G.R. No. L-20850 November 29, 1965
Lessons Applicable: Types of Acquisitions / Transfers (Corporate Law)
FACTS:
- March 21, 1958: Pacific Farms Inc. (Pacific) purchased as highest bidder from a bank auction 1,000 shares of stock of Insular Farms for P285,126.99 and BOD of Insular as reorganized, then caused its assets, including its leasehold rights over a public land in Bolinao, Pangasinan, to be sold to Insular for P10,000.00 and paid for the other assets of Insular Farms.
- October 9, 1958: Edward J. Nell Co. (Edward) in Civil Case No. 58579 of the Municipal Court of Manila against Insular Farms, Inc. (Insular) a judgment for the sum of P1,853.80 unpaid balance for a pump sold with interest plus P125 attorney's fees and P84.00 as costs.
- August 14, 1959: A writ of execution, issued after the judgment had become final returned unsatisfied, stating that Insular Farms had no leviable property.
- November 13, 1959: Edward filed the present action against Pacific upon the theory that Pacific is the alter ego of Insular Farms
- CA affirmed Municipal Court: dismissed the complaint
ISSUE: W/N Pacific Farms is an alter ego of Insular Farms
HELD: NO. Appeal Affirmed
- GR: 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
- EX:
- where the purchaser expressly or impliedly agrees to assume such debts - no proof
- where the transaction amounts to a consolidation or merger of the corporations - not claimed
- where the purchasing corporation is merely a continuation of the selling corporation; - no proof
- where the transaction is entered into fraudulently in order to escape liability for such debts - no proof
- price paid was fair and reasonable