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Montilla, Jr. v. G Holdings, Inc., G.R. No. 194995, November 18, 2021 –
Doctrine:"Settled is the rule that where one corporation sells or otherwise transfers all its assets to another
corporation for value, the latter is not, by alone, liable for the debts and liabilities of the transferor.
FACTS:
Marinduque Mining and Industrial Corporation (MMIC) was a mining corporation, which was
foreclosed. MMC (Maricalum Mining) was incorporated by DBP and PNB to own, manage, and
operate the foreclosed properties, but MMC was eventually sold by (Asset Privatization Trust (APT)-
a government entity) to "G" Holdings (GHI), a holding corporation, when MMC became a non-
performing asset.
Petitioner EMILIO MONTILLA JR. is a judgment oblige of a case which involved a mining claim, that
involved MMIC who derived benefits from said mining claim. San Remigio, Real Copper, and Marinduque
(MMIC, which, is now owned by "G" Holdings" through a series of foreclosures and sales) are the judgment
obligors whom the court ordered in its April 12, 2002, decision, to deliver to petitioner MONTILLA a
percentage of profits and benefits they derived from mining activities through years of exploitation of the
mining claim.
However, in a Sheriff's Report, the Sheriff informed the court that MMIC had no more properties at Sipalay
City, Negros Occidental, as the properties found on site were already acquired by respondent "G" Holdings,
Inc. (GHI) from Maricalum Mining Corporation (MMC) thru a foreclosure sale.
Montilla, Jr., hoping to secure some properties to satisfy the judgment, moved for the issuance of an
AMENDED WRIT OF EXECUTION praying that the court would issue a writ to direct the court sheriff to
take properties belonging to (1) San Remigio Mines Inc. (2) and its assigns/successors, including
respondent GHl's properties.
However, the TC issued an Amended Order which reads: "G" Holdings, Inc. (GHI) does not appear to be a
privy of defendant Marinduque for the decision to be enforced against GHI. GHI got hold of the subject
properties and mining claims by way of foreclosure sale and mortgagee and highest bidder from Maricalum
Mining Corporation, an entity owned and controlled by the government organized by PNP and DBP after
DBP had earlier acquired said properties and mining claims as mortgagees and highest bidders from
defendant Maricalum in a foreclosure sale.
The CA upheld the RTC Decision, stating that GHI was not a party to the case where the assets of MMC
are disputed; as a consequence, the lower court cannot enforce its judgment against GHI. The CA
disregarded Montilla, Jr.'s assertion that GHI and the defunct MMIC are one and the same person as the
mere presence of interlocking directors is not by itself a ground to pierce the corporate fiction.
ISSUES:
(1) WHETHER GHI's purchase of Maricalum's mining claims and properties means that they have
effectively assumed the risks involved pursuant to the principle of caveat emptor (buyer beware) in effect,
allowing the piercing of the veil of corporate fiction.
(2) Whether or not the writ of execution may be issued against GHI.
RULINGS:
(1) NO. The GHI's purchase of Maricalum's mining claims and properties did not means that they have
effectively assumed the risks involved pursuant to the principle of caveat emptor (buyer beware). Thus, the
CA correctly denied the piercing of the veil of corporate fiction. In the case of Maricalum Mining Corp. v.
Florentino.
The Supreme Court held that the transfer of all assets of one corporation to another does not make the
transferee liable for the debts and liabilities of the transferor.
Exceptions:
(1) ASSUMPTION either express or implied assumption of obligation;
(2) Merger or Consolidation - corporate merger or consolidation;
(3) Existence existence of transferor is continued by transferee - where the transfer is merely a continuation
of the existence of the transferor; and
(4) FRAUD - fraud is employed to escape liability.
Note that the transfer of some of Maricalum's assets in favor of respondent GHI was by virtue of a
Purchase Service Agreement (PSA) as part of an official measure to dispose the government's non-
performing assets.
However, in July 2001, the properties of Maricalum, which had been mortgaged to secure the notes, were
extrajudicially foreclosed and eventually sold to respondent Gl as the highest bidder.
Since then, respondent GHI had been the controlling stockholder of Maricalum.
Settled is the rule that where one corporation sells or otherwise transfers all its assets to another
corporation for value, the latter is not, by that fact alone, liable for the debts and liabilities of the transferor.
Here, when respondent GHI purchased Maricalum's shares from the APT, it did so not for the purpose of
continuing Maricalum's existence/operations nor evading liability to creditors, but for the purpose of
investing in the mining industry without having to directly engage in the management and operation of
mining.
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As a Holding Company, respondent's acquisition of Maricalum's properties was merely to invest in the
equity of another corporation for the purpose of earning from the latter9s endeavors.
Hence, in the absence of clear and convincing evidence that GHI committed fraud in taking over the assets
of Maricalum, the former cannot be held automatically liable for the satisfaction of claims against
Maricalum. Thus: the transfer of Maricalum's mining claims and properties to GHI does not automatically
shift the former's liabilities to the latter. To restate, where one corporation sells or otherwise transfers all its
assets to another corporation for value, the latter is not, by that fact alone, liable for the debts and liabilities
of the transferor.
As to being a ALTER EGO, Neither can the SC find for petitioner's argument that respondent is a mere
alter ego of Maricalum to support the piercing of corporate veil between these two entities and ultimately
enforce the judgment award against respondent. The matter of separate corporate personality between
respondent and Maricalum has already been resolved as early as the case of "G" Holdings. Inc. v. National
Mines and Allied Workers
Union: the mere interlocking of directors and officers does not warrant piercing the separate corporate
personalities of MMC and GHI.
Under the ALTER EGO theory, piercing the veil of corporate fiction may be allowed only if the following
elements concur:
(1) Control - not mere stock control, but complete domination - not only of finances, but of policy and
business practice in respect to the transaction attacked, must have been such 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 a fraud or a wrong, to perpetuate the
violation of a statutory or other positive legal duty, or a dishonest and an unjust act in contravention of
plaintiff9s legal right; and
(3) The said control and breach of duty must have proximately caused the injury or unjust loss complained
of.
However, the "mortgage deed transaction" attacked as a basis for piercing the corporate veil was a
transaction that was an offshoot of the mortgages earlier constituted by GHI with APT in the name of MMC,
in a full privatization process. It appears that if there was any control or domination exercised over MMC, it
was the APT, not GHI, that wielded it.

