G.R. No. L-42538; May 21, 1935
Willamette Iron & Steel Works, plaintiff-appellee, vs. A.H. Muzzal, defendant-appellant.

FACTS

Plaintiff Willamette Iron & Steel Works sued defendant A.H. Muzzal, a former resident of California then residing in the Philippines, for debts incurred by Meyer-Muzzal Company, a California corporation, on November 5, 1928, and December 22, 1928. Plaintiff sought to hold Muzzal personally liable as a stockholder under Section 322 of the California Civil Code, which imposes proportional liability on stockholders for corporate debts incurred during their stock ownership. Defendant denied liability, contesting the proof of his stock ownership, the proof of California law, and the enforceability of that law in the Philippines.

ISSUE

Whether the defendant, as a stockholder of a California corporation, can be held personally liable in the Philippines for corporate debts under California law.

RULING

Yes. The Supreme Court affirmed the trial court’s judgment against the defendant.
(1) The evidence, including testimony from a certified public accountant who examined the corporate records, sufficiently established that defendant owned 1,433 shares in Meyer-Muzzal Company when the debts were incurred.
(2) The existence of California law (Section 322) was adequately proven through the testimony of a California attorney and the presentation of an annotated California Civil Code. Foreign law is a matter of fact that may be proved by competent evidence, such as witness testimony or official publications.
(3) The California law is enforceable against the defendant in the Philippines. As an incorporator and stockholder of the California corporation, defendant was chargeable with knowledge of California’s stockholder liability law. The fact that it differs from Philippine Corporation Law does not relieve him of liability voluntarily assumed under California law. The judgment ordering defendant to pay the debts proportionally, with interest and attorney’s fees, was affirmed.

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