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1. Palay, Inc. vs.

Clave
Facts:
- Albert Onstott as President of Palay, Inc., executed a contract to sell a parcel of land
located in Crestview Heights Subdivision in Antipolo, Rizal in favor of Nazario Dumpit.
- The contract provided for automatic extrajudicial rescission upon default in payment of
any monthly installment after the lapse of 90 days from the expiration of the grace period
of one month without need of notice and forfeiture of installments paid.
- Nazario Dumpit paid the downpayment and several installments but defaulted later
however.
- Almost 6 years later, Dumpit wrote the petitioner offering to update all his overdue
accounts with interest and seeking its written consent to the assignment of his rights to a
certain Lourdes Dizon.
- Petitioner replied informing Dumpit that his contract to sell had long been rescinded
pursuant to the automatic extrajudicial rescission provision of the contract and that the
lot had already been resold.
- Thereafter, Dumpit filed a complaint with the national Housing Authority questioning the
validity of the rescission and for reconveyance.
- National Housing Authority found the rescission void in the absence of either judicial or
notarial demand and ordered petitioner and Albert Onstott, in his capacity as the President
of corporation to jointly and severally be liable for refund.
- On appeal to the Office of the President, Presidential Executive Assistant Jacobo Clave,
respondent, affirmed the resolution of NHA.
- Hence, this petititon.
ISSUE:
1. Whether or not the contract was validly rescinded? NO.
2. Whether or not the president of the corporation can be made jointly and severally liable
with the corporation? No.
HELD:
When a real estate corporation extrajudicially rescinded a contract to sell but failed to fulfill its
obligation under the same contract to deliver a substitute lot or refund the purchase price, the
president of the corporation cannot be held liable even where he appears to be the controlling
stockholder absent sufficient proof that he used the corporation to defraud defaulting lot buyer.
Mere ownership by a single stockholder or by another corporation of all or nearly all capital
stock of corporation not sufficient ground for disregarding corporate personality.
Although it is true that judicial action for rescission of contract to sell is not necessary where
contract provides for its revocation and cancellation for violation of any of its terms and
conditions, it shall be with a written notice sent to defaulter informing hi, of the rescission.
- No notice was sent to Dumpit.
No badges of Fraud was found on the part of Albert Onstott.
- He did not use the corporation to defraud private respondent.

2. Cruz vs. Dalisay
Facts:
- A case was filed in NLRC against Qualitrans Limousine Service, Inc.
- Judgment was rendered and an implementing was issued, NLRC directing Qualitrans to
reinstate the discharged employees and pay them full backwages.
- Upon advice from the counsel for the discharged employees, Quiterio L. Dalisay, the
Senior Deputy Sheriff of Manila implementing the writ, attached and/or levied the money
deposited at the Philtrust Bank, which belonged to Adelio Cruz, the President of
Qualitrans.
- Because Cruz was not himself the judgment debtor in the judgment of NLRC and despite
that, the writ was enforced against him, he charged Dalisay administratively with
malfeasance in office, corrupt practices and serious irregularitites.
- Prior to termination of proceedings, Cruz desisted stating that he is no longer interested in
prosecuting the cas, there being only a “misunderstanding”.
Issue: Whether or not the corporate veil can be pierced? No.
Held:
It is a well-settled doctrine both in law and in equity that as a legal entity, a corporation has a
personality distinct and separate from its individual stockholders or members. The mere fact that
one is a president of a corporation does not render the property he owns or possesses the
property of the corporation, since the president, as individual, and the corporation are separate
entities. A sheriff who enforced a judgment against the president of corporation when it is
directed against the corporation is liable administratively. By choosing to “pierce the veil” of
corporate entity, the sheriff usurped a power that belongs to the court and assumed
improvidently that since the complainant is owner and president of the judgment creditor, they
are one and the same.
Cruz, president of Qualitrans has distinct personality from the corporation.
Desistance of complainant does not preclude the taking of disciplinary action against Sheriff.
- Being a public officer must at all times be free from appearance of impropriety.
- Must be imposed appropriate corrective sanction.

6. INDOPHIL TExTILE MILL WORKERS UNION-PTGWO, petitioner, vs. CALICA

Petitioner Indophil Textile Mill Workers Union-PTGWO is a legitimate labor organization duly registered with the Department of Labor and Employment and the exclusive bargaining agent of all the rank-and-file employees of Indophil Textile Mills. . . Marilao. Acrylic became operational and hired workers according to its own criteria and standards.Petitioner Indophil and private respondent Indophil Textile Mills. Indophil Acrylic Manufacturing Corporation was formed and registered with the Securities and Exchange Commission. Calica is impleaded in his official capacity as the Voluntary Arbitrator of the National Conciliation and Mediation Board of the Department of Labor and Employment. .On November 3. . 1990. Acrylic applied for registration with the Board of Investments for incentives under the 1987 Omnibus Investments Code.In 1988. it is the petitioner's contention that Acrylic is part of the Indophil bargaining unit. The parties jointly requested the public respondent to act as voluntary arbitrator in the resolution of the pending labor dispute pertaining to the proper interpretation of the CBA provision. 1989.In 1990 or a year after the workers of Acrylic have been unionized and a CBA executed.After the parties submitted their respective position papers and replies. while private respondent Indophil Textile Mills. sale and export of yarns of various counts and kinds and of materials of kindred character and has its plants at Barrio Lambakin.Respondent Teodorico P. Time and again. We stress that the decisions of voluntary arbitrators are to be given the highest respect and a certain measure of finality. but this is not a hard and fast rule. Inc. HELD: We find the petition devoid of merit.Facts: .The existing impasse led the petitioner and private respondent to enter into a submission agreement on September 6. . it does not preclude . Inc. the public respondent Voluntary Arbitrator rendered its award which provides that the proper interpretation and application of Sec. the workers of Acrylic unionized and a duly certified collective bargaining agreement was executed.Sometime in July. the petitioner union claimed that the plant facilities built and set up by Acrylic should be considered as an extension or expansion of the facilities of private respondent Company pursuant to Section 1(c). 1987. 1. ISSUE: WHETHER OR NOT THE RESPONDENT ARBITRATOR ERRED IN INTERPRETING SECTION 1 (c). . Bulacan. . . . ART I OF THE CBA BETWEEN PETITIONER UNION AND RESPONDENT COMPANY. . 1987 to March 31. I of the 1987 CBA do (sic) not extend to the employees of Acrylic as an extension or expansion of Indophil Textile Mills. Incorporated.Subsequently. executed a collective bargaining agreement effective from April 1. is a corporation engaged in the manufacture. . (c). Article I of the CBA. Art. this petition. The application was approved on a preferred non-pioneer status. In other words. Inc. 1990.The petitioner's contention was opposed by private respondent which submits that it is a juridical entity separate and distinct from Acrylic.Hence.

