ConceptBuildersInc.,v.NLRCandMarabeet.al., G.R. No. 10873 Ma! "#, 1##$ %&RM'(I(IM), *R.,*.

,acts+ -etitioner Concept Builders, Inc., a do.estic corporation, en/a/ed in t0e constructionbusiness e.plo!ed -rivate respondents as laborers, carpenters and ri//ers. )1ter t0e pro2ect in30ic0t0e!3ere0ired0adbeenco.pleted,t0e! 3ereservedindividual3rittennoticeso1 ter.ination o1 e.plo!.ent b! petitioner statin/ t0at t0eir contracts o1 e.plo!.ent 0ad e4pired. -ublicrespondent1oundittobe,t0e1act,0o3ever,t0atatt0eti.eo1t0eter.inationo1privaterespondent5se.plo!.ent,t0e pro2ectin30ic0t0e!3ere0ired0adnot!etbeen1inis0edandco.pleted. -etitioner 0ad to en/a/e t0e services o1 sub6 contractors 30ose 3or7ers per1or.ed t0e1unctions o1 private respondents. )//rieved, private respondents 1iled a co.plaint 1or ille/al dis.issal, un1air labor practice and non6pa!.ento1t0eirle/al0olida!pa!,overti.e pa!andt0irteent06.ont0pa!a/ainstpetitioner. 80e Labor )rbiter rendered 2ud/.ent orderin/ petitioner to reinstate private respondents and to pa!t0e.bac73a/ese9uivalenttoone!earort0ree0undred3or7in/da!s.80eNationalLabor Relations Co..ission :NLRC; dis.issed t0e .otion 1or reconsideration 1iled b! petitioner on t0e/round t0at t0e said decision 0ad alread! beco.e 1inal and e4ecutor!. 80e Labor )rbiter issued a3rit o1 e4ecution and 3as partiall! satis1ied t0rou/0 /arnis0.ent o1 su.s 1ro. petitioner5s debtor,t0eMetropolitan<ater3or7sand(e3era/e)ut0orit! 3it0t0ea.ountturnedovertot0ecas0iero1 t0e NLRC. )s to t0e balance o1 t0e a3ard, t3o alias 3rits o1 e4ecution 3ere issued but to no availsince t0e properties stated 3ere alle/ed to be o3ned b! anot0er corporation, o1 %!dro -ipes-0ilippines,Inc.:%--I;. In t0e li/0t o1 suc0 circu.stances, a =brea76open order 3as issued inspite o1 a t0ird6part! clai. 1iled>ennis Cu!e/7en/ in be0al1 o1 %--I. It 3as alle/ed t0at %--I and petitioner corporation 3ereo3ned b! t0e sa.e incorporator?stoc70olders. 80e! also alle/ed t0at petitioner te.poraril!suspended its business operations in order to evade its le/al obli/ations to t0e. and t0at privaterespondents 3ere 3illin/ to post an inde.nit! bond to ans3er 1or an! da.a/es 30ic0 petitioner and%--I.a!su11erbecauseo1t0eissuanceo1t0ebrea76open order. Issue+ <0et0er t0e National Labor Relations Co..ission co..itted /rave abuse o1 discretion30en it issued a =brea76open order= to t0e s0eri11 to be en1orced a/ainst personal propert! 1ound int0e pre.ises o1 petitioner5s sister co.pan!. %eld+ @es. 80e sister corporation is used as a s0ield to evade a corporation5s subsidiar! liabilit! 1or da.a/es, t0e corporation .a! not be 0eard to sa! t0at it 0as a personalit! separate and distinct1ro. t0e ot0er corporation. 80e piercin/ o1 t0e corporate veil co.es into pla!. Clearl!, petitioner ceased its business operations in order to evade t0e pa!.ent to private respondents o1 bac73a/es and to bar t0eir reinstate.ent to t0eir 1or.er positions. %--I is obviousl! a business conduito1 petitioner corporation and its e.er/ence 3as s7ill1ull! orc0estrated to avoid t0e 1inancial liabilit!t0at alread! attac0ed to petitioner corporation. 80e conditions under 30ic0 t0e 2uridical entit! .a! be disre/arded var! accordin/ to t0e peculiar 1acts and circu.stances o1 eac0 case. No 0ard and 1ast rule can be accuratel! laid do3n, butcertainl!, t0ere are so.e probative 1actors o1 identit! t0at 3ill 2usti1! t0e application o1 t0e doctrine .