INTERNATIONAL ACADEMY OF MANAGEMENT v. LITTON, GR No. 191525, 2017-12-13

Facts:
Atty. Emmanuel T. Santos (Santos), a lessee to two (2) buildings owned by Litton owed the latter rental
arrears as well as his share of the payment of realty taxes. Litton filed a complaint for unlawful detainer
against Santos before the MeTC of Manila. The MeTC ruled in Litton's favor and ordered Santos to vacate
A.I.D. Building and Litton Apartments and to pay various sums of money representing unpaid arrears, realty
taxes, penalty, and attorney's fees.
The judgment was not executed.
On 11 November 1996, the sheriff of the MeTC of Manila levied on a piece of real property covered by
Transfer Certificate of Title (TCT) No. 187565 and registered in the name of International Academy of
Management and Economics Incorporated (I/AME), in order to execute the judgment against Santos.
Indicated that such was "only up to the extent of the share of Emmanuel T. Santos." I/AME claimed that it
has a separate and distinct personality from Santos; hence, its properties should not be made to answer for
the latter's liabilities.
Upon motion for reconsideration of I/AME, the MeTC reversed its earlier ruling and ordered the cancellation
of the annotations of levy as well as the writ of execution.Petitioner avers that its right to due process was
violated when it was dragged into the case and its real property made an object of a writ of execution in a
judgment against Santos.It argues that since it was not impleaded in the main case, the court a quo never
acquired jurisdiction over it.
Petitioner I/AME argues that the doctrine of piercing the corporate veil applies only to stock corporations,
and not to non-stock, nonprofit corporations such as I/AME since there are no stockholders to hold liable in
such a situation but instead only members. Hence, they do not have investments or shares of stock or
assets to answer for possible liabilities. Thus, no one in a non-stock corporation can be held liable in case
the corporate veil is disregarded or pierced.
The petitioner also insists that the piercing of the corporate veil cannot be applied to a natural person - in
this case, Santos - simply because as a human being, he has no corporate veil shrouding or covering his
person.
Issues:
The issues boil down to the alleged denial of due process when the court pierced the corporate veil of
I/AME and its property was made to answer for the liability of Santos.
Ruling:
The piercing of the corporate veil is premised on the fact that the corporation concerned must have been
properly served with summons or properly subjected to the jurisdiction of the court a quo. Corollary thereto,
it cannot be subjected to a writ of execution meant for another in violation of its right to due process.
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There exists, however, an exception to this rule: if it is shown "by clear and convincing proof that the
separate and distinct personality of the corporation was purposefully employed to evade a legitimate and
binding commitment and perpetuate a fraud or like wrongdoings."
The resistance of the Court to offend the right to due process of a corporation that is a nonparty in a main
case, may disintegrate not only when its director, officer, shareholder, trustee or member is a party to the
main case, but when it finds facts which show that piercing of the corporate veil is merited.
In determining the propriety of applicability of piercing the veil of corporate fiction, this Court, in a number of
cases, did not put in issue whether a corporation is a stock or non-stock corporation.
In the United States, from which we have adopted our law on corporations, non-profit corporations are not
immune from the doctrine of piercing the corporate veil. Their courts view piercing of the corporation as an
equitable remedy, which justifies said courts to scrutinize any organization however organized and in
whatever manner it operates. Moreover, control of ownership does not hinge on stock ownership.
As held in Barineau v. Barineau:[36] [t]he mere fact that the corporation involved is a nonprofit corporation
does not by itself preclude a court from applying the equitable remedy of piercing the corporate veil. The
equitable character of the remedy permits a court to look to the substance of the organization, and its
decision is not controlled by the statutory framework under which the corporation was formed and operated.
While it may appear to be impossible for a person to exercise ownership control over a nonstock, not-for-
profit corporation, a person can be held personally liable under the alter ego theory if the evidence shows
that the person controlling the corporation did in fact exercise control, even though there was no stock
ownership.
The concept of equitable ownership, for stock or non-stock corporations, in piercing of the corporate veil
scenarios, may also be considered. An equitable owner is an individual who is a non-shareholder
defendant, who exercises sufficient control or considerable authority over the corporation to the point of
completely disregarding the corporate form and acting as though its assets are his or her alone to manage
and distribute.
The piercing of the corporate veil may apply to corporations as well as natural persons involved with
corporations. This Court has held that the "corporate mask may be lifted and the corporate veil may be
pierced when a corporation is just but the alter ego of a person or of another corporation.”
Like Arcilla, Santos: (1) was adjudged liable to pay on a judgment against him; (2) he became President of
a corporation; (3) he formed a corporation to conceal assets which were supposed to pay for the judgment
against his favor; (4) the corporation which has Santos as its President, is being asked by the court to pay
on the judgment; and (5) he may not use as a defense that he is no longer President of I/AME (although a
visit to the website of the school shows he is the current President).
This Court agrees with the CA that I/AME is the alter ego of Santos and Santos - the natural person - is the
alter ego of I/AME. Santos falsely represented himself as President of I/AME in the Deed of Absolute Sale
when he bought the Makati real property, at a time when I/AME had not yet existed.
We borrow from American parlance what is called reverse piercing or reverse corporate piercing or piercing
the corporate veil "in reverse."
"in a traditional veil-piercing action, a court disregards the existence of the corporate entity so a claimant
can reach the assets of a corporate insider. In a reverse piercing action, however, the plaintiff seeks to
reach the assets of a corporation to satisfy claims against a corporate insider."
"Reverse-piercing flows in the opposite direction (of traditional corporate veil-piercing) and makes the
corporation liable for the debt of the shareholders."
It has two (2) types: outsider reverse piercing and insider reverse piercing. Outsider reverse piercing occurs
when a party with a claim against an individual or corporation attempts to be repaid with assets of a
corporation owned or substantially controlled by the defendant.[52] In contrast, in insider reverse piercing,
the controlling members will attempt to ignore the corporate fiction in order to take advantage of a benefit
available to the corporation, such as an interest in a lawsuit or protection of personal assets.
Outsider reverse veil-piercing is applicable in the instant case. Litton, as judgment creditor, seeks the
Court's intervention to pierce the corporate veil of I/AME in order to make its Makati real property answer
for a judgment against Santos, who formerly owned and still substantially controls I/AME.
In the U.S. case Acree v. McMahan,[54] the American court held that "[o]utsider reverse veil-piercing
extends the traditional veil-piercing doctrine to permit a third-party creditor to pierce the veil to satisfy the
debts of an individual out of the corporation's assets."
This notwithstanding, the equitable remedy of reverse corporate piercing or reverse piercing was not meant
to encourage a creditor's failure to undertake such remedies that could have otherwise been available, to
the detriment of other creditors.