00.For whatever reason.545. including labor and materials. and the University of the Philippines.000. the private respondent complained to the petitioner that 6 airconditioning units on the third floor of the building were not cooling properly. After inspection of the equipment. the repair was never undertaken. . which again sent its representatives to assess the defects. now the Institute for Industrial Relations. contract. and/or within the scope of the petitioner.Upon its completion. the building was formally turned over by EPG to the private respondent UP issued a certification of acceptance. grave abuse of discretion. public respondent cited facts and the law upon which he based the award. EPG demurred. offices and facilities are situated in the same compound. the voluntary arbitrator Teodorico Calica. it made UP a written offer to repair the system for P194. Hence. . that some of the employees of the private respondent are the same persons manning and providing for auxiliary services to the units of Acrylic. . Inc. . a professor of the U. Asian Labor Education Center. EPG agreed to shoulder the expenses for their repair.000. and that the physical plants.00. .P. Hence.00. the rank-and-file employees working at Acrylic should not be recognized as part of. supported the private respondent's contentions. Contrary to petitioner's assertion. 7. . 1983.UP then contracted with another company.judicial review thereof where want of jurisdiction. or erroneous interpretation of the law were brought to our attention. the Acrylic not being an extension or expansion of private respondent. it is our considered opinion that these facts are not sufficient to justify the piercing of the corporate veil of Acrylic.000. as the bargaining representative of private respondent. The agreement included a provision on guarantee. entered into a contract for the construction of the UP Law Library Building for the stipulated price of P7.. CA Facts: .Sometime in July. neither are we inclined to apply the doctrine invoked by petitioner in granting the relief sought. found that the existing law and jurisprudence on the matter.UP insisted that EPG was obligated to repair the defects at its own expense under the guarantee provision in their.UP repeated its complaints to EPG. in the amount of P38.Petitioner EPG Construction Co. . It should be emphasized that in rendering the subject arbitral award. herein private respondent. violation of due process. While we do not discount the possibility of the similarities of the businesses of private respondent and Acrylic.00. denial of substantial justice.000. Finally. public respondent did not abuse his discretion. The fact that the businesses of private respondent and Acrylic are related. which repaired the defects for P190. EPG Construction Company vs.

1719. or . The fact that the president resisted the claims of the client does not demonstrate malice or bad faith to make him personally liable. The petitioners argue that by issuing the certificate of acceptance. expected to recognize the same. Held: The president of a corporation cannot be held solidarily liable with the corporation for a breach of contract in the construction of a library absent evidence of malicious acts by the former since a corporation has a personality separate and distinct from its officers and stockholders. Any other interpretation would make the guarantee provision useless to begin with as it would have automatically become functus officio with the turn-over of the construction. "Acceptance of the work by the employer relieves the contractor of liability . De Guzman moved to dismiss the complaint as to him for lack of a cause of action. . and costs. The petitioners bolster their argument by quoting Article 1719 of the Civil Code thus. and 3) Emmanuel de Guzman has a separate personality from that of EPG Construction Co. P10.- The private respondent subsequently demanded from EPG reimbursement of the said amount plus an equal sum as liquidated damages. The Article reads in full as follows: Art. ." and stopping there. When the demand was rejected. TC and CA favored UP. by his special knowledge. which sustained the trial court.000. UP sued EPG and its president. Acceptance of the work by the employer relieves the contractor of liability for any defect in the work. P50.00 as liquidated damages. After trial. 2) the defects were due to force majeure or fortuitous event. UP waived the guarantee provision and is now estopped from invoking it.. unless: (1) The defect is hidden and the employer is not.000. All UP certified to was that the building was in good condition at the time it was turned over to it on January 13. This argument is absurd. de Guzman. The petitioners appealed to the Court of Appeals. The same conclusion cannot be altered even though the president is the controlling stockholder because mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself a sufficient ground for disregarding the separate corporate personality. Emmanuel P. It did not thereby relieve the petitioners of liability for any defect that might arise or be discovered later during the one-year period of the guarantee. but the motion was denied. Inc.00 as attorney's fees. Solano requiring both defendants jointly and severally to pay the plaintiff P190.000.00 as actual damages. 1 They then came to this Court to fault the respondent court for not holding that: 1) UP was estopped by its certificate of acceptance from imputing liability to EPG for the defects. judgment was rendered by Judge Antonio P. 1983. in the Regional Trial Court of Quezon City.