Luxuria homes vs CA 302 SCRA 315 Business Organization Corporation Law Piercing the Vei o! Corporate "iction )ida -osadas 3as t0e o3ner o1 a 1.$ 0ectare land in (ucat, Muntinlupa. In 1#8#, s0e entered into an a/ree.ent 3it0 *ai.e Bravo 1or t0e latter to dra1t a develop.ent and arc0itectural desi/n 1or t0e said propert!. 80e contract price 3as - A0,000.00. -osadas /ave a do3n pa!.ent o1 -"A,000.00. Later, -osadas assi/ned 0er propert! to Lu4uria %o.es, Inc. 'ne o1 t0e 3itnesses to t0e deed o1 assi/n.ent and articles o1 incorporation 3as *ai.e Bravo. In 1##", Bravo 1inis0ed t0e arc0itectural desi/n so 0e proposed t0at 0e and 0is co.pan! .ana/e t0e develop.ent o1 t0e propert!. But -osadas turned do3n t0e proposal and t0erea1ter t0e business relations0ip bet3een t0e t3o 3ent sour. Bravo t0en de.anded -osadas to pa! t0e. t0e balance o1 t0eir a/ree.ent as re/ards t0e arc0itectural desi/n :- "A7;. Bravo also de.anded pa!.ent 1or so.e ot0er e4penses and 1ees 0e incurred i.e., ne/otiatin/ and relocatin/ t0e in1or.al settlers t0en occup!in/ t0e land o1 -osadas. -osadas re1used to .a7e pa!.ent. Bravo t0en 1iled a co.plaint 1or speci1ic per1or.ance a/ainst -osadas but 0e included Lu4uria %o.es as a co6de1endant as 0e alle/ed t0at Lu4uria %o.es 3as a .ere conduit o1 -osadasB t0at t0e said corporation 3as created in order to de1raud Bravo and avoid t0e pa!.ent o1 debt. ISSUE: <0et0er or not Lu4uria %o.es s0ould be i.pleaded. HELD: No. It 3as -osadas 30o entered into a contract 3it0 Bravo in 0er personal capacit!. Bravo 3as not able to prove t0at Lu4uria %o.es 3as a .ere conduit o1 -osadas. -osadas o3ns 2ust 33C o1 Lu4uria %o.es. ,urt0er, 30en Lu4uria %o.es 3as created, Bravo 3as t0ere as a 3itness. (o 0o3 can 0e clai. t0at t0e creation o1 said corporation 3as to de1raud 0i.. 80e eventual trans1er o1 -osadasD propert! to Lu4uria 3as 3it0 t0e 1ull 7no3led/e o1 Bravo. 80e a/ree.ent bet3een -osadas and Bravo 3as entered into even be1ore Lu4uria e4isted 0ence Lu4uria 3as never a part! t0ereto. <0atever liabilit! -osadas incurred arisin/ 1ro. said a/ree.ent .ust be borne b! 0er solel! and not in solidu. 3it0 Lu4uria. 8o disre/ard t0e separate 2uridical personalit! o1 a corporation, t0e 3ron/doin/ .ust be clearl! and convincin/l! establis0ed. It cannot be presu.ed.

