Scribd Logo
Upload

Welcome to Scribd!

  • 290 views

    The Edward Nell Company vs. Pacific Farms, INC.

    Uploaded by

    Aphr
    The Supreme Court affirmed the lower court's decision to dismiss a complaint filed by The Edward J. Nell Company against Pacific Farms. The Edward J. Nell Company had obtained a judgment against Insular Farms for an unpaid pump purchase. When Insular Farms did not pay, The Edward J. Nell Company sued Pacific Farms, claiming it was the alter ego of Insular Farms since it had purchased Insular Farms' assets. However, the Supreme Court found no evidence that Pacific Farms had expressly or impliedly agreed to assume Insular Farms' debts, that the transaction was a consolidation or merger, or that the transaction was fraudulent. The sales occurred before the initial judgment and at a

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    The Edward Nell Company vs. Pacific Farms, INC.

    Uploaded by

    Aphr
    290 views2 pages
    The Supreme Court affirmed the lower court's decision to dismiss a complaint filed by The Edward J. Nell Company against Pacific Farms. The Edward J. Nell Company had obtained a judgment against Insular Farms for an unpaid pump purchase. When Insular Farms did not pay, The Edward J. Nell Company sued Pacific Farms, claiming it was the alter ego of Insular Farms since it had purchased Insular Farms' assets. However, the Supreme Court found no evidence that Pacific Farms had expressly or impliedly agreed to assume Insular Farms' debts, that the transaction was a consolidation or merger, or that the transaction was fraudulent. The sales occurred before the initial judgment and at a

    Original Title

    10. The Edward Nell Company vs. Pacific Farms, INC.

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The Supreme Court affirmed the lower court's decision to dismiss a complaint filed by The Edward J. Nell Company against Pacific Farms. The Edward J. Nell Company had obtained a judgment against Insular Farms for an unpaid pump purchase. When Insular Farms did not pay, The Edward J. Nell Company sued Pacific Farms, claiming it was the alter ego of Insular Farms since it had purchased Insular Farms' assets. However, the Supreme Court found no evidence that Pacific Farms had expressly or impliedly agreed to assume Insular Farms' debts, that the transaction was a consolidation or merger, or that the transaction was fraudulent. The sales occurred before the initial judgment and at a

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    290 views2 pages

    The Edward Nell Company vs. Pacific Farms, INC.

    Uploaded by

    Aphr
    The Supreme Court affirmed the lower court's decision to dismiss a complaint filed by The Edward J. Nell Company against Pacific Farms. The Edward J. Nell Company had obtained a judgment against Insular Farms for an unpaid pump purchase. When Insular Farms did not pay, The Edward J. Nell Company sued Pacific Farms, claiming it was the alter ego of Insular Farms since it had purchased Insular Farms' assets. However, the Supreme Court found no evidence that Pacific Farms had expressly or impliedly agreed to assume Insular Farms' debts, that the transaction was a consolidation or merger, or that the transaction was fraudulent. The sales occurred before the initial judgment and at a

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    THE EDWARD J. NELL COMPANY vs.

    PACIFIC FARMS

    GR No. L-20850 | November 29, 1965

    Conception, J.

    Doctrine
    Generally 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, except: (1) where the purchaser expressly or impliedly agrees to
    assume such debts; (2) where the transaction amounts to a consolidation or merger of the corporations; (3) where the
    purchasing corporation is merely a continuation of the selling corporation; and (4) where the transaction is entered into
    fraudulently in order to escape liability for such debts. (Fletcher Cyclopedia Corporations, Vol. 15, Sec. 7122, pp.
    160-161)

    Facts of the Case

     Appellant secured in Civil Case No. 58579 of the Municipal Court of Manila against Insular Farms a
    judgment for the sum of P 1, 853.80, representing the unpaid balance of the price of a pump sold by appellant
    to IF, with interest and attorney’s fees.
     A writ of execution was issued after the judgment had become final, however it was returned saying that IF
    has no leviable property.
     Appellant then filed an action against Pacific Farm for the collection of the earlier judgment saying that PF is
    the alter ego of IF, because the former had purchased all or substantially all of the shares of stock, as well as
    the real and personal properties of the latter, including the pumping equipment sold by appellant to Insular
    Farms. The record shows that, on March 21, 1958, appellee purchased 1,000 shares of stock of Insular Farms
    for P285,126.99; that, thereupon, appellee sold said shares of stock to certain individuals, who forthwith
    reorganized said corporation; and that the board of directors 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.
     PF denied the allegations.

    MTC/RTC/CA Ruling
     MTC, RTC, and CA dismissed the complaint.
     CA ruled that the facts above do not prove that Pacific Farms is an alter ego of Insular Farms.
     Hence this appeal on certiorari.
    Issue/s:
    WON Pacific Farms is liable for said unpaid obligation of the Insular Farm.

    SC Ruling:

    NO. There is neither proof nor allegation that appellee had expressly or impliedly agreed to assume the debt
    of Insular Farms in favor of appellant herein, or that the appellee is a continuation of Insular Farms, or that
    the sale of either the shares of stock or the assets of Insular Farms to the appellee has been entered into
    fraudulently, in order to escape liability for the debt of the Insular Farms in favor of appellant herein.

    These sales took place not only over six (6) months before the rendition of the judgment sought to be
    collected in the present action, but, also, over a month before the filing of the case in which said judgment
    was rendered. Moreover, appellee purchased the shares of stock of Insular Farms as the highest bidder at an
    auction sale held at the instance of a bank to which said shares had been pledged as security for an
    obligation of Insular Farms in favor of said bank. It has, also, been established that the appellee had paid
    P285,126.99 for said shares of stock, apart from the sum of P10,000.00 it, likewise, paid for the other assets
    of Insular Farms.

    Neither is it claimed that these transactions have resulted in the consolidation or merger of the Insular Farms
    and appellee herein. On the contrary, appellant's theory to the effect that appellee is an alter ego of the
    Insular Farms negates such consolidation or merger, for a corporation cannot be its own alter ego.
    DECISION APPEALED WAS AFFIRMED.

    You might also like