Case Digest (G.R. No. L-5377) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Maria Carla Pirovano et al. v. De la Rama Steamship Co., Inc. (96 Phil. 335, Dec. 29, 1954), the minor children of the late Enrico Pirovano, through their mother and guardian Estefania R. Pirovano, sued their father’s employer and beneficiary of life insurance policies—The De la Rama Steamship Co., Inc.—before the Court of First Instance of Rizal. They sought enforcement of Board of Directors’ and stockholders’ resolutions of July 10, 1946, January 6, 1947, June 24, 1947, and September 13, 1949, by which the Company renounced its claim to insurance proceeds of ₱583,813.59 and agreed to hold them as a 5% loan payable only after first settling or redeeming its bonded indebtedness to the National Development Company. Subsequent political and corporate maneuvers, including advice from the Securities and Exchange Commission and a March 8, 1951 stockholders’ resolution rescinding the earlier grant, led the children to demand payment. The trial court upheld the donation as valid, bi Case Digest (G.R. No. L-5377) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and corporate context
- Plaintiffs are the four minor children of the late Enrico Pirovano, represented by their mother and judicial guardian, Estefania R. Pirovano.
- Defendant is The De la Rama Steamship Co., Inc., a Philippine corporation with capital stock originally P500,000, later increased, controlled chiefly by the De la Rama family and with representation of the National Development Company.
- Insurance policies and corporate resolutions
- In early 1941 the company insured Pirovano’s life for ₱1,000,000. Policies with Filipino insurers lapsed during the war; American policies remained in force.
- July 10, 1946: Board of Directors and stockholders unanimously resolved to set aside ₱400,000 (4,000 shares at par) from proceeds for Pirovano’s four minor children.
- Late 1946: Family members, upon realizing the shares’ market value, sought to retract their pre-emptive waivers; BoD in turn adopted new form of benefit.
- January 6, 1947: BoD renounced all rights as beneficiary over insurance proceeds in favor of the children, to be retained by the company as a loan bearing 5% interest, payable only after settling its then bonded indebtedness (~₱5 million). National Development Company concurred.
- June 24, 1947: BoD amended that interest may be paid “whenever the company is in a position to meet said obligation.”
- February 26, 1948: Guardian formally accepted the donation; BoD took “official notice.”
- July 25 & September 5, 1949: BoD and guardian executed sale of a New Rochelle, New York house (cost US$75,000) to the children out of trust funds; court approved.
- September 13, 1949: Stockholders ratified the donation, clarifying (a) no payment until liquidation or redemption of outstanding preferred shares (~₱3.26 million) issued to National Development Company, and (b) deduction of taxes and expenses from proceeds.
- June 20, 1950: Securities & Exchange Commission opined the donation ultra vires; BoD considered alternatives but took no action.
- March 8, 1951: Majority stockholders passed a resolution revoking ratification of the January 6, 1947 donation resolution.
- Plaintiffs demanded payment (₱564,980.89 as of December 31, 1951) with interest; defendant refused, prompting this suit in the Court of First Instance of Rizal.
Issues:
- Nature of the grant
- Whether the corporate grant of insurance proceeds to the Pirovano children is a remunerative donation.
- Perfection and irrevocability
- Whether the donation was validly perfected and thus cannot be rescinded by defendant.
- Corporate power and ultra vires
- Whether the corporation had legal or charter authority to make such a donation, or whether it was ultra vires.
- Condition precedent
- Whether defendant’s subsequent conduct frustrated the condition precedent to payment, rendering the donation immediately demandable.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)