CORPORATION

 LAW  |  TINIMBANG  |  III.  

13.  HALL  v  PICCIO   ordered  in  a  quo  warranto  proceeding  instituted  in  
  accordance  with  section  19  of  the  Corporation  Law.  
DOCTRINE:      
PETITIONER:  C.  ARNOLD  HALL  AND  BRADLEY  HALL   (b)   Inasmuch   as   respondents   Fred   Brown   and   Emma  
RESPONDENTS:   EDMUNDO   S.   PICCIO,   FRED   AND   Brown  had  signed  the  article  of  incorporation  but  only  
EMMA  BROWN   a  partnership.  
   
FACTS:    
(1)   Petitioner   C.   Arnold   Hall   and   Bradley   P.   Hall,   and   ISSUE:   WON   had   jurisdiction   to   dissolve   the   de   facto  
the   respondents   Fred   Brown,   Emma   Brown,   signed   corporation?  [NO]  
and   acknowledged   in   Leyte,   the   article   of    
incorporation   of   the   Far   Eastern   Lumber   and    
Commercial   Co.,   Inc.,   organized   to   engage   in   a   COURT  RULING:  
general   lumber   business   to   carry   on   as   general    
contractors,  operators  and  managers,  etc.  Attached  to   Under   our   statue   it   is   to   be   noted   (Corporation   Law,  
the  article  was  an  affidavit  of  the  treasurer   stating   sec.   11)   that   it   is   the   issuance   of   a   certificate   of  
that   23,428   shares   of   stock   had   been   subscribed   and   incorporation   by   the   Director   of   the   Bureau   of  
fully   paid   with   certain   properties   transferred   to   the   Commerce  and  Industry  which  calls  a  corporation  into  
corporation  described  in  a  list  appended  thereto.   being.   The   immunity   if   collateral   attack   is   granted  
  to   corporations   "claiming   in   good   faith   to   be   a  
(2)  Immediately   after   the   execution  of  said  articles   corporation   under   this   act."   Unless   there   has   been  
of   incorporation,   the   corporation   proceeded   to   do   an  evident  attempt  to  comply  with  the  law  the  claim  to  
business   with   the   adoption   of   by-­‐laws   and   the   be   a   corporation   "under   this   act"   could   not   be   made  
election  of  its  officers.   "in  good  faith  
   
(3)   Said   articles   of   incorporation   were   filed   in   the   Section  19  reads  as  follows:  
office   of   the   Securities   and   Exchange   Commissioner,    
for   the   issuance   of   the   corresponding   certificate   of   “The   due   incorporation   of   any   corporations   claiming  
incorporation.   in  good  faith  to  be  a  corporation  under  this  Act  and  its  
  right   to   exercise   corporate   powers   shall   not   be  
(4)  Pending  action  on  the  articles  of  incorporation  by   inquired   into   collaterally   in   any   private   suit   to  
the   aforesaid   governmental   office,   the   respondents   which   the   corporation   may   be   a   party,   but   such  
filed   before   the   Court   of   First   Instance   of   Leyte   the   inquiry   may   be   had   at   the   suit   of   the   Insular  
civil  case  entitled  "Fred  Brown  et  al.  vs.  Arnold  C.  Hall   Government  on  information  of  the  Attorney-­‐General.”  
et   al.",   alleging   among   other   things   that   the   Far    
Eastern   Lumber   and   Commercial   Co.   was   an   There  are  least  two  reasons  why  this  section  does  not  
unregistered  partnership;  that  they  wished  to  have   govern  the  situation.    
it   dissolved   because   mismanagement   and   fraud   by   1.  Not  having  obtained  the  certificate  of  incorporation,  
the  managers  and  heavy  financial  losses.   the   Far   Eastern   Lumber   and   Commercial   Co.   —   even  
  its   stockholders   —   may   not   probably   claim   "in   good  
(5)   The   defendants   in   the   suit,   C.   Arnold   Hall   and   faith"  to  be  a  corporation.  
Bradley   P.   Hall,   filed  a  motion  to  dismiss,   contesting    
the  court's  jurisdiction     2.  This  is  not  a  suit  in  which  the  corporation  is  a  party.  
  This  is  a  litigation  between  stockholders  of  the  alleged  
(6)   Hon.  Edmund  S.  Piccio  ordered  the  dissolution   corporation,   for   the   purpose   of   obtaining   its  
of  the  company   dissolution.   Even   the   existence   of   a   de   jure  
  corporation   may   be   terminated   in   a   private   suit   for   its  
(7)   Whereupon,   the   present   special   civil   action   was   dissolution   between   stockholders,   without   the  
instituted   in   this   court.   It   is   based   upon   two   main   intervention  of  the  state.  
propositions,  to  wit:    
   
(a)   The   court   had   no   jurisdiction   to   decree   the  
dissolution   of   the   company,   because   it   being   a   de  
facto  corporation,  dissolution  thereof  may  only  be