G.R. No. 157549. May 30, 2011.

DONNINA C. HALLEY, petitioner, vs.

PRINTWELL, INC., respondent.

Judges; A trial or appellate judge may occasionally

view a party’s memorandum or brief as worthy of due
consideration either entirely or partly.—It is to be
observed in this connection that a trial or appellate
judge may occasionally view a party’s memorandum or
brief as worthy of due consideration either entirely or
partly. When he does so, the judge may adopt and
incorporate in his adjudication the memorandum or the
parts of it he deems suitable, and yet not be guilty of the
accusation of lifting or copying from the memorandum.
This is because of the avowed objective of the
memorandum to contribute in the proper illumination
and correct determination of the controversy.
Corporation Law; Piercing the Veil of Corporate
Fiction; The corporate personality may be disregarded,
and the individuals composing the corporation will be
treated as individuals, if the corporate entity is being
used as a cloak or cover for fraud or illegality; as a
justification for a wrong; as an alter ego, an adjunct, or
a business conduit for the sole benefit of the stockholders.
—Although a corporation has a personality separate
and distinct from those of its stockholders, directors, or
officers, such separate and distinct personality is merely
a fiction created by law for the sake of convenience and
to promote the ends of justice. The corporate personality
may be disregarded, and the individuals composing the
corporation will be treated as individuals, if the
corporate entity is being used as a cloak or cover for
fraud or illegality; as a justification for a wrong; as an
alter ego, an adjunct, or a business conduit for the sole
benefit of the stockholders. As a general rule, a
corporation is looked upon as a legal entity, unless and
until sufficient reason to the contrary appears. Thus,
the courts always presume good faith, and for that
reason accord prime importance to the separate
personality of the corporation, disregarding the
corporate personality only after the wrongdoing is first
clearly and convincingly established. It thus

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* THIRD DIVISION.

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VOL. 649, MAY 30, 2011 117

Halley vs. Printwell, Inc.

behooves the courts to be careful in assessing the milieu

where the piercing of the corporate veil shall be done.
Same; Trust Fund Doctrine; Under the trust fund
doctrine, a corporation has no legal capacity to release
an original subscriber to its capital stock from the
obligation of paying for his shares, in whole or in part,
without a valuable consideration, or fraudulently, to the
prejudice of creditors.—Under the trust fund doctrine, a
corporation has no legal capacity to release an original
subscriber to its capital stock from the obligation of
paying for his shares, in whole or in part, without a
valuable consideration, or fraudulently, to the prejudice
of creditors. The creditor is allowed to maintain an
action upon any unpaid subscriptions and thereby steps
into the shoes of the corporation for the satisfaction of
its debt.
Same; The prevailing rule is that a stockholder is
personally liable for the financial obligations of the
corporation to the extent of his unpaid subscription.—
The prevailing rule is that a stockholder is personally
liable for the financial obligations of the corporation to
the extent of his unpaid subscription. In view of the
petitioner’s unpaid subscription being worth
P262,500.00, she was liable up to that amount.

PETITION for review on certiorari of a decision of

the Court of Appeals.
The facts are stated in the opinion of the Court.
Carlo Magno Verzo for petitioner.
Perpetuo Paner for respondent.

BERSAMIN, J.:
Stockholders of a corporation are liable for the
debts of the corporation up to the extent of their
unpaid subscriptions. They cannot invoke the veil
of corporate identity as a shield from liability,
because the veil may be lifted to avoid defrauding
corporate creditors.

118

118 SUPREME COURT REPORTS

ANNOTATED
Halley vs. Printwell, Inc.

We affirm with modification the decision

promulgated on August 14, 2002,1 whereby the
Court of Appeals (CA) upheld the decision of the
Regional Trial Court, Branch 71, in Pasig City
(RTC),2 ordering the defendants (including the
petitioner) to pay to Printwell, Inc. (Printwell) the
principal sum of P291,342.76 plus interest.

Antecedents

The petitioner was an incorporator and original

director of Business Media Philippines, Inc.
(BMPI), which, at its incorporation on November
12, 1987,3 had an authorized capital stock of
P3,000,000.00 divided into 300,000 shares each
with a par value of P10.00, of which 75,000 were
initially subscribed, to wit: