1. Castillo et al v. Balinghasay et al., G.R. No.

150976, October 18, 2004 FACTS: Petitioners and the respondents are stockholders of MCPI, with the former holding Class B shares and the latter owning Class A shares. MCPI is a domestic corporation with offices at Dr. A. Santos Avenue, Sucat, Paraaque City. It was organized sometime in September 1977. At the time of its incorporation, Act No. 1459, the old Corporation Law was still in force and effect. Article VII of MCPIs original Articles of Incorporation, as approved by the Securities and Exchange Commission (SEC) on October 26, 1977, provides that: Only holders of Class A shares can have the right to vote and the right to be elected as directors or as corporate officers On July 31, 1981, Article VII of the Articles of Incorporation of MCPI was amended, to read thus: Only holders of Class A shares have the right to vote and the right to be elected as directors or as corporate officers. On September 9, 1992, Article VII was again amended to provide as follows: Except when otherwise provided by law, only holders of Class A shares have the right to vote and the right to be elected as directors or as corporate officers Before the trial court, the herein petitioners alleged that they were deprived of their right to vote and to be voted on as directors at the annual stockholders meeting held on February 9, 2001, because respondents had erroneously relied on Article VII of the Articles of Incorporation of MCPI, despite Article VII being contrary to the Corporation Code, thus null and void. ISSUE: Whether or not holders of Class B shares of the MCPI may be deprived of the right to vote and be voted for as directors in MCPI HELD: When Article VII of the Articles of Incorporation of MCPI was amended in 1992, the phrase except when otherwise provided by law was inserted in the provision governing the grant of voting powers to Class A shareholders. This particular amendment is relevant for it speaks of a law providing for exceptions to the exclusive grant of voting rights to Class A stockholders. The law referred to in the amendment to Article VII refers to the Corporation Code and no other law. At the time of the incorporation of MCPI in 1977, the right of a corporation to classify its shares of stock was sanctioned by Section 5 of Act No. 1459. The law repealing Act No. 1459, B.P. Blg. 68, retained the same grant of right of classification of stock shares to corporations, but with a significant change. Under Section 6 of B.P. Blg. 68, the requirements and restrictions on voting rights were explicitly provided for, such that no share may be deprived of voting rights except those classified and issued as preferred or redeemable shares, unless otherwise provided in this Code and that there shall always be a class or series of shares which have complete voting rights. Section 6 of the Corporation Code being deemed written into Article VII of the Articles of Incorporation of MCPI, it necessarily follows that unless Class B shares of MCPI stocks are clearly categorized to be preferred or

redeemable shares, the holders of said Class B shares may not be deprived of their voting rights. Note that there is nothing in the Articles of Incorporation nor an iota of evidence on record to show that Class B shares were categorized as either preferred or redeemable shares. The only possible conclusion is that Class B shares fall under neither category and thus, under the law, are allowed to exercise voting rights. The stockholder cannot be deprived of the right to vote his stock nor may the right be essentially impaired, either by the legislature or by the corporation, without his consent, through amending the charter, or the by-laws. Section 148 of the Corporation Code expressly provides that it shall apply to corporations in existence at the time of the effectivity of the Code. Hence, the non-impairment clause is inapplicable in this instance. When Article VII of the Articles of Incorporation of MCPI were amended in 1992, the board of directors and stockholders must have been aware of Section 6 of the Corporation Code and intended that Article VII be construed in harmony with the Code, which was then already in force and effect. PETITION GRANTED. 2. Koruga vs. Arcenas Facts: Koruga is a minority stockholder of Banco Filipino Savings and Mortgage Bank. On August 20, 2003, she filed a complaint before the Makati RTC against its board of directors for allegedly engaging in unsafe and fraudulent banking practices. The complaint filed by Koruga charged the defendants with violation of Section 31 to 34 of the Corporation Code which prohibit selfdealing and conflict of interest of directors and officers; invoked her right to inspect the corporations records under Section 74 of the Corporation Code and prayed for receivership and creation of a management committee pursuant to the Rules of Civil Procedure, the Securities Regulation Code, the Interim Rules of Procedure Governing Intra-Corporate Controversies, the General Banking Law of 2000, and the New Central Bank Act. She claimed that Banco Filipino's management had: engaged in unsafe, unsound, and even fraudulent banking practices; engaged in self-dealing; violated banking laws prohibiting or limiting DOSRI transactions; put the bank and its depositors in jeopardy.

The respondents, however, questioned the jurisdiction of the trial court, and even went to as far as getting an injunction from the Court of Appeals. In a decision dated July 20, 2005, the appellate court directed the trial court to proceed with the hearings, having found no grave abuse of discretion when it accepted the case. The case was eventually brought to the Supreme Court. Issue: WON the RTC has jurisdiction over the case.

Held: RTC has no jurisdiction.