and many missing parts like bolts and screws of panels. and should not be held solidarily liable with it. and the terminal screws of a circuit breaker. was poor workmanship. The final point of the petition is that Emmanuel P. it has not been shown that the cooling system in buildings within the same area have been similarly damaged by the power cut-offs.(2) The employer expressly reserves his rights against the contractor by reason of the defect. There is no such showing here. Inc. In its Comment on the present petition. The resolution thereof by the lower. We do not see how mere maintenance work could have corrected the above-mentioned defects. UP also did not refute the petitioners' argument and simply passed upon it sub silentio although the matter was squarely raised and discussed in the petition. At any rate. improper setting of the Hi and Lo pressure switches. We agree that the real cause of the problem.. The defects complained against were hidden and the employer was not expected to recognize them at the time the work was accepted. The petitioners' contention that the defects were caused by force majeure or fortuitous event as a result of the frequent brown-outs in Metro Manila is not meritorious. The petitioners also claim that the breakdown of the cooling system was caused by the failure of UP to do maintenance work thereon. as discovered upon inspection of the cooling system. and is not affected by the personal rights. and neither did the respondent court when it affirmed the appealed decision. but they cannot excuse all contractual irregularities. according to the petitioners' own subcontractor. . obligations and transactions of its stockholders or members. The brown-outs have become an intolerable annoyance. including the petitioners' shortcomings. whether the repairs in the air-conditioning system can be considered mere maintenance work is a factual issue. and the compressor terminal insulation. also in all the six units.. Inc. courts is binding upon this Court in the absence of a clear showing that it comes under the accepted exceptions to the rule. Among the defects noted were improper interlocking of the entire electrical system in all the six units. 3 The trial court did not explain why Emmanuel de Guzman was held solidarily liable with EPG Construction Co. He stresses that the acts of the company are its own responsibility and there is no reason why any liability arising from such acts should be ascribed to him. wrong specification of the time delay relay. de Guzman has a separate legal personality from EPG Construction Co. there was an express reservation by UP of its right to hold the contractor liable for the defects during a period of one year. The exceptions were omitted by the petitioners for obvious reasons. Thus: It is a doctrine well-established and obtains both at law and in equity that a corporation is a distinct legal entity to be considered as separate and apart from the individual stockholders or members who compose it.. 2 Curiously. incorrect wiring connections on the oil pressure switches. The Court is not prepared to accept that the recurrent power cut-offs can be classified as force majeure or a fortuitous event. Moreover.

Roxas. because his acts as such were corporate acts imputable to EPG itself as his principal. It is so ordered. restaurants. That exception is not applicable in the case at bar. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality.When Eugenia died. because it has not been proved that De Guzman acted maliciously or in bad faith when.. her heirs among whom were Rebecca Boyer-Roxas and Guillermo Roxas decided to form the corporation.Notably. open pavilions inside the Hidden Valley Springs Resort in Laguna. buildings. . the appealed decision is AFFIRMED but with the modification that EPG Construction Co. Boyer-Roxas vs. shall be solely liable for the damages awarded in favor of the University of the Philippines. It is settled that: A corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other entity to which it may be related. as President of EPG." in which event he may be made personally liable for his own act.Eugenia Roxas originally owned the questioned properties in this case which include among others cottages. Court of Appeals Facts: . In sum. . tennis court. with the inherited properties as capital of the corporation. Heirs of Eugenia V. when Manuel de Guzman moved to dismiss the complaint as to him. Inc. as De Guzman correctly contended." His inclusion as President of the company was therefore superfluous. we hold that the lower court did not err in holding EPG liable for the repair of the airconditioning system at its expense pursuant to the guarantee provision in the construction contract with UP. Whatever damage was caused to UP as a result of his acts is the sole responsibility of EPG even though De Guzman was its principal officer and controlling stockholder.This was incorporated with the primary purpose of engaging in agriculture to develop the inherited properties. The general manager of a corporation therefore should not be made personally answerable for the payment of the employee's backwages unless he had acted maliciously or in bad faith in terminating the services of the employee. having acted on its behalf within the scope of his authority and without any demonstrated malice or bad faith. swimming pools. UP said in its opposition to the motion that it was suing him "in his official capacity and not in his personal capacity. However. . Inc. Emmanuel de Guzman is not solidarily liable with it. 4 The exception noted is where the official "had acted maliciously or in bad faith. houses. he sought to protect its interests and resisted UP's claims. WHEREFORE. 8.

- The Articles of Incorporation however was amended to allow it to engage in the resort business. The Corrporation may elect to eject petitioners at any time it wishes for the benefit and interest of the respondent corporation. Hence. A corporation can therefore sue to recover real property being occupied by its former president (who was also a significant stockholder) for it has a juridical personality separate and distinct from its stockholders even though in the past the corporation allowed the president to enjoy the possession of the property. Despite demand however. Held: Properties registered in the name of the corporation are owned by it as an entity separate and distinct from its members.Eufrocino’s action can not bound the corporation forever. they refused to vacate. Hence. Nor is he entitled to the possession of any definite portion of its property or assets. the corporation put up a resort known as Hidden Valley Spring Resort where the questioned properties were located. There is nothing irregular in the adoption of the Resolution by the BOD ejecting petitioners for Corporation’s expansion and improvement program. Inc. Eufrocino Roxas. ordered Rebecca and all persons claiming under her to vacate the premises. Issue: Whether or not the petitioner could be ejected? Yes. The stockholder is not a co-owner or tenant in common of the corporate property. (husband of Eugenia) during his lifetime together with Eribito Roxas ( husband of Rebecca and father of Guillermo) managed the corporation. Accordingly. vs. they do not represent property of the corporation. 17. Eriberto and Rebecca occupied the staff house as their residence and converted the recreation hall into a residential house with the blessings of Eufrocino. The Board of directors did not object to the actions of Eufrocino. two separate complaints for recovery of possession was filed. this petition. The corporation has property of its own.Petitioner’s stay within the questioned properties was merely by tolerance of the respondent corporation in deference to the wishes of Eufrocino Roxas. who was then the majority stockholder of the corporation. . A share of stock only typifies an aliquot part of the corporation’s property or the right to share in its proceeds to that extent when distributed according to law and equity but its holder is not the owner of any part of the capital of the corporation. Rebecca and Guillermo were allowed to stay within the questioned properties until the Board of Directors approved a resolution ejecting them. Asionics Philippines. NLRC . . While shares of stock constitute personal property. TC affirmed by CA.

