FERMIN Z. CARAM, JR. and ROSA O. DE CARAM , petitioner , vs.

THE HONORABLE COURT OF APPEALS and ALBERTO V.

ARELLANO

GR No. | Date G.R. No. L-48627. June 30, 1987 Ponente

Topic THE CORPORATE ENTITY; PIERCING THE CORPORATE VEIL

Doctrine A bona fide corporation should alone be liable for its corporate

acts duly authorized by its officers and directors.The stockholders of a bona fide corporation
cannot be held personally liable for its duly authorized acts.

Facts

Fermin Caram and Rosa Caram were subsequent investors (later Board Members)

of the Filipinas Orient Airways corporation which was their co-defendant in the

lower court aside from Baretto and Garcia. The Corporation hired the services of

Alberto Arellano (priv. respondent), and now said resp. is claiming his due payment.

The lower court made both Carams jointly and severally liable with said

corporation, Baretto, and Garcia on the grounds that the project study was

presented to Caram so the latter shall be convinced to invest in the proposed airline

company. It was on the basis of Arellano’s study that Filipinas Orient Airways

corporation was actually organized and rendered operational. Garcia and Caram,

and Barretto (defendant’s in the lower court) became members of the Board and/or

officers of Corporation. Thus, not only the defendant corporation but all the other

defendants who were involved in the preparatory stages of the incorporation, who

caused the preparation and/or benefited from the project study and the

technical services of plaintiff must be liable.

Only the Carams contested this ruling, claiming that they never personally part of

the contract between the corporation and private respondent.

Ratio Decidendi

W/N Issue

Whether or not the Carams are personally liable to the services of Arellano?

No, they are not. The Court held that there was no showing that the Filipinas Orient

Airways was a fictitious corporation and did not have a separate juridical personality,
tojustify 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.The petitioners did not
contract such services. It was only the results of such services that Barretto and Garcia
presented to the Carams which persuaded them to invest in the proposed airline.

Ruling:

WHEREFORE, the petition is granted. The petitioners are declared not liable under the

challenged decision, which is hereby modified accordingly. It is so ordered.