Case Digest (G.R. No. L-18805) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In The Board of Liquidators v. Heirs of Maximo M. Kalaw, G.R. No. L-18805, decided August 14, 1967, the government’s Board of Liquidators (substituted for the dissolved National Coconut Corporation or NACOCO) sued Maximo M. Kalaw (deceased), Juan Bocar, Casimiro Garcia (deceased) and Leonor Moll to recover ₱1,343,274.52 claimed to have been lost in copra trading contracts. NACOCO was chartered in 1940 to develop the coconut industry and, upon its 1946 amendment, empowered to buy and sell copra. General Manager and Chairman Kalaw unilaterally signed nine forward‐sale contracts between July and October 1947 for delivery through January 1948. Four typhoons that October–December devastated coconut production, impeded fulfillment and rendered the contracts unprofitable. NACOCO partially performed, paid several buyers by compromise, and settled with Louis Dreyfus for 70% of its claims. In February 1949 the government filed suit under the old Civil Code (Art. 1902) for Kalaw’s alleged Case Digest (G.R. No. L-18805) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Charter and Amendments
- The National Coconut Corporation (NACOCO) was created May 7, 1940 by Commonwealth Act No. 518 to protect, preserve and develop the Philippine coconut industry.
- On August 1, 1946, Republic Act No. 5 amended its charter, granting NACOCO authority “to buy, sell, barter, export, and in any other manner deal in coconut, copra, and dessicated coconut … and to act as agent, broker or commission merchant.”
- Management and Contracts
- Maximo M. Kalaw served as General Manager and Board Chairman; Juan Bocar and Casimiro Garcia were directors; Leonor Moll joined December 22, 1947.
- From July to October 1947, Kalaw executed numerous forward‐sale copra contracts totaling 16,500 long tons with buyers including Alexander Adamson (assigned to Louis Dreyfus), Pacific Vegetable Co., Spencer Kellogg & Sons, Franklin Baker, Juan Cojuangco (assigned), Fairwood & Co. (assigned), and others.
- Typhoons, Performance, and Settlements
- Four destructive typhoons (Oct–Dec 1947) damaged coconut trees, reduced copra output, destroyed warehouses, and delayed exports.
- NACOCO delivered 7,091.45 tons; failed 9,408.55 tons. Buyers threatened suits; some settled:
- Pacific Vegetable Co. – ₱539,000.00
- Franklin Baker – ₱78,210.00
- Spencer Kellogg – ₱159,040.00
- Louis Dreyfus sued for ₱810,035.03; amicably compromised at ₱567,024.52 (70%). Total settlements: ₱1,343,274.52.
- Procedural History
- February 1949: NACOCO (succeeded by Board of Liquidators under EO 372, Nov 24, 1950) sued Kalaw, Bocar, Garcia, Moll for ₱1,343,274.52, alleging negligence (Art. 1902 old CC) and bad faith/breach of trust.
- The trial court dismissed plaintiff’s complaint and counterclaims, awarded Kalaw’s heirs ₱2,601.94.
- Board of Liquidators appealed directly to the Supreme Court.
Issues:
- Corporate Capacity
- Does the Board of Liquidators retain legal personality and capacity to sue beyond the three‐year liquidation period prescribed in Executive Order 372?
- Survival of Action
- Does the action survive against deceased Kalaw’s heirs and Garcia’s estate, or must it be pursued in estate proceedings as a contractual claim?
- Authority to Contract and Ratification
- Did Kalaw have implied authority under corporate by‐laws to enter forward‐sale copra contracts without prior board approval?
- Does the board’s January 30, 1948 ratification cure any lack of prior approval?
- Liability for Losses
- Did the directors act in bad faith or breach trust when ratifying the contracts?
- Were the losses due to directors’ misconduct or to force majeure (typhoons), constituting damnum absque injuria?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)