The SC quashed Korugas complaint filed at the Makati City Regional Trial Court, saying the latter has no jurisdiction to hear complaints on a banks operations. The court pointed out that it is the BangkoSentralngPilipinas and not the RTC which has jurisdiction over the case. In its decision, the high court said: "It is clear that the acts complained of pertain to the conduct of Banco Filipinos banking business... It is the governments responsibility to see to it that the financial interests of those who deal with banks and banking institutions... are protected... That task is delegated to the BSP..." The General Banking Law of 2000, which provides powers to the Monetary Board, restricts the bank exposures of directors and its officers. It also allows the Monetary Board to determine whether a bank is conducting business in an unsafe manner. The New Central Bank Act, on the other hand, provides the Monetary Board with the power to impose administrative sanctions on the officers and board members of erring banks. "[Under the law], it is the Monetary Board that exercises exclusive jurisdiction over proceedings for receivership of banks. Thus, the courts jurisdiction could only have been invoked after the Monetary Board had taken action on the matter and only on the ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction. Finally, there is one other reason why Korugas complaint before the RTC cannot prosper. Given her own admission and the same is likewise supported by evidence that she is merely a minority stockholder of Banco Filipino, she would not have the standing to question the Monetary Boards action. Section 30 of the New Central Bank Act provides: The petition for certiorari may only be filed by the stockholders of record representing the majority of the capital stock within ten (10) days from receipt by the board of directors of the institution of the order directing receivership, liquidation or conservatorship. All the foregoing discussion yields the inevitable conclusion that the CA erred in upholding the jurisdiction of, and remanding the case to, the RTC. Given that the RTC does not have jurisdiction over the subject matter of the case, its refusal to dismiss the case on that ground amounted to grave abuse of discretion. 3. LINTONJUA, JR. vs. ETERNIT CORPORATION (now ETERTON MULTI-RESOURCES CORPORATION) and ETEROUTREMER, S.A. Corp. CALLEJO, SR., J.: Petition for Review on Certiorari is the Decision of CA. Facts: Eternit Corporation (EC), a corporation duly organized and registered under Philippine laws, engaged in the manufacture of roofing materials and pipe products.Its operations were conducted in 8 parcels of land in Mandaluyong under Far East Bank as trustee. 90% shares of stocks of EC were owned by Eteroutremer S.A. Corporation (ESAC), a corporation organized and registered under the laws of Belgium. Jack Glanville, was the General Manager and President of EC, while Claude Frederick Delsaux was the Regional Director for Asia of ESAC. In 1986, management of ESAC grew concerned about the political situation in the Philippines and wanted to stop its operations in the country. The Committee for Asia of ESAC instructed Michael Adams, a member of ECs Board of Directors, to dispose the parcels of land. Adams engaged the services of realtor/broker Lauro G. Marquez. Marquez offered the subject land for 27M (subject to negotiation) to Eduardo B. Litonjua, Jr. of the Litonjua& Company, Inc., but the latter offered to buy for 20M cash. Marquez apprised Glanville of the

counter-offer and relayed the same to Delsaux in Belgium. Delsaux sent a telex stating that, based on the "Belgian/Swiss decision," the final offer was US$1M and P2.5M. Litonjua, Jr. accepted the counterproposal and deposited US$1M with Security Bank and drafted an escrow account to expedite the sale. Glanville then informed Delsaux of these facts and emphasized that the buyers were concerned of incuring expenses in bank commitment fees as a consequence of prolonged period of inaction. With the assumption of Corazon C. Aquino as President of the Republic of the Philippines, the political situation in the Philippines had improved. Marquez received a call from Glanville, advising that the sale would no longer proceed. Delsaux himself later sent a letter to Marquez confirming that the ESAC Regional Office had decided not to proceed with the sale of the subject land. Litonjuas then filed a complaint for specific performance and damages against EC (now the Eterton Multi-Resources Corporation) and the Far East Bank, and ESAC in the RTC of Pasig City. In their answer, EC and ESAC alleged that since Eteroutremer was not doing business in the Philippines, it cannot be subject to the jurisdiction of Philippine courts; the Board and stockholders of EC never approved any resolution to sell subject properties nor authorized Marquez to sell the same. RTC-dismissed the complaint and held that there is no valid and binding sale between the plaintiffs and said defendants, since the authority of the agents/realtors was not in writing, the sale is void. Plaintiffs could not assume that defendants had agreed to sell the property without a clear authorization from the corporation concerned. Litonjuasappeled to CA. CA- CA affirmed the decision of the RTC and ruled that Marquez, who was a real estate broker, was a special agent within the purview of Article 1874 of the New Civil Code. Under Section 23 of the Corporation Code, he needed a special authority from ECs board of directors to bind such corporation to the sale of its properties Issue: WON Marquez, Glanville and Delsaux had the authority to bind EC and ESAC to the alleged sale. Held: Marquez, Glanville and Delsaux had no authority to bind EC and ESAC in the disposal of the subject property. SEC. 23.The Board of Directors or Trustees. Unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stocks, or where there is no stock, from among the members of the corporation, who shall hold office for one (1) year and until their successors are elected and qualified. Indeed, a corporation is a juridical person separate and distinct from its members or stockholders and is not affected by the personal rights, obligations and transactions of the latter.It may act only through its board of directors or, when authorized either by its bylaws or by its board resolution, through its officers or agents in the normal course of business. The general principles of agency govern the relation between the corporation and its officers or agents, subject to the articles of incorporation, by-laws, or relevant provisions of law. Section 36 of the Corporation Code, a corporation may sell or convey its real properties, subject to the limitations prescribed by law and the Constitution, The property of a corporation, however, is not the property of the stockholders or members, and as such, may not be sold without express authority from the board of directors.Physical acts, like the offering of the properties of the corporation for sale, or the acceptance of a counter-offer of prospective buyers of such properties and the execution of the deed of sale covering such property, can be performed by the corporation only by officers or