Hence.Boaquina and Gayola joined Lakas ng Manggagawa sa Pilipinas Labor Union which staged a strike despite pendency of conciliation meetings.Inasmuch as its business activity remained critical. . Held: Where there is nothing on record to indicate that the president and majority stockholder of a corporation had acted in bad faith or with malice in carrying out the retrenchment program of the company. . court of Appeals Facts: . material control clerk and Juana Gayola. . .Facts: . .Boaquina and Gayola filed a complaint for illegal dismissal against API and or Frank Yih.NLRC modified this decision by declaring that the two were not guilty of illegal dismissal but Yih was held solidarily and personally liable with API. API was constrained to implement a company-wide retrenchment based on productivity or performance standards pursuant to the CBA. 18. had not been recalled. this special civil action Issue: Whether or not frank Yih can be held solidarily and personally liable with the corporation? No. production operator were among the employees asked to take a leave from work. . . . a deadlock ensued and the union decided to file a notice of strike.Prompted by it.When the deadlock was resolved. . being its president and majority stockholder to pay Boaquina and Gayola their separation pays. . . . API was forced to suspend operations pursuant to the Labor Code.During negotiations with the duly recognized bargaining agent of its employees.Yolanda Boaquina. two customers of API-INDALA and CP CLARE THETA to thereupon refrain from sending additional kits or materials for assembly.Gayola however. the president of can not be held solidarily and personally liable with the corporation Frank Yih can not be held personally liable on account done of his being the President and majority stockholder of the company. Indala promptly resumed its business with API.As a result. Francisco Motors Corporation vs.Boaquina was directed to report back since her work pertained to items being ordered by Indala. .Labor arbiter held API and Yih guilty of illegal dismissal.Petitioner Asionics was negaged in the business of assembling semi-conductor chips and other electronic product mainly for export.

the Manuels in their answer interposed a counterclaim for unpaid legal services rendered by Gregorio which were not paid by the incorporators. Issue: Whether or not FMC is liable? No. officers and incorporation concerned. Thereafter. since it is has a separate juridical personality. . ruled in favor of FMC in regard to its claim for money but also allowed the counterclaim of the Manuel’s. Complex Electronics Employees Association vs. 19. Claim for legal fees against concerned individuals could not properly be directed against the corporation without violating basic principles governing the corporation. NLRC Facts: . . Gregorio and Librada Manuel purchased a jeep body from petitioner. this petition.- Gregorio Manuel used to be employed as the Assistant Legal Officer of Francisco Motors Corporation. whatever obligation said incorporators. Held: The lawyer of the stockholder of a corporation in an estate case cannot sue the corporation for payment of his attorney’s fee.That is an erroneous invocation. Hence. it was incurred in their personal capacity. directors and officers of the corporation had incurred. directors and members of petitioner to represent them in the intestate estate proceedings of the late Benita Trinidad. Supreme Court reversed the decision insofar as it only held FMC liable for the legal obligation owing to Gregorio Manuel. Considering the nature of the legal services involved. On the other hand. After the termination of the proceedings however. directors and officers of petitioner corporation. The Trial Court affirmed by CA. Doctrine of piercing the corporate veil has no application. Petitioner later filed a complaint against the Manuels for failure to pay the balance of the purchase price and cost of the repair of the vehicle. His services was solicited by the incorporators. o Greg Manuel sought to collect legal fees from the corporation. Doctrine has been turned upside down in this case. directors. his services were not paid.It is the petitioner as a corporation which is being ordered to answer for the personal liability of certain individuals.

engaged in the same line of business and the latter hired some of the displaced workers ssince it is established that the second corporation was an independent company organized even prior to the labor dispute in the first corporation. The laborers vandalized the equipment. The employees however. ELECTRONICS. demanded for a higher separation pay which COMPLEX refused to give. common president. Petitioner filed a notice of closure but the employees filed a notice of strike.- - Petitioner corporation. Issue: Whether or not the corporate veil can be pierced? No. One of petitioner’s customers. The company totally closed the following day. There was no lockout. The Labor arbiter held them jointly and solidarily liable. . require it to lower its price by 10%. to which COMPLEX did not comply as it was not feasible since they were already incurring losses at the present prices of their products. Held: When the business operations of the corporation ceased because of losses. A complaint was filed with the Labor Arbiter where IONICS and Lawrence Qua were impleaded. this petitions. The union failed to show that the primary reason for the closure of the establishment was due to the union activities of the employees. engaged in the manufacture of electronic products subcontracts electronic products by accepting job orders from its customers. labor dispute and its customers transferred their orders for delivery of electronic products to another corporation engaged in the same line of business. CO. The closure was motivated by the Union’s acts or employees but rather by necessity since it can no longer engage in production without the much needed materials.. went on picketing and threats to lock-out which prompted Lawrence Qua. the displaced workers of the first corporation cannot apply the doctrine of piercing the corporate veil to enforce their monetary claims against the second corporation simply because the two corporations have the same controlling stockholders. Hence. petitioner informed the employees of retrenchment.. equipment and machinery. NLRC excluded IONICS and Qua. Left with no alternative but to close down the operations of LITE-ON. LITE-ON PHILS. These customers were foreign based companies with different product lines and specifications requiring the employment of workers with specific skills for each product line. the President of COMPLEX to direct the pull-out of machinery. effected during nighttime and made pursuant to the demands of the customers who were greatly alarmed. who send their own materials and condign their equipment to it. Petitioner corporation’s rank and file workers were organized into a union known as the COMPLEX ELECTRONICS EMPLOYEES ASSOCIATION. equipment and materials and transfer to the premises of IONIC CIRCUIT INC.

