Sulo ng Bayan v Araneta L-31061
Facts:
In 26 April 1966, Sulo ng Bayan, Inc. filed an accion
de revindicacion with the Court of First Instance of
Bulacan, Fifth Judicial District, Valenzuela, Bulacan,
against Gregorio Araneta Inc. (GAI), Paradise Farms
Inc., National Waterworks & Sewerage Authority
(NAWASA), Hacienda Caretas Inc., and the Register
of Deeds of Bulacan to recover the ownership and
possession of a large tract of land in San Jose del
Monte, Bulacan, containing an area of 27,982,250 sq.
ms., more or less, registered under the Torrens
System in the name of GAI, et. al.'s
predecessors-in-interest (who are members of the
corporation). On 2 September 1966, GAI filed a
motion to dismiss the amended complaint on the
grounds that (1) the complaint states no cause of
action; and (2) the cause of action, if any, is barred by
prescription and laches. Paradise Farms, Inc. and
Hacienda Caretas, Inc. filed motions to dismiss based
on the same grounds. NAWASA did not file any
motion to dismiss. However, it pleaded in its answer
as special and affirmative defenses lack of cause of
action by Sulo ng Bayan Inc. and the barring of such
action by prescription and laches. On 24 January
1967, the trial court issued an Order dismissing the
(amended) complaint. On 14 February 1967, Sulo ng
Bayan filed a motion to reconsider the Order of
dismissal, arguing among others that the complaint
states a sufficient cause of action because the subject
matter of the controversy in one of common interest
to the members of the corporation who are so
numerous that the present complaint should be
treated as a class suit. The motion was denied by the
trial court in its Order dated 22 February 1967.
Sulo ng Bayan appealed to the Court of Appeals. On
3 September 1969, the Court of Appeals, upon
finding that no question of fact was involved in the
appeal but only questions of law and jurisdiction,
certified the case to the Supreme Court for resolution
of the legal issues involved in the controversy.
Issue:
1. Whether the corporation (non-stock) may
institute an action in behalf of its individual
members for the recovery of certain parcels
of land allegedly owned by said members,
among others.
2. Whether the complaint filed by the
corporation in behalf of its members may be
treated as a class suit
Held:
1. 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,
and is not affected by the personal rights, obligations
and transactions of its stockholders or members. The
property of the corporation is its property and not that
of the stockholders, as owners, although they have
equities in it. Properties registered in the name of the
corporation are owned by it as an entity separate and
distinct from its members. Conversely, a corporation
ordinarily has no interest in the individual property of
its stockholders unless transferred to the corporation,
"even in the case of a one-man corporation." The
mere fact that one is president of a corporation does
not render the property which he owns or possesses
the property of the corporation, since the president, as
individual, and the corporation are separate
similarities. Similarly, stockholders in a corporation
engaged in buying and dealing in real estate whose
certificates of stock entitled the holder thereof to an
allotment in the distribution of the land of the
corporation upon surrender of their stock certificates
were considered not to have such legal or equitable
title or interest in the land, as would support a suit for
title, especially against parties other than the
corporation. It must be noted, however, that the
juridical personality of the corporation, as separate
and distinct from the persons composing it, is but a
legal fiction introduced for the purpose of
convenience and to subserve the ends of justice. This
separate personality of the corporation may be
disregarded, or the veil of corporate fiction pierced,
in cases where it is used as a cloak or cover for fraud
or illegality, or to work -an injustice, or where
necessary to achieve equity. It has not been claimed
that the members have assigned or transferred
whatever rights they may have on the land in
question to the corporation. Absent any showing of
interest, therefore, a corporation, has no personality
to bring an action for and in behalf of its stockholders
or members for the purpose of recovering property
which belongs to said stockholders or members in
their personal capacities.
2. In order that a class suit may prosper, the following
requisites must be present: (1) that the subject matter
of the controversy is one of common or general
interest to many persons; and (2) that the parties are
so numerous that it is impracticable to bring them all
before the court. Here, there is only one party
plaintiff, and the corporation does not even have an
interest in the subject matter of the controversy, and
cannot, therefore, represent its members or
stockholders who claim to own in their individual
capacities ownership of the said property. Moreover,
a class suit does not lie in actions for the recovery of
property where several persons claim partnership of
their respective portions of the property, as each one
could alleged and prove his respective right in a
different way for each portion of the land, so that
they cannot all be held to have identical title through
acquisition/prescription.
