal liability of a corporate director, trustee, or officer, along (although not necessarily) with the corporation, may validly attach, as a rule, only when – (1)  he assents to a patently unlawful act of the corporation, or when he is guilty of bad faith or gross negligence in directing its affairs, or when there is a conflict of interest resulting in damages to the corporation, its stockholders, or other persons; (2)  he consents to the issuance of watered down stocks or who, having knowledge thereof, does not forthwith file with the corporate secretary his written objection thereto; (3) he agrees to hold himself personally and solidarily liable with the corporation; or (4) he is made by a specific provision of law personally answerable for his corporate action.  Queensland-Tokyo Commodities, Inc., et al. vs. Thomas George, G.R. No. 172727, September 8, 2010.

(Note:  This post will be updated after the other September 2010 cases become available.)