Employer-Employee Relationship

Maricalum Mining Corporation vs Ely G . Florentino et. Al.

G.R. No. 221813 July 23, 2018
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Facts: In 1992, respondent G Holdings Inc. bought 90% of petitioner Maricalum Mining Corporation’s
shares and thereafter immediately took possession of its Sipalay Mining Complex and took full control of its
management and operations. In 1999, the Sipalay General Hospital, Inc. was duly incorporated.
Afterwards, some of Maricalum Mining's employees retired and formed several manpower cooperatives
each of which executed identical sets of Memorandum of Agreement with Maricalum Mining wherein they
undertook, among others, to provide the latter with a steady supply of workers, machinery and equipment
for a monthly fee. In 2001, Maricalum Mining decided to stop its mining operations to avert continuing
losses. Its properties were foreclosed and sold to G Holdings as the highest bidder.
In 2010, some of Maricalum Mining's workers and Sipalay General Hospital's employees jointly filed
a Complaint with the Labor Arbiter (LA) against G Holdings, and the cooperatives for illegal dismissal,
underpayment and nonpayment of salaries and benefits, and damages.
Complainants posited that: the Sipalay Hospital is "among the assets" of Maricalum Mining acquired
by G Holdings; and their payroll were prepared by G Holdings' accounting department. Correspondingly, G
Holdings maintained that: it was Maricalum Mining who entered into an agreement with the manpower
cooperatives for the employment of complainants' services.
The LA ruled in favor of complainants and held that G Holdings connived with Marcalum Mining in
orchestrating the formation of manpower cooperatives to circumvent complainants' labor standards rights.
On appeal, the NLRC imposed the liability of paying the monetary awards imposed by the LA against
Maricalum Mining, instead of G Holdings, on the ground that it was Maricalum Mining who entered into
service contracts with each of the manpower cooperatives. The Court of Appeals affirmed the decision of
the NLRC.

Issue: Whether or not there is employer-employee relationship between G Holdings and the employees of
Sipalay Hospital.

Ruling: NO.
In this case, the Supreme Court applied the four-fold test: a) the selection and engagement of the
employee; b) the payment of wages; c) the power of dismissal; and d) the power to control the employee's
conduct, or the so-called "control test."
Complainant failed to show that their services were selected and engaged by either Maricalum
Mining or G Holdings. However, the cash vouchers and notices of termination are reasonable enough to
draw an inference that G Holdings and Maricalum Mining may have had a hand in the complainants'
payment of salaries and dismissal.
Further, in order to determine the presence or absence of an employment relationship between G
Holdings and the employees of Sipalay Hospital by using the control test, the Court examined Sipalay
Hospital's Articles of Incorporation imparting its 'primary purpose, to wit:
“ To own, manage, lease or operate hospitals or clinics offering and providing medical services and
facilities to the general public, provided that purely professional, medical or surgical services shall be
performed by duly qualified physicians or surgeons who may or may not be connected with the
corporation and who shall be freely and individually contracted by patients.”
It is immediately apparent that Sipalay Hospital, even if its facilities are located inside the Sipalay
Mining Complex, does not limit its medical services only to the employees and officers of Maricalum Mining
and/or G Holdings. Moreover, G Holdings is a holding company primarily engaged in investing substantially
in the stocks of another company-not in directing and managing the latter's daily business operations.
Because of this corporate attribute, the Court can reasonably draw an inference that G Holdings does not
have a considerable ability to control means and methods of work of Sipalay Hospital employees.
Markedly, the records are simply bereft of any evidence that G Holdings had, in fact, used its ownership to
control the daily operations of Sipalay Hospital as well as the working methods of the latter's employees.

CASE: PNB VS. HYDRO RESOURCES CONTRACTORS CORPORATION

G.R NO. 167530, 693 SCRA 294
March 13, 2013

Topic: Doctrine of Piercing the Veil of Corporate Fiction

FACTS:
Sometime in 1984, petitioners DBP and PNB foreclosed on certain mortgages made on the properties of
Marinduque Mining and Industrial Corporation (MMIC). As a result of the foreclosure, DBP and PNB
acquired substantially all the assets of MMIC and resumed the business operations of the defunct MMIC by
organizing NMIC.7 DBP and PNB owned 57% and 43% of the shares of NMIC, respectively, except for five
qualifying shares. As of September 1984, the members of the Board of Directors of NMIC, namely, Jose
Tengco, Jr., Rolando Zosa, Ruben Ancheta, Geraldo Agulto, and Faustino Agbada, were either from DBP
or PNB.
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Subsequently, NMIC engaged the services of Hercon, Inc., for NMIC’s Mine Stripping and Road
Construction Program in 1985 for a total contract price of P35,770,120. After computing the payments
already made by NMIC under the program and crediting the NMIC’s receivables from Hercon, Inc., the
latter found that NMIC still has an unpaid balance of P8,370,934.74.10 Hercon, Inc. made several demands
on NMIC, including a letter of final demand dated August 12, 1986, and when these were not heeded, a
complaint for sum of money was filed in the RTC of Makati, Branch 136 seeking to hold petitioners NMIC,
DBP, and PNB solidarily liable for the amount owing Hercon, Inc.

Subsequent to the filing of the complaint, Hercon, Inc. was acquired by HRCC in a merger.

Thereafter, on December 8, 1986, then President Corazon C. Aquino issued Proclamation No. 50 creating
the APT for the expeditious disposition and privatization of certain government corporations and/or the
assets thereof. Pursuant to the said Proclamation, on February 27, 1987, DBP and PNB executed their
respective deeds of transfer in favor of the National Government assigning, transferring and conveying
certain assets and liabilities, including their respective stakes in NMIC. In turn and on even date, the
National Government transferred the said assets and liabilities to the APT as trustee under a Trust
Agreement.

NMIC and DPB claimed that HRCC had no cause of action and asserted that the contract with HRCC was
entered into by its President without any authority. It also failed o comply with the rules and regulations
concerning government of contracts. DBP asserts that it is not a privy to the contact with NMIC and NMIC’s
juridical personality id separate from DBP.

RTC of Makati rendered decision in favor of HRCC, it pierced veil of NMIC and held DBP and PNB
solidarily liable with NMIC.