agents duly authorized for the purpose by corporate by-laws or by specific acts of the board of directors. Absent such valid delegation/authorization, that the declarations of an individual director relating to the affairs of the corporation, but not in the course of, or connected with, the performance of authorized duties of such director, are not binding on the corporation. Any sale of real property of a corporation by a person purporting to be an agent thereof but without written authority from the corporation is null and void. Petitioners as plaintiffs below, failed to adduce in evidence any resolution of the Board of Directors of respondent EC empowering Marquez, Glanville or Delsaux as its agents, to sell, let alone offer for sale, for and in its behalf, the parcels of land owned by EC including the improvements thereon. While Glanville was the President and General Manager of respondent EC, and Adams and Delsaux were members of its Board of Directors, they acted for and in behalf of respondent ESAC, and not as duly authorized agents of respondent EC; a board resolution evincing the grant of such authority is needed to bind EC to any agreement regarding the sale of the subject properties. Such board resolution is not a mere formality but is a condition sine qua non to bind respondent EC. 4. RUFINA LUY LIM, petitioner, vs. COURT OF APPEALS, AUTO TRUCK TBA CORPORATION, SPEED DISTRIBUTING, INC., ACTIVE DISTRIBUTORS, ALLIANCE MARKETING CORPORATION, ACTION COMPANY, INC. respondents. BUENA, J.: Facts: Petitioner RufinaLuy Lim is the surviving spouse of late Pastor Y. Lim whose estate is the subject of probate proceedings in Special Proceedings Q-95-23334. Private respondents Auto Truck Corporation, Alliance Marketing Corporation, Speed Distributing, Inc., Active Distributing, Inc. and Action Company are corporations formed, organized and existing under Philippine laws and which owned real properties covered under the Torrens system. On 11 June 1994, Pastor Y. Lim died intestate. Herein petitioner, as surviving spouse and duly represented by her nephew George Luy, filed on 17 March 1995, a joint petition for the administration of the estate of Pastor Y. Lim before the Regional Trial Court of Quezon City. Private respondent corporations, whose properties were included in the inventory of the estate of Pastor Y. Lim, then filed a motion for the lifting of lispendens and motion for exclusion of certain properties from the estate of the decedent. RTC granted their petition. rufina opposed and alleged that: -Although the above business entities dealt and engaged in business with the public as corporations, all their capital, assets and equity were however, personally owned by the late Pastor Y Lim. Hence the alleged stockholders and officers appearing in the respective articles of incorporation of the above business entities were mere dummies of Pastor Y. Lim, and they were listed therein only for purposes of registration with the Securities and Exchange Commission. -That the following real properties, although registered in the name of the above entities, were actually acquired by Pastor Y. Lim during his marriage with petitioner.

-The aforementioned properties and/or real interests left by the late Pastor Y. Lim, are all conjugal in nature, having been acquired by him during the existence of his marriage with petitioner. The rtc thus reverse the petition and included the property of the corporation to the probate of Pator Lim's estate. CA reversed lower courts decision hence this petitio.

ISSUE: whether the corporations are the mere alter egos or instrumentalities of Pastor Lim?

Held: no. It is settled that a corporation is clothed with personality separate and distinct from that of the persons composing it. It may not generally be held liable for that of the persons composing it. It may not be held liable for the personal indebtedness of its stockholders or those of the entities connected with it. Rudimentary is the rule that a corporation is invested by law 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.

Piercing the veil of corporate entity requires the court to see through the protective shroud which exempts its stockholders from liabilities that ordinarily, they could be subject to, or distinguishes one corporation from a seemingly separate one, were it not for the existing corporate fiction.30 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. Where badges of fraud exist, where public convenience is defeated; where a wrong is sought to be justified thereby, the corporate fiction or the notion of legal entity should come to naught. Further, the test in determining the applicability of the doctrine of piercing the veil of corporate fiction is as follows: 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; (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 plaintiffs legal right; and (3) The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of. The absence of any of these elements prevent "piercing the corporate veil". Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself a sufficient reason for disregarding the fiction of separate corporate personalities. Moreover, to disregard the separate juridical personality of a corporation, the wrong-doing must be clearly and convincingly established. It cannot be presumed.

