THIRD DIVISION [G.R. No. 170689. March 17, 2009.

] PANTRANCO EMPLOYEES ASSOCIATION (PEA-PTGWO) and PANTRANCO RETRENCHED EMPLOYEES ASSOCIATION (PANREA),petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC), PANTRANCO NORTH EXPRESS, INC. (PNEI), PHILIPPINE NATIONAL BANK (PNB), PHILIPPINE NATIONAL BANK-MANAGEMENT AND DEVELOPMENT CORPORATION (PNB-MADECOR), and MEGA PRIME REALTY AND HOLDINGS CORPORATION (MEGA PRIME), respondents.

[G.R. No. 170705. March 17, 2009.] PHILIPPINE NATIONAL BANK, petitioner, vs. PANTRANCO EMPLOYEES ASSOCIATION, INC. (PEA-PTGWO), PANTRANCO RETRENCHED EMPLOYEES ASSOCIATION (PANREA) AND PANTRANCO ASSOCIATION OF CONCERNED EMPLOYEES (PACE), ET AL., PHILIPPINE NATIONAL BANK-MANAGEMENT DEVELOPMENT CORPORATION (PNB-MADECOR), and MEGA PRIME REALTY HOLDINGS, INC.,respondents.

DECISION

NACHURA, J p: Before us are two consolidated petitions assailing the Court of Appeals (CA) Decision 1 dated June 3, 2005 and its Resolution 2 dated December 7, 2005 in CA-G.R. SP No. 80599. aATCDI In G.R. No. 170689, the Pantranco Employees Association (PEA) and Pantranco Retrenched Employees Association (PANREA) pray that the CA decision be set aside and a new one be entered, declaring the Philippine National Bank (PNB) and PNB Management and Development Corporation (PNB-Madecor) jointly and solidarily liable for the P722,727,150.22 National Labor Relations Commission (NLRC) judgment in favor of the Pantranco North Express, Inc. (PNEI) employees; 3while in G.R. No. 170705, PNB prays that the auction sale of the Pantranco properties be declared null and void. 4 The facts of the case, as found by the CA, 5 and established in Republic of the Phils. v. NLRC, 6 Pantranco North Express, Inc. v. NLRC, 7 and PNB MADECOR v. Uy, 8follow: The Gonzales family owned two corporations, namely, the PNEI and Macris Realty Corporation (Macris). PNEI provided transportation services to the public, and had its bus terminal at the corner of Quezon and Roosevelt Avenues in Quezon City. The terminal stood on four valuable pieces of real estate (known as Pantranco properties) registered under the name of Macris. 9 The Gonzales family later incurred huge financial losses despite attempts of rehabilitation and loan infusion. In March 1975, their creditors took over the management of PNEI and Macris. By 1978, full ownership was transferred to one of their creditors, the National Investment Development Corporation (NIDC), a subsidiary of the PNB. Macris was later renamed as the National Realty Development Corporation (Naredeco) and eventually merged with the National Warehousing Corporation (Nawaco) to form the new PNB subsidiary, the PNB-Madecor. In 1985, NIDC sold PNEI to North Express Transport, Inc. (NETI), a company owned by Gregorio Araneta III. In 1986, PNEI was among the several companies placed under sequestration by the Presidential Commission on Good Government (PCGG) shortly after the historic events in EDSA. In January 1988, PCGG lifted the sequestration order to pave the way for the sale of PNEI back to the private sector through the Asset Privatization Trust (APT). APT thus took over the management of PNEI.

In 1992, PNEI applied with the Securities and Exchange Commission (SEC) for suspension of payments. A management committee was thereafter created which recommended to the SEC the sale of the company through privatization. As a costsaving measure, the committee likewise suggested the retrenchment of several PNEI employees. Eventually, PNEI ceased its operation. Along with the cessation of business came the various labor claims commenced by the former employees of PNEI where the latter obtained favorable decisions. TEIHDa On July 5, 2002, the Labor Arbiter issued the Sixth Alias Writ of Execution 10 commanding the NLRC Sheriffs to levy on the assets of PNEI in order to satisfy the P722,727,150.22 due its former employees, as full and final satisfaction of the judgment awards in the labor cases. The sheriffs were likewise instructed to proceed against PNB, PNB-Madecor and Mega Prime. 11 In implementing the writ, the sheriffs levied upon the four valuable pieces of real estate located at the corner of Quezon and Roosevelt Avenues, on which the former Pantranco Bus Terminal stood. These properties were covered by Transfer Certificate of Title (TCT) Nos. 87881-87884, registered under the name of PNB-Madecor. 12 Subsequently, Notice of Sale of the foregoing real properties was published in the newspaper and the sale was set on July 31, 2002. Having been notified of the auction sale, motions to quash the writ were separately filed by PNB-Madecor and Mega Prime, and PNB. They likewise filed their Third-Party Claims. 13 PNB-Madecor anchored its motion on its right as the registered owner of the Pantranco properties, and Mega Prime as the successor-in-interest. For its part, PNB sought the nullification of the writ on the ground that it was not a party to the labor case. 14 In its Third-Party Claim, PNB alleged that PNB-Madecor was indebted to the former and that the Pantranco properties would answer for such debt. As such, the scheduled auction sale of the aforesaid properties was not legally in order. 15 On September 10, 2002, the Labor Arbiter declared that the subject Pantranco properties were owned by PNB-Madecor. It being a corporation with a distinct and separate personality, its assets could not answer for the liabilities of PNEI. Considering, however, that PNB-Madecor executed a promissory note in favor of PNEI for P7,884,000.00, the writ of execution to the extent of the said amount was concerned was considered valid. 16 PNB's third-party claim to nullify the writ on the ground that it has an interest in the Pantranco properties being a creditor of PNB-Madecor, on the other hand, was denied because it only had an inchoate interest in the properties. 17 The dispositive portion of the Labor Arbiter's September 10, 2002 Resolution is quoted hereunder: WHEREFORE, the Third Party Claim of PNB Madecor and/or Mega Prime Holdings, Inc. is hereby GRANTED and concomitantly the levies made by the sheriffs of the NLRC on the properties of PNB Madecor should be as it (sic) is hereby LIFTED subject to the payment by PNB Madecor to the complainants the amount of P7,884,000.00. ScAaHE The Motion to Quash and Third Party Claim of PNB is hereby DENIED. The Motion to Quash of PNB Madecor and Mega Prime Holdings, Inc. is hereby PARTIALLY GRANTED insofar as the amount of the writ exceeds P7,884,000.00. The Motion for Recomputation and Examination of Judgment Awards is hereby DENIED for want of merit. The Motion to Expunge from the Records claimants/complainants Opposition dated August 3, 2002 is hereby DENIED for lack of merit. SO ORDERED. 18 On appeal to the NLRC, the same was denied and the Labor Arbiter's disposition was affirmed. 19 Specifically, the NLRC concluded as follows: (1)PNB-Madecor and Mega Prime contended that it would be impossible for them to comply with the requirement of the labor arbiter to pay to the PNEI employees the amount of P7.8 million as a condition to the lifting of the levy on the properties, since the credit was already garnished by Gerardo Uy and other creditors of PNEI. The NLRC found no evidence that Uy had satisfied his judgment from the promissory note, and opined that even if the credit was in custodia legis, the claim of the PNEI employees should enjoy preference under the Labor Code.

(2)The PNEI employees contested the finding that PNB-Madecor was indebted to the PNEI for only P7.8 million without considering the accrual of interest. But the NLRC said that there was no evidence that demand was made as a basis for reckoning interest. (3)The PNEI employees further argued that the labor arbiter may not properly conclude from a decision of Judge Demetrio Macapagal Jr. of the RTC of Quezon City that PNB-Madecor was the owner of the properties as his decision was reconsidered by the next presiding judge, nor from a decision of the Supreme Court that PNEI was a mere lessee of the properties, the fact being that the transfer of the properties to PNB-Madecor was done to avoid satisfaction of the claims of the employees with the NLRC and that as a result of a civil case filed by Mega Prime, the subsequent sale of the properties by PNB to Mega Prime was rescinded. The NLRC pointed out that while the Macapagal decision was set aside by Judge Bruselas and hence, his findings could not be invoked by the labor arbiter, the titles of PNBMadecor are conclusive and there is no evidence that PNEI had ever been an owner. The Supreme Court had observed in its decision that PNEI owed back rentals of P8.7 million to PNB-Madecor. (4)The PNEI employees faulted the labor arbiter for not finding that PNEI, PNB, PNB-Madecor and Mega Prime were all jointly and severally liable for their claims. The NLRC underscored the fact that PNEI and Macris were subsidiaries of NIDC and had passed through and were under the Asset Privatization Trust (APT) when the labor claims accrued. The labor arbiter was correct in not granting PNB's third-party claim because at the time the causes of action accrued, the PNEI was managed by a management committee appointed by the PNB as the new owner of PNRI (sic) and Macris through a deed of assignment or transfer of ownership. The NLRC says at length that the same is not true with PNBMadecor which is now the registered owner of the properties. 20 CIaHDc The parties' separate motions for reconsideration were likewise denied. 21 Thereafter, the matter was elevated to the CA by PANREA, PEA-PTGWO and the Pantranco Association of Concerned Employees. The latter group, however, later withdrew its petition. The former employees' petition was docketed as CA-G.R. SP No. 80599. PNB-Madecor and Mega Prime likewise filed their separate petition before the CA which was docketed as CA-G.R. SP No. 80737, but the same was dismissed. 22

