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G.R. No. 158086 February 14, 2008 ASJ CORPORATION and ANTONIO SAN JUAN, petitioners, vs. SPS.

EFREN & MAURA EVANGELISTA, respondents. FACTS: Respondents, under the name and style of R.M. Sy Chicks, are engaged in the large-scale business of buying broiler eggs, hatching them, and selling their hatchlings (chicks) and egg by-products in Bulacan and Nueva Ecija. For the incubation and hatching of these eggs, respondents availed of the hatchery services of ASJ Corp., a corporation duly registered in the name of San Juan and his family. Respondents delivered to petitioners various quantities of eggs at an agreed service fee of 80 centavos per egg, whether successfully hatched or not. Each delivery was reflected in a "Setting Report". Initially, the service fees were paid upon release of the eggs and by-products to respondents. But as their business went along, respondents delays on their payments were tolerated by San Juan, who just carried over the balance, as there may be, into the next delivery, out of keeping goodwill with respondents. Believing firmly that the total value of the eggs delivered was more than sufficient to cover the outstanding balance, Maura promised to settle their accounts only upon proper accounting by San Juan. San Juan disliked the idea and threatened to impound their vehicle and detain them at the hatchery compound if they should come back unprepared to fully settle their accounts with him. The parties tried to settle amicably their differences before police authorities, but to no avail. Thus, respondents filed with the RTC an action for damages based on petitioners retention of the chicks and by -products covered by Setting Report Nos. 108 to 113. The RTC ruled in favor of respondents. The RTC disregarded the corporate fiction of ASJ Corp., and held it and San Juan solidarily liable to respondents. Both parties appealed to the Court of Appeals. Respondents prayed for an additional award of actual damages for the cost of other unreturned by-products and as unrealized profits, while petitioners prayed for the reversal of the trial courts entire decision. The Court of Appeals denied both appeals for lack of merit and affi rmed the trial courts decision. The Court of Appeals, applying the doctrine of piercing the veil of corporate fiction, considered ASJ Corp. and San Juan as one entity, after finding that there was no bona fide intention to treat the corporation as separate and distinct from San Juan and his wife Iluminada. ISSUE: Whether or not the Court of Appeals erred in holding that the veil of corporate fiction is pierced thereby considering ASJ Corp. and Antonio San Juan as one entity for purposes of liability. HELD: NO. Although no hard and fast rule can be accurately laid down under which the juridical personality of a corporate entity may be disregarded, the following probative factors of identity justify the application of the doctrine of piercing the veil of corporate fiction in this case: (1) San Juan and his wife own the bulk of shares of ASJ Corp.; (2) The lot where the hatchery plant is located is owned by the San Juan spouses; (3) ASJ Corp. had no other properties or assets, except for the hatchery plant and the lot where it is located; (4) San Juan is in complete control of the corporation; (5) There is no bona fide intention to treat ASJ Corp. as a different entity from San Juan; and (6) The corporate fiction of ASJ Corp. was used by San Juan to insulate himself from the legitimate claims of respondents, defeat public convenience, justify wrong, defend crime, and evade a corporations subsidiary liability for damages. These findings, being purely one of fact, should be respected. The Court need not assess and evaluate the evidence all over again where the findings of both courts on these matters coincide. [G.R. Nos. 116124-25. November 22, 2000] BIBIANO O. REYNOSO, IV, petitioner, vs. HON. COURT OF APPEALS and GENERAL CREDIT CORPORATION, respondents. FACTS: A complaint for sum of money with preliminary attachment, was instituted in the then Court of First Instance of Rizal by CCCQC against petitioner, who had in the meantime been dismissed from his employment by CCC-Equity. The complaint was subsequently amended in order to include Hidelita Nuval, petitioners wi fe, as a party defendant. The complaint alleged that petitioner embezzled the funds of CCC-QC and out of this fund was used for the purchase of a house and lot located at Pasig City. The property was mortgaged to CCC, and was later foreclosed. The case was subsequently transferred to the Regional Trial Court of Quezon City, Branch 86, pursuant to the Judiciary Reorganization Act of 1980. The trial court rendered its decision dismissing the complaint for lack of merit. Both parties appealed to the then Intermediate Appellate Court. The appeal of Commercial Credit Corporation of Quezon City was dismissed for failure to pay docket fees. Petitioner, on the other hand, withdrew his appeal. Hence, the decision became final and, accordingly, a Writ of Execution was issued, however the judgment remained unsatisfied. Meanwhile, the CCC became known as the General Credit Corporation.