5.UNION BANK c/o GWEN 6. De Lima v. Gois, G.R. No. 178352, June 17, 2008- Ferreria FACTS: A case for illegal dismissal was filed by petitioner Virgilio S. Delima against Golden Union Aquamarine Corporation (Golden), Prospero Gois and herein respondent Susan MercaidaGois before the Regional Arbitration Branch No. VIII of the National Labor Relations Commission on October 29, 2004. Labor Arbiter Philip B. Montaces rendered a decision in favor of the complainant: ordering respondent Golden Union Aquamarine Corporation to pay complainant(P115,561.05) Golden failed to appeal the aforesaid decision; hence, it became final and executory. A writ of execution was issued and an Isuzu Jeep with plate number PGE-531 was attached. Thereafter, respondent Gois filed an Affidavit of Third Party Claim claiming that the attachment of the vehicle was irregular because said vehicle was registered in her name and not Goldens; and that she was not a party to the illegal dismissal case filed by Delima against Golden ISSUE:WON property of incorporator/corporate officer(s) can be attached for obligations of the corporation? RULING: No. The rule is that obligations incurred by the corporation acting through its directors, officers, and employees are its sole liabilities. A corporation has a personality distinct and separate from its individual stockholders or members and from that of its officers who manage and run its affairs. The rule is that obligations incurred by the corporation, acting through its directors, officers and employees, are its sole liabilities. Thus, property belonging to a corporation cannot be attached to satisfy the debt of a stockholder and vice versa, the latter having only an indirect interest in the assets and business of the former. Since the Decision of the Labor Arbiter directed only Golden to pay the petitioner the sum of P115,561.05 and the same was not joint and solidary obligation with Gois, then the latter could not be held personally liable since Golden has a separate and distinct personality of its own. It remains undisputed that the subject vehicle was owned by Gois, hence it should not be attached to answer for the liabilities of the corporation. Unless they have exceeded their authority, corporate officers are, as a general rule, not personally liable for their official acts, because a corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders and members. No evidence was presented to show that the termination of the petitioner was done with malice or in bad faith for it to hold the corporate officers, such as Gois, solidarily liable with the corporation. 7.Construction and Development Corporation of the Philippines v Cuenca, G.R. No. 163981, August 12, 2005- Gringo CONSTRUCTION & DEVELOPMENT CORPORATION OF THE PHILIPPINES (now PHILIPPINE NATIONAL CONSTRUCTION CORPORATION),petitioner, vs. RODOLFO M. CUENCA and MALAYAN INSURANCE CO., INC., respondents.

was valid for 12 months, and was renewed several times, the last time being on May 15, 1983.[3] To protect MICIs interests, UITC, Edilberto Cuenca, and Rodolfo Cuenca, herein respondent, executed an Indemnity Agreement[4] in favor of MICI. Edilberto was then the President, while Rodolfo was a member of the Board of Directors of UITC. Edilberto signed the indemnity agreement in his official and personal capacity, while Rodolfo signed in his personal capacity only. In the said agreement, UITC, Edilberto and Rodolfo bound themselves jointly and severally to indemnify MICI of any payment it would make under the surety bond. On February 18, 1983, Goodyear sent a letter[5] to MICI informing it of UITCs default on its obligation. In the said letter, Goodyear requested MICI to pay P600,000.00 under the surety bond. MICI sent several demand letters to UITC, Edilberto and Rodolfo, requiring them to immediately settle Goodyears claim.[6] UITC, Edilberto and Rodolfo failed to settle the account with Goodyear. Thus, on April 25, 1983, MICI paid Goodyear P600,000.00.[7] On May 3, 1983, MICI sent a demand letter to UITC, Edilberto and Rodolfo for reimbursement of the payment it made to Goodyear, plus legal interest.[8] UITC replied that Construction & Development Corporation of the Philippines (CDCP), now Philippine National Construction Corporation (PNCC), had initiated a complete review of UITCs financial plans to enable it to pay its creditors, like MICI.[9] UITC was a subsidiary of petitioner PNCC,[10] with the latter owning around 78% of the formers shares of stock. [11] UITC requested MICI to delay the filing of any suit against it, to give it time to work out an acceptable repayment plan.[12] MICI agreed and gave UITC until May 20, 1983 to come up with an offer.[13] However, UITC, Edilberto and Rodolfo still failed to pay MICI. On July 1, 1983, MICI filed a Complaint[14] for sum of money against UITC, Edilberto and Rodolfo, praying for indemnity of the amount it paid to Goodyear, plus interest per annum compounded quarterly from April 25, 1983 until fully paid, and 20% of the amount involved as attorneys fees and costs of the suit. On July 23, 1983, UITC wrote MICI proposing the following: a. Immediate payment of P150,000.00.

b. Balance payable P50,000.00 per month until the obligation is fully liquidated. c. Interest and penalty charges are to be waived.[15]

On August 26, 1983, UITC remitted to MICI P150,000.00 as partial payment of its obligation.[19] Nonetheless, the parties failed to reach an amicable settlement of their respective claims. RTC Decision: UITC and PNCC, jointly and solidarily liable to MICI under the indemnity agreement. The trial court ruled that UITC was bound by the indemnity agreement entered into by its two officers, even though there was no board resolution specifically authorizing them to do so because it had, in effect, ratified the acts of the said officers. Moreover, UITC has acknowledged its obligation to MICI in the letters it sent to the latter, and when it had remitted P150,000.00 as partial payment. It also held PNCC solidarily liable with UITC on the basis of the board resolution attesting to the fact that PNCC had assumed all liabilities arising from the guarantees made by its officers in other affiliated corporations.[20] The trial court dismissed the complaint as against the Cuencas. CA Decision: CA affirmed in toto the appealed decision. The appellate court added that Edilberto and Rodolfo, having signed the indemnity agreement also in their personal capacity, would ordinarily be personally liable under the said agreement; but because MICI failed to appeal the decision, it had effectively waived its right to hold them liable on its claim.