Rufina filed a verified amended petition alleging that not only the properties in the possession and registered in the names of the corporations but also the corporations themselves are properly part of the the decedent’s estate because during his lifetime.CA set aside the order of RTC. . . organized and existing under Philippine laws and which owned real properties covered under the Torrens system. duly represented by her nephew George Luy.Pastor Lim owned and controlled these corporations during his lifetime. and in the absence of any cogency to shred the veil of corporate fiction. . . The main reason for the cessation was the pulling out of the materials.. Active Distributing.The real properties owned by the corporations were included in the inventory. Inc. . hiss surviving spouse. . this petition. Lim before the RTC of Quezon City.Lawrence Qua.The corporations filed a motion for the lifting of the les pendens and motion for the exclusion of said properties from the estate of the decedent which RTC both granted. Alliance Marketing Corporation.When Pastor died intestate. 20. filed a joint petition for the administration of the estate of Pastor Y.The probate court denied the motion for exclusion.Private respondents Auto Truck Corporation. Speed Distributing. . the presumption of conclusiveness of said titles in favor of private respondents should stand undisturbed. Lim are in the possession of and are registered in the name of private respondent corporations. . which under the law possess a personality separate and distinct from their stockholders. Issue: Whether or not the questioned properties should be included? No. equipment and materials. as president. and Action Company are corporations formed. .he manifested no malice or bad faith. Held: In as much as the real properties included in the inventory of the estate of the late Pastor Y. Thus. pastor organized and wholly owned the five corporations. . Court of Appeals Facts: .Hence. Lim vs. Rufina Lim.He does’nt have the intention to defraud the employee’s and the union by transferring them. . the inclusion in the estate of the deceased stockholder properties ender the name of various corporations was erroneous even though the corporations were owned and controlled by the deceased stockholder during his lifetime. o Compelled to act upon the instructions of customers who were real owners of the machinery. Inc. cannot be held personally liable.

2. etc. generally. Mere ownership by a single stockholder of all or nearly all of the capital stock of a corporation is not by itself sufficient reason for disregarding the fiction of separate corporate personalities. Whether or not corporate veil of ECO should be pierced? No. . A corporation may . is invested by law with a personality separate and distinct from those persons composing it as well as from any other legal entity to which it may be related. the wrongdoing must be clearly and convincingly established. a stockholder may not. In order to disregard the separate juridical personality of a corporation.LBP rejected it and filed a complaint for sum of money against ECO and Emmanuel C.The presumption of conclusiveness of said titles in favor of private respondents should stand undisturbed. and vice versa. upon coming into existence. however. Held: A corporation. Whether or not Onate should be held jointly and severally liable of ECO for loans incurred from LBP? No. By this attribute. Issue: 1. it does not mean that the said corporation is merely a dummy of Oñate. Onate. For this reason.Petitioner LBP contends that the personalities of Onate and of ECO should be treated as one since Onate owns the majority of the interest holdings in ECO. Even if it did.TC affirmed by CA rendered judgment in favor of LBP but dismissed the case with regard to Onate. Neither is the fact that the name “ECO” represents the first three letters of Oñate’s name sufficient reason to pierce the veil.However. CA Facts: . be made to answer for acts or liabilities of the said corporation. the acronym of ECO stands for the initials of Emmanuel C. Land Bank of the Philippines vs. 22. . it may not be used or invoked for ends subversive to the policy and purpose behind its creation or which could not have been intended by law to which it owes its being.Petitioner LBP extended a series of credit accommodations to ECO management Corporation on various dates. merely a fiction created by law for convenience and to promote the ends of justice. . Onate.This separate and distinct personality is. ECO failed to pay the same on the respective maturity dates a nd instead proposed and submitted to LBP a “Plan of Payment” wherby it would set up a financing company which would absorb the loan obligations. Onate controlled ECO by holding two corporate positions (chairman and treasurer) beginning from time of incorporation and continuously thereafter without benefit of election. . The mere fact that Oñate owned the majority of the shares of ECO is not a ground to conclude that Oñate and ECO is one and the same.

The burden is on petitioner LBP to prove that the corporation and its shareholders are in fact using the personality of corporation as a means to perpetuate fraud and or escape a liability and responsibility demanded by law. extended a letter of credit in favor of Ritratto Group Inc.The outstanding obligations were not paid. organized and doing business in Hongkong. then the suit against PNB suffices. the initials of one of its shareholders.PNB. secured by real estate mortgages constituted over four parcels of land. 23. The courts may in the exercise of judicial discretion step in to prevent the abuses of separate entity privilege and pierce the veil of corporate entity. There is nothing illegal in a corporation acquiring the name or as in this case. If used to perform legitimate functions.The three corporations filed a complaint for injunction and prayed that PNB be ordered to recomputed the rescheduling of interest to be paid.assume any name provided it is lawful. Facts: ..PNB-International Finance Ltd. Held: The mere fact that a corporation owns all of the stocks of another corporation. Rather. and Dadasan General Merchandise. . Inc. there is no showing of the indicative factors that the former corporation is a mere instrumentality of the parent company. taken alone is not sufficient to justify their being treated as one entity. PNB vs. Aside from the fact that PNB-IFL is a wholly owned subsidiary of petitioner PNB. .TC judge issued an order for the issuance of a writ of preliminary injunction and subsequently ruled that since PNB-IFL is wholly owned subsidiary of PNB. Issue: Whether or not the trial court is correct? No. a subsidiary's separate existence may be respected. . notified the 3 corporations of the foreclosure pursuant to the terms of the real estate mortgages. a subsidiary ccompany of PNB. as attorney-in-facts of PNB-IFL with full power and authority to foreclose on the properties mortgaged.The evidence presented by petitioner does not suffice to hold respondent Onate personally liable for debt of ECO. and the liability of the parent corporation as well as the subsidiary will be confined to those arising in their respective business. . . Ritratto Int’l Inc. Ritratto Group. the petitioner was sued because it acted as an attorney- .. The parent-subsidiary relationship between PNB and PNB-IFL is not the significant legal relationship involved in this case since the petitioner was not sued because it is the parent company of PNB-IFL.

