Facts:
Jacob
S. Lim was engaged in the airline business as owner- operator of Southern Air
Lines (SAL) a single proprietorship. Japan Domestic Airlines (JDA) and Lim
entered into and executed a sales contract for the sale and purchase of two (2)
DC-3A Type aircrafts and one (1) set of necessary spare parts for the total
agreed price of US $109,000.00 to be paid in installments. Pioneer Insurance
and Surety Corporation as surety executed and issued its Surety Bond No. 6639
in favor of JDA, in behalf of its principal, Lim, for the balance price of the
aircrafts and spare parts. It appears that Bormaheco, Cervanteses and Maglana contributed
some funds used in the purchase of the above aircrafts and spare parts. The
funds were supposed to be their contributions to a new corporation proposed by
Lim to expand his airline business. They executed two separate indemnity
agreements in favor of Pioneer. The indemnity agreements stipulated that the
indemnitors principally agree and bind themselves jointly and severally to
indemnify and hold and save harmless Pioneer from and against any/all damages,
losses, costs, damages, taxes, penalties, charges and expenses of whatever kind
and nature which Pioneer may incur in consequence of having become surety upon
the bond/note and to pay, reimburse and make good to Pioneer, its successors
and assigns, all sums and amounts of money which it or its representatives
should or may pay or cause to be paid or become liable to pay on them of
whatever kind and nature.
Lim
doing business under the name and style of SAL executed in favor of Pioneer as
deed of chattel mortgage as security for the latter’s suretyship in favor of
the former. It was stipulated therein that Lim transfer and convey to the
surety the two aircrafts. Pioneer then filed a petition for the extrajudicial
foreclosure of the said chattel mortgage before the Sheriff of Davao City. The
Cervanteses and Maglana, however, filed a third party claim alleging that they
are co-owners of the aircrafts.
Issue:
What
legal rules govern the relationship among co-investors whose agreement was to
do business through the corporate vehicle but who failed to incorporate the
entity in which they had chosen to invest? How are the losses to be treated in
situations where their contributions to the intended ‘corporation’ were
invested not through the corporate form?
Decision (Lim v. CA):
One
who takes no part except to subscribe for stock in a proposed corporation which
is never legally formed does not become a partner with other subscribers who
engage in business under the name of the pretended corporation, so as to be
liable as such in an action for settlement of the alleged partnership and
contribution. A partnership relation between certain stockholders and other
stockholders, who were also directors, will not be implied in the absence of an
agreement, so as to make the former liable to contribute for payment of debts
illegally contracted by the latter.
The
petitioner was declared non-suited for his failure to appear during the
pretrial despite notification. In his answer, the petitioner denied having
received any amount from respondents Bormaheco, the Cervanteses and Maglana.
The trial court and the appellate court, however, found that the petitioner received the amount of P151,000.00 representing the
participation of Bormaheco and Atty. Constancio B. Maglana in the ownership of
the subject airplanes and spare parts. The record shows that defendant Maglana
gave P75,000.00 to petitioner Jacob Lim thru the Cervanteses.
It
is therefore clear that the petitioner never had the intention to form a
corporation with the respondents despite his representations to them. This
gives credence to the cross-claims of the respondents to the effect that they
were induced and lured by the petitioner to make contributions to a proposed
corporation which was never formed because the petitioner reneged on their
agreement.
Contrary
to the agreement among the defendants, defendant Lim in connivance with the
plaintiff, signed and executed the alleged chattel mortgage and surety bond
agreement in his personal capacity as the alleged proprietor of the SAL. The
answering defendants learned for the first time of this trickery and
misrepresentation of the other, Jacob Lim, when the herein plaintiff chattel
mortgage (sic) allegedly executed by defendant Lim, thereby forcing them to
file an adverse claim in the form of third party claim. Notwithstanding
repeated oral demands made by defendants Bormaheco and Cervanteses, to
defendant Lim, to surrender the possession of the two planes and their
accessories and or return the amount advanced by the former amounting to an
aggregate sum of P 178,997.14 as evidenced by a statement of accounts, the
latter ignored, omitted and refused to comply with them.
No
de facto partnership was created among the parties which would entitle the
petitioner to a reimbursement of the supposed losses of the proposed
corporation. The record shows that the petitioner was acting on his own and not
in behalf of his other would-be incorporators in transacting the sale of the
airplanes and spare parts.
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