Consolidated Bank and Trust Corp. v. CA + L.C. Diaz and Compan :"003; ? Carpio Facts LC >iaE Fpro1essional partners0ip en/a/ed in accountin/G opened a savin/s account 3it0 (olidban7. LC >iaE5s cas0ier, Macara!a, 1illed up t3o savin/s deposit slips, and s0e /ave t0e. H passboo7 to .essen/er Calapre and instructed 0i. to deposit t0e .one! 3it0 (olidban7. Calapre presented t0e deposit slips and passboo7 to t0e teller. %e le1t t0e passboo7 3it0 (olidban7 1irst as 0e 0ad to .a7e anot0er deposit at )llied Ban7, but 30en 0e returned, 0e 3as in1or.ed t0at so.ebod! /ot t0e passboo7. Calapre reported t0is to Macara!a. Macara!a H Calapre 3ent bac7 to (olidban7 3it0 a deposit slip F-"007 c0ec7G. <0en Macara!a as7ed about t0e passboo7, t0e teller said t0at so.eone s0orter t0an Calapre /ot it. Macara!a reported t0is .atter. 80e 1ollo3in/ da!, C&' >iaE called (olidban7 to stop an! transaction usin/ t0e passboo7 until t0e co.pan! could open a ne3 account. It 3as 1ound out t0at learned t0at -3007 3as 3it0dra3n 1ro. t0e account t0e previous da!. 80e 3it0dra3al slip bore t0e si/natures o1 t3o aut0oriEed si/natories o1 LC >iaE but t0e! denied si/nin/ it. Noel 8a.a!o received t0is su. o1 .one!. )n in1or.ation 1or &sta1a t0rou/0 ,alsi1ication o1 Co..ercial >ocu.ent 3as 1iled a/ainst one o1 t0eir .essen/ers :Ila/an; and one Roscoe IerdaEola :!irst ti#e the$ appeare% in the case %iscussion;, but t0e R8C dis.issed t0e cri.inal case. LC >iaE de.anded t0e return o1 t0eir .one! 1ro. (olidban7, but t0e latter re1used and a co.plaint 1or recover! o1 a su. o1 .one! 3as 1iled a/ainst t0e.. %o3ever, (olidban7 3as absolved. R8C applied rules on savin/s account 3ritten on t0e passboo7 F=-ossession o1 t0is boo7 s0all raise t0e presu.ption o1 o3ners0ip and an! pa!.ent or pa!.ents .ade b! t0e ban7 upon t0e production o1 t0e said boo7 and entr! t0erein o1 t0e 3it0dra3al s0all 0ave t0e sa.e e11ect as i1 .ade to t0e depositor personall!.=G R8C said t0at t0e burden o1 proo1 s0i1ted to LC >iaE to prove t0at t0e si/natures are not 1or/ed. )lso, t0e! applied t0e rule t0at t0e 0older o1 t0e passport is presu.ed to be t0e o3ner. It 3as also 0eld t0at (olidban7 did not 0ave an! participation in t0e custod! and care o1 t0e passboo7 and as suc0, t0eir act o1 allo3in/ t0e 3it0dra3al 3as not t0e pro4i.ate cause o1 t0e loss. 80e pro4i.ate cause 3as LC >iaED ne/li/ence. )s re/ards t0e contention t0at LC >iaE and (olidban7 0ad precautionar! procedures : i&e a secret han%sha&e o! sorts; 30enever t0e 1or.er 3it0dre3 a lar/e su., R8C pointed out t0at LC >iaE disre/arded t0is in t0e past 3it0dra3al. C), on t0e ot0er 0and, said t0at t0e pro4i.ate cause o1 t0e unaut0oriEed 3it0dra3al is (olidban75s ne/li/ence, appl!in/ NCC "17$. C) said t0e 3 ele.ents o1 J> are present Fda.a/esB 1ault or ne/li/enceB connection o1 cause and e11ectG. 80e teller could 0ave called up LC >iaE since t0e a.ount bein/ dra3n 3as si/ni1icant. -ro4i.ate cause is teller5s 1ailure to call LC >iaE. C) ruled t0at 30ile LC >iaE 3as ne/li/ent in entrustin/ its deposits to its .essen/er and its .essen/er in leavin/ t0e passboo7 3it0 t0e teller, (olidban7 could not escape liabilit!