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The Regional Trial Court of Quezon City issued an Order directing General Credit Corporation to file its comment on petitioners motion for alias writ of execution. General Credit Corporation filed a Special Appearance and Opposition alleging that it was not a party to the case, and therefore petitioner should direct his claim against CCC-QC and not General Credit Corporation. The Regional Trial Court of Quezon City ordered the issuance of an alias writ of execution. Previously, General Credit Corporation instituted a complaint before the Regional Trial Court of Pasig against Bibiano Reynoso IV and Edgardo C. Tanangco, in his capacity as Deputy Sheriff of Quezon City , praying that the levy on its parcel of land located in Pasig, Metro Manila and covered by Transfer Certificate of Title No. 29940 be declared null and void, and that defendant sheriff be enjoined from consolidating ownership over the land and from further levying on other properties of General Credit. The Regional Trial Court of Pasig, Branch 167, did not issue a temporary restraining order. Thus, General Credit Corporation instituted two (2) petitions for certiorari with the Court of Appeals. The Court of Appeals rendered a decision in the two consolidated cases granting the injunctive relief and nullifying the orders issued by the trial court of Quezon City. Hence, this petition. ISSUE: THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT GENERAL CREDIT CORPORATION IS A STRANGER TO CIVIL CASE NO. Q-30583, INSTEAD OF, DECLARING THAT COMMERCIAL CREDIT CORPORATION OF QUEZON CITY IS THE ALTER EGO, INSTRUMENTALITY, CONDUIT OR ADJUNCT OF COMMERCIAL CREDIT CORPORATION AND ITS SUCCESSOR GENERAL CREDIT CORPORATION. HELD: YES. A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incident to its existence. It is an artificial being invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related. It was evolved to make possible the aggregation and assembling of huge amounts of capital upon which big business depends. It also has the advantage of non-dependence on the lives of those who compose it even as it enjoys certain rights and conducts activities of natural persons. Any piercing of the corporate veil has to be done with caution. However, the Court will not hesitate to use its supervisory and adjudicative powers where the corporate fiction is used as an unfair device to achieve an inequitable result, defraud creditors, evade contracts and obligations, or to shield it from the effects of a court decision. The corporate fiction has to be disregarded when necessary in the interest of justice. In First Philippine International Bank v. Court of Appeals, et al, the Court held: When the fiction is urged as a means of perpetrating a fraud or an illegal act or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, the achievement or perfection of a monopoly or generally the perpetration of knavery or crime, the veil with which the law covers and isolates the corporation from the members or stockholders who compose it will be lifted to allow for its consideration merely as an aggregation of individuals. Paraphrasing the ruling in Claparols v. Court of Industrial Relations, reiterated in Concept Builders Inc. v. National Labor Relations, it is very obvious that respondent seeks the protective shield of a corporate fiction whose veil the present case could, and should, be pierced as it was deliberately and maliciously designed to evade its financial obligation of its employees. If the corporate fiction is sustained, it becomes a handy deception to avoid a judgment debt and work an injustice. The decision raised to us for review is an invitation to multiplicity of litigation. As we stated in Islamic Directorate vs. Court of Appeals,[30] the ends of justice are not served if further litigation is encouraged when the issue is determinable based on the records. A court judgment becomes useless and ineffective if the employer, in this case CCC as a mother corporation, is placed beyond the legal reach of the judgment creditor who, after protracted litigation, has been found entitled to positive relief. Courts have been organized to put an end to controversy. This purpose should not be negated by an inapplicable and wrong use of the fiction of the corporate veil.