: Registration that he certificate of liquidation in
Gallagher v Germania Brewing
Stockholders of Guanzon and Sons v RD Gr L-18261
Facts:
September 19, 1960, the five stockholders of the F.
Guanzon and Sons, Inc. executed a certificate of
liquidation of the assets of the corporation reciting,
among other things, that by virtue of a resolution of
the stockholders adopted on September 17, 1960,
dissolving the corporation
they have distributed among themselves in proportion
to their shareholdings, as liquidating dividends, the
assets of said corporation, including real properties
located in Manila.
The certificate of liquidation, when presented to the
Register of Deeds of Manila, was denied registration
on seven grounds, of which the following were
disputed by the stockholders:
3. The number of parcels not certified to in the
acknowledgment;
5. P430.50 Reg. fees need be paid;
6. P940.45 documentary stamps need be attached to
the document;
7. The judgment of the Court approving the
dissolution and directing the disposition of the assets
of the corporation need be presented (Rules of Court,
Rule 104, Sec. 3).
Deciding the ​consulta elevated by the stockholders,
the Commissioner of Land Registration overruled
ground No. 7 and sustained requirements Nos. 3, 5
and 6.
Issue: whether or not that certificate merely involves
a distribution of the corporation's assets or should be
considered a transfer or conveyance.
Ruling:
The court agreed with the Commissioner of Land
question, though it involves a distribution of the
corporation's assets, in the last analysis represents a
transfer of said assets from the corporation to the
stockholders. Hence, in substance it is a transfer or
conveyance.
A corporation is a juridical person distinct from the
members composing it. Properties registered in the
name of the corporation are owned by it as an entity
separate and distinct from its members. While shares
of stock constitute personal property they do not
represent property of the corporation.
it is clear that the act of liquidation made by the
stockholders of the F. Guanzon and Sons, Inc. of the
latter's assets is not and cannot be considered a
partition of community property, but rather a transfer
or conveyance of the title of its assets to the
individual stockholders
Caram v CA L-48627
Facts:
Caram claims that they should not be solidarily liable
with Filipinas Orient Airways to Arellano since they
are mere investors of the latter, and that no contract
was made between Caram and Arellano.
Issue: Whether or not the petitioners themselves are
also​ and ​personallyl​ iable for such expenses and, if so,
to what extent.
Ruling:
The Court found that that the petitioners were not
really involved in the initial steps that finally led to
the incorporation of the Filipinas Orient Airways.
The petitioners were merely among the financiers
whose interest was to be invited and who were in fact
persuaded, on the strength of the project study, to
invest in the proposed airline.
no showing that the Filipinas Orient Airways was a
fictitious corporation and did not have a separate
juridical personality, to justify making the petitioners,
as principal stockholders thereof, responsible for its
obligations. As a ​bona fide​ corporation, the Filipinas
Orient Airways should alone be liable for its
corporate acts as duly authorized by its officers and
directors.
we hold that the petitioners cannot be held personally
liable for the compensation claimed by the private
respondent for the services performed by him in the
organization of the corporation. To repeat, the
petitioners did not contract such services
Palay Inc. v Clave L-50076
Facts:
ON March 28, 1965, petitioner Palay, Inc., through
its President, Albert Onstott executed in favor of
private respondent, Nazario Dumpit, a Contract to
sell a parcel of Land in Antipolo, Rizal owned by
said corporation. The sale price was P23, 300.00 with
9% interest per annum, payable with a down payment
of P4, 660.00 and monthly installments of P246.42
until fully paid.
Paragraph 6 of 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 with forfeiture of all
installments paid. Respondent Dumpit paid the down
payment and several installments amounting to P13,
722.50. The last payment was made on December 5,
1967 for installments up to September 1967.
On May 10, 1973, or almost six (6) years later,
private respondent wrote 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. In response, petitioners
informed respondent that his Contract to Sell had
long been rescinded pursuant to paragraph 6 of the
contract, and that the lot had already been resold.
