Case Digest (G.R. No. 156819) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In G.R. No. 156819, decided on December 11, 2003 under the 1987 Constitution, petitioners Alicia E. Gala, Guia G. Domingo and Rita G. Benson challenged decisions of the Securities and Exchange Commission (SEC) and the Court of Appeals involving two family-controlled corporations, Ellice Agro-Industrial Corporation (Ellice) and Margo Management and Development Corporation (Margo). On March 28, 1979, spouses Manuel and Alicia Gala, their children (Guia, Ofelia, Raul, and Rita) and two encargados formed Ellice with a total capital of ₱3.5 million. Over the years, multiple share subscriptions and transfers among the Gala spouses, their children and Margo shareholders altered ownership, leading to Margo’s acquisition of 24,312.5 shares in Ellice by 1988. In June and August 1990, special stockholders’ meetings reorganized both corporations, electing Raul Gala as chairman, president and general manager. On March 27, 1990, respondents filed SEC Case No. 3747 to appoint a management comm Case Digest (G.R. No. 156819) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Formation of Ellice Agro-Industrial Corporation
- On March 28, 1979, spouses Manuel and Alicia Gala, their children (Guia Domingo, Ofelia Gala, Raul Gala, Rita Benson) and their encargados (Virgilio Galeon, Julian Jader) organized Ellice Agro-Industrial Corporation with an authorized capital of ₱3,500,000 (35,000 shares).
- Payment of subscriptions was made by transferring parcels of land in Quezon and Laguna. In 1982, Manuel, Alicia, and Ofelia Gala subscribed to additional shares.
- Formation of Margo Management and Development Corporation
- On September 16, 1982, Guia Domingo, Ofelia Gala, Raul Gala, Virgilio Galeon, and Julian Jader formed Margo with a capital stock of ₱200,000 (20,000 shares).
- Between November 1982 and July 1988, Manuel and Alicia Gala transferred large blocks of their Ellice shares to Margo and to their children, altering the ownership structure.
- Shareholdings as of commencement
- By the time of suit, Ellice had 50,000 issued shares (₱5,000,000), held by Margo (24,312.5 shares), Alicia Gala (21,480.2), Raul Gala (2,704.5), Ofelia Gala (980.8), Guia Domingo (516), and minor shareholders.
- Margo’s board elected new officers on June 23, 1990 (with Raul Gala as president) and approved actions to annul certain property dispositions; Ellice’s board reorganized similarly on August 24, 1990.
- SEC proceedings and consolidation
- Respondents filed SEC Case No. 3747 (mismanagement, receiver, dissolution); petitioners filed SEC Case No. 4027 (nullification of elections and resolutions, return of titles and records).
- The two cases were consolidated on November 23, 1993. On November 3, 1998, the SEC Hearing Officer dismissed 3747 and granted relief in 4027; on July 4, 2002, the SEC En Banc reversed, granting respondents relief in 3747 and dismissing 4027.
- Appeals below and SC petition
- Petitioners sought relief in the Court of Appeals; on November 8, 2002 and December 27, 2002 it affirmed the SEC En Banc decision.
- Petitioners filed a Rule 45 petition before the Supreme Court raising issues of corporate purpose, procedural speed, deprivation of legitime, and piercing the corporate veil.
Issues:
- Whether the CA erred in not declaring illegal and against public policy the purposes and manner of organization of Ellice and Margo (to avoid CARP coverage and for estate planning).
- Whether the CA erred in disposing of the case within two days of respondents’ comment and in merely adopting the SEC’s factual findings without analysis.
- Whether the CA erred in ruling that the organization of Ellice and Margo did not deprive petitioners Rita Benson and Guia Domingo of their legitime.
- Whether the CA erred in refusing to pierce the corporate veils of Ellice and Margo.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)