where .in-fact of PNB-IFL in initiating the foreclosure proceedings. 1988.On June 19 and 26. on the other hand. 1987 against them.The borrowers failed to pay when the obligations became due. no merger took place between Dynetics and respondent Dyne-Sem.” . . Inc. . Held: A corporation could not be made a party defendant to a collection case simply because summons could not be served on the debtor corporation on the mere grounds that the businesses of the two corporations are interrelated and they have common directors absent sufficient showing that the corporate entity was purposely used as a shield to defraud creditors and third persons of their rights.Lim. Thus. the case was scheduled for pre-trial with respect to Lim. 26. A suit against an agent cannot without compelling reasons be considered a suit against the principal. 1987 denying that “he promised to pay [the obligations] jointly and severally to [petitioner]. . . Lim borrowed a total of P8.On September 23.Petitioner appealed to CA.On January 7. Accordingly. The case against Dynetics was archived.939. the case before the Regional Trial Court must be dismissed and the preliminary injunction issued in connection therewith. . respondent was formed and organized to be Dynetics’ as its alter ego. . What took place was a sale of the assets of the former to the latter. 1985. because it had already closed down. respondent’s acquisition of some of the machineries and equipment of Dynetics was not proof that respondent was formed to defraud petitioner.The loan was evidenced by six promissory notes. vs DYNE-SEM ELECTRONICS CORPORATION Facts: . . Merger is legally distinct from a sale of assets. must be lifted.Summons was not served on Dynetics.According to petitioner. Antonio Garcia and Jacob Ratinoff.The trial court favored Dyne Sem. Dynetics. filed his answer on December 15.000 from petitioner China Banking Corporation. Respondents do not have a cause of action against the petitioner as the latter is not privy to the contract the provisions of which respondents seek to declare void. an amended complaint was filed by petitioner impleading respondent Dyne-Sem Electronics Corporation (Dyne-Sem) and its stockholders Vicente Chuidian. Issue: Whether or not TC was correct? Yes. however. As the Court of Appeals found. . . 1988. CHINA BANKING CORPORATION. Likewise.Petitioner consequently instituted a complaint for sum of money on June 25. and Elpidio O.

Held: Where the lawyer of the controlling stockholder of the corporation advised another stockholder that he could obtain possession of certain corporate properties by way of return for his equity investment but the lawyer acted without board approval. the advice is not binding on the . - The corporate name of WAKO was later changed to. 29. 10%. Ryuichi Yamamoto. Doce) advised Yamamoto by letter that he could obtain possession of certain corporate properties by way of return for his equity investment. organized under Philippine laws Wako Enterprises Manila. vs. also a Japanese national. 1992 before the Regional Trial Court (RTC) of Makati a complaint against them for replevin. now known as Nishino Leather Industries. by his claim. its current name NLII. NISHINO LEATHER INDUSTRIES. - Eventually. Ikuo Nishino (Nishino). Emmanuel G. but he was frustrated by respondents. Doce (Atty. reducing Yamamoto’s investment therein to. a Japanese national. Inc. drawing Yamamoto to file on January 15. (NLII). as reflected earlier. part of his investment in the corporation. - Yamamoto and the other respondent. the latter is not. - On the basis of such letter. forged a Memorandum of Agreement under which they agreed to enter into a joint venture wherein Nishino would acquire such number of shares of stock equivalent to 70% of the authorized capital stock of WAKO. liable for the debts and liabilities of the transferor. less than 10% according to Nishino. one of herein respondents. - Hence. a corporation engaged principally in leather tanning. by Yamamoto’s admission. INC.one corporation sells or otherwise transfers all its assets to another corporation for value. Yamamoto attempted to recover the machineries and equipment which were. this petition. - RTC favored Yamamoto which was reversed by CA. - In the course of the negotiations. Yoshinobu and Nishino’s counsel Atty. - Negotiations subsequently ensued in light of a planned takeover of NLII by Nishino who would buy-out the shares of stock of Yamamoto. Incorporated (WAKO). RYUICHI YAMAMOTO. by that fact alone. Facts: - Petitioner. Nishino and his brother Yoshinobu Nishino (Yoshinobu) acquired more than 70% of the authorized capital stock of WAKO.