A complaint was filed by the respondent with the
NHA for conveyance with an alternative prayer for
refund. The NHA, in its resolution, ordered Palay,
Inc. and Alberto Onstott in his capacity as President
of the corporation, jointly and severally, to refund
immediately to respondent the amount paid with 12%
interest from the filing of complaint. Respondent
Presidential Executive Assistant Clave affirmed the
NHA resolution.
ISSUE
1. Whether the doctrine of piercing the veil of
corporate fiction has application to the case.
2. Whether petitioner On Stott can be held solidarity
liable with petitioner Corporation for the refund of
the installment payments made by respondent Dump
it.
RULING
The doctrine of piercing the veil of corporate fiction
has no application to the case. Consequently,
petitioner Onstott cannot be held solidarity liable
with petitioner Corporation for the refund of the
installment payments made by respondent Dumpit.
A corporation is invested by law with a personality
separate and distinct from those of the persons
composing it. As a general rule, a corporation may
not be made to answer for acts or liabilities of its
stockholders or those of the legal entities to which it
may be connected and vice versa.
However, the veil of corporate fiction may be pierced
when: it is used as a shield to further an end
subversive of justice; or for purposes that could not
have been intended by the law that created it; or to
defeat public convenience, justify wrong, protect
fraud, or defend crime; or to perpetrate fraud or con
fuse legitimate issues; or to circumvent the law or
perpetuate deception; or as an alter ego, adjunct or
business conduit for the sole benefit of the
stockholders. In this case however, there are no
badges of fraud on the part of the petitioners. They
had literally relied, although mistakenly, on
paragraph 6 of the contract with respondent when
they rescinded the contract to sell extra judicially.
Although On Stott appears to be the controlling
stockholder, there being no fraud, he cannot be made
personally liable.
Cruz v Dalisay AM R-181-P
Facts:
ruz charged Quiterio L. Dalisay, Senior Deputy
Sheriff of Manila, with "malfeasance in office,
corrupt practices and serious irregularities"
Cruz alleged that Dalisay attached the money
belonging to him when it was Qualitrans Limousine
Service who was the judgment debtor
Dalisay explained that when he garnished
complainant’s cash deposit at the Philtrust bank, he
was merely performing a ministerial duty and he did
so due to Cruz being the President of said company
and upon the advice of the plaintiff’s counsel in the
labor case.
Issue: W/n Cruz as president of the company is liable
as judgment debtor? NO
Ruling:
The court ruled to discipline Dalisay since he went
over the powers given to him.
The tenor of the NLRC judgment and the
implementing writ is clear enough. It directed
Qualitrans Limousine Service, Inc., to reinstate the
discharged employees and pay them full backwages.
Dalisay, however, chose to "pierce the veil of
corporate entity" usurping a power belonging to the
court and assumed improvidently that since the
complainant is the owner/president of Qualitrans
Limousine Service, Inc., they are one and the same.
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 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
Indophil v Calica Gr No. 96490
Facts:
Indophil Textile Mill Workers Union-PTGWO is a
legitimate labor organization duly registered with the
DOLE and the exclusive bargaining agent of all the
rank-and-file employees of Indophil Textile Mills,
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,
Indophil Textile Mill Workers Union-PTGWO and
private respondent Indophil Textile Mills, Inc.
executed a collective bargaining agreement effective
Indophil Acrylic Manufacturing Corporation was
formed and registered with the SEC.
Acrylic became operational and workers of acrylic
formed a union
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 Indophil.
Issue: whether or not the operations in Indophil
Acrylic Corporation are an extension or expansion of
private respondent Company.
Ruling:
In the case at bar, petitioner seeks to pierce the veil of
corporate entity of Acrylic, alleging that the creation
of the corporation is a devise to evade the application
of the CBA between petitioner Union and private
respondent Company.
Although it is possible that both businesses are
related, the Court was not inclined to apply the
doctrine invoked by petitioner in granting the relief
sought. Even though some of the employees of the
private respondent are the same persons manning and
providing for auxilliary services to the units of
Acrylic, and that the physical plants, offices and
facilities are situated in the same compound, it is our
considered opinion that these facts are not sufficient
to justify the piercing of the corporate veil of Acrylic.
it is grave abuse of discretion to treat two companies
as a single bargaining unit when these companies are
indubitably distinct entities with separate juridical
personalities.