In view of the P7,884,000.00 debt of PNB-Madecor to PNEI, on June 23, 2004, an auction sale was conducted over the Pantranco properties to satisfy the claim of the PNEI employees, wherein CPAR Realty was adjudged as the highest bidder. 23 On June 3, 2005, the CA rendered the assailed decision affirming the NLRC resolutions. The appellate court pointed out that PNB, PNB-Madecor and Mega Prime are corporations with personalities separate and distinct from PNEI. As such, there being no cogent reason to pierce the veil of corporate fiction, the separate personalities of the above corporations should be maintained. The CA added that the Pantranco properties were never owned by PNEI; rather, their titles were registered under the name of PNB-Madecor. If PNB and PNB-Madecor could not answer for the liabilities of PNEI, with more reason should Mega Prime not be held liable being a mere successor-in-interest of PNBMadecor. Unsatisfied, PEA-PTGWO and PANREA filed their motion for reconsideration; 24 while PNB filed its Partial Motion for Reconsideration. 25 PNB pointed out that PNB-Madecor was made to answer for P7,884,000.00 to the PNEI employees by virtue of the promissory note it (PNB-Madecor) earlier executed in favor of PNEI. PNB, however, questioned the June 23, 2004 auction sale as the P7.8 million debt had already been satisfied pursuant to this Court's decision in PNB MADECOR v. Uy. 26 Both motions were denied by the appellate court. 27 In two separate petitions, PNB and the former PNEI employees come up to this Court assailing the CA decision and resolution. The former PNEI employees raise the lone error, thus: The Honorable Court of Appeals palpably departed from the established rules and jurisprudence in ruling that private respondents Pantranco North Express, Inc. (PNEI), Philippine National Bank (PNB),

Philippine National Bank Management and Development Corporation (PNB-MADECOR), Mega Prime Realty and Holdings, Inc. (Mega Prime) are not jointly and severally answerable to the P722,727,150.22 Million NLRC money judgment awards in favor of the 4,000 individual members of the Petitioners. 28 DAcSIC They claim that PNB, through PNB-Madecor, directly benefited from the operation of PNEI and had complete control over the funds of PNEI. Hence, they are solidarily answerable with PNEI for the unpaid money claims of the employees. 29 Citing A.C. Ransom Labor Union-CCLU v. NLRC, 30 the employees insist that where the employer corporation ceases to exist and is no longer able to satisfy the judgment awards in favor of its employees, the owner of the employer corporation should be made jointly and severally liable. 31 They added that malice or bad faith need not be proven to make the owners liable. On the other hand, PNB anchors its petition on this sole assignment of error, viz.: THE AUCTION SALE OF THE PROPERTY COVERED BY TCT NO. 87884 INTENDED TO PARTIALLY SATISFY THE CLAIMS OF FORMER WORKERS OF PNEI IN THE AMOUNT OF P7,884,000.00 (THE AMOUNT OF PNB-MADECOR'S PROMISSORY NOTE IN FAVOR OF PNEI) IS NOT IN ORDER AS THE SAID PROPERTY IS NOT OWNED BY PNEI. FURTHER, THE SAID PROMISSORY NOTE HAD ALREADY BEEN GARNISHED IN FAVOR OF GERARDO C. UY WHICH LED TO THREE (3) PROPERTIES UNDER THE NAME OF PNB-MADECOR, NAMELY TCT NOS. 87881, 87882 AND 87883, BEING LEVIED AND SOLD ON EXECUTION IN THE "PNB-MADECOR VS. UY" CASE (363 SCRA 128 [2001]) AND "GERARDO C. UY VS. PNEI" (CIVIL CASE NO. 95-72685, RTC MANILA, BRANCH 38). 32 PNB insists that the Pantranco properties could no longer be levied upon because the promissory note for which the Labor Arbiter held PNB-Madecor liable to PNEI, and in turn to the latter's former employees, had already been satisfied in favor of Gerardo C. Uy. It added that the properties were in fact awarded to the highest bidder. Besides, says PNB, the subject properties were not owned by PNEI, hence, the execution sale thereof was not validly effected. 33 Both petitions must fail.

G.R. No. 170689

Stripped of the non-essentials, the sole issue for resolution raised by the former PNEI employees is whether they can attach the properties (specifically the Pantranco properties) of PNB, PNB-Madecor and Mega Prime to satisfy their unpaid labor claims against PNEI. We answer in the negative.

First, the subject property is not owned by the judgment debtor, that is, PNEI. Nowhere in the records was it shown that

PNEI owned the Pantranco properties. Petitioners, in fact, never alleged in any of their pleadings the fact of such ownership. What was established, instead, in PNB MADECOR v. Uy 34 and PNB v. Mega Prime Realty and Holdings Corporation/Mega Prime Realty and Holdings Corporation v. PNB 35 was that the properties were owned by Macris, the predecessor of PNBMadecor. Hence, they cannot be pursued against by the creditors of PNEI. TIcAaH We would like to stress the settled rule that the power of the court in executing judgments extends only to properties unquestionably belonging to the judgment debtor alone. 36 To be sure, one man's goods shall not be sold for another man's debts. 37 A sheriff is not authorized to attach or levy on property not belonging to the judgment debtor, and even incurs liability if he wrongfully levies upon the property of a third person. 38

Second, PNB, PNB-Madecor and Mega Prime are corporations with personalities separate and distinct from that of PNEI.

PNB is sought to be held liable because it acquired PNEI through NIDC at the time when PNEI was suffering financial reverses. PNB-Madecor is being made to answer for petitioners' labor claims as the owner of the subject Pantranco properties and as a subsidiary of PNB. Mega Prime is also included for having acquired PNB's shares over PNB-Madecor. The general rule is that a corporation has a personality separate and distinct from those of its stockholders and other corporations to which it may be connected. 39This is a fiction created by law for convenience and to prevent injustice. 40 Obviously, PNB, PNB-Madecor, Mega Prime, and PNEI are corporations with their own personalities. The "separate personalities" of the first three corporations had been recognized by this Court in PNB v. Mega Prime Realty and Holdings Corporation/Mega Prime Realty and Holdings Corporation v. PNB 41 where we stated that PNB was only a

stockholder of PNB-Madecor which later sold its shares to Mega Prime; and that PNB-Madecor was the owner of the Pantranco properties. Moreover, these corporations are registered as separate entities and, absent any valid reason, we maintain their separate identities and we cannot treat them as one. Neither can we merge the personality of PNEI with PNB simply because the latter acquired the former. Settled is the rule that where one corporation sells or otherwise transfers all its assets to another corporation for value, the latter is not, by that fact alone, liable for the debts and liabilities of the transferor. 42

Lastly, while we recognize that there are peculiar circumstances or valid grounds that may exist to warrant the piercing of
the corporate veil, 43 none applies in the present case whether between PNB and PNEI; or PNB and PNB-Madecor.

Under the doctrine of "piercing the veil of corporate fiction", the court looks at the corporation as a mere collection of individuals or an aggregation of persons undertaking business as a group, disregarding the separate juridical personality of the corporation unifying the group. 44 Another formulation of this doctrine is that when two business enterprises are owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect the rights of third parties, disregard the legal fiction that two corporations are distinct entities and treat them as identical or as one and the same. 45 DCcTHa Whether the separate personality of the corporation should be pierced hinges on obtaining facts appropriately pleaded or proved. However, any piercing of the corporate veil has to be done with caution, albeit the Court will not hesitate to disregard the corporate veil when it is misused or when necessary in the interest of justice. After all, the concept of corporate entity was not meant to promote unfair objectives. 46 As between PNB and PNEI, petitioners want us to disregard their separate personalities, and insist that because the company, PNEI, has already ceased operations and there is no other way by which the judgment in favor of the employees can be satisfied, corporate officers can be held jointly and severally liable with the company. Petitioners rely on the pronouncement of this Court in A.C. Ransom Labor Union-CCLU v. NLRC 47 and subsequent cases. 48 This reliance fails to persuade. We find the aforesaid decisions inapplicable to the instant case. For one, in the said cases, the persons made liable after the company's cessation of operations were the officers and agents of the corporation. The rationale is that, since the corporation is an artificial person, it must have an officer who can be presumed to be the employer, being the person acting in the interest of the employer. The corporation, only in the technical sense, is the employer. 49 In the instant case, what is being made liable is another corporation (PNB) which acquired the debtor corporation (PNEI). Moreover, in the recent cases Carag v. National Labor Relations Commission 50 and McLeod v. National Labor Relations Commission, 51 the Court explained the doctrine laid down in AC Ransom relative to the personal liability of the officers and agents of the employer for the debts of the latter. In AC Ransom, the Court imputed liability to the officers of the corporation on the strength of the definition of an employer in Article 212 (c) (now Article 212 [e]) of the Labor Code. Under the said provision, employer includes any person acting in the interest of an employer, directly or indirectly, but does not include any labor organization or any of its officers or agents except when acting as employer. It was clarified in Carag and McLeod that Article 212 (e) of the Labor Code, by itself, does not make a corporate officer personally liable for the debts of the corporation. It added that the governing law on personal liability of directors or officers for debts of the corporation is still Section 31 52 of the Corporation Code.