Petitioner Virgilio Delima filed a case for dismissal against Golden Union aquamarine Corp.Hence. . Unless they have exceeded their authority. property belonging to a corporation cannot be attached to satisfy the debt of a stockholder and vice versa. not personally liable for their official acts. Thus.L. a writ of execution was issued and an Isuzu Jeep was attached. 30. corporate officers are as a general rule.Labor Arbiter favored him.05 and the same was not joint and solidary obligation with Gois. not personally liable for their official acts because a corporation has a personality separate and distinct from its officers. . Unless they have exceeded their authority. Gois filed a third party claim claiming that the attachment was irregular. because a corporation. . .561. The doctrine of piercing the corporate veil can not be invoked on the sole ground that the presence of other stockholders in the corporation was only for the purpose of complying with the statutory minimum requirements on number of directors. Prospero Gois and herein respondent Susan Mercaida Gois before the NLRC.corporation even though it had the approval of the controlling stockholder. as a general rule.MR was also denied and an Entry of Judgment was issued..She filed a petition for certiorari before CA invoking corporate fiction and was granted. . the vehicle not belonging to Golden but was denied by the Labor arbiter. stockholders and members.Golden failed to appeal and so the decision became final and executory.A. which vehicle was registered in Susan Gois’ name. Delima vs. this petition by petitioner. the latter having only an indirect interest in the assets and business of the former. 2005 directed only Golden to pay the petitioner the sum of P115. ordered the release of the vehicle but NLRC denied appeal. Gois FACTS: .16 Since the Decision of the Labor Arbiter dated April 29.For this reason. hence it should not be attached to answer for the liabilities of the corporation. has a personality separate and distinct from . then the latter could not be held personally liable since Golden has a separate and distinct personality of its own. . corporate officers are. by legal fiction. acting through its officers and employees are its sole liabilities. It remains undisputed that the subject vehicle was owned by Gois. Likewise. ISSUE: w/N Susan Gois is liable? HELD: NO! The rule is that obligations incurred by the corporation.She filed an appeal with NLRC and at the same time filed a motion to release the motor vehicle after substituting the same with a cash bond before the NLRC. . .

No evidence was presented to show that the termination of the petitioner was done with malice or in bad faith for it to hold the corporate officers. thus it cannot institute the case. It also denied owing anything to Win. the counsel of Win moved that its name in the case be changed from "Win Multi-Rich Builders. VicePresident for Productions. Inc. - In the Reply filed by petitioner. its President and General Manager. Inc. such as Gois. Ying amounting to P8. as it had already paid all its obligations to it. entered into a contract with Multi-Rich Builders (Multi-Rich) represented by Wilson G. stockholders and members.448. for the construction of a garment factory within the Cavite Philippine Economic Zone Authority (CPEZ). Inc. solidarily liable with the corporation. - Petitioner obtained a Certificate of Non-Registration of Corporation/Partnership from the SEC which certified that the latter did not have any records of a "Multi-Rich Builders. EXCELLENT QUALITY APPAREL.. Inc. and Alfiero R.) No. 32." . INC." - It was only then that petitioner apparently became aware of the variance in the name of the plaintiff. - Petitioner pointed to the presence of the Arbitration Clause and it asserted that the case should be referred to the Construction Industry Arbitration Commission (CIAC) pursuant to Executive Order (E. INC.F. Orden. Chua (Chua). Facts: - Petitioner Excellent Quality Apparel. (Win) was incorporated with the Securities and Exchange Commission (SEC) on 20 February 1997 with Chua as its President and General Manager. Treasurer. - In the hearing held. vs.634. - The duration of the project was for a maximum period of five (5) months or 150 consecutive calendar days. WIN MULTI RICH BUILDERS. Ying. - On 26 January 2004. 1008.its officers. it moved to dismiss the case since Win was not the contractor and neither a party to the contract. Included in the contract is an arbitration clause." to "Multi-Rich Builders. - Respondent Win Multi-Rich Builders.O. then represented by Max L. - Petitioner filed an Omnibus Motion claiming that it was neither about to close.20. Inc. Win filed a complaint for a sum of money against petitioner and Mr.

does Win have a legal personality to institute the present case. 2. it admitted that at the time of execution of the contract. Win admitted that it was only incorporated on 20 February 1997 while the construction contract was executed on 26 March 1996. o PNEI provided transportation services to the public. and had its bus terminal in Quezon City standing on four valuable pieces of real estate (known as Pantranco properties) registered under the name of Macris. - Hence. 33. this petition. . - RTC denied the motion but was reversed by CA. or even in the registered name of the single proprietorship as a sole proprietorship is not vested with any juridical personality to file or defend an action. full ownership was transferred to one of their creditors. that is. - Few years after. Held: A suit seeking to enforce the contractual rights of a single proprietorship. Likewise. a subsidiary of the PNB. Such suit cannot be brought either in the name of a corporation organized by the proprietor in view of the separate personality of a corporation there being no showing that the proprietor assigned the receivables to the corporation. does the RTC have jurisdiction over the case notwithstanding the presence of the arbitration clause. - Gonzales family owned two corporations. - The Gonzales family later incurred huge financial losses and so their creditors took over the management of PNEI and Macris. namely.- Moreover. Win in its Rejoinder did not oppose the allegations in the Reply. NLRC FACTS: - These are two consolidated petitions by PEA-PTGWO against NLRC and PNB vs PEAPTGWO. the PNEI and Macris Realty Corporation (Macris). the National Investment Development Corporation (NIDC). Multi-Rich was a registered sole proprietorship and was issued a business permit by the Office of the Mayor of Manila. collection of receivables arising from a construction agreement must be brought in the name of the proprietor himself. Issues: 1. PANTRANCO EMPLOYEES ASSOCIATION (PEA-PTGWO) vs.