Mobilia Products v Umezawa Gr No. 149357
Facts:
Mobilia Products, Inc. is a corporation engaged in the
manufacture and export of quality furniture
Mobilia Products Japan sent Hajime Umezawa to the
Philippines in order to head Mobilia Products, Inc. as
President and General Manager. To qualify him as
such and as a Board Director, he was entrusted with
one nominal share of stock.
Umezawa,organized another company with his wife
Kimiko, and his sister, Mitsuyo Yaguchi, to be
known as ​Astem Philippines Corporation​, without the
knowledge of Mobilia Japan. Said company engaged
in the same business as Mobilio Japan.
To take part in the International Furniture Fair
Umezawa in his capacity stole prototype furniture
from Mobilia and presented it in the fair as Asterm’s.
After sometime, Umezawa used Mobilia’s resources
to manufacture furniture and used them in favor of
Astem and not Mobilia’s.
Umezawa was charged in the Trial court of Cebu
where the principal office of Mobilia was situated.
The trial Court dismissed the cases and ruled that it is
the SEC who has jurisdiction.
Umezawa argues that the dispute between Umezawa
and Mobilia was an intra-corporate dispute as such
jurisdiction lies with the SEC
Issue: W/n the SEC has jurisdiction over the matter?
Ruling:
The RTC had exclusive jurisdiction over the crimes
charged. Petitioner MPI further avers that even if
there is no allegation in the Informations identifying
it as the owner of the personal properties described in
the Informations, its ownership of the properties can
be inferred from the other allegations.
The petitioners maintain that even if the Informations
are deficient, the remedy is the amendment of the
Informations and not the dismissal of the cases.
filing of the civil/intra-corporate case before the SEC
does not preclude the simultaneous and concomitant
filing of a criminal action before the regular courts;
such that, a fraudulent act may give rise to liability
for violation of the rules and regulations of the SEC
cognizable by the SEC itself, as well as criminal
liability for violation of the ​Revised Penal Code
cognizable by the regular courts, both charges to be
filed and proceeded independently, and may be
simultaneously with the other
The filing of a petition in the SEC for the
nullification of the Resolution of May 2, 1995 issued
by the Chairman and two members of the Board of
Directors of petitioner MPI, which authorized the
filing of criminal cases against respondent Umezawa,
was not a bar to his prosecution for estafa and
qualified theft for his alleged fraudulent and delictual
acts
Child Learning Center v Tagario Gr No. 150920
Facts:
Timothy entered the comfort room on the third floor
of the Marymount building to answer the call of
nature.
He, was locked inside and unable to get out.
Timothy started to panic and so he banged and kicked
the door and yelled several times for help.
No help arrived he decided to open the window to
call for help. In the process of opening the window,
Timothy went right through and fell down three
stories. Timothy was hospitalized and given medical
treatment for serious multiple physical injuries.
Spouses tagario filed a case for damages against the
school.
The trial court ruled in favor of Tagario and ordered
Child Learninig center and Spuoses Limon to pay
said damages.
The trial court disregarded the corporate fiction of
CLC and held the Spouses Limon personally liable
because they were the ones who actually managed the
affairs of the CLC.
CA affirmed.
Issue: W/n it is necessary to pierce the corporate veil
of Child Learning Center? NO

Ruling:
There was no basis to pierce CLC's separate
corporate personality.

To disregard the corporate existence, the plaintiff

must prove: (1) Control by the individual owners, not
mere majority or complete stock ownership, resulting
in complete domination not only of finances but of
policy and business practice in respect to a
transaction so that the corporate entity as to this
transaction had at the time no separate mind, will or
existence of its own; (2) such control must have been
used by the defendant to commit fraud or wrong, to
perpetuate the violation of a statutory or other
positive legal duty, or a dishonest and unjust act in
contravention of the plaintiff's legal right; and (3) the
control and breach of duty must proximately cause
the injury or unjust loss complained of.

The absence of these elements prevents piercing the

corporate veil.
Yu v NLRC Gr No. 111810-11
Facts:
Duran, Eduardo Paliwan, Roque Estoce, and
Rodrigo Santos were employees of respondent
corporation Tanduay Distillery, Inc,(TDI)
22 employees of TDI, including private
respondents employees, received a memorandum
from TDI terminating their services. for reasons of
retrenchment,
A new buyer of TDI's assets, Twin Ace
Holdings, Inc. took over the business. Twin Ace
assumed the business name Tanduay Distillers.