ISSUE: Whether or not there is sufficient ground to pierce the veil of corporate fiction.
Whether or not DBP and PNB solidarily liable with NMIC.

RULING:
No, there s no sufficient proof to pierce the veil of corporate fiction.

Although from all indications, it appears that NMIC is a mere adjunct, business conduit or alter ego of both
DBP and PNB. Thus, the DBP and PNB are jointly and severally liable with NMIC for the latter’s unpaid
obligations to plaintiff, where owned, conducted and controlled the business of NMIC as shown by the
following circumstances: NMIC was owned by DBP and PNB, the officers of DBP and PNB were also the
officers of NMIC, and DBP and PNB financed the operations of NMIC. As it is well-settled that "where it
appears that the business enterprises are owned, conducted and controlled by the same parties, both law
and equity will, when necessary to protect the rights of third persons, disregard legal fiction that two (2)
corporations are distinct entities, and treat them as identical." (Phil. Veterans Investment Development
Corp. vs. CA, 181 SCRA 669).

CA then concluded that, "in keeping with the concept of justice and fair play," the corporate veil of NMIC
should be pierced.

For to treat NMIC as a separate legal entity from DBP and PNB for the purpose of securing beneficial
contracts, and then using such separate entity to evade the payment of a just debt, would be the height of
injustice and iniquity. Surely that could not have been the intendment of the law with respect to
corporations.

A corporation is an artificial entity created by operation of law. It possesses the right of succession and
such powers, attributes, and properties expressly authorized by law or incident to its existence. It has a
personality separate and distinct from that of its stockholders and from that of other corporations to which it
may be connected. As a consequence of its status as a distinct legal entity and as a result of a conscious
policy decision to promote capital formation, a corporation incurs its own liabilities and is legally responsible
for payment of its obligations. In other words, by virtue of the separate juridical personality of a corporation,
the corporate debt or credit is not the debt or credit of the stockholder. 41 This protection from liability for
shareholders is the principle of limited liability.4

Equally well-settled is the principle that the corporate mask may be removed or the corporate veil pierced
when the corporation is just an alter ego of a person or of another corporation. For reasons of public policy
and in the interest of justice, the corporate veil will justifiably be impaled only when it becomes a shield for
fraud, illegality or inequity committed against third persons.

The doctrine of piercing the corporate veil applies only in three (3) basic areas, namely: 1) defeat of
public convenience as when the corporate fiction is used as a vehicle for the evasion of an existing
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obligation; 2) fraud cases or when the corporate entity is used to justify a wrong, protect fraud, or defend a
crime; or 3) alter ego cases, where a corporation is merely a farce since it is a mere alter ego or business
conduit of a person, or where the corporation is so organized and controlled and its affairs are so
conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.

In this connection, case law lays down a three-pronged test to determine the application of the alter
ego theory, which is also known as the instrumentality theory, namely:

(1) Control, not mere majority or complete stock control, but complete domination, not only of
finances but of policy and business practice in respect to the transaction attacked so that the
corporate entity as to this transaction had at the time no separate mind, will or existence of its
own;(Control Test)

(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 dishonest and unjust act in
contravention of plaintiff’s legal right; and (Fraud Test)

(3) The aforesaid control and breach of duty must have proximately caused the injury or unjust loss
complained of. (Harm Test)

For piercing the corporate veil based on the alter ego theory requires the concurrence of three elements:
control of the corporation by the stockholder or parent corporation, fraud or fundamental unfairness
imposed on the plaintiff, and harm or damage caused to the plaintiff by the fraudulent or unfair act of the
corporation. The absence of any of these elements prevents piercing the corporate veil.

These are not present in this case.

As a general rule, a corporation will be looked upon as a legal entity, unless and until sufficient reason to
the contrary appears. For the separate juridical personality of a corporation to be disregarded, the
wrongdoing must be clearly and convincingly established. It cannot be presumed.

There being a total absence of evidence pointing to a fraudulent, illegal or unfair act committed against
HRCC by DBP and PNB under the guise of NMIC, there is no basis to hold that NMIC was a mere alter ego
of DBP and PNB. Thus, DBP and PNB may not be held solidarily liable with NMIC, no contingent liability
may be imputed to the APT as well. Only NMIC as a distinct and separate legal entity is liable to pay its
corporate obligation to HRCC in the amount of ₱8,370,934.74, with legal interest thereon from date of
demand.

KUKAN INTERNATIONAL CORPORATION v. AMOR REYES, GR No. 182729, 2010-09-29

Facts:
the RTC disregarded the separate corporate identities of Kukan, Inc. and Kukan International Corporation
and declared them to be one and the same entity. Accordingly, the RTC held Kukan International
Corporation, albeit not impleaded in the underlying complaint of Romeo M. Morales, liable for the judgment
award decreed in a Decision dated November 28, 2002[5] in favor of Morales and against Kukan, Inc.
Sometime in March 1998, Kukan, Inc. conducted a bidding for the supply and installation of signages in a
building being constructed in Makati City.
Issues:
The third and main issue in this case is whether or not the trial and appellate courts correctly applied the
principle of piercing the veil of corporate entity--called also as disregarding the fiction of a separate juridical
personality of a corporation--to support a conclusion... that Kukan, Inc. and KIC are but one and the same
corporation with respect to the contract award referred to at the outset. This principle finds its context on
the postulate that a corporation is an artificial being invested with a personality separate and distinct from
those of... the stockholders and from other corporations to which it may be connected or related.
Ruling:
collection of individuals or an aggregation of persons undertaking business as a group, disregarding the
separate juridical personality of the corporation... unifying the group.
While a corporation may exist for any lawful purpose, the law will regard it as an association of persons or,
in case of two corporations, merge them into one, when its corporate legal entity is used as a cloak for
fraud or illegality. This is the doctrine... of piercing the veil of corporate fiction. The doctrine applies only
when such corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend
crime, or when it is made as a shield to confuse the legitimate issues, or where a corporation is... the mere
alter ego or business conduit of a person, or where the corporation is so organized and controlled and its
affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another
corporation.
Morales' contention is untenable.
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The implication of the above comment is twofold: (1) the court must first acquire jurisdiction over the
corporation or corporations involved before its or their separate personalities are disregarded; and (2) the
doctrine of piercing the veil of corporate entity can only be... raised during a full-blown trial over a cause of
action duly commenced involving parties duly brought under the authority of the court by way of service of
summons or what passes as such service.