150. Notice of Sale of the foregoing real properties was published in the newspaper and the sale was set. - Eventually. a company owned by Gregorio Araneta III. - In 1988. the PNB-Madecor. o The sheriffs were likewise instructed to proceed against PNB. the committee likewise suggested the retrenchment of several PNEI employees.22 due its former employees. as full and final satisfaction of the judgment awards in the labor cases. APT thus took over the management of PNEI. - Along with the cessation of business came the various labor claims commenced by the former employees of PNEI where the latter obtained favorable decisions. o A management committee was thereafter created which recommended to the SEC the sale of the company through privatization. and PNB and likewise filed their Third-Party Claims. Inc. - PNEI applied with the Securities and Exchange Commission (SEC) for suspension of payments. o As a cost-saving measure.727. - In 1986. - Having been notified of the auction sale. PNEI ceased its operation. 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). o In implementing the writ. motions to quash the writ were separately filed by PNB-Madecor and Mega Prime. - NIDC sold PNEI to North Express Transport. PNEI was among the several companies placed under sequestration by the PCGG. - Subsequently. the sheriffs levied upon the four valuable pieces of real estate on which the former Pantranco Bus Terminal stood which were registered under the name of PNB-Madecor. .o 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. PNB-Madecor and Mega Prime. - Labor Arbiter: o issued the Sixth Alias Writ of Execution commanding the NLRC Sheriffs to levy on the assets of PNEI in order to satisfy the P722. (NETI).

884. this separate petitions by PNB and the former PNEI employees. a. directly benefited from the operation of PNEI and had complete control over the funds of PNEI. Labor Arbiter declared: 1. Considering. 2. had already been satisfied in favor of Gerardo C. b. o Contentions of petitioners: ISSUES:  PEA-PTGWO . its assets could not answer for the liabilities of PNEI. hence. through PNB-Madecor. the subject properties were not owned by PNEI.that PNB. NLRC affirmed Labor Arbiter’s disposition and CA affirming NLRC. however. o For its part. - Hence. was denied because it only had an inchoate interest in the properties.  - In its Third-Party Claim. 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.000.00. the execution sale thereof was not validly effected.o PNB-Madecor anchored its motion on its right as the registered owner of the Pantranco properties. and o Mega Prime as the successor-in-interest. the writ of execution to the extent of the said amount was concerned was considered valid. and in turn to the latter’s former employees. says PNB. It being a corporation with a distinct and separate personality.  PNB insists that the Pantranco properties could no longer be levied upon because the promissory note for which the Labor Arbiter held PNBMadecor liable to PNEI. - On appeal. . – on the other hand. PNB alleged that PNB-Madecor was indebted to the former and that the Pantranco properties would answer for such debt. Besides. Hence. PNB sought the nullification of the writ on the ground that it was not a party to the labor case. that PNB-Madecor executed a promissory note in favor of PNEI for P7. that the subject Pantranco properties were owned by PNB-Madecor. It added that the properties were in fact awarded to the highest bidder. Uy. they are solidarily answerable with PNEI for the unpaid money claims of the employees.

absent any valid reason. by that fact alone. PNB. they cannot be pursued against by the creditors of PNEI. Ransom Labor Union-CCLU v. PNB-Madecor and Mega Prime are corporations with personalities separate and distinct from that of PNEI.This reliance fails to persuade. the predecessor of PNB-Madecor. one man’s goods shall not be sold for another man’s debts. A. NLRC: . We find the aforesaid decisions inapplicable to the instant case. First. - the power of the court in executing judgments extends only to properties unquestionably belonging to the judgment debtor alone. we maintain their separate identities and we cannot treat them as one. liable for the debts and liabilities of the transferor. since the corporation is an . - these corporations are registered as separate entities and.C. PNEI - the properties were owned by Macris. Mega Prime. or PNB and PNB-Madecor. and PNEI are corporations with their own personalities. The rationale is that. PNB-Madecor. - PNB. Lastly. o PNB was only a stockholder of PNB-Madecor which later sold its shares to Mega Prime. none applies in the present case whether between PNB and PNEI. . that is.1. o and that PNB-Madecor was the owner of the Pantranco properties. PNB-Madecor and Mega Prime to satisfy their unpaid labor claims against PNEI? NO! HELD: Both petitions must fail.For one. w/N PNEI employees can attach the Pantranco properties of PNB. Settled is the rule that where one corporation sells or otherwise transfers all its assets to another corporation for value. Hence. in the said cases. - To be sure. while we recognize that there are peculiar circumstances or valid grounds that may exist to warrant the piercing of the corporate veil. Second. the subject property is not owned by the judgment debtor. the persons made liable after the company’s cessation of operations were the officers and agents of the corporation. - Neither can we merge the personality of PNEI with PNB simply because the latter acquired the former. the latter is not.

artificial person. is PNB-Madecor or its successor-in-interest. the PNB-Madecor. is not sufficient to justify their being treated as one entity. This is especially true in the instant case. Again. . what is being made liable is another corporation (PNB) which acquired the debtor corporation (PNEI). They failed to show that PNB was using PNEI as a mere adjunct or instrumentality or has exploited or misused the corporate privilege of PNEI. taken alone. being the person acting in the interest of the employer. definitely not PNB. The corporation. PNB only has an inchoate right to the properties of Mega Prime in case the latter would not be able to pay its indebtedness. 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.They were never owned by PNEI or PNB. this strengthens the proper parties’ right to question the validity of the execution sale. The Pantranco properties which were the subject of execution sale were owned by Macris and later.Following our earlier discussion on the separate personalities of the different corporations involved in the instant case. . The general rule remains that PNB-Madecor has a personality separate and distinct from PNB. it must have an officer who can be presumed to be the employer. Applying the foregoing doctrine to the instant case. Settled is the rule that proceedings in court must be instituted by the real party in interest. It has long been established in PNB-Madecor v. is the employer. PNB-Madecor was thus made liable to the former PNEI employees as the judgment debtor of PNEI. the only entity which has the right and interest to question the execution sale and the eventual right to annul the same. - The mere fact that a corporation owns all of the stocks of another corporation. we quote with approval the CA disposition in this wise: The burden undoubtedly falls on the petitioners to prove their affirmative allegations. if any. only in the technical sense. 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 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. - In the instant case.