The employees filed a motion to implead
James Yu and Wilson Young, doing business under
the name and style of Tanduay Distillers, as party
respondents in the labor cases.
Yu and Young filed an opposition thereto,
asserting that they are representatives of Tanduay
Distillers an entity distinct and separate from
Tanduay Distillery, the previous owner, there is no
employer-employee relationship between Tanduay
Distillers and private respondents.
NLRC ruled that the retrenchment done by
Tanduay Distillery was illegal.
Tanduay Distillery was held liable to
reinstate respondents up to the time of change of
ownership, The Labor Arbiter issued an order for
Tanduay Distillers. Yu and Young(owners of
Tandauy Distillers) to reinstate the employees.
Issue: W/n Tanduay Distillers are liable to reinstate
the employees? NO
Ruling:
Tanduay Distillers, on one hand, and
Tanduay Distillery Inc. (TDI), on the other, are
distinct and separate corporations. There is nothing to
suggest that the owners of TDI, have any common
relationship as to identify it with Allied Bank Group
which runs Tanduay Distillers.
The use of a similar sounding or almost
identical name is an obvious device to capitalize on
the goodwill which Tanduay Rum has built over the
years.
Basic 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 legal entity to which it may be related
The doctrine of piercing the veil of
corporate entity applies when the corporate fiction is
used to defeat public convenience, justify wrong,
protect fraud, or defend crime or where a corporation
is the mere alter ego or business conduit of a person
The genuine nature of the sale to Twin Ace is
evidenced by the fact that Twin Ace was only a
subsequent interested buyer. At the time when
termination notices were sent to its employees, TDI
was negotiating with the First Pacific Metro
Corporation for the sale of its assets. Only after First
Pacific gave up its efforts to acquire the assets did
Twin Ace or Tanduay Distillers come into the
picture.
Respondents-employees have not presented
any proof as to communality of ownership and
management to support their contention that the two
companies are one firm or closely related.
PNB v Ritratto Group Inc. Gr No. 14246
Facts:
PNB International Finance Ltd. (PNB-IFL) a
subsidiary company of PNB, extended a letter of
credit in favor of Ritratto in the amount of
US$300,000.00 secured by real estate mortgages
constituted over four (4) parcels of land in Makati
City
Ritratto’s outstanding obligations stood at
US$1,497,274.70.
Pursuant to the terms of the real estate
mortgages, PNB-IFL, through its attorney-in-fact
PNB, notified Ritratto of the foreclosure of all the
real estate mortgages and that the properties subject
thereo.
Ritratto filed an injunction in the RTC of
Makati, which was granted.
PNB assailed the issuance of the writ of
preliminary injunction.
Ritratto argues PNB-IFL, is a wholly owned
subsidiary of defendant Philippine National Bank, the
suit against the defendant PNB is a suit against
PNB-IFL .
Ritratto sought to enjoin and restrain PNB
from the foreclosure and eventual sale of the property
in order to protect their rights to said property by
reason of void credit facilities as bases for the real
estate mortgage over the said property

ISSUE: W/N PNB is an alter ego of PNB-IFL? NO

Ruling:
The contract questioned is one entered into
between respondent and PNB-IFL, not PNB.
PNB is a mere attorney-in-fact for the
PNB-IFL with full power and authority to, ​inter alia,​
foreclose on the properties mortgaged to secure their
loan obligations with PNB-IFL.
PNB is an agent with limited authority and
specific duties under a special power of attorney
incorporated in the real estate mortgage. It is not
privy to the loan contracts entered into by
respondents and PNB-IFL.
Ritratto does not have any cause of action
against petitioner.
The general rule is that as a legal entity, a
corporation has a personality distinct and separate
from its individual stockholders or members, and is
not affected by the personal rights, obligations and
transactions of the latter.
The mere fact that a corporation owns all of
the stocks of another corporation, taken alone is not
sufficient to justify their being treated as one entity. If
used to perform legitimate functions, a subsidiary's
separate existence may be respected, and the liability
of the parent corporation as well as the subsidiary
will be confined to those arising in their respective
business