Azuelo, Josiebeth B. Corporation Law
JD II March 12, 2018 Att. Att. Jose !io"il Montebon
FACTS:
ABC, Inc. owns a pri#e parcel o$ lan" in Calin"a%an. D&' approaches it an" proposes a (oint )enture to "e)elop a planne" co##unit o$ con"o#iniu#s, #alls, an" ser)ice centers. *n"er the ter#s o$ the (oint )enture, ABC+s eposure shall onl be li#i li#ite te" " to its its cont contri ribut butio ion n o$ the the lan" lan".. D&' D&', on the the othe otherr han" han",, shal shalll $inan $inance ce the the "e)elop#ent "e)elop#ent eclusi)el eclusi)el $ro# its own resources, resources, without utilizin% utilizin% the lan" as collateral collateral $or a loan. -o pursue the (oint )enture, the parties or%anize a new corporation, Montecillo Ar#s De)elop#ent Corporation., with ABC hol"in% 0/ an" D&' ownin% 0/ o$ the euit. euit. oon a$ter the (oint )enture co#pan is $or#e", $or#e", D&' reuires ABC ABC to assi%n assi%n its lan" to the (oint )enture co#pan. ABC is reluctant at $irst, because it woul" li3e D&' to $irst put in a substantial portion o$ capital $or the pro(ect as a counterpart. 4owe)er, D&' is )er persuasi)e, persuasi)e, an" ABC assi%ns assi%ns the propert. propert. Because Because o$ the assi%n#ent assi%n#ent,, howe)er, howe)er, ABC acuires control o$ the (oint )enture co#pan pursuant to the ta5$ree pro)ision in the Internal !e)enue Co"e which reuires that the owner o$ an asset echan%e" $or euit #ust retain at least #a(orit control o$ the corporation to which the propert has been trans$erre". In the #eanti#e, D&' has not put in its capital, althou%h it has succee"e" in intere interest stin% in% a $ew in)est in)estors ors to acuire acuire shares shares $ro# $ro# the (oint (oint )enture )enture co#pan co#pan.. -he procee"s o$ o $ these sales ha)e been "eposite" in the (oint )enture co#pan+ ban3 account. A$ter #ore than a ear, D&' still has not intro"uce" i#pro)e#ents on the propert. ABC then ousts the D&' representati)es in the (oint )enture Boar" an" ta3es control o$ the co#pan. D&', D&', howe)er, re$uses to surren"er the co#pan+s ban account. ISSUE:
6ill rescission o$ the (oint )enture a%ree#ent prosper7 6hat conseuences will it ha)e on all parties, inclu"in% D&'+s D&'+s in)estors to the (oint )enture co#pan7
DISCUSSION: DISCUSSION:
o, rescission is not the proper re#e" since this case in)ol)es corporate (oint )enture. -he upre#e Court in -uason )s. Bolanos state" that, 9while a corporation has no power to enter into a partnership partnership,, it can )ali"l )ali"l enter into a Joint :enture :enture a%ree#ent a%ree#ent where the nature o$ that )enture is in line with the business authorise" b its charter.9 -here is no ;hilippine law that epressl reco%nizes or %o)erns the $or#ation o$ (oint )entures )entures howe)er, howe)er, the eistence o$ which has been reco%nize" b se)eral se)eral (urispru"enc (urispru"encee alrea" alrea". -here are two tpes5 the contractual contractual (oint )enture an" corporate corporate (oint )enture, )enture, are treate" b ;hilippine ta law as corporate tapaers $or purposes o$ corporate inco#e ta.
Corporate Joint :entures are un"erta3en b the $or#ation o$ a new "o#estic corporation that #ust be license" b the &C..-he $or#ation there$ore is %o)erne" b the Corporation Co"e. -he ecurities an" &chan%e Co##ission <&C= licences an" re%ulates corporate (oint )entures an" are create" li3e an or"inar "o#estic corporation. -here eist a corporate (oint )enture in the case at bar as when ABC, Inc. an" D&' a%ree" to $or# one an" subseuentl $or#e" the Montecillo Ar#s De)elop#ent Corporation pursuant to a (oint )enture a%ree#ent. -he pro)isions in the Corporation Co"e appl, hence, the proper re#e" woul" be "issolution an" not rescission. -he upre#e Court in the case o$ ;ri#elin3 ;roperties an" De)elop#ent Corporation ). Lazatin5Ma%at sai" that 9when the !-C rescin"e" the J:A on co#plaint o$ respon"ents base" on the e)i"ence on recor" that petitioners will$ull an" persistentl co##itte" a breach o$ the J:A, the court thereb "issol)e">cancelle" the partnership.9 'urther#ore, in ancho ). Lizarra%a, the C rule" that owin% to the "e$en"ant+s $ailure to pa to the partnership the whole a#ount which he boun" hi#sel$ to pa, he beca#e in"ebte" to the partnership $or the re#ain"er, with interest an" an "a#a%es occasione" thereb, but the plaintiff did not thereby acquire the right to demand rescission of the partnership contract according to article 1124 of the Code. Article 1124 cannot be applied to the case in question, because it refers to the resolution of obligations in general, whereas articles 1681 and 1682 specifically refer to the contract of partnership in particular. And it is a well nown principle that special pro!isions pre!ail o!er general pro!isions.