Title
Roquel v. Philippine National Bank
Case
G.R. No. 246270
Ponente
CARANDANG, J :
Decision Date
2021-06-30
The Supreme Court rules that Philippine National Bank (PNB) cannot be held liable for the alleged
illegal dismissal of an employee due to lack of evidence of control and wrongdoing, and the
application of Philippine labor laws in a Hong Kong-based employment.
Facts:
The petitioner, Susan R. Roquel, was hired by PNB International Finance Ltd. (PNB-IFL), a subsidiary of
respondent Philippine National Bank (PNB), as a general clerk in May 1990. In 2002, PNB-IFL temporarily
transferred its operations to PNB's Hong Kong Branch (PNB-HK) and PNB's Remittance Center Limited
(PNB-RCL), both of which are subsidiaries of PNB. Roquel was assigned to PNB-HK as a supervisor and
later as an officer-in-charge. PNB-IFL resumed its operations in 2004, but Roquel was designated as
branch manager of PNB-RCL until April 2010. Roquel was transferred back to PNB-HK as a trainee in April
2010 and later transferred to PNB Global Remittance and Finance Co. (HK) Ltd. (PNB Global) upon
completion of her training. Roquel was terminated by PNB Global on December 23, 2011. She filed a
complaint for illegal dismissal against PNB with the National Labor Relations Commission (NLRC).
Issue:
The main issue is whether the doctrine of piercing the veil of corporate fiction should be applied to hold
PNB liable for Roquel's illegal dismissal.
Ruling:
The Court ruled in favor of Roquel and held that PNB should be held liable for her illegal dismissal. The
Court applied the alter ego theory to pierce the veil of corporate fiction and treat PNB and its subsidiaries
as one entity. The Court found that PNB exercised control and supervision over Roquel's employment, and
the transfers between PNB-HK and PNB Global demonstrated that the corporations acted as one entity.
Therefore, PNB was considered Roquel's employer and was held liable for her illegal dismissal.
Ratio:
The Court applied the alter ego theory to pierce the veil of corporate fiction and treat PNB and its
subsidiaries as one entity. The Court found that PNB exercised control and supervision over Roquel's
employment, as evidenced by her transfers between PNB-HK and PNB Global. The Court also considered
the fact that PNB acknowledged the arrangement of using the same employees among its subsidiaries.
Therefore, PNB was considered Roquel's employer and was held liable for her illegal dismissal.

PIONEER INSURANCE SURETY CORPORATION v. MORNING STAR TRAVEL, GR No. 198436, 2015-
07-08
Facts:
This case originated from a Complaint[3] for Collection of Sum of Money and Damages filed by Pioneer
Insurance & Surety Corporation (Pioneer) against Morning Star Travel & Tours, Inc. (Morning Star) for the
amounts Pioneer paid the International Air
Transport Association under its credit insurance policy.
Pioneer filed this Petition for Review[5] assailing the Court of Appeals' February 28, 2011 Decision[
Morning Star is a travel and tours agency with Benny Wong, Estelita Wong, Arsenio Chua, Sonny Chua,
and Wong Yan Tak as shareholders and members of the board of directors.
International Air Transport Association is a Canadian corporation licensed to do business in the Philippines
"to promote safe, regular and economical air transport for all people, among others."[10]
International Air Transport Association appointed Morning Star as an accredited travel agent.[11] Morning
Star "avail[ed] of the privilege of getting on credit... air transport tickets from various airline companies [to
be sold] to passengers at prices... fixed by the airline companies[.]"[12]
Morning Star and International Air Transport Association entered a Passenger Sales Agency Agreement
such that Morning Star must report all air transport ticket sales to International Air Transport Association
and account all payments received through the centralized system... called Billing and Settlement Plan.[13]
Morning Star only holds in trust all monies collected as these belong to the airline companies.
 Page 8 of 12

International Air Transport Association obtained a Credit Insurance Policy from Pioneer to assure itself of
payments by accredited travel agents for ticket sales and monies due to the airline companies under the
Billing and Settlement Plan.[15] The policy... was for the period
The policy was made known to the accredited travel agents. Morning Star, through its President, Benny
Wong, was among those that declared itself liable to indemnify Pioneer for any and all claims under the
policy. He executed a registration form under the Credit
Morning Star had an accrued billing of P49,051,641.80 and US$325,865.35 for the period from December
16, 2002 to December 31, 2002. It failed to remit these amounts through the Billing and Settlement Plan,
prompting the International Air Transport Association to send a letter... dated January 17, 2003 advising on
the overdue remittance.[18]
Pursuant to the credit insurance policies, International Air Transport Association demanded from Pioneer
the sums of P109,728,051.00 and US$457,834.14 representing Morning Star's overdue account as of April
30, 2003. Pioneer investigated, ascertained, and validated the claims,... then paid International Air
Transport Association the amounts of P100,479,171.59 and US$457,834.14.[20]
Consequently, Pioneer demanded these amounts from Morning Star through a letter dated September 23,
2003.[21] International Air Transport Association executed in Pioneer's favor a Release of Claim and
Subrogation Receipt on December 23, 2003.[22]
On November 10, 2005, Pioneer filed a Complaint for Collection of Sum of Money and Damages against
Morning Star and its shareholders and directors.
Morning Star, Benny Wong, and Estelita Wong were served with summons and a copy of the Complaint on
November 22, 2005, while Arsenio Chua, Sonny Chua, and Wong Yan Tak were unserved.[24]
The Regional Trial Court in its Decision[31] dated November 9, 2007 ruled in favor of Pioneer and ordered
respondents to jointly and severally pay Pioneer:
Court of Appeals, in its Decision dated February 28, 2011, affirmed the trial court with modification in that
only Morning Star was liable to pay petitioner:
The Court of Appeals denied Pioneer's Motion for Partial Reconsideration.[34] Thus, Pioneer filed this
Petition.
Pioneer argues that "the individual respondents were, at the very least, grossly negligent in running the
affairs of respondent Morning Star by knowingly allowing it to amass huge debts to [International Air
Transport Association] despite its financial distress, thus, giving... sufficient ground for the court to pierce
the corporate veil and hold said individual respondents personally liable."[37] It cites Section 31 of the
Corporation Code on the liability of directors "guilty of gross negligence or bad faith in directing the... affairs
of the corporation[.]"
Pioneer contends that the abnormally large indebtedness to International Air Transport Association was
incurred in fraud and bad faith, with Morning Star having no intention to pay its debt.
Issues:
whether the doctrine of piercing the corporate veil applies to hold the individual respondents solidarily liable
with respondent Morning Star Travel and Tours, Inc. to pay the award in favor of petitioner Pioneer
Insurance & Surety Corporation.
Ruling:
We affirm the Court of Appeals.
The law vests corporations with a separate and distinct personality from those that represent these
corporations.[61]
A separate corporate personality shields corporate officers acting in good faith and within their scope of
authority from personal liability except for situations enumerated by law and jurisprudence
Personal liability of a corporate director, trustee or officer along (although not necessarily) with the
corporation may so validly attach, as a rule, only when —
'1. He assents (a) to a patently unlawful act of the corporation, or (b) for bad faith or gross negligence in
directing its affairs, or (c) for conflict of interest, resulting in damages to the corporation, its stockholders or
other persons;
The first exception comes from Section 31 of the Corporation Code:
Petitioner imputes gross negligence and bad faith on the part of the individual respondents for incurring the
huge indebtedness to International Air Transport Association.[66]
Bad faith "imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, not simply
bad judgment or negligence."[67] "[I]t means breach of a known duty through some motive or interest or ill
will; it partakes of the nature of... fraud."
Despite the fact that defendant Morning Star was already incurring losses as early as 1998 up to the year
2000, the latter still contracted loans and/or obligations with IATA sometime in 2002 and which
indebtedness ballooned to the huge amount of Phpl09,728,051.00 and
US$496,403.21 as of April 30, 2003, which obviously it could not pay considering its financial standing.
First, petitioner failed to substantiate the fourth badge of fraud on "[e]vidence of large indebtedness or
complete insolvency."[76]
In 1993, International Air Transport Association appointed respondent Morning Star as an accredited travel
agent with the privilege of getting air tickets on credit, and they entered a Passenger Sales Agency
Agreement.[77] None of the parties made... allegations on the financial status or business standing of
respondent Morning Star during the first five years from its accreditation in 1993.
 Page 9 of 12