because o1 t0e doctrine o1 Klast clear c0ance.L (olidban7 could 0ave averted t0e in2ur! 0ad it called up LC >iaE to veri1! t0e 3it0dra3al. !ATI" On So i%'an&(s !i%uciar$ %ut$ un%er the aw (C sa!s t0at (olidban7 is liable 1or breac0 o1 M due to ne/li/ence Fcu pa contractua G. M Fsavin/s deposit a/ree.entG bet3een ban7 and depositor /overned b! provisions on si.ple loanB ban7 is t0e debtor and depositor is t0e creditor. Ban7s are under obli/ation to treat accounts o1 depositors 3it0 .eticulous care F0i/0er t0an %i igence o! a goo% !ather o! a !a#i $ standardG, bearin/ in .ind t0e 1iduciar! nature o1 t0eir relations0ip. 80e ban75s obli/ation to observe 0i/0 standards o1 inte/rit! and per1or.ance is dee.ed 3ritten in ever! deposit a/ree.ent. %o3ever, t0is nature does not convert M 1ro. a si.ple loan to a trust a/ree.ent :1ailure b! ban7 to pa! depositor is 1ailure to pa! a si.ple loan onl!;. So i%'an&(s 'reach o! )*tua o' igation ,or breac0 o1 t0e savin/s deposit a/ree.ent due to ne/li/ence, or cu pa contractua , t0e ban7 is liable to its depositor. <0en t0e passboo7 is in t0e possession o1 (olidban7Ds tellers durin/ 3it0dra3als, t0e la3 i.poses an even 0i/0er de/ree o1 dili/ence. Li7e3ise, tellers .ust e4ercise a 0i/0 de/ree o1 dili/ence in insurin/ t0at t0e! return t0e passboo7 onl! to t0e depositor or aut0oriEed representative. In cu pa contractua , once t0e plainti11 proves a breac0 o1 contract, t0ere is a presu.ption t0at t0e de1endant 3as at 1ault or ne/li/ent. 80e burden is on t0e de1endant to prove t0at 0e 3as not at 1ault or ne/li/ent. In cu pa a+ui iana, t0e plainti11 0as t0e burden o1 proo1. (olidban7 1ailed to disc0ar/e t0is burden, a1ter LC >iaE establis0in/ t0e breac0 o1 M6tual obli/ation. %ence, (olidban7 is bound b! t0e ne/li/ence o1 its e.plo!ees. 80e de1ense o1 e4ercisin/ re9uired dili/ence in selectin/, supervisin/ e.plo!ees is N'8 a co.plete de1ense in cu pa contractua , unli7e in cu pa a+ui iana. Pro,i#ate cause o! unauthorize% with%rawa Solid#ank$s ne%li%en&e in not returnin% t'e pass#ook to Calapre (as t'e pro)imate &ause. F>e1inition+ cause 30ic0, in natural and continuous se9uence, unbro7en b! an! e11icient intervenin/ cause, produces t0e in2ur! and 3it0out 30ic0 t0e result 3ould not 0ave occurred.G R8C said t0at LC >iaED ne/li/ence 3as t0e pro4i.ate cause. %o3ever, (C sa!s LC >iaE 3as not at 1ault t0at t0e passboo7 landed in t0e 0ands o1 t0e i.postor. In 1act, it 3as in t0e possession o1 t0e ban7 30ile t0e deposit 3as bein/ processed. C) said t0at teller5s 1ailure to call LC >iaE 3as t0e pro4i.ate cause. (C sa!s t0e ban7 did not 0ave t0e dut! to call LC >iaE to con1ir. 3it0dra3al. -octrine o! ast c ear chance =<0ere bot0 parties are ne/li/ent but t0e ne/li/ent act o1 one is appreciabl! later t0an t0at o1 t0e ot0er, or 30ere it is i.possible to deter.ine 30ose 1ault or ne/li/ence caused t0e loss, t0e one 30o 0ad t0e last clear opportunit! to avoid t0e loss but 1ailed to do so, is c0ar/eable 3it0 t0e loss.=