More importantly, as aptly observed by this Court in AC Ransom, it appears that Ransom, foreseeing the possibility or probability of payment of backwages to its employees, organized Rosario to replace Ransom, with the latter to be eventually phased out if the strikers win their case. The execution could not be implemented against Ransom because of the disposition posthaste of its leviable assets evidently in order to evade its just and due obligations. 53 Hence, the Court sustained the piercing of the corporate veil and made the officers of Ransom personally liable for the debts of the latter. SDIaCT Clearly, what can be inferred from the earlier cases is that the doctrine of piercing the corporate veil applies only in three (3) basic areas, namely: 1) defeat of public convenience as when the corporate fiction is used as a vehicle for the evasion of an existing obligation; 2) fraud cases or when the corporate entity is used to justify a wrong, protect fraud, or defend a crime; or 3) alter ego cases, where a corporation is merely a farce since it is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality,

agency, conduit or adjunct of another corporation. 54 In the absence of malice, bad faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be made personally liable for corporate liabilities. 55 Applying the foregoing doctrine to the instant case, we quote with approval the CA disposition in this wise: It would not be enough, then, for the petitioners in this case, the PNEI employees, to rest on their laurels with evidence that PNB was the owner of PNEI. Apart from proving ownership, it is necessary to show facts that will justify us to pierce the veil of corporate fiction and hold PNB liable for the debts of PNEI. The burden undoubtedly falls on the petitioners to prove their affirmative allegations. In line with the basic jurisprudential principles we have explored, they must show that PNB was using PNEI as a mere adjunct or instrumentality or has exploited or misused the corporate privilege of PNEI. We do not see how the burden has been met. Lacking proof of a nexus apart from mere ownership, the petitioners have not provided us with the legal basis to reach the assets of corporations separate and distinct from PNEI. 56 Assuming, for the sake of argument, that PNB may be held liable for the debts of PNEI, petitioners still cannot proceed against the Pantranco properties, the same being owned by PNB-Madecor, notwithstanding the fact that PNB-Madecor was a subsidiary of PNB. The general rule remains that PNB-Madecor has a personality separate and distinct from PNB. The mere fact that a corporation owns all of the stocks of another corporation, taken alone, is not sufficient to justify their being treated as one entity. If used to perform legitimate functions, a subsidiary's separate existence shall be respected, and the liability of the parent corporation as well as the subsidiary will be confined to those arising in their respective businesses. 57 In PNB v. Ritratto Group, Inc., 58 we outlined the circumstances which are useful in the determination of whether a subsidiary is but a mere instrumentality of the parent-corporation, to wit: 1.The parent corporation owns all or most of the capital stock of the subsidiary; HEDaTA 2.The parent and subsidiary corporations have common directors or officers; 3.The parent corporation finances the subsidiary; 4.The parent corporation subscribes to all the capital stock of the subsidiary or otherwise causes its incorporation; 5.The subsidiary has grossly inadequate capital; 6.The parent corporation pays the salaries and other expenses or losses of the subsidiary; 7.The subsidiary has substantially no business except with the parent corporation or no assets except those conveyed to or by the parent corporation; 8.In the papers of the parent corporation or in the statements of its officers, the subsidiary is described as a department or division of the parent corporation, or its business or financial responsibility is referred to as the parent corporation's own; 9.The parent corporation uses the property of the subsidiary as its own; 10.The directors or executives of the subsidiary do not act independently in the interest of the subsidiary, but take their orders from the parent corporation; 11.The formal legal requirements of the subsidiary are not observed. None of the foregoing circumstances is present in the instant case. Thus, piercing of PNB-Madecor's corporate veil is not warranted. Being a mere successor-in-interest of PNB-Madecor, with more reason should no liability attach to Mega Prime.

G.R. No. 170705

In its petition before this Court, PNB seeks the annulment of the June 23, 2004 execution sale of the Pantranco properties on the ground that the judgment debtor (PNEI) never owned said lots. It likewise contends that the levy and the eventual sale on execution of the subject properties was null and void as the promissory note on which PNB-Madecor was made liable had already been satisfied. It has been repeatedly stated that the Pantranco properties which were the subject of execution sale were owned by Macris and later, the PNB-Madecor. They were never owned by PNEI or PNB. Following our earlier discussion on the separate personalities of the different corporations involved in the instant case, the only entity which has the right and interest to question the execution sale and the eventual right to annul the same, if any, is PNB-Madecor or its successor-in-interest. Settled is the rule that proceedings in court must be instituted by the real party in interest. HSEcTC A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. 59 "Interest" within the meaning of the rule means material interest, an interest in issue and to be affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental interest. 60 The interest of the party must also be personal and not one based on a desire to vindicate the constitutional right of some third and unrelated party. 61 Real interest, on the other hand, means a present substantial interest, as distinguished from a mere expectancy or a future, contingent, subordinate, or consequential interest. 62 Specifically, in proceedings to set aside an execution sale, the real party in interest is the person who has an interest either in the property sold or the proceeds thereof. Conversely, one who is not interested or is not injured by the execution sale cannot question its validity. 63 In justifying its claim against the Pantranco properties, PNB alleges that Mega Prime, the buyer of its entire stockholdings in PNB-Madecor was indebted to it (PNB). Considering that said indebtedness remains unpaid, PNB insists that it has an interest over PNB-Madecor and Mega Prime's assets. Again, the contention is bereft of merit. While PNB has an apparent interest in Mega Prime's assets being the creditor of the latter for a substantial amount, its interest remains inchoate and has not yet ripened into a present substantial interest, which would give it the standing to maintain an action involving the subject properties. As aptly observed by the Labor Arbiter, PNB only has an inchoate right to the properties of Mega Prime in case the latter would not be able to pay its indebtedness. This is especially true in the instant case, as the debt being claimed by PNB is secured by the accessory contract of pledge of the entire stockholdings of Mega Prime to PNB-Madecor. 64 The Court further notes that the Pantranco properties (or a portion thereof ) were sold on execution to satisfy the unpaid obligation of PNB-Madecor to PNEI. PNB-Madecor was thus made liable to the former PNEI employees as the judgment debtor of PNEI. It has long been established in PNB-Madecor v. Uy and other similar cases that PNB-Madecor had an unpaid obligation to PNEI amounting to more or less P7 million which could be validly pursued by the creditors of the latter. Again, this strengthens the proper parties' right to question the validity of the execution sale, definitely not PNB. Besides, the issue of whether PNB has a substantial interest over the Pantranco properties has already been laid to rest by the Labor Arbiter. 65 It is noteworthy that in its Resolution dated September 10, 2002, the Labor Arbiter denied PNB's ThirdParty Claim primarily because PNB only has an inchoate right over the Pantranco properties. 66 Such conclusion was later affirmed by the NLRC in its Resolution dated June 30, 2003. 67 Notwithstanding said conclusion, PNB did not elevate the matter to the CA via a petition for review. Hence it is presumed to be satisfied with the adjudication therein. 68 That decision of the NLRC has become final as against PNB and can no longer be reviewed, much less reversed, by this Court. 69 This is in accord with the doctrine that a party who has not appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the appealed decision. 70 IAaCST WHEREFORE, premises considered, the petitions are hereby DENIED for lack of merit. SO ORDERED.

SEAOIL PETROLEUM CORPORATION, petitioner, vs. RODRIGUEZ, respondents.

AUTOCORP

GROUP

and

PAUL

Y.