FACTS: Ultra International Trading Corporation (UITC) applied for a surety bond from Malayan Insurance Co., Inc. (MICI), to guarantee its credits, indebtedness, obligations and liabilities of any kind to Goodyear Tire and Rubber Company of the Philippines (Goodyear). MICI approved the application and issued MICO Bond No. 65734[2] for an amount not exceeding P600,000.00. The surety bond

The CA further affirmed the trial courts finding that PNCC was liable under the indemnity agreement. The appellate court noted that UITC was a subsidiary company of PNCC because the latter holds almost 78% of UITCs stocks. ISSUE: Whether or not the petitioner is jointly and solidarily liable with UITC, a subsidiary corporation, to respondent MICI under the indemnity agreement for reimbursement, attorneys fees and costs. RULING: The petitioner maintains that it cannot be held liable under the indemnity agreement primarily because it was not a party to it. Likewise, it cannot answer for UITCs liability under the indemnity agreement merely because it is the majority stockholder of UITC. It maintains that it has a personality separate and distinct from that of UITC; hence, it cannot be held liable for the latters obligations. The mere fact that the materials purchased from Goodyear were delivered to it does not warrant the piercing of the corporate veil so as to treat the two corporations as one entity, absent sufficient and clear showing that it was purposely used as a shield to defraud creditors.[26] The petition is impressed with merit. We do not agree with the CA ruling that the petitioner is liable under the indemnity agreement. The petitioner cannot be made directly liable to MICI under the indemnity agreement on the ground that it is UITCs majority stockholder. In any case, petitioner PNCC, as majority stockholder, may not be held liable for UITCs obligation. A corporation, upon coming into existence, is invested by law with a personality separate and distinct from those persons composing it as well as from any other legal entity to which it may be related.[38] The veil of corporate fiction may only be disregarded in cases where the corporate vehicle is being used to defeat public convenience, justify a wrong, protect fraud, or defend a crime.[39] Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality.[40] To disregard the separate juridical personality of a corporation, the wrongdoing must be clearly and convincingly established.[41] Neither can the petitioner be made liable under the indemnity agreement on the ground that it had assumed the personal liability of respondent Cuenca. WHEREFORE, premises considered, the petition is GRANTED. The decision of the Court of Appeals is MODIFIED in that petitioner PNCC is absolved from any liability under the indemnity agreement. The third-party complaint against the petitioner is DISMISSED for lack of merit. SO ORDERED. 8. Bautista v. Auto Plus Traders, Inc., G.R. No. 166405,August 6, 2008- Lantin CLAUDE P. BAUTISTA, petitioner, vs. AUTO PLUS TRADERS, INCORPORATED and COURT OF APPEALS (Twenty-First Division), respondents. FACTS: Petitioner Claude P. Bautista, in his capacity as President and Presiding Officer of Cruiser Bus Lines and Transport Corporation, purchased various spare parts from private respondent Auto Plus Traders, Inc. and issued two postdated checks to cover his purchases. The checks were subsequently dishonored. Private respondent then executed an affidavit-complaint for violation of Batas PambansaBlg. 22 against petitioner. Consequently, two Informations for violation of BP Blg. 22 were filed with the MTCC Davao City against the petitioner. Claude Pleaded not guilty. After the presentation of the prosecution's evidence, petitioner filed a demurrer to evidence. Which was granted by the MTCC however he and

Cruiser were required to pay the amount of the two checks with interest at the rate of 12% per annum (248,700 value of 2 checks) . Petitioner moved for partial reconsideration but his motion was denied. Thereafter, both parties appealed to the RTC which modified the decision the accused was ordered to pay the value of the two checks and the filing fees and cost of the suit. Petitioner moved for reconsideration, but his motion was denied. Petitioner elevated the case to the Court of Appeals, which affirmed the decision of the RTC. ISSUE: whether the Court of Appeals erred in upholding the RTC's ruling that petitioner, as an officer of the corporation, is personally and civilly liable to the private respondent for the value of the two checks. Petitioner asserts that BP Blg. 22 merely pertains to the criminal liability of the accused and that the corporation, which has a separate personality from its officers, is solely liable for the value of the two checks. HELD: CA erred in affirming the RTC decision The MTCC found that the two checks belong to Cruiser Bus Lines and Transport Corporation while the RTC found that one of the checks was a personal check of the petitioner. Generally this Court, in a petition for review on certiorari under A perusal of the two check return slips in conjunction with the Current Account Statements would show that the check for P151,200 was drawn against the current account of Claude Bautista while the check for P97,500 was drawn against the current account of Cruiser Bus Lines and Transport Corporation. Hence, we sustain the factual finding of the RTC. find the appellate court in error for affirming the decision of the RTC holding petitioner liable for the value of the checks considering that petitioner was acquitted of the crime charged and that the debts are clearly corporate debts for which only Cruiser Bus Lines and Transport Corporation should be held liable. Juridical entities have personalities separate and distinct from its officers and the persons composing it. Generally, the stockholders and officers are not personally liable for the obligations of the corporation except only when the veil of corporate fiction is being used as a cloak or cover for fraud or illegality, or to work injustice.These situations, however, do not exist in this case. The evidence shows that it is Cruiser Bus Lines and Transport Corporation that has obligations to Auto Plus Traders, Inc. for tires. There is no agreement that petitioner shall be held liable for the corporation's obligations in his personal capacity. Hence, he cannot be held liable for the value of the two checks issued in payment for the corporation's obligation in the total amount of P248,700. Petition is GRANTED. The Decision dated August 10, 2004 and the Resolution dated October 29, 2004 of the Court of Appeals in CAG.R. CR No. 28464 are REVERSED and SET ASIDE.Criminal Case Nos. 52633-03 and 52634-03 are DISMISSED, without prejudice to the right of private respondent Auto Plus Traders, Inc., to file the proper civil action against Cruiser Bus Lines and Transport Corporation for the value of the two checks.