(C >'&( N'8 )--L@ I8 %&R&. (olidban7 is liable 1or breac0 o1 contract due to ne/li/ence in t0e per1or.ance o1 its contractual obli/ation to LC >iaE. 80is is a case o1 cu pa contractua , 30ere neit0er t0e contributor! ne/li/ence o1 t0e plainti11 nor 0is last clear c0ance to avoid t0e loss, 3ould e4onerate t0e de1endant 1ro. liabilit!. (ince LC >iaE 3as /uilt! o1 contributor! ne/li/ence, (olidban75s liabilit! s0ould be reduced. FIRST PHIL INTL BANK VS CA 252 SCRA 25. Lega /thics "oru# Shopping Ci0i Law Contract o! Sa e Parties to a Sa es Contract -roducers Ban7 :no3 called ,irst -0ilippine International Ban7;, 30ic0 0as been under conservators0ip since 1#8 , is t0e o3ner o1 $ parcels o1 land. 80e Ban7 0ad an a/ree.ent 3it0 >e.etrio >e.etria and *ose *anolo 1or t0e t3o to purc0ase t0e parcels o1 land 1or a purc0ase price o1 -A.A .illion pesos. 80e said a/ree.ent 3as .ade b! >e.etria and *anolo 3it0 t0e Ban7Ds .ana/er, Mercurio Rivera. Later 0o3ever, t0e Ban7, t0rou/0 its conservator, Leonida &ncarnacion, sou/0t t0e repudiation o1 t0e a/ree.ent as it alle/ed t0at Rivera 3as not aut0oriEed to enter into suc0 an a/ree.ent, 0ence t0ere 3as no valid contract o1 sale. (ubse9uentl!, >e.etria and *anolo sued -roducers Ban7. 80e re/ional trial court ruled in 1avor o1 >e.etria et al. 80e Ban7 1iled an appeal 3it0 t0e Court o1 )ppeals. Mean30ile, %enr! Co, 30o 0olds 80C s0ares o1 stoc7s 3it0 t0e said Ban7, 1iled a .otion 1or intervention 3it0 t0e trial court. 80e trial court denied t0e .otion since t0e trial 0as been concluded alread! and t0e case is no3 pendin/ appeal. (ubse9uentl!, Co, assisted b! )CCR) la3 o11ice, 1iled a separate civil case a/ainst >e.etria and *anolo see7in/ to 0ave t0e purported contract o1 sale be declared unen1orceable a/ainst t0e Ban7. >e.etria et al ar/ued t0at t0e second case constitutes 1oru. s0oppin/. ISSUES: 1. <0et0er or not t0ere is 1oru. s0oppin/. ". <0et0er or not t0ere is a per1ected contract o1 sale. HELD: 1. @es. 80ere is 1oru. s0oppin/ because t0ere is identit! o1 interest and parties bet3een t0e 1irst case and t0e second case. 80ere is identit! o1 interest because bot0 cases sou/0t to 0ave t0e a/ree.ent, 30ic0 involves t0e sa.e propert!, be declared unen1orceable as a/ainst t0e Ban7. 80ere is identit! o1 parties even t0ou/0 t0e 1irst case is in t0e na.e o1 t0e ban7 as de1endant, and t0e second case is in t0e na.e o1 %enr! Co as plainti11. 80ere is still 1oru. s0oppin/ 0ere because %enr! Co essentiall! represents t0e ban7. Bot0 cases ai. to 0ave t0e ban7 escape liabilit! 1ro. t0e a/ree.ent it entered into 3it0 >e.etria et al. 80e (upre.e Court did not la! do3n an! disciplinar! action a/ainst t0e )CCR) la3!ers but t0e! 3ere 3arned t0at a repetition 3ill be dealt 3it0 .ore severel!. ". @es. 80ere is a per1ected contract o1 sale because t0e ban7 .ana/er, Rivera, entered into t0e a/ree.ent 3it0 apparent aut0orit!. 80is apparent aut0orit! 0as been dul! proved b! t0e evidence presented 30ic0 s0o3ed t0at in all t0e dealin/s and transactions, Rivera participated activel! 3it0out t0e opposition o1 t0e conservator. In 1act, in t0e advertise.ents and

announce.ents o1 t0e ban7, Rivera 3as desi/nated as t0e /o6to /u! in relation to t0e disposition o1 t0e Ban7Ds assets.