DECISION

NACHURA, J p: Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision 1 of the Court of Appeals (CA) dated May 20, 2004 in CA-G.R. CV No. 72193, which had affirmed in toto the Decision 2 of the Regional Trial Court (RTC) of Pasig City, Branch 157, dated September 10, 2001 in Civil Case No. 64943. DCcSHE The factual antecedents, as summarized by the CA, are as follows: On September 24, 1994, defendant-appellant Seaoil Petroleum Corporation (Seaoil, for brevity) purchased one unit of ROBEX 200 LC Excavator, Model 1994 from plaintiff-appellee Autocorp Group (Autocorp for short). The original cost of the unit was P2,500,000.00 but was increased to P3,112,519.94 because it was paid in 12 monthly installments up to September 30, 1995. The sales agreement was embodied in the Vehicle Sales Invoice No. A-0209 and Vehicle Sales Confirmation No. 258. Both documents were signed by Francis Yu (Yu for short), president of Seaoil, on behalf of said corporation. Furthermore, it was agreed that despite delivery of the excavator, ownership thereof was to remain with Autocorp until the obligation is fully settled. In this light, Seaoil's contractor, Romeo Valera, issued 12 postdated checks. However, Autocorp refused to accept the checks because they were not under Seaoil's name. Hence, Yu, on behalf of Seaoil, signed and issued 12 postdated checks for P259,376.62 each with Autocorp as payee. The excavator was subsequently delivered on September 26, 1994 by Autocorp and was received by Seaoil in its depot in Batangas. The relationship started to turn sour when the first check bounced. However, it was remedied when Seaoil replaced it with a good check. The second check likewise was also good when presented for payment. However, the remaining 10 checks were not honored by the bank since Seaoil requested that payment be stopped. It was downhill from thereon. EcHaAC Despite repeated demands, Seaoil refused to pay the remaining balance of P2,593,766.20. Hence, on January 24, 1995, Autocorp filed a complaint for recovery of personal property with damages and replevin in the Regional Trial Court of Pasig. The trial court ruled for Autocorp. Hence, this appeal. Seaoil, on the other hand, alleges that the transaction is not as simple as described above. It claims that Seaoil and Autocorp were only utilized as conduits to settle the obligation of one foreign entity named Uniline Asia (herein referred to as Uniline), in favor of another foreign entity, Focus Point International, Incorporated (Focus for short). Paul Rodriguez (Rodriguez for brevity) is a stockholder and director of Autocorp. He is also the owner of Uniline. On the other hand, Yu is the president and stockholder of Seaoil and is at the same time owner of Focus. Allegedly, Uniline chartered MV Asia Property (sic) in the amount of $315,711.71 from its owner Focus. Uniline was not able to settle the said amount. Hence, Uniline, through Rodriguez, proposed to settle the obligation through conveyance of vehicles and heavy equipment. Consequently, four units of Tatamobile pick-up trucks procured from Autocorp were conveyed to Focus as partial payment. The excavator in controversy was allegedly one part of the vehicles conveyed to Focus. Seaoil claims that Rodriguez initially issued 12 postdated checks in favor of Autocorp as payment for the excavator. However, due to the fact that it was company policy for Autocorp not to honor postdated checks issued by its own directors, Rodriguez requested Yu to issue 12 PBCOM postdated checks in favor of Autocorp. In turn, said checks would be funded by the corresponding 12 Monte de Piedad postdated checks issued by Rodriguez. These Monte de Piedad checks were postdated three days prior to the maturity of the PBCOM checks. aETADI Seaoil claims that Rodriguez issued a stop payment order on the ten checks thus constraining the former to also order a stop payment order on the PBCOM checks. In short, Seaoil claims that the real transaction is that Uniline, through Rodriguez, owed money to Focus. In lieu of payment, Uniline instead agreed to convey the excavator to Focus. This was to be paid by checks issued by Seaoil but which in turn were to be funded by checks issued by Uniline. . . . 3

As narrated above, respondent Autocorp filed a Complaint for Recovery of Personal Property with Damages and Replevin 4 against Seaoil before the RTC of Pasig City. In its September 10, 2001 Decision, the RTC ruled that the transaction between Autocorp and Seaoil was a simple contract of sale payable in installments. 5 It also held that the obligation to pay plaintiff the remainder of the purchase price of the excavator solely devolves on Seaoil. Paul Rodriguez, not being a party to the sale of the excavator, could not be held liable therefor. The decretal portion of the trial court's Decision reads, thus: WHEREFORE, judgment is hereby rendered in favor of plaintiff Autocorp Group and against defendant Seaoil Petroleum Corporation which is hereby directed to pay plaintiff: P2,389,179.23 plus 3% interest from the time of judicial demand until full payment; and 25% of the total amount due as attorney's fees and cost of litigation. The third-party complaint filed by defendant Seaoil Petroleum Corporation against third-party defendant Paul Rodriguez is hereby DISMISSED for lack of merit. CTHaSD SO ORDERED. Seaoil filed a Petition for Review before the CA. In its assailed Decision, the CA dismissed the petition and affirmed the RTC's Decision in toto. 6It held that the transaction between Yu and Rodriguez was merely verbal. This cannot alter the sales contract between Seaoil and Autocorp as this will run counter to the parol evidence rule which prohibits the introduction of oral and parol evidence to modify the terms of the contract. The claim that it falls under the exceptions to the parol evidence rule has not been sufficiently proven. Moreover, it held that Autocorp's separate corporate personality cannot be disregarded and the veil of corporate fiction pierced. Seaoil was not able to show that Autocorp was merely an alter ego of Uniline or that both corporations were utilized to perpetrate a fraud. Lastly, it held that the RTC was correct in dismissing the third-party complaint since it did not arise out of the same transaction on which the plaintiff's claim is based, or that the third party's claim, although arising out of another transaction, is connected to the plaintiff's claim. Besides, the CA said, such claim may be enforced in a separate action. Seaoil now comes before this Court in a Petition for Review raising the following issues: I Whether or not the Court of Appeals erred in partially applying the parol evidence rule to prove only some terms contained in one portion of the document but disregarded the rule with respect to another but substantial portion or entry also contained in the same document which should have proven the true nature of the transaction involved. IHaSED II Whether or not the Court of Appeals gravely erred in its judgment based on misapprehension of facts when it declared absence of facts which are contradicted by presence of evidence on record. III Whether or not the dismissal of the third-party complaint would have the legal effect of res judicata as would unjustly preclude petitioner from enforcing its claim against respondent Rodriguez (third-party defendant) in a separate action. SICaDA IV Whether or not, given the facts in evidence, the lower courts should have pierced the corporate veil. The Petition lacks merit. We sustain the ruling of the CA.

We find no fault in the trial court's appreciation of the facts of this case. The findings of fact of the trial court are conclusive upon this Court, especially when affirmed by the CA. None of the exceptions to this well-settled rule has been shown to exist in this case. IcCATD Petitioner does not question the validity of the vehicle sales invoice but merely argues that the same does not reflect the true agreement of the parties. However, petitioner only had its bare testimony to back up the alleged arrangement with Rodriguez. The Monte de Piedad checks the supposedly "clear and obvious link" 7 between the documentary evidence and the true transaction between the parties are equivocal at best. There is nothing in those checks to establish such link. Rodriguez denies that there is such an agreement. cdrep Unsubstantiated testimony, offered as proof of verbal agreements which tends to vary the terms of a written agreement, is inadmissible under the parol evidence rule. 8 Rule 130, Section 9 of the Revised Rules on Evidence embodies the parol evidence rule and states: SEC. 9.Evidence of written agreements. When the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors-in-interest, no evidence of such terms other than the contents of the written agreement. HTacDS However, a party may present evidence to modify, explain or add to the terms of the written agreement if he puts in issue in his pleading: (a)An intrinsic ambiguity, mistake or imperfection in the written agreement; (b)The failure of the written agreement to express the true intent and agreement of the parties thereto; (c)The validity of the written agreement; or (d)The existence of other terms agreed to by the parties or their successors-in-interest after the execution of the written agreement. The term "agreement" includes wills. The parol evidence rule forbids any addition to, or contradiction of, the terms of a written agreement by testimony or other evidence purporting to show that different terms were agreed upon by the parties, varying the purport of the written contract. 9

This principle notwithstanding, petitioner would have the Court rule that this case falls within the exceptions, particularly that the written agreement failed to express the true intent and agreement of the parties. This argument is untenable. cCHITA Although parol evidence is admissible to explain the meaning of a contract, it cannot serve the purpose of incorporating into the contract additional contemporaneous conditions which are not mentioned at all in the writing unless there has been fraud or mistake. 10 Evidence of a prior or contemporaneous verbal agreement is generally not admissible to vary, contradict or defeat the operation of a valid contract. 11 The Vehicle Sales Invoice 12 is the best evidence of the transaction. A sales invoice is a commercial document. Commercial documents or papers are those used by merchants or businessmen to promote or facilitate trade or credit transactions. 13 Business forms,e.g., order slip, delivery charge invoice and the like, are commonly recognized in ordinary commercial transactions as valid between the parties and, at the very least, they serve as an acknowledgment that a business transaction has in fact transpired. 14 These documents are not mere scraps of paper bereft of probative value, but vital pieces of evidence of commercial transactions. They are written memorials of the details of the consummation of contracts. 15