9. Francisco Motors v. CA, G.R. No. 100812, June 25, 1999Lofranco FRANCISCO V. COURT OF APPEALS G.R. No. 100812 | June 25, 1999 QUISUMBING, J. FACTS:

Petitioner, Francisco Motors Corp. filed a complaint against Spouses Gregorio and Librada MANUEL to recover P3,412.06, representing the balance of the jeep body purchased by the Manuels from Francisco Motors, plus balance for the unpaid balance (P20K+) on the cost of repair of the vehicle; and P6K for cost of suit and attorney's fees. The trial court decided the case in favor of petitioner in regard to the petitioner's claim for money, but also allowed the counter-claim of private respondents; In their answer, the Manuel spouses interposed a counterclaim for unpaid legal services by Gregorio Manuel in the amount of P50,000 which was not paid by the incorporators, directors and officers of Francisco Motors. For failure to answer the counterclaim, the trial court decided the case in favor of the MANUELs and found that Gregorio Manuel indeed rendered legal services to the Francisco family in a separate Special Proceedings case. On appeal, the CA sustained the trial court's decision applying the doctrine of piercing the veil of corporate entity. Hence, the present petition for review on certiorari.

cited instances, for reasons of public policy and in the interest of justice, will be justifiably set aside.

SC RULING: :The Supreme Court GRANTED the petition and REVERSED the ruling. 10. Wensha Spa Center, Inc. v. Yung, G.R. No. 185122, August 16, 2010- Loretcha FACTS: As stated in Loretas position paper:Wensha Spa Center, Inc. (Wensha) in Quezon City is in the business of sauna bath and massage services. XuZhiJie a.k.a. Pobby Co (Xu) is its president,3 respondent Loreta T. Yung (Loreta) was its administrative manager at the time of her termination from employment. - Loreta used to be employed by Manmen Services Co., Ltd. (Manmen) where Xu was a client. Xu was apparently impressed by Loretas performance. After he established Wensha, he convinced Loreta to transfer and work at Wensha. Loreta was initially reluctant to accept Xus offer because her job at Manmen was stable and she had been with Manmen for seven years. But Xu was persistent and offered her a higher pay. Enticed, Loreta resigned from Manmen and transferred to Wensha. She started working on April 21, 2004 as Xus personal assistant and interpreter at a monthly salary of P12,000.00. -On May 18, 2004 , she was promoted to the position of Administrative Manager - On August 10, 2004, she was asked to leave her office because Xu and a FengShui master were exploring the premises. Later that day, Xu asked Loreta to go on leave with pay for one month. She did so and returned on September 10, 2004. Upon her return, Xu and his wife asked her to resign from Wensha because, according to the FengShui master, her aura did not match that of Xu. - Loreta went to the NLRC and filed a case for illegal dismissal against Xu and Wensha.

ISSUE/S: Whether or not Francisco Motors Corporation should be liable for the legal services of Gregorio Manuel rendered in the intestate proceedings over Benita Trinidads estate (of the Francisco family). HELD: No. The doctrine of piercing the corporate veil has no relevant application in the case. The rationale behind piercing a corporation's identity in a given case is to remove the barrier between the corporation from the persons comprising it to thwart the fraudulent and illegal schemes of those who use the corporate personality as a shield for undertaking certain proscribed activities. However, in the case at bar, instead of holding certain individuals or persons responsible for an alleged corporate act, the situation has been reversed. It is the petitioner as a corporation which is being ordered to answer for the personal liability of certain individual directors, officers and incorporators concerned. Hence, it appears to us that the doctrine has been turned upside down because of its erroneous invocation. Note that according to private respondent, his services were solicited as counsel for members of the Francisco family to represent them in the intestate proceedings over Benita Trinidad's estate. These estate proceedings did not involve any business of petitioner. DOCTRINE/S: Application of the piercing the veil of corporate fiction doctrine.Basic in corporation law is the principle that a corporation has a separate personality distinct from its stockholders and from other corporations to which it may be connected. However, under the doctrine of piercing the veil of corporate entity, the corporation's separate juridical personality may be disregarded, for example, when the corporate identity is used to defeat public convenience, justify wrong, protect fraud, or defend crime. Also, where the corporation 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, then its distinct personality may be ignored. In these circumstances, the courts will treat the corporation as a mere aggrupation of persons and the liability will directly attach to them. The legal fiction of a separate corporate personality in those