In a corporate (oint )enture, "issolution #a be e$$ecte" b the a$$ir#ati)e )ote o$ the stoc3hol"ers ownin% at least two5thir"s o$ the outstan"in% capital stoc3. 4owe)er, it is noteworth that in the case at bar, that it is not clear whether there were reall in)estors en%a%e" in the corporate (oint )enture because the $acts onl state" that D&' succee"e" in interestin% se)eral in)estors. Assu#in% that there were in"ee" in)estors an" transactions alrea" ensue", then ection 11? o$ the Corporation Co"e #ust be $ollowe" on the pro)ision o$ )oluntar "issolution where cre"itors are a$$ecte". -he pro)ision states that, @a petition $or "issolution shall be $ile" with the ecurities an" &chan%e Co##ission. -he petition shall be si%ne" b a #a(orit o$ its boar" o$ "irectors or trustees or other o$$icers ha)in% the #ana%e#ent o$ its a$$airs, )eri$ie" b its presi"ent or secretar or one o$ its "irectors or trustees, an" shall set $orth all clai#s an" "e#an"s a%ainst it, an" that its "issolution was resol)e" upon b the a$$ir#ati)e )ote o$ the stoc3hol"ers representin% at least two5thir"s <2>= o$ the outstan"in% cap ital stoc3 or b at least two5thir"s <2>= o$ the #e#bers at a #eetin% o$ its stoc3hol"ers or #e#bers calle" $or that purpose. A "issol)e" corporation continues its corporate eistence but #a not carr on an acti)ities ecept those appropriate to win" up an" liui"ate its a$$airs. rantin% that there are in)estors in this case, an" assu#in% that there were alrea" transactions per$or#e" un"er the na#e o$ the corporation, liabilities to the in)estors or cre"itors #ust be pai" usin% corporate assets. D&'s re$usal to surren"er the corporate ban3 boo3 #a be re#e"ie" b petition b #an"a#us, e$$ecti)el or"erin% D&' to surren"er the sa#e. -he
ban3 account belon%s to the corporation create", not to D&', nor to ABC. In a""ition, the court #a also or"er, b ABCs proper petition in court, that D&' shall pa the its liabilit to the corporation. D&' boun" itsel$ to $inance the "e)elop#ent o$ the (oint )enture eclusi)el $ro# its own resources when the parties or%anize" Montecillo Ar#s De)elop#ent Corporation., with ABC hol"in% 0/ an" D&' ownin% 0/ o$ the euit. 6ith D&'+s $ailure to co#pl with its pro#ise" obli%ation, the rule on euit reuires D&' to pa what he owes in the Montecillo Ar#s De)elop#ent Corporation, which, in the $irst place, was create" because o$ its own in"uce#ent. -hus, D&' will ha)e to pa what he has to pa in or"er to co#plete the corporations asset an" pa the cre"itors. A$ter the win"in% up, the Montecillo Ar#s De)elop#ent Corporation ceases to eist.
REFERENCE:
-Joint )entures in the ;hilippines o)er)iew b ;err L. ;e an" An"rea Antonette A. ese5!elucio, !o#ulo Mabanta Buena)entura aoc E "e los An%eles https>>u3.practicallaw.tho#sonreuters.co#>w50115F8G27 transition-peHDe$aultEcontetDataH
--uason )s. Bolanos, .!. o. L5?G, 28 Ma 1?G -;ri#elin3 ). Lazatin5Ma%at, .!. o. 1F?, June 2, 200F -ancho ). Lizarra%a, .!.o. L5G80 'ebruar F, 1?1