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The terms of the subject sales invoice are clear. They show that Autocorp sold to Seaoil one unit Robex 200 LC Excavator paid for by checks issued by one Romeo Valera. This does not, however, change the fact that Seaoil Petroleum Corporation, as represented by Yu, is the customer or buyer. The moment a party affixes his or her signature thereon, he or she is bound by all the terms stipulated therein and is subject to all the legal obligations that may arise from their breach. 16 Oral testimony on the alleged conditions, coming from a party who has an interest in the outcome of the case, depending exclusively on human memory, is not as reliable as written or documentary evidence. 17 Hence, petitioner's contention that the document falls within the exception to the parol evidence rule is untenable. The exception obtains only where "the written contract is so ambiguous or obscure in terms that the contractual intention of the parties cannot be understood from a mere reading of the instrument. In such a case, extrinsic evidence of the subject matter of the contract, of the relations of the parties to each other, and of the facts and circumstances surrounding them when they entered into the contract may be received to enable the court to make a proper interpretation of the instrument." 18 Even assuming there is a shred of truth to petitioner's contention, the same cannot be made a basis for holding respondents liable therefor. CTcSIA As pointed out by the CA, Rodriguez is a person separate and independent from Autocorp. Whatever obligations Rodriguez contracted cannot be attributed to Autocorp 19 and vice versa. In fact, the obligation that petitioner proffers as its defense under the Lease Purchase Agreement was not even incurred by Rodriguez or by Autocorp but by Uniline. The Lease Purchase Agreement 20 clearly shows that the parties thereto are two corporations not parties to this case: Focus Point and Uniline. Under this Lease Purchase Agreement, it is Uniline, as lessee/purchaser, and not Rodriguez, that incurred the debt to Focus Point. The obligation of Uniline to Focus Point arose out of a transaction completely different from the subject of the instant case. EICScD It is settled that a corporation has a personality separate and distinct from its individual stockholders or members, and is not affected by the personal rights, obligations and transactions of the latter. 21 The corporation may not be held liable for the obligations of the persons composing it, and neither can its stockholders be held liable for its obligation. 22 Of course, this Court has recognized instances when the corporation's separate personality may be disregarded. However, we have also held that the same may only be done in cases where the corporate vehicle is being used to defeat public convenience, justify wrong, protect fraud, or defend crime. 23 Moreover, the wrongdoing must be clearly and convincingly established. It cannot be presumed. 24 To reiterate, the transaction under the Vehicle Sales Invoice is separate and distinct from that under the Lease Purchase Agreement. In the former, it is Seaoil that owes Autocorp, while in the latter, Uniline incurred obligations to Focus. There was never any allegation, much less any evidence, that Autocorp was merely an alter ego of Uniline, or that the two corporations' separate personalities were being used as a means to perpetrate fraud or wrongdoing. aSTcCE Moreover, Rodriguez, as stockholder and director of Uniline, cannot be held personally liable for the debts of the corporation, which has a separate legal personality of its own. While Section 31 of the Corporation Code 25 lays down the exceptions to the rule, the same does not apply in this case. Section 31 makes a director personally liable for corporate debts if he willfully and knowingly votes for or assents to patently unlawful acts of the corporation. Section 31 also makes a director personally liable if he is guilty of gross negligence or bad faith in directing the affairs of the corporation. 26 The bad faith or wrongdoing of the director must be established clearly and convincingly. Bad faith is never presumed. 27 The burden of proving bad faith or wrongdoing on the part of Rodriguez was, on petitioner, a burden which it failed to discharge. Thus, it was proper for the trial court to have dismissed the third-party complaint against Rodriguez on the ground that he was not a party to the sale of the excavator. TcSHaD Rule 6, Section 11 of the Revised Rules on Civil Procedure defines a third-party complaint as a claim that a defending party may, with leave of court, file against a person not a party to the action, called the third-party defendant, for contribution, indemnity, subrogation or any other relief, in respect of his opponent's claim. The purpose of the rule is to permit a defendant to assert an independent claim against a third party which he, otherwise, would assert in another action, thus preventing multiplicity of suits. 28 Had it not been for the rule, the claim could have been filed separately from the original complaint. 29

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Petitioner's claim against Rodriguez was fully ventilated in the proceedings before the trial court, tried and decided on its merits. The trial court's ruling operates as res judicata against another suit involving the same parties and same cause of action. This is rightly so because the trial court found that Rodriguez was not a party to the sale of the excavator. On the other hand, petitioner Seaoil's liability has been successfully established by respondent. EISCaD A last point. We reject Seaoil's claim that "the ownership of the subject excavator, having been legally and completely transferred to Focus Point International, Inc., cannot be subject of replevin and plaintiff [herein respondent Autocorp] is not legally entitled to any writ of replevin." 30 The claim is negated by the sales invoice which clearly states that "[u]ntil after the vehicle is fully paid inclusive of bank clearing time, it remains the property of Autocorp Group which reserves the right to take possession of said vehicle at any time and place without prior notice." 31 Considering, first, that Focus Point was not a party to the sale of the excavator and, second, that Seaoil indeed failed to pay for the excavator in full, the same still rightfully belongs to Autocorp. Additionally, as the trial court found, Seaoil had already assigned the same to its contractor for the construction of its depot in Batangas. 32 Hence, Seaoil has already enjoyed the benefit of the transaction even as it has not complied with its obligation. It cannot be permitted to unjustly enrich itself at the expense of another. EaISDC WHEREFORE, the foregoing premises considered, the Petition is hereby DENIED. The Decision of the Court of Appeals dated May 20, 2004 in CA-G.R. CV No. 72193 is AFFIRMED. SO ORDERED.

[G.R. No. 136409. March 14, 2008.] SUBHASH C. PASRICHA and JOSEPHINE A. PASRICHA, petitioners, vs. DON LUIS DISON REALTY, INC., respondent.

DECISION

NACHURA, J p: This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision 1 of the Court of Appeals (CA) dated May 26, 1998 and its Resolution 2 dated December 10, 1998 in CA-G.R. SP No. 37739 dismissing the petition filed by petitioners Josephine and Subhash Pasricha. The facts of the case, as culled from the records, are as follows: Respondent Don Luis Dison Realty, Inc. and petitioners executed two Contracts of Lease 3 whereby the former, as lessor, agreed to lease to the latter Units 22, 24, 32, 33, 34, 35, 36, 37 and 38 of the San Luis Building, located at 1006 M.Y. Orosa cor. T.M. Kalaw Streets, Ermita, Manila. Petitioners, in turn, agreed to pay monthly rentals, as follows: For Rooms 32/35:

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From March 1, 1991 to August 31, 1991 P5,000.00/P10,000.00 From September 1, 1991 to February 29, 1992 P5,500.00/P11,000.00 From March 1, 1992 to February 28, 1993 P6,050.00/P12,100.00 From March 1, 1993 to February 28, 1994 P6,655.00/P13,310.00 From March 1, 1994 to February 28, 1995 P7,320.50/P14,641.00 From March 1, 1995 to February 28, 1996 P8,052.55/P16,105.10 From March 1, 1996 to February 29, 1997 P8,857.81/P17,715.61 From March 1, 1997 to February 28, 1998 P9,743.59/P19,487.17 From March 1, 1998 to February 28, 1999 P10,717.95/P21,435.89 From March 1, 1999 to February 28, 2000 P11,789.75/P23,579.48 4 For Rooms 22 and 24: Effective July 1, 1992 P10,000.00 with an increment of 10% every two years. 5 For Rooms 33 and 34: Effective April 1, 1992 P5,000.00 with an increment of 10% every two years. 6 For Rooms 36, 37 and 38: Effective when tenants vacate said premises P10,000.00 with an increment of 10% every two years. 7 Petitioners were, likewise, required to pay for the cost of electric consumption, water bills and the use of telephone cables. 8 The lease of Rooms 36, 37 and 38 did not materialize leaving only Rooms 22, 24, 32, 33, 34 and 35 as subjects of the lease contracts. 9 While the contracts were in effect, petitioners dealt with Francis Pacheco (Pacheco), then General Manager of private respondent. Thereafter, Pacheco was replaced by Roswinda Bautista (Ms. Bautista). 10 Petitioners religiously paid the monthly rentals until May 1992. 11 After that, however, despite repeated demands, petitioners continuously refused to pay the stipulated rent. Consequently, respondent was constrained to refer the matter to its lawyer who, in turn, made a final demand on petitioners for the payment of the accrued rentals amounting to P916,585.58. 12Because petitioners still refused to comply, a complaint for ejectment was filed by private respondent through its representative, Ms. Bautista, before the Metropolitan Trial Court (MeTC) of Manila. 13 The case was raffled to Branch XIX and was docketed as Civil Case No. 143058-CV. Petitioners admitted their failure to pay the stipulated rent for the leased premises starting July until November 1992, but claimed that such refusal was justified because of the internal squabble in respondent company as to the person authorized to receive payment. 14 To further justify their non-payment of rent, petitioners alleged that they were prevented from using the units (rooms) subject matter of the lease contract, except Room 35. Petitioners eventually paid their monthly rent for December 1992 in the amount of P30,000.00, and claimed that respondent waived its right to collect the rents for the months of July to November 1992 since petitioners were prevented from using Rooms 22, 24, 32, 33, and 34. 15 However, they again withheld payment of rents starting January 1993 because of respondent's refusal to turn over Rooms 36, 37 and 38. 16 To show good faith and willingness to pay the rents, petitioners alleged that they prepared the check vouchers for their monthly rentals from January 1993 to January 1994. 17 Petitioners further averred in their Amended Answer 18 that the complaint for ejectment was prematurely filed, as the controversy was not referred to the barangay for conciliation.