Palay Inc v Clave . -ala! Inc. t0rou/0 its -resident 'nstott e4ecutedi1o >u.pit a contract to sell a parcel o1 land in Crestvie3 %ei/0ts(ubd in )ntipolo 1or -"3300, 3it0 #C interest, pa!able 3it0 ado3npa!.ent and .ont0l! install.ents. 80e contract contains aprovision t0at s0ould >u.pit de1ault in pa!.ent o1 an! .ont0l!install.ent a1ter t0e lapse o1 #0 da!s 1ro. t0e e4piration o1 t0e 1.ont0 /race period, -ala! Inc 3ill auto.aticall! rescind t0e contract3it0out need o1 notice and 3ill 1or1eit all pa!.ents .ade. >u.pitpaid t0e do3npa!.ent and .ade several pa!.ents, but soonde1aulted. $ !ears a1ter t0e last pa!.ent, >u.pit 3anted to updateall 0is overdue accounts, but 3as told b! -ala! Inc t0at t0e contract0ad alread! been rescinded in accordance 3it0 t0e contract and t0eland 0ad alread! been sold. >u.pit 1iled a co.plaint 3it0 t0e N%)30ic0 0eld t0e contract void 1or absence o1 2udicial or notarialde.and and instructed -ala! Inc and 'nstott to return to >u.pit all0e 0as paid plus 1"C interest 1ro. 1ilin/ o1 co.plaint. -ala!appealed to '- 30ic0 a11ir.ed t0e N%) resolution.I+ <?N 'nstott s0ould be 0eld solidaril! liable 3it0 -ala! Inc%+ No. GRNa corporation .a! not be .ade to ans3er 1or acts andliabilities o1 its stoc70olders or t0ose o1 t0e le/al entities to 30ic0 it.a! be connected and vise6versa. &4ceptionNt0e veil o1 corporate1iction .a! be pierced 30en+1.it is used as a s0ield to 1urt0er an end subversive o1 2ustice".it is used 1or purposes not intended b! t0e la3 t0at created it3.it is used to de1eat public convenience, or+ . 2 u s t i 1 ! a 3 r o n / A . p r o t e c t 1 r a u d $ . d e 1 e n d c r i . e 7.perpetuate 1rad or con1use le/iti.ate issues8.circu.vent t0e la3 or perpetuate deception#.use as an alter6e/o, ad2unct or business conduit 1or t0e sole bene1it o1 t0e stoc70olders t0e (C did not 1ind an! bad/es o1 1raud on t0e part o1 -ala! and'nstott. 80e! 0ad literall! and .ista7enl! relied on para/rap0 $ o1 t0e contract 30en it rescinded t0e sa.e, and 30ic0 3as 0eld to bevoid b! t0e N%) and '-. 'nstott 3as .ade liable because 0e 3ast0en t0e -resident and appeared to be t0e controllin/ stoc70older o1 -ala! Inc. No proo1 3as 1ound t0at 'nstott used t0e corporation tode1raud >u.pit. Onless su11icient proo1 appears on record t0at ano11icer 0as used t0e corporation to de1raud a t0ird part!, 0e cannotbe .ade personall! liable 2ust because 0e appeared to be t0e .a2orstoc70older. Mere o3ners0ip b! a sin/le stoc70older or b! anot0ercorporation o1 all or nearl! all o1 t0e capital stoc7 o1 a corporation isnot o1 itsel1 su11icient /round 1or disre/ardin/ t0e separate corporatepersonalit!