As stated in Wensha andXus position paper: -denied illegally terminating Loretas employment. They claimed that two months after Loreta was hired, they received various complaints against her from the employees so that on August 10, 2004, they advised her to take a leave of absence for one month while they conducted an investigation on the matter. Based on the results of the investigation, they terminated Loretas employment on August 31, 2004 for loss of trust and confidence Labor Arbiter (LA) - Francisco Robles dismissed Loretas complaint for lack of merit. He found it more probable that Loreta was dismissed from her employment due to Wenshas loss of trust and confidence in her NLRC: -ruling was affirmed in its December 29, 2006 Resolution,citing its observation that Wensha was still considering the proper action to take on the day Loreta left Wensha and filed her complaint. The

NLRC added that this finding was bolstered by Wenshas September 10, 2004 letter to Loreta asking her to come back to personally clarify some matters, but she declined because she had already filed a case. CA: -reversed the ruling of the NLRC on the ground that it gravely abused its discretion in appreciating the factual bases that led to Loretas dismissal. The CA noted that there were irregularities and inconsistencies in Wenshas position. - the CA concluded that petitioner Xu and Wensha are jointly and severally liable to Loreta ISSUE: Whether or not petitioner Xu be held solidarily liable with Wensha RULING: NO. Xu cannot be held solidarily liable with Wensha. -As correctly found by the CA, the cause of Loretas dismissal is questionable. Loss of trust and confidence to be a valid ground for dismissal must have basis and must be founded on clearly established facts -CAs decision in its entirety simply failed to come across any finding of bad faith or malice on the part of Xu. There is, therefore, no justification for such a ruling. To sustain such a finding, there should be an evidence on record that an officer or director acted maliciously or in bad faith in terminating the services of an employee. Moreover, the finding or indication that the dismissal was effected with malice or bad faith should be stated in CAs decision itself. -Elementary is the rule that a corporation is invested by law with a personality separate and distinct from those of the persons composing it and from that of any other legal entity to which it may be related. "Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality." In labor cases, corporate directors and officers may be held solidarily liable with the corporation for the termination of employment only if done with malice or in bad faith. Bad faith does not connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty through some motive or interest or ill will; it partakes of the nature of fraud. WHEREFORE, the petition is GRANTED. Wensha Spa Center, Inc. is hereby ordered to pay Loreta T. Yung her full backwages, other privileges, and benefits, or their monetary equivalent, and separation pay reckoned from the date of her dismissal, September 1, 2004, up to the finality of this decision, plus damages in the amounts of Fifty Thousand (P50,000.00) Pesos, as moral damages; Twenty Five Thousand (P25,000.00) Pesos as exemplary damages; and Twenty Thousand (P20,000.00) Pesos, as attorneys fees. No costs.

evidenced by six promissory notes. Upon failure to pay, petitioner instituted a complaint for sum of money on June 25, 1987 against them.Summons was not served on Dynetics, because it had already closed down. Lim, on the other hand, denied that "he promised to pay the obligations jointly and severally. On September 23, 1988, an amended complaint was filed by petitioner impleading respondent Dyne-Sem Electronics and its stockholders Vicente Chuidian, Antonio Garcia and Jacob Ratinoff. According to petitioner, respondent was formed and organized to be Dynetics alter ego as established by the following circumstances: Dynetics, Inc. and respondent are both engaged in the same line of business of manufacturing, producing, assembling, processing, importing, exporting, buying, distributing, marketing and testing integrated circuits and semiconductor devices; the principal office and factory site of Dynetics, Inc. located at Avocado Road, FTI Complex, Taguig, Metro Manila, were used by respondent as its principal office and factory site; respondent acquired some of the machineries and equipment of Dynetics, Inc. from banks which acquired the same through foreclosure; respondent retained some of the officers of Dynetics, Inc. Respondent opposed on the said allegations of the petitioner stating that: 1 [t]he incorporators as well as present stockholders of [respondent] are totally different from those of Dynetics, Inc., and not one of them has ever been a stockholder or officer of the latter; 2 [n]ot one of the directors of [respondent] is, or has ever been, a director, officer, or stockholder of Dynetics, Inc.; .3 [t]he various facilities, machineries and equipment being used by [respondent] in its business operations were legitimately and validly acquired, under arms-length transactions, from various corporations which had become absolute owners thereof at the time of said transactions; these were not just "taken over" nor "acquired from Dynetics" by [respondent], contrary to what plaintiff falsely and maliciously alleges; .4 [respondent] acquired most of its present machineries and equipment as second-hand items to keep costs down; 5 [t]he present plant site is under lease from Food Terminal, Inc., a government-controlled corporation, and is located inside the FTI Complex in Taguig, Metro Manila, where a number of other firms organized in 1986 and also engaged in the same or similar business have likewise established their factories; practical convenience, and nothing else, was behind [respondents] choice of plant site; 6 [respondent] operates its own bonded warehouse under authority from the Bureau of Customs which has the sole and absolute prerogative to authorize and assign customs bonded warehouses; again, practical convenience played its role here since the warehouse in question was virtually lying idle and unused when said Bureau decided to assign it to [respondent] in June 1986. On February 28, 1989, the trial court issued an order archiving the case as to Chuidian, Garcia and Ratinoff since summons had