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For failure of the parties to reach an amicable settlement, the pre-trial conference was terminated. Thereafter, they submitted their respective position papers. On November 24, 1994, the MeTC rendered a Decision dismissing the complaint for ejectment. 19 It considered petitioners' non-payment of rentals as unjustified. The court held that mere willingness to pay the rent did not amount to payment of the obligation; petitioners should have deposited their payment in the name of respondent company. On the matter of possession of the subject premises, the court did not give credence to petitioners' claim that private respondent failed to turn over possession of the premises. The court, however, dismissed the complaint because of Ms. Bautista's alleged lack of authority to sue on behalf of the corporation. Deciding the case on appeal, the Regional Trial Court (RTC) of Manila, Branch 1, in Civil Case No. 94-72515, reversed and set aside the MeTC Decision in this wise: WHEREFORE, the appealed decision is hereby reversed and set aside and another one is rendered ordering defendants-appellees and all persons claiming rights under them, as follows: (1)to vacate the leased premised (sic) and restore possession thereof to plaintiff-appellant; (2)to pay plaintiff-appellant the sum of P967,915.80 representing the accrued rents in arrears as of November 1993, and the rents on the leased premises for the succeeding months in the amounts stated in paragraph 5 of the complaint until fully paid; and (3)to pay an additional sum equivalent to 25% of the rent accounts as and for attorney's fees plus the costs of this suit. SO ORDERED. 20 The court adopted the MeTC's finding on petitioners' unjustified refusal to pay the rent, which is a valid ground for ejectment. It, however, faulted the MeTC in dismissing the case on the ground of lack of capacity to sue. Instead, it upheld Ms. Bautista's authority to represent respondent notwithstanding the absence of a board resolution to that effect, since her authority was implied from her power as a general manager/treasurer of the company. 21 Aggrieved, petitioners elevated the matter to the Court of Appeals in a petition for review on certiorari. 22 On March 18, 1998, petitioners filed an Omnibus Motion 23 to cite Ms. Bautista for contempt; to strike down the MeTC and RTC Decisions as legal nullities; and to conduct hearings and ocular inspections or delegate the reception of evidence. Without resolving the aforesaid motion, on May 26, 1998, the CA affirmed 24 the RTC Decision but deleted the award of attorney's fees. 25 Petitioners moved for the reconsideration of the aforesaid decision. 26 Thereafter, they filed several motions asking the Honorable Justice Ruben T. Reyes to inhibit from further proceeding with the case allegedly because of his close association with Ms. Bautista's uncle-in-law. 27 In a Resolution 28 dated December 10, 1998, the CA denied the motions for lack of merit. The appellate court considered said motions as repetitive of their previous arguments, irrelevant and obviously dilatory. 29 As to the motion for inhibition of the Honorable Justice Reyes, the same was denied, as the appellate court justice stressed that the decision and the resolution were not affected by extraneous matters. 30Lastly, the appellate court granted respondent's motion for execution and directed the RTC to issue a new writ of execution of its decision, with the exception of the award of attorney's fees which the CA deleted. 31 Petitioners now come before this Court in this petition for review on certiorari raising the following issues: I. Whether this ejectment suit should be dismissed and whether petitioners are entitled to damages for the unauthorized and malicious filing by Rosario (sic) Bautista of this ejectment case, it being clear that [Roswinda] whether as general manager or by virtue of her subsequent designation by the Board of Directors as the corporation's attorney-in-fact had no legal capacity to institute the ejectment suit, independently of whether Director Pacana's Order setting aside the SEC revocation Order is a mere scrap of paper. HDTSIE

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II. Whether the RTC's and the Honorable Court of Appeals' failure and refusal to resolve the most fundamental factual issues in the instant ejectment case render said decisions void on their face by reason of the complete abdication by the RTC and the Honorable Justice Ruben Reyes of their constitutional duty not only to clearly and distinctly state the facts and the law on which a decision is based but also to resolve the decisive factual issues in any given case. III. Whether the (1) failure and refusal of Honorable Justice Ruben Reyes to inhibit himself, despite his admission by reason of his silence of petitioners' accusation that the said Justice enjoyed a $7,000.00 scholarship grant courtesy of the uncle-in-law of respondent "corporation's" purported general manager and (2), worse, his act of ruling against the petitioners and in favor of the respondent "corporation" constitute an unconstitutional deprivation of petitioners' property without due process of law. 32 In addition to Ms. Bautista's lack of capacity to sue, petitioners insist that respondent company has no standing to sue as a juridical person in view of the suspension and eventual revocation of its certificate of registration. 33 They likewise question the factual findings of the court on the bases of their ejectment from the subject premises. Specifically, they fault the appellate court for not finding that: 1) their non-payment of rentals was justified; 2) they were deprived of possession of all the units subject of the lease contract except Room 35; and 3) respondent violated the terms of the contract by its continued refusal to turn over possession of Rooms 36, 37 and 38. Petitioners further prayed that a Temporary Restraining Order (TRO) be issued enjoining the CA from enforcing its Resolution directing the issuance of a Writ of Execution. Thus, in a Resolution 34 dated January 18, 1999, this Court directed the parties to maintain the status quo effective immediately until further orders.

The petition lacks merit. We uphold the capacity of respondent company to institute the ejectment case. Although the Securities and Exchange Commission (SEC) suspended and eventually revoked respondent's certificate of registration on February 16, 1995, records show that it instituted the action for ejectment on December 15, 1993. Accordingly, when the case was commenced, its registration was not yet revoked. 35 Besides, as correctly held by the appellate court, the SEC later set aside its earlier orders of suspension and revocation of respondent's certificate, rendering the issue moot and academic. 36 We likewise affirm Ms. Bautista's capacity to sue on behalf of the company despite lack of proof of authority to so represent it. A corporation has no powers except those expressly conferred on it by the Corporation Code and those that are implied from or are incidental to its existence. In turn, a corporation exercises said powers through its board of directors and/or its duly authorized officers and agents. Physical acts, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of directors. 37 Thus, any person suing on behalf of the corporation should present proof of such authority. Although Ms. Bautista initially failed to show that she had the capacity to sign the verification and institute the ejectment case on behalf of the company, when confronted with such question, she immediately presented the Secretary's Certificate 38 confirming her authority to represent the company. There is ample jurisprudence holding that subsequent and substantial compliance may call for the relaxation of the rules of procedure in the interest of justice. 39 In Novelty Phils., Inc. v. Court of Appeals, 40 the Court faulted the appellate court for dismissing a petition solely on petitioner's failure to timely submit proof of authority to sue on behalf of the corporation. In Pfizer, Inc. v. Galan, 41 we upheld the sufficiency of a petition verified by an employment specialist despite the total absence of a board resolution authorizing her to act for and on behalf of the corporation. Lastly, in China Banking Corporation v. Mondragon International Philippines, Inc., 42 we relaxed the rules of procedure because the corporation ratified the manager's status as an authorized signatory. In all of the above cases, we brushed aside technicalities in the interest of justice. This is not to say that we disregard the requirement of prior authority to act in the name of a corporation. The relaxation of the rules applies only to highly meritorious cases, and when there is substantial compliance. While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and while the swift unclogging of court dockets is a laudable objective, we should not insist on strict adherence to the rules at the expense of substantial justice. 43 Technical and procedural rules are intended to help secure, not suppress, the cause of justice; and a deviation