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vs. INLAND CONSTRUCTION AND DEVELOPMENT CORP., Respondent. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 123822 March 23, 2009 WESTMONT BANK (formerly ASSOCIATED CITIZENS BANK and now UNITED OVERSEAS BANK, PHILS.), Petitioner, vs. COURT OF APPEALS and INLAND CONSTRUCTION AND DEVELOPMENT CORP., Respondents FACTS: Inland Construction and Development Corp. obtained various loans and other credit accommodations from petitioner, then known as Associated Citizens Bank which later became United Overseas Bank, Phils., and still later Westmost Bank) in 1977. To secure the payment of its obligations, Inland executed real estate mortgages over three real properties in Pasig City. When the first and second promissory notes fell due, Inland defaulted in its payments. It, however, authorized the bank to debit P350,000 from its savings account to partially satisfy its obligations. It appears that by a Deed of Assignment, Conveyance and Release, Felix Aranda, President of Inland, assigned and conveyed all his rights and interests at Hanil-Gonzales Construction & Development (Phils.) Corporation (Hanil-Gonzales Corporation) in favor of Horacio Abrantes (Abrantes), Executive Vice-President and General Manager of Hanil-Gonzales Corporation. Under the same Deed of Assignment, it appears that Abrantes assumed, among other obligations of Inland and Aranda.The banks Account Officer, Lionel Calo Jr. (Calo), signed for its conformity to the deed. The trial court found that the bank ratified the act of its account officer Calo and it accordingly rendered judgment in favor of Inland forever restraining and enjoining the defendants Associated Citizens Bank and the Sheriff of this Court from proceeding with the foreclosure of and conducting an auction sale on the real estate. The bank appealed the trial courts decision to the Court of Appeals which the affirmed the decision in so far as it had ratified the Deed of Assignment. ISSUE: Whether or not the Court of Appeals erred in affirming the finding of the Trial Court that petitioner has ratified the Deed of Assignment and such ratification is binding on the Bank. HELD: NO. The general rule remains that, in the absence of authority from the board of directors, no person, not even its officers, can validly bind a corporation. If a corporation, however, consciously lets one of its officers, or any other agent, to act within the scope of an apparent authority, it will be estopped from denying such officers authority. The records show that Calo was the one assigned to transact on petitioners behalf respecting the loan transactions and arrangements of Inland as well as those of Hanil-Gonzales and Abrantes. Since it conducted business through Calo, who is an Account Officer, it is presumed that he had authority to sign for the bank in the Deed of Assignment. Petitioner relies heavily, however, on the Courts pronouncement in Yao Ka Sin Trading that it was incumbent upon; in this case, Inland to prove that petitioner had clothed its account officer with apparent power to conform to the Deed of Assignment. Unmistakably, the Courts directive in Yao Ka Sin Trading is that a corporation should first prove by clear evidence that its corporate officer is not in fact authorized to act on its behalf before the burden of evidence shifts to the other party to prove, by previous specific acts, that an officer was clothed by the corporation with apparent authority. It bears noting that in Westmont Bank v. Pronstroller, the therein petitioner Westmont Bank, through a management committee, proved that it rejected the letter-agreement entered into by its assistant vice-president. Consequently, the therein respondent had to prove by citing other instances of the said officers apparent authority to bind the bank-therein petitioner. In the present petitions, petitioner-bank failed to discharge its primary burden of proving that Calo was not authorized to bind it, as it did not present proof that Calo was unauthorized. It did not present, much less cite, any Resolution from its Board of Directors or its Charter or By-laws from which the Court could reasonably infer that he indeed had no authority to sign in its behalf or bind it in the Deed of Assignment. The May 20, 1985 inter-office memorandum28 stating that Calo had "no signing authority" remains self-serving as it does not even form part of petitioners body of evi dence. Both the trial courts and the appellate courts inferences and conclusion that petitioner ratified its account officers act are thus rationally based on evidence and circumstances duly highlighted in their respective decisions. Absent any serious abuse or evident lack of basis or capriciousness of any kind, the lower courts findings of fact are conclusive upon this Court.

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