Second, petitioner failed to substantiate the fifth badge of fraud on the "transfer of all or nearly all of his
property by a debtor, especially when he is insolvent or greatly embarrassed financially."[85]
Third, petitioner also failed to substantiate the sixth badge of fraud that "the transfer is made between father
and son, when there are present other of the above circumstances."[88]
The records do not show that the individual respondents controlled Morning Star Tour Planners, Inc. and
that such control was used to commit fraud against petitioner. Neither does this suspicion support
petitioner's position that the individual respondents were in bad faith or... gross negligence in directing the
affairs of respondent Morning Star.
Petition is DENIED. The Court of Appeals Decision is AFFIRMED with MODIFICATION in that legal interest
is 6% per annum from September 23, 2003 until fully paid.

LIVESEY VS BINSWANGER (G.R. NO. 177493 MARCH 19, 2014)

Livesey vs Binswanger Philippines Inc.

G.R. No. 177493 March 19, 2014
J. Brion
Facts: In December 2001, petitioner Eric Godfrey Stanley Livesey filed a complaint for illegal dismissal with
money claims against CBB Philippines Strategic Property Services, Inc. (CBB) and Paul Dwyer. CBB was a
domestic corporation engaged in real estate brokerage and Dwyer was its President.
Thereafter, the parties entered into a compromise agreement which LA Reyno approved in an order dated
November 6, 2002. Under the agreement, Livesey was to receive US$31,000.00 in full satisfaction of LA
Reyno’s decision, broken down into US$13,000.00 to be paid by CBB to Livesey or his authorized
representative upon the signing of the agreement; US$9,000.00 on or before June 30, 2003; and
US$9,000.00 on or before September 30, 2003. Further, the agreement provided that unless and until the
agreement is fully satisfied, CBB shall not: (1) sell, alienate, or otherwise dispose of all or substantially all of
its assets or business; (2) suspend, discontinue, or cease its entire, or a substantial portion of its business
operations; (3) substantially change the nature of its business; and (4) declare bankruptcy or insolvency.
CBB paid Livesey the initial amount of US$13,000.00, but not the next two installments as the company
ceased operations. In reaction, Livesey moved for the issuance of a writ of execution. LA Eduardo G.
Magno granted the writ, but it was not enforced. Livesey then filed a motion for the issuance of an alias writ
of execution, alleging that in the process of serving respondents the writ, he learned “that respondents, in a
clear and willful attempt to avoid their liabilities to complainant . . . have organized another corporation,
[Binswanger] Philippines, Inc.” He claimed that there was evidence showing that CBB and Binswanger
Philippines, Inc. (Binswanger) are one and the same corporation, pointing out that CBB stands for
Chesterton Blumenauer Binswanger. Invoking the doctrine of piercing the veil of corporate fiction, Livesey
prayed that an alias writ of execution be issued against respondents Binswanger and Keith Elliot, CBB’s
former President, and now Binswanger’s President and Chief Executive Officer (CEO).
Issue: Whether or not the doctrine of piercing the corporate veil may be applied.
Held: Yes. It has long been settled that the law vests a corporation with a personality distinct and separate
from its stockholders or members. In the same vein, a corporation, by legal fiction and convenience, is an
entity shielded by a protective mantle and imbued by law with a character alien to the persons comprising
it. 43 Nonetheless, the shield is not at all times impenetrable and cannot be extended to a point beyond its
reason and policy. Circumstances might deny a claim for corporate personality, under the “doctrine of
piercing the veil of corporate fiction.”