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from the rigid enforcement of the rules may be allowed to attain that prime objective, for, after all, the dispensation of justice is the core reason for the existence of courts. 44 As to the denial of the motion to inhibit Justice Reyes, we find the same to be in order. First, the motion to inhibit came after the appellate court rendered the assailed decision, that is, after Justice Reyes had already rendered his opinion on the merits of the case. It is settled that a motion to inhibit shall be denied if filed after a member of the court had already given an opinion on the merits of the case, the rationale being that "a litigant cannot be permitted to speculate on the action of the court . . . (only to) raise an objection of this sort after the decision has been rendered." 45 Second, it is settled that mere suspicion that a judge is partial to one of the parties is not enough; there should be evidence to substantiate the suspicion. Bias and prejudice cannot be presumed, especially when weighed against a judge's sacred pledge under his oath of office to administer justice without regard for any person and to do right equally to the poor and the rich. There must be a showing of bias and prejudice stemming from an extrajudicial source, resulting in an opinion on the merits based on something other than what the judge learned from his participation in the case. 46 We would like to reiterate, at this point, the policy of the Court not to tolerate acts of litigants who, for just about any conceivable reason, seek to disqualify a judge (or justice) for their own purpose, under a plea of bias, hostility, prejudice or prejudgment. 47 We now come to the more substantive issue of whether or not the petitioners may be validly ejected from the leased premises. Unlawful detainer cases are summary in nature. In such cases, the elements to be proved and resolved are the fact of lease and the expiration or violation of its terms. 48 Specifically, the essential requisites of unlawful detainer are: 1) the fact of lease by virtue of a contract, express or implied; 2) the expiration or termination of the possessor's right to hold possession; 3) withholding by the lessee of possession of the land or building after the expiration or termination of the right to possess; 4) letter of demand upon lessee to pay the rental or comply with the terms of the lease and vacate the premises; and 5) the filing of the action within one year from the date of the last demand received by the defendant. 49 It is undisputed that petitioners and respondent entered into two separate contracts of lease involving nine (9) rooms of the San Luis Building. Records, likewise, show that respondent repeatedly demanded that petitioners vacate the premises, but the latter refused to heed the demand; thus, they remained in possession of the premises. The only contentious issue is whether there was indeed a violation of the terms of the contract: on the part of petitioners, whether they failed to pay the stipulated rent without justifiable cause; while on the part of respondent, whether it prevented petitioners from occupying the leased premises except Room 35. This issue involves questions of fact, the resolution of which requires the evaluation of the evidence presented. The MeTC, the RTC and the CA all found that petitioners failed to perform their obligation to pay the stipulated rent. It is settled doctrine that in a civil case, the conclusions of fact of the trial court, especially when affirmed by the Court of Appeals, are final and conclusive, and cannot be reviewed on appeal by the Supreme Court. 50 Albeit the rule admits of exceptions, not one of them obtains in this case. 51 To settle this issue once and for all, we deem it proper to assess the array of factual findings supporting the court's conclusion. The evidence of petitioners' non-payment of the stipulated rent is overwhelming. Petitioners, however, claim that such nonpayment is justified by the following: 1) the refusal of respondent to allow petitioners to use the leased properties, except room 35; 2) respondent's refusal to turn over Rooms 36, 37 and 38; and 3) respondent's refusal to accept payment tendered by petitioners. Petitioners' justifications are belied by the evidence on record. As correctly held by the CA, petitioners' communications to respondent prior to the filing of the complaint never mentioned their alleged inability to use the rooms. 52 What they pointed out in their letters is that they did not know to whom payment should be made, whether to Ms. Bautista or to Pacheco. 53 In their July 26 and October 30, 1993 letters, petitioners only questioned the method of computing their electric billings without, however, raising a complaint about their failure to use the rooms. 54 Although petitioners stated in their December 30, 1993 letter that respondent failed to fulfill its part of the contract, 55 nowhere did they specifically refer to their inability to use the leased rooms. Besides, at that time, they were already in default on their rentals for more than a year. If it were true that they were allowed to use only one of the nine (9) rooms subject of the contract of lease, and considering that the rooms were intended for a business purpose, we cannot understand why they did not specifically assert their right. If we believe petitioners' contention that they had been prevented from using the rooms for more than a year before the

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complaint for ejectment was filed, they should have demanded specific performance from the lessor and commenced an action in court. With the execution of the contract, petitioners were already in a position to exercise their right to the use and enjoyment of the property according to the terms of the lease contract. 56 As borne out by the records, the fact is that respondent turned over to petitioners the keys to the leased premises and petitioners, in fact, renovated the rooms. Thus, they were placed in possession of the premises and they had the right to the use and enjoyment of the same. They, likewise, had the right to resist any act of intrusion into their peaceful possession of the property, even as against the lessor itself. Yet, they did not lift a finger to protect their right if, indeed, there was a violation of the contract by the lessor. What was, instead, clearly established by the evidence was petitioners' non-payment of rentals because ostensibly they did not know to whom payment should be made. However, this did not justify their failure to pay, because if such were the case, they were not without any remedy. They should have availed of the provisions of the Civil Code of the Philippines on the consignation of payment and of the Rules of Court on interpleader.

Article 1256 of the Civil Code provides: Article 1256.If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due. Consignation alone shall produce the same effect in the following cases: xxx xxx xxx (4)When two or more persons claim the same right to collect; xxx xxx xxx. Consignation shall be made by depositing the things due at the disposal of a judicial authority, before whom the tender of payment shall be proved in a proper case, and the announcement of the consignation in other cases. 57 In the instant case, consignation alone would have produced the effect of payment of the rentals. The rationale for consignation is to avoid the performance of an obligation becoming more onerous to the debtor by reason of causes not imputable to him. 58 Petitioners claim that they made a written tender of payment and actually prepared vouchers for their monthly rentals. But that was insufficient to constitute a valid tender of payment. Even assuming that it was valid tender, still, it would not constitute payment for want of consignation of the amount. Well-settled is the rule that tender of payment must be accompanied by consignation in order that the effects of payment may be produced. 59 Moreover, Section 1, Rule 62 of the Rules of Court provides: Section 1.When interpleader proper. Whenever conflicting claims upon the same subject matter are or may be made against a person who claims no interest whatever in the subject matter, or an interest which in whole or in part is not disputed by the claimants, he may bring an action against the conflicting claimants to compel them to interplead and litigate their several claims among themselves. Otherwise stated, an action for interpleader is proper when the lessee does not know to whom payment of rentals should be made due to conflicting claims on the property (or on the right to collect). 60 The remedy is afforded not to protect a person against double liability but to protect him against double vexation in respect of one liability. 61 Notably, instead of availing of the above remedies, petitioners opted to refrain from making payments. Neither can petitioners validly invoke the non-delivery of Rooms 36, 37 and 38 as a justification for non-payment of rentals. Although the two contracts embraced the lease of nine (9) rooms, the terms of the contracts with their particular reference to specific rooms and the monthly rental for each easily raise the inference that the parties intended the lease of each room separate from that of the others. There is nothing in the contract which would lead to the conclusion that the lease of one or more rooms was to be made dependent upon the lease of all the nine (9) rooms. Accordingly, the use of each room by the lessee gave rise to the corresponding obligation to pay the monthly rental for the same. Notably, respondent demanded payment of rentals only for the rooms actually delivered to, and used by, petitioners.

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It may also be mentioned that the contract specifically provides that the lease of Rooms 36, 37 and 38 was to take effect only when the tenants thereof would vacate the premises. Absent a clear showing that the previous tenants had vacated the premises, respondent had no obligation to deliver possession of the subject rooms to petitioners. Thus, petitioners cannot use the non-delivery of Rooms 36, 37 and 38 as an excuse for their failure to pay the rentals due on the other rooms they occupied. In light of the foregoing disquisition, respondent has every right to exercise his right to eject the erring lessees. The parties' contracts of lease contain identical provisions, to wit: In case of default by the LESSEE in the payment of rental on the fifth (5th) day of each month, the amount owing shall as penalty bear interest at the rate of FOUR percent (4%) per month, to be paid, without prejudice to the right of the LESSOR to terminate his contract, enter the premises, and/or eject the LESSEE as hereinafter set forth; 62 Moreover, Article 1673 63 of the Civil Code gives the lessor the right to judicially eject the lessees in case of non-payment of the monthly rentals. A contract of lease is a consensual, bilateral, onerous and commutative contract by which the owner temporarily grants the use of his property to another, who undertakes to pay the rent therefor. 64 For failure to pay the rent, petitioners have no right to remain in the leased premises. WHEREFORE, premises considered, the petition is DENIED and the Status Quo Order dated January 18, 1999 is hereby LIFTED. The Decision of the Court of Appeals dated May 26, 1998 and its Resolution dated December 10, 1998 in CA-G.R. SP No. 37739 are AFFIRMED. SO ORDERED.