Liddel v CIR ( corporate entity was used to evade the payment of higher taxes) . Liddell P Co 3as en/a/ed in i.portin/ and retailin/ carsand truc7s. ,ran7 Liddell o3ned #8C o1 t0e stoc7s. LaterLiddell Motors Inc 3as or/aniEed to do retailin/ 1or Liddell PCo. ,ran7Ds 3i1e o3ned al.ost all o1 t0at corporationDs stoc7s.(ince t0en, Liddell P Co paid sales ta4 on t0e basis o1 its salesto Liddell Motors. But t0e CIR considered t0e sales b! LiddellMotors to t0e public as t0e basis 1or t0e ori/inal sales ta4.%+ 80e Court, a/reein/ 3it0 t0e CIR, 0eld t0at ,ran7 Liddello3ned bot0 corporations as 0is 3i1e could not 0ave 0ad t0e.one! to pa! 0er subscriptions. (uc0 1act alone t0ou/0 notsu11icient to 3arrant piercin/, but under t0e proven 1actsalone, Liddel Motors 3as t0e .ediu. created b! Liddel P Coto reduce its ta4 liabilit!. ) ta4pa!er 0as t0e le/al ri/0t todecrease, b! .eans 30ic0 t0e la3 per.its, t0e a.ount o1 30at ot0er3ise 3ould be 0is ta4es or alto/et0er avoid t0e.Bbut a du..! corporation servin/ no business purposes ot0ert0an as a blind, 3ill be disre/arded. ) ta4pa!er .a! /ainadvanta/e o1 doin/ business t0ru a corporation i1 0e pleases,but t0e revenue o11icers in t0e proper cases .a! disre/ard t0eseparate corporate entit! 30ere it serves but as a s0ield 1orta4 evasion and treat t0e person 30o actuall! .a! ta7e t0ebene1its o1 t0e transaction as t0e person accordin/l! ta4able.Mere o3ners0ip b! a sin/le stoc70older or b! anot0ercorporation o1 all or nearl! all capital stoc7s o1 t0e corporationis not b! itsel1 a su11icient /round 1or disre/ardin/ t0eseparate corporate personalit!. (ubstantial o3ners0ip in t0ecapital stoc7 o1 a corporation entitlin/ t0e s0are0older asi/ni1icant vote in t0e corporate a11airs allo3s t0e. nostandin/ or clai.s pertainin/ to corporate a11airs. <0ere acorporation is a du..! and serves no business purpose and isintended onl! as a blind, t0e corporate 1iction .a! be i/nored (ubstantial o3ners0ip in t0e capital stoc7 o1 a corporation entitlin/ t0e (% toa si/ni1icant vote in corporate a11airs allo3s t0en no standin/ or clai.spertainin/ to corporate a11airs. Mere o3ners0ip b! a sin/le (% or b! anot0ercorporation o1 all or nearl! all capital stoc7 o1 a corporation is not o1 itsel1 su11icient /round 1or disre/ardin/ t0e separate corporate personalit!

PNB VS RITTRATO GROUP

FACTS:

May 29, 1996: PNB International Finance Ltd. (PNB IFL! a "#$"idiary co%&any o' PNB, or(ani)ed and doin( $#"ine"" in *on( +on(, e,tended a letter o' credit in 'a-or o' t.e /itratto 0ro#&, Inc. (/itartto! in t.e a%o#nt o' 1S2344+ "ec#red $y real e"tate %ort(a(e" con"tit#ted o-er 5 &arcel" o' land in Ma6ati City

Se&te%$er 1996: increa"ed "#cce""i-ely to 1S21,154,444.44 No-e%$er 1996: to 1S21,294,444.44 Fe$r#ary 1997: 1S21,528,444.44 A&ril 1999: decrea"ed to 1S21,521,316.19 Ritratto Group, Inc. %ade re&ay%ent" o' t.e loan inc#rred $y re%ittin( t.o"e a%o#nt" to t.eir loan acco#nt :it. PNB IFL in *on( +on(.

