1. The resolution approved by 92.5% of stockholders to consolidate the properties of two bus companies (LTB and BT) under a new third corporation does not constitute a legal merger, as the two original corporations will continue to exist.
2. The court found that the consolidation would not be prejudicial to LTB or its stockholders, deferring to the testimony of the founder of both companies who believed earnings would remain equal.
3. As a small minority, the dissenting stockholders are not entitled to an injunction to block the consolidation approved by the large majority, but instead their remedy is to formally object and demand payment for their shares.
1. The resolution approved by 92.5% of stockholders to consolidate the properties of two bus companies (LTB and BT) under a new third corporation does not constitute a legal merger, as the two original corporations will continue to exist.
2. The court found that the consolidation would not be prejudicial to LTB or its stockholders, deferring to the testimony of the founder of both companies who believed earnings would remain equal.
3. As a small minority, the dissenting stockholders are not entitled to an injunction to block the consolidation approved by the large majority, but instead their remedy is to formally object and demand payment for their shares.
1. The resolution approved by 92.5% of stockholders to consolidate the properties of two bus companies (LTB and BT) under a new third corporation does not constitute a legal merger, as the two original corporations will continue to exist.
2. The court found that the consolidation would not be prejudicial to LTB or its stockholders, deferring to the testimony of the founder of both companies who believed earnings would remain equal.
3. As a small minority, the dissenting stockholders are not entitled to an injunction to block the consolidation approved by the large majority, but instead their remedy is to formally object and demand payment for their shares.
properties, is tantamount to consolidation Doctrine: “A merger implies necessarily the or merger termination or cessation of the merged corporations 2. Assuming arguendo that it was tantamount and not merely a merger of their properties and to a consolidation or merger, whether the assets.” same is prejudicial to the corporation Facts: 3. Whether minority stockholders who dissented to a resolution allegedly Laguna Tayabas Bus Co. (LTB) and the Batangas consolidating the properties of two Transportation (BT). are prewar corporations corporations is entitled to judicial relief via organized in 1928 and 1918, respectively. injunction They ceased operating during World War II. Held: 1945 - they resumed operations, and pursuant to the 1. We are of the opinion that the transaction authority granted by the respective Board of called for therein cannot be considered, strictly Directors, the two companies were jointly operated speaking, as a merger or consolidation of the under a single management. two corporations because, a merger implies necessarily the termination or cessation of the In view of the success of this joint operation, it was merged corporations and not merely a merger strongly recommended that it be continued and of their properties and assets. made permanent. This situation does not here obtain. 1947 - For this purpose a meeting of the stockholders was called, and a resolution was The two corporations will not lose their corporate passed, to whereby: existence or personality, or at least the Laguna Tayabas Bus Co., but will continue to exist even after the Board of Directors is charged with the the consolidation. authority to take the necessary steps to consolidate the properties and franchises of the In other words, what is intended by the resolution is Laguna Tayabas Bus Co. with those of the merely a consolidation of properties and assets, to Batangas Transportation Co. under a new be managed and operated by a new corporation, corporation in return for stock of the new and not a merger of the corporations themselves. corporation, or by exchange of stock, and/or through such other means as may be deemed 2. No. After weighing the evidence, the lower court most advisable by the Board of Directors reached the conclusion that the merger would not be prejudicial or disadvantageous to the 92.5% of the stockholders of LTB present approved appellants or to the stockholders of the Laguna the resolution Tayabas Bus Co. Petitioners, the minority stockholders of LTB who On this point the court said: "The testimony of Max dissented the resolution, filed this injunction case to Blouse, who had founded both the Laguna Tayabas restrain its Board of Directors composed of the Bus Co. and the Batangas Transportation Co., should defendants from carrying out the resolution, be given considerable weight and credence not only contending that the alleged merger is prejudicial to because of the position which he enjoys in both the interests of LTB. companies, but also because of his long experience in the transportation business in this country. Applicable law: His .opinion, therefore, insofar as he states that the Section 28 Corporation law: a corporation may sell, earnings of both companies should be about equal, exchange, lease or otherwise dispose of all its in normal circumstances, is entitled to more weight property and assets, including its good will, upon and credit than that of the plaintiffs. such terms and conditions as Its Board of Directors may deem expedient when authorized by the 3. No. It is not fair to allow a small minority to affirmative vote of the shareholders holding at least undo or set at naught what they have done. 2/3 of the voting power The remedy of the appellants is to register their Issues: objection in writing and demand payment of their shares from the corporation as provided for in 1. Whether or not a resolution approved by section 281/2 of the corporation law 92.5% of stockholders, consolidating the properties of two corporations by creating a