11. China Banking Corp., v. Dyne-Sem Electronics Corp., G.R. No. 149237, July 11, 2006- Mendoza FACTS: On June 19 and 26, 1985, Dynetics, Inc. and Elpidio O. Lim borrowed P8,939,000 from petitioner China Banking Corporation,

remained unserved and that that Dyne-Sem Electronics Corporation is not an alter ego of Dynetics, Inc. Thus, Dyne-Sem Electronics Corporation is not liable under the promissory notes.Petitioner appealed to the Court of Appeals8 but the appellate court dismissed the appeal and affirmed the trial courts decision. ISSUE: WON the Regional Trial Court of Manila Branch 15 in its Decision dated December 27, 1991 and the Court of Appeals in its Decision dated February 28, 2001 and Resolution dated July 27, 2001, which affirmed en toto[Branch 15, Manila Regional Trial Courts decision,] have ruled in accordance with law and/or applicable [jurisprudence] to the extent that the Doctrine of Piercing the Veil of Corporat[e] Fiction is not applicable in the case at bar? HELD: YES, the general rule is that a corporation has a personality separate and distinct from that of its stockholders and other corporations to which it may be connected. This is a fiction created by law for convenience and to prevent injustice. To disregard the separate juridical personality of a corporation, the wrongdoing must be proven clearly and convincingly.18 In this case, petitioner failed to prove that Dyne-Sem was organized and controlled, and its affairs conducted, in a manner that made it merely an instrumentality, agency, conduit or adjunct of Dynetics, or that it was established to defraud Dynetics creditors, including petitioner. The similarity of business of the two corporations did not warrant a conclusion that respondent was but a conduit of Dynetics. As we held in Umali v. Court of Appeals,19 "the mere fact that the businesses of two or more corporations are interrelated is not a justification for disregarding their separate personalities, absent sufficient showing that the corporate entity was purposely used as a shield to defraud creditors and third persons of their rights." Likewise, respondents acquisition of some of the machineries and equipment of Dynetics was not proof that respondent was formed to defraud petitioner. As the Court of Appeals found, no merger 20 took place between Dynetics and respondent Dyne-Sem. What took place was a sale of the assets21 of the former to the latter. Merger is legally distinct from a sale of assets.22 Thus, 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. Petitioner itself admits that respondent acquired the machineries and equipment not directly from Dynetics but from the various corporations which successfully bidded for them in an auction sale. The contracts of sale executed between the winning bidders and respondent showed that the assets were sold for considerable amounts.23 The Court of Appeals thus correctly ruled that the assets were not "diverted" to respondent as an alter ego of Dynetics.24 The machineries and equipment were transferred and disposed of by the winning bidders in their capacity as owners. The sales were therefore valid and the transfers of the properties to respondent legal and not in any way in contravention of petitioners rights as Dynetics creditor. Finally, it may be true that respondent later hired Dynetics former Vice-President LuviniaMaglaya and Assistant Corporate Counsel VirgilioGesmundo. From this, however, we cannot conclude that respondent was an alter ego of Dynetics. In fact, even the overlapping of incorporators and stockholders of two or more corporations will not necessarily lead to such inference and justify the piercing of the veil of corporate fiction.25 Much more has to be proven.

Premises considered, no factual and legal basis exists to hold respondent Dyne-Sem liable for the obligations of Dynetics to petitioner.

12. Jardine Davies, Inc. v. JRB Realty, Inc., G.R. No. 151438, July 15, 2005- Montecastro JARDINE DAVIES, INC, Petitioner versus JRB REALTY, INC., Respondent G.R. No. 151438 July 15, 2005 THE CASE This is a petition for review of the Decision of the Court of Appeals affirming in toto that of the Regional Trial Court for specific performance. THE ANTECEDENTS In 1979-1980, respondent JRB Realty, Inc. built a ninestorey building, named Blanco Center, on its parcel of land located at 119 Alfaro St., Salcedo Village, Makati City. An air conditioning system was needed for the Blanco Law Firm housed at the second floor of the building. On March 13, 1980, the respondents Executive Vice-President, Jose R. Blanco, accepted the contract quotation of Mr. A.G. Morrison, President of Aircon and Refrigeration Industries, Inc. (Aircon), for two (2) sets of FeddersAdaptomatic air conditioning equipment. Thereafter, two (2) brand new packaged air conditioners were installed by Aircon. When the units with rotary compressors were installed, they could not deliver the desired cooling temperature. Despite several adjustments and corrective measures, the respondent conceded that Fedders Air Conditioning USAs technology for rotary compressors for big capacity conditioners like those installed at the Blanco Center had not yet been perfected. The parties thereby agreed to replace the units with reciprocating/semihermetic compressors instead. In a Letter Aircon stated that it would be replacing the units currently installed with new ones using rotary compressors, at the earliest possible time. Regrettably, however, it could not specify a date when delivery could be effected. TempControl Systems, Inc. (a subsidiary of Aircon until 1987) undertook the maintenance of the units, inclusive of parts and services. In October 1987, the respondent learned, through newspaper ads, that Maxim Industrial and Merchandising Corporation (Maxim, for short) was the new and exclusive licensee of Fedders