A&ril 34, 1999: o#t"tandin( a%o#nted to 1S21,597,275.74 PNB IFL, t.ro#(. it" attorney in 'act PNB, noti'ied t.e% o' t.e 'oreclo"#re o' all t.e real e"tate %ort(a(e" and t.at t.e &ro&ertie" "#$;ected

May 28, 1999: /itratto 0ro#&, Inc 'iled a co%&laint 'or in;#nction :it. &rayer 'or t.e i""#ance o' a :rit o' &reli%inary in;#nction and<or te%&orary re"trainin( order $e'ore t.e /TC. (ranted 72 .o#r T/=

/TC and CA: di"%i""ed %otion to di"%i"" PNB IFL, i" a :.olly o:ned "#$"idiary o' de'endant P.ili&&ine National Ban6, t.e "#it a(ain"t t.e de'endant PNB i" a "#it a(ain"t PNB IFL

/ittratto: entire credit 'acility i" -oid a" it contain" "ti&#lation" in -iolation o' t.e &rinci&le o' %#t#ality o' contract"

ISS1>: ?<N PNB i" an alter e(o o' PNB IFL

*>L@: N=. Petition i" (ranted

PNB i" an a(ent :it. li%ited a#t.ority and "&eci'ic d#tie" #nder a "&ecial &o:er o' attorney incor&orated in t.e real e"tate %ort(a(e.

not &ri-y to t.e loan contract" entered into $y PNB IFL. %ere 'act t.at a cor&oration o:n" all o' t.e "toc6" o' anot.er cor&oration, ta6en alone i" not "#''icient to ;#"ti'y t.eir $ein( treated a" one entity. I' #"ed to &er'or% le(iti%ate '#nction", a "#$"idiaryA" "e&arate e,i"tence %ay $e re"&ected, and t.e lia$ility o' t.e &arent cor&oration a" :ell a" t.e "#$"idiary :ill $e con'ined to t.o"e ari"in( in t.eir re"&ecti-e $#"ine"". (eneral r#le t.e "toc6 o:ner".i& alone $y one cor&oration o' t.e "toc6 o' anot.er doe" not t.ere$y render t.e do%inant cor&oration lia$le 'or t.e tort" o' t.e "#$"idiary #nle"" t.e "e&arate cor&orate e,i"tence o' t.e "#$"idiary i" a %ere ".a%, or #nle"" t.e control o' t.e "#$"idiary i" "#c. t.at it i" $#t an in"tr#%entality or ad;#nct o' t.e do%inant cor&oration.

The Circumstance rendering the subsidiary an instrumentality (co%%on circ#%"tance"!

(a! T.e &arent cor&oration o:n" all or %o"t o' t.e ca&ital "toc6 o' t.e "#$"idiary. ($! T.e &arent and "#$"idiary cor&oration" .a-e co%%on director" or o''icer". (c! T.e &arent cor&oration 'inance" t.e "#$"idiary. (d! T.e &arent cor&oration "#$"cri$e" to all t.e ca&ital "toc6 o' t.e "#$"idiary or ot.er:i"e ca#"e" it" incor&oration.

(e! T.e "#$"idiary .a" (ro""ly inadeB#ate ca&ital. ('! T.e &arent cor&oration &ay" t.e "alarie" and ot.er e,&en"e" or lo""e" o' t.e "#$"idiary. ((! T.e "#$"idiary .a" "#$"tantially no $#"ine"" e,ce&t :it. t.e &arent cor&oration or no a""et" e,ce&t t.o"e con-eyed to or $y t.e &arent cor&oration. (.! In t.e &a&er" o' t.e &arent cor&oration or in t.e "tate%ent" o' it" o''icer", t.e "#$"idiary i" de"cri$ed a" a de&art%ent or di-i"ion o' t.e &arent cor&oration, or it" $#"ine"" or 'inancial re"&on"i$ility i" re'erred to a" t.e &arent cor&orationA" o:n. (i! T.e &arent cor&oration #"e" t.e &ro&erty o' t.e "#$"idiary a" it" o:n. (;! T.e director" or e,ec#ti-e" o' t.e "#$"idiary do not act inde&endently in t.e intere"t o' t.e "#$"idiary $#t ta6e t.eir order" 'ro% t.e &arent cor&oration. (6! T.e 'or%al le(al reB#ire%ent" o' t.e "#$"idiary are not o$"er-ed.