233 Chung Ka vs.

IAC
FACTS
Philippine Blooming Mills Company’s (PBM) corporate
life has expired. BOD assigned all receivables,
properties, obligations and liabilities in favor of
petitioner, as treasurer of the new PBM.
This was not prohibited by the Corporation Act. In fact,
it was expressly allowed by Section 28-1/2. What the
Court finds especially intriguing in this case is the fact
that although the deed of assignment was executed in
1977, it was only in 1981 that it occurred to the
petitioners to question its validity.

Petitioners, all stockholders of the old PBM, filed with
the SEC a petition for liquidation (but not dissolution) of
both old and new PBM.
SEC dismissed several cases for lack of cause of
action and on ground of lack of jurisdiction. IAC
affirmed. Hence, this petition. The petitioners contend
the following, among others:
a. The BOD of an already dissolved corporation
does not have the inherent power, without the
express consent (2/3 vote) of the
stockholders, to convey all its assets to a new
corporation; no stockholder meeting was
conducted for such purpose
b. The new corporation is accountable for the
said assets to the stockholders of the
dissolved corporation who had not consented
to the conveyance of the same to the new
corporation.
Barred by laches
Four years had elapsed before the petitioners filed their
action for liquidation, and during such period, new PBM
was in full operation. Thus, petitioners are barred by
laches.
Laches is the failure or neglect, for an unreasonable
and unexplained length of time, to do that which, by
exercising due diligence, could or should have been
done earlier. It is negligence or omission to assert a
right within a reasonable time, warranting a
presumption that the party entitled to assert it either
has abandoned or declined to assert it. Unlike the
statute of limitation, laches does not involve mere lapse
or passage of time but is principally an impediment to
the assertion or enforcement of a right, which has
become under the circumstances inequitable or unfair
to permit.
Appealed decision is affirmed.

ISSUES
1. Whether consent was given by the
stockholders to the conveyance all assets to
the corporation
2. Whether the transfer to the new PBM of the
corporate assets of the old PBM is valid

HELD
1. No? But action has prescribed.
2. Yes.

The regularity of performance of duty by respondent is

presumed. Otherwise, the new PBM would not have
been issued a certificate of incorporation, which should
also be presumed to have been done regularly. It must
also be noted that under Section 28-1/2, any
stockholder who did not vote to authorize the action of
the board of directors may, within forty days, demand
payment and file their written objection.”

While we agree that the BOD is not normally permitted

to undertake any activity outside of the usual liquidation
of the business of the dissolved corporation, there is
nothing to prevent the stockholders from conveying
their respective shareholdings toward the creation of a
new corporation to continue the business of the old.
Winding up is the sole activity of a dissolved
corporation that does not intend to incorporate anew. If
it does, however, it is not unlawful for the old BOD to
negotiate and transfer the assets of the dissolved
corporation to the new corporation intended to be
created as long as the stockholders have given their
consent.