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Piercing the veil of corporate fiction is an equitable doctrine developed to address situations where the
separate corporate personality of a corporation is abused or used for wrongful purposes. Under the
doctrine, the corporate existence may be disregarded where the entity is formed or used for non-legitimate
purposes, such as to evade a just and due obligation, or to justify a wrong, to shield or perpetrate fraud or
to carry out similar or inequitable considerations, other unjustifiable aims or intentions, in which case, the
fiction will be disregarded and the individuals composing it and the two corporations will be treated as
identical.
In the present case, we see an indubitable link between CBB’s closure and Binswanger’s incorporation.
CBB ceased to exist only in name; it re-emerged in the person of Binswanger for an urgent purpose — to
avoid payment by CBB of the last two installments of its monetary obligation to Livesey, as well as its other
financial liabilities. Freed of CBB’s liabilities, especially that owing to Livesey, Binswanger can continue, as
it did continue, CBB’s real estate brokerage business.
Livesey’s evidence, whose existence the respondents never denied, converged to show this continuity of
business operations from CBB to Binswanger. It was not just coincidence that Binswanger is engaged in
the same line of business CBB embarked on: (1) it even holds office in the very same building and on the
very same floor where CBB once stood; (2) CBB’s key officers, Elliot, no less, and Catral moved over to
 Page 10 of 12

Binswanger, performing the tasks they were doing at CBB; (3) notwithstanding CBB’s closure,
Binswanger’s Web Editor (Young), in an e-mail correspondence, supplied the information that Binswanger
is “now known” as either CBB (Chesterton Blumenauer Binswanger or as Chesterton Petty, Ltd., in the
Philippines; (4) the use of Binswanger of CBB’s paraphernalia (receiving stamp) in connection with a labor
case where Binswanger was summoned by the authorities, although Elliot claimed that he bought the item
with his own money; and (5) Binswanger’s takeover of CBB’s project with the PNB.
While the ostensible reason for Binswanger’s establishment is to continue CBB’s business operations in the
Philippines, which by itself is not illegal, the close proximity between CBB’s disestablishment and
Binswanger’s coming into existence points to an unstated but urgent consideration which, as we earlier
noted, was to evade CBB’s unfulfilled financial obligation to Livesey under the compromise agreement.

MANUEL C. ESPIRITU v. PETRON CORPORATION, GR No. 170891, 2009-11-24

Facts:
Respondent Petron... sold and distributed
LPG... in cylinder tanks that carried its trademark "Gasul."
Respondent Carmen J. Doloiras owned and operated Kristina Patricia Enterprises (KPE), the exclusive...
distributor of Gasul LPGs in the whole of Sorsogon.
Jose Nelson Doloiras (Jose) served as KPE's manager.
Bicol Gas... was also in the business of selling and distributing LPGs in Sorsogon but theirs carried the
trademark "Bicol Savers Gas." Petitioner Audie Llona managed Bicol Gas.
In the course of trade and competition, any given distributor of LPGs at times acquired possession of LPG
cylinder tanks belonging to other distributors operating in the same area. They called these "captured
cylinders."
According to
KPE's manager,... in April 2001 Bicol Gas... agreed with KPE for the swapping of "captured cylinders" since
one distributor could not refill captured cylinders with its own brand of LPG.
At one time, in the course of implementing this arrangement, KPE's Jose visited the Bicol Gas refilling
plant. While there, he noticed... several Gasul tanks in Bicol Gas' possession. He requested a swap but
Audie Llona of Bicol Gas replied that he first needed to ask the permission of the Bicol Gas owners. That
permission was given and they had a swap involving around 30 Gasul tanks held by Bicol Gas in
exchange... for assorted tanks held by KPE.
KPE's Jose noticed, however, that Bicol Gas still had a number of Gasul tanks in its yard.
He offered to make a swap for these but Llona declined, saying the Bicol Gas owners wanted to send those
tanks to Batangas.
Later Bicol Gas told Jose that it had no more Gasul tanks left... in its possession. Jose observed on almost
a daily basis, however, that Bicol Gas' trucks which plied the streets of the province carried a load of Gasul
tanks. He noted that KPE's volume of sales dropped significantly from June to July 2001.
On August 4, 2001 KPE's Jose saw a particular Bicol Gas truck on the Maharlika Highway.
While the truck carried mostly Bicol Savers LPG tanks,... it had on it one unsealed 50-kg Gasul tank and
one 50-kg Shellane tank.
Jose followed the truck and when it stopped at a store, he asked... the driver, Jun Leorena, and the Bicol
Gas sales representative, Jerome Misal, about the Gasul tank in their truck. They said it was empty but,
when Jose turned open its valve, he noted that it was not. Misal and Leorena then admitted that the Gasul
and Shellane tanks on their... truck belonged to a customer who had them filled up by Bicol Gas. Misal then
mentioned that his manager was a certain Rolly Mirabena.
Because of the above incident, KPE filed a complaint... for violations of
R.A.
623 (illegally filling up registered cylinder tanks), as amended, and Sections 155 (infringement of trade
marks) and 169.1 (unfair competition) of the Intellectual
Property Code (R.A. 8293)
The complaint charged the following: Jerome Misal, Jun Leorena, Rolly Mirabena, Audie Llona, and several
John and Jane Does, described as the directors, officers, and stockholders of Bicol Gas.
the provincial prosecutor ruled that there was probable cause only for violation of R.A. 623... and that only
the four Bicol Gas employees, Mirabena, Misal, Leorena, and petitioner Llona, could be charged. The
charge against... the other petitioners who were the stockholders and directors of the company was
dismissed.
Petron and KPE filed a petition for review with the Office of the Regional State Prosecutor, Region V, which
initially denied the petition but partially granted it on motion for reconsideration.
The Office of the Regional State Prosecutor ordered the filing of... additional informations against the four
employees of Bicol Gas for unfair competition.
It ruled, however, that no case for trademark infringement was present. The Secretary of Justice denied the
appeal of Petron and KPE and their motion for reconsideration.
Petron and KPE filed a special civil action for certiorari with the Court of Appeals... the Court... of Appeals
reversed the Secretary of Justice's ruling. It held that unfair competition does not necessarily absorb
trademark infringement.
 Page 11 of 12