[G.R. No. 149237. July 11, 2006.] CHINA BANKING CORPORATION, petitioner, vs. CORPORATION, respondent. DYNE-SEM ELECTRONICS

DECISION

CORONA, J p: On June 19 and 26, 1985, Dynetics, Inc. (Dynetics) and Elpidio O. Lim borrowed a total of P8,939,000 from petitioner China Banking Corporation. The loan was evidenced by six promissory notes. 1 The borrowers failed to pay when the obligations became due. Petitioner consequently instituted a complaint for sum of money 2 on June 25, 1987 against them. The complaint sought payment of the unpaid promissory notes plus interest and penalties. Summons was not served on Dynetics, however, because it had already closed down. Lim, on the other hand, filed his answer on December 15, 1987 denying that "he promised to pay [the obligations] jointly and severally to [petitioner]." 3 On January 7, 1988, the case was scheduled for pre-trial with respect to Lim. The case against Dynetics was archived. On September 23, 1988, an amended complaint 4 was filed by petitioner impleading respondent Dyne-Sem Electronics Corporation (Dyne-Sem) and its stockholders Vicente Chuidian, Antonio Garcia and Jacob Ratinoff. According to petitioner, respondent was formed and organized to be Dynetics' alter ego as established by the following circumstances:

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Dynetics, Inc. and respondent are both engaged in the same line of business of manufacturing, producing, assembling, processing, importing, exporting, buying, distributing, marketing and testing integrated circuits and semiconductor devices; [t]he principal office and factory site of Dynetics, Inc. located at Avocado Road, FTI Complex, Taguig, Metro Manila, were used by respondent as its principal office and factory site; [r]espondent acquired some of the machineries and equipment of Dynetics, Inc. from banks which acquired the same through foreclosure; [r]espondent retained some of the officers of Dynetics, Inc. 5 xxx xxx xxx On December 28, 1988, respondent filed its answer, alleging that: 5.1[t]he incorporators as well as present stockholders of [respondent] are totally different from those of Dynetics, Inc., and not one of them has ever been a stockholder or officer of the latter; 5.2[n]ot one of the directors of [respondent] is, or has ever been, a director, officer, or stockholder of Dynetics, Inc.; 5.3[t]he various facilities, machineries and equipment being used by [respondent] in its business operations were legitimately and validly acquired, under arms-length transactions, from various corporations which had become absolute owners thereof at the time of said transactions; these were not just "taken over" nor "acquired from Dynetics" by [respondent], contrary to what plaintiff falsely and maliciously alleges; 5.4[respondent] acquired most of its present machineries and equipment as second-hand items to keep costs down; 5.5[t]he present plant site is under lease from Food Terminal, Inc., a government-controlled corporation, and is located inside the FTI Complex in Taguig, Metro Manila, where a number of other firms organized in 1986 and also engaged in the same or similar business have likewise established their factories; practical convenience, and nothing else, was behind [respondent's] choice of plant site; 5.6[respondent] operates its own bonded warehouse under authority from the Bureau of Customs which has the sole and absolute prerogative to authorize and assign customs bonded warehouses; again, practical convenience played its role here since the warehouse in question was virtually lying idle and unused when said Bureau decided to assign it to [respondent] in June 1986. 6 On February 28, 1989, the trial court issued an order archiving the case as to Chuidian, Garcia and Ratinoff since summons had remained unserved. AHECcT After hearing, the court a quo rendered a decision on December 27, 1991 which read: . . . [T]he Court rules that Dyne-Sem Electronics Corporation is not an alter ego of Dynetics, Inc. Thus, Dyne-Sem Electronics Corporation is not liable under the promissory notes. xxx xxx xxx WHEREFORE, judgment is hereby rendered ordering Dynetics, Inc. and Elpidio O. Lim, jointly and severally, to pay plaintiff. xxx xxx xxx

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Anent the complaint against Dyne-Sem and the latter's counterclaim, both are hereby dismissed, without costs. SO ORDERED. 7 From this adverse decision, petitioner appealed to the Court of Appeals 8 but the appellate court dismissed the appeal and affirmed the trial court's decision. 9 It found that respondent was indeed not an alter ego of Dynetics. The two corporations had different articles of incorporation. Contrary to petitioner's claim, no merger or absorption took place between the two. What transpired was a mere sale of the assets of Dynetics to respondent. The appellate court denied petitioner's motion for reconsideration. 10 Hence, this petition for review 11 with the following assigned errors: VI. Issues What is the quantum of evidence needed for the trial court to determine if the veil of corporat[e] fiction should be pierced? [W]hether or not the Regional Trial Court of Manila Branch 15 in its Decision dated December 27, 1991 and the Court of Appeals in its Decision dated February 28, 2001 and Resolution dated July 27, 2001, which affirmed en toto [Branch 15, Manila Regional Trial Court's decision,] have ruled in accordance with law and/or applicable [jurisprudence] to the extent that the Doctrine of Piercing the Veil of Corporat[e] Fiction is not applicable in the case at bar? 12 We find no merit in the petition. The question of whether one corporation is merely an alter ego of another is purely one of fact. So is the question of whether a corporation is a paper company, a sham or subterfuge or whether petitioner adduced the requisite quantum of evidence warranting the piercing of the veil of respondent's corporate entity. This Court is not a trier of facts. Findings of fact of the Court of Appeals, affirming those of the trial court, are final and conclusive. The jurisdiction of this Court in a petition for review on certiorari is limited to reviewing only errors of law, not of fact, unless it is shown, inter alia, that: (a) the conclusion is grounded entirely on speculations, surmises and conjectures; (b) the inference is manifestly mistaken, absurd and impossible; (c) there is grave abuse of discretion; (d) the judgment is based on a misapplication of facts; (e) the findings of fact of the trial court and the appellate court are contradicted by the evidence on record and (f) the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of both parties. 13 We have reviewed the records and found that the factual findings of the trial and appellate courts and consequently their conclusions were supported by the evidence on record. The general rule is that a corporation has a personality separate and distinct from that of its stockholders and other corporations to which it may be connected. 14 This is a fiction created by law for convenience and to prevent injustice. 15 Nevertheless, being a mere fiction of law, peculiar situations or valid grounds may exist to warrant the disregard of its independent being and the piercing of the corporate veil. 16 In Martinez v. Court of Appeals, 17 we held: The veil of separate corporate personality may be lifted when such personality is used to defeat public convenience, justify wrong, protect fraud or defend crime; or used as a shield to confuse the legitimate issues; or when the corporation is merely an adjunct, a business conduit or an alter ego of another corporation or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation; or when the corporation is used as a cloak or cover for fraud or illegality, or to work injustice, or where necessary to achieve equity or for the protection of the creditors. In such cases, the corporation will be considered as a mere association of persons. The liability will directly attach to the stockholders or to the other corporation. To disregard the separate juridical personality of a corporation, the wrongdoing must be proven clearly and convincingly. 18

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In this case, petitioner failed to prove that Dyne-Sem was organized and controlled, and its affairs conducted, in a manner that made it merely an instrumentality, agency, conduit or adjunct of Dynetics, or that it was established to defraud Dynetics' creditors, including petitioner. The similarity of business of the two corporations did not warrant a conclusion that respondent was but a conduit of Dynetics. As we held inUmali v. Court of Appeals, 19 "the mere fact that the businesses of two or more corporations are interrelated is not a justification for disregarding their separate personalities, absent sufficient showing that the corporate entity was purposely used as a shield to defraud creditors and third persons of their rights." Likewise, respondent's acquisition of some of the machineries and equipment of Dynetics was not proof that respondent was formed to defraud petitioner. As the Court of Appeals found, no merger 20 took place between Dynetics and respondent Dyne-Sem. What took place was a sale of the assets 21 of the former to the latter. Merger is legally distinct from a sale of assets. 22 Thus, where one corporation sells or otherwise transfers all its assets to another corporation for value, the latter is not, by that fact alone, liable for the debts and liabilities of the transferor. Petitioner itself admits that respondent acquired the machineries and equipment not directly from Dynetics but from the various corporations which successfully bidded for them in an auction sale. The contracts of sale executed between the winning bidders and respondent showed that the assets were sold for considerable amounts. 23 The Court of Appeals thus correctly ruled that the assets were not "diverted" to respondent as an alter ego of Dynetics. 24 The machineries and equipment were transferred and disposed of by the winning bidders in their capacity as owners. The sales were therefore valid and the transfers of the properties to respondent legal and not in any way in contravention of petitioner's rights as Dynetics' creditor.

Finally, it may be true that respondent later hired Dynetics' former Vice-President Luvinia Maglaya and Assistant Corporate Counsel Virgilio Gesmundo. From this, however, we cannot conclude that respondent was an alter ego of Dynetics. In fact, even the overlapping of incorporators and stockholders of two or more corporations will not necessarily lead to such inference and justify the piercing of the veil of corporate fiction. 25Much more has to be proven. cITaCS Premises considered, no factual and legal basis exists to hold respondent Dyne-Sem liable for the obligations of Dynetics to petitioner. WHEREFORE, the petition is hereby DENIED. The assailed Court of Appeals' decision and resolution in CA-G.R. CV No. 40672 are hereby AFFIRMED. Costs against petitioner. SO ORDERED.

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