Consequently, the court ordered the filing of additional charges of trademark infringement against the
concerned Bicol Gas employees as... well.
Since the Bicol Gas employees presumably acted under the direct order and control of its owners, the
Court of Appeals also ordered the inclusion of the stockholders of Bicol Gas in the various charges,
bringing to 16 the number of persons to be charged, now including petitioners
Manuel C. Espiritu, Jr., Freida F. Espiritu, Carlo F. Espiritu, Rafael F. Espiritu, Rolando M. Mirabuna,
Hermilyn A. Mirabuna, Kim Roland A. Mirabuna, Kaye Ann A. Mirabuna, Ken Ryan A. Mirabuna, Juanito P.
de Castro, Geronima A. Almonite, and Manuel C. Dee (together with Audie
Llona), collectively, petitioners Espiritu, et al. The court denied the motion for reconsideration of these
employees and stockholders in its Resolution dated January 6, 2006, hence, the present petition for
review[6] before this Court.
Issues:
Whether or not the facts of the case warranted the filing of charges against the Bicol Gas people for
Filling up the LPG tanks registered to another manufacturer without the latter's consent in violation of R.A.
623, as amended
Ruling:
R.A. 623, as amended,... punishes any person who, without the written consent of the manufacturer or
seller of gases contained in duly registered steel cylinders or tanks, fills the steel cylinder or tank, for the
purpose of sale, disposal or trafficking,... other than the purpose for which the manufacturer or seller
registered the same. This was what happened in this case, assuming the allegations of KPE's manager to
be true. Bicol Gas employees filled up with their firm's gas the tank registered to Petron and bearing its
mark... without the latter's written authority. Consequently, they may be prosecuted for that offense.
Bicol Gas is a corporation. As such, it is an entity separate and distinct from the persons of its officers,
directors, and stockholders. It has been held, however, that corporate officers or employees, through
whose act, default or omission the corporation commits a crime, may... themselves be individually held
answerable for the crime.
Jose claimed in his affidavit that, when he negotiated the swapping of captured cylinders with Bicol Gas, its
manager, petitioner Audie Llona, claimed that he would be consulting with the owners of Bicol Gas about it.
Subsequently, Bicol Gas declined the offer to swap cylinders... for the reason that the owners wanted to
send their captured cylinders to Batangas. The Court of Appeals seized on this as evidence that the
employees of Bicol Gas acted under the direct orders of its owners and that "the owners of Bicol Gas have
full control of the operations... of the business."
The "owners" of a corporate organization are its stockholders and they are to be distinguished from its
directors and officers. The petitioners here, with the exception of Audie Llona, are being charged in their
capacities as stockholders of Bicol Gas. But the Court of Appeals... forgets that in a corporation, the
management of its business is generally vested in its board of directors, not its stockholders.
Stockholders are basically investors in a corporation. They do not have a hand in running the day-to-day
business... operations of the corporation unless they are at the same time directors or officers of the
corporation. Before a stockholder may be held criminally liable for acts committed by the corporation,
therefore, it must be shown that he had knowledge of the criminal act committed in... the name of the
corporation and that he took part in the same or gave his consent to its commission, whether by action or
inaction.
Although the KPE manager heard petitioner Llona say that he was going to consult the owners of Bicol Gas
regarding the offer to swap additional captured cylinders, no indication was given... as to which Bicol Gas
stockholders Llona consulted.
It would be unfair to charge all the stockholders involved, some of whom were proved to be minors.
No evidence was presented establishing the names of the stockholders who were charged with running
the... operations of Bicol Gas. The complaint even failed to allege who among the stockholders sat in the
board of directors of the company or served as its officers.
The Court of Appeals of course specifically mentioned petitioner stockholder Manuel C. Espiritu, Jr. as the
registered owner of the truck that the KPE manager brought to the police for investigation because that
truck carried a tank of Petron Gasul. But the act that R.A. 623... punishes is the unlawful filling up of
registered tanks of another. It does not punish the act of transporting such tanks. And the complaint did not
allege that the truck owner connived with those responsible for filling up that Gasul tank with Bicol Gas
LPG.

G.R. No. 185280, January 18, 2012

Corporation Law Case Digest by John Paul C. Ladiao (15 March 2016)
(Topic: Doctrine of Piercing the Veil of Corporate Fiction)
FACTS:
On June 20, 2003, the petitioner, who was hired by Sceptre as a security guard sometime in April 1976,
was asked by Karen Therese Tan (Karen), Sceptre’s Operation Manager, to submit a resignation letter as
the same was supposedly required for applying for a position at Royale. The petitioner was also asked to fill
up Royale’s employment application form, which was handed to him by Royale’s General Manager,
respondent Cesar Antonio Tan II (Cesar).
 Page 12 of 12

After several weeks of being in floating status, Royale’s Security Officer, Martin Gono (Martin), assigned the
petitioner at Highlight Metal Craft, Inc. (Highlight Metal) from July 29, 2003 to August 8, 2003. Thereafter,
the petitioner was transferred and assigned to Wide Wide World Express, Inc. (WWWE, Inc.).
On September 17, 2003, the petitioner was informed that his assignment at WWWE, Inc. had been
withdrawn because Royale had allegedly been replaced by another security agency. The petitioner,
however, shortly discovered thereafter that Royale was never replaced as WWWE, Inc.’s security agency.
When he placed a call at WWWE, Inc., he learned that his fellow security guard was not relieved from his
post.
On September 21, 2003, the petitioner was once again assigned at Highlight Metal, albeit for a short period
from September 22, 2003 to September 30, 2003. Subsequently, when the petitioner reported at Royale’s
office on October 1, 2003, Martin informed him that he would no longer be given any assignment per the
instructions of Aida Sabalones-Tan (Aida), general manager of Sceptre. This prompted him to file a
complaint for illegal dismissal on October 4, 2003.
ISSUE:
Whether or not Royale’s corporate fiction should be pierced for the purpose of compelling it to recognize
the petitioner’s length of service with Sceptre and for holding it liable for the benefits that have accrued to
him arising from his employment with Sceptre?
RULING:
Yes.
The doctrine of piercing the corporate veil applies in alter ego cases, where a corporation is merely a farce
since it is a mere alter ego or business conduit of a
person, or where the corporation is so organized and controlled and its affairs are so conducted as to make
it merely an instrumentality, agency, conduit or adjunct of another corporation.
The respondents’ scheme reeks of bad faith and fraud and compassionate justice dictates that Royale and
Sceptre be merged as a single entity, compelling Royale to credit and recognize the petitioner’s length of
service with Sceptre. The respondents cannot use the legal fiction of a separate corporate personality for
ends subversive of the policy and purpose behind its creation53 or which could not have been intended by
law to which it owed its being.
Also, Sceptre and Royale have the same principal place of business. As early as October 14, 1994, Aida
and Wilfredo became the owners of the property used by Sceptre as its principal place of business by virtue
of a Deed of Absolute Sale they executed with Roso.57 Royale, shortly after its incorporation, started to
hold office in the same property. These, the respondents failed to dispute.
Royale also claimed a right to the cash bond which the petitioner posted when he was still with Sceptre. If
Sceptre and Royale are indeed separate entities, Sceptre should have released the petitioner’s cash bond
when he resigned and Royale would have required the petitioner to post a new cash bond in its favor.
However, the manner by which the petitioner was made to resign from Sceptre and how he became an
employee of Royale suggest the perverted use of the legal fiction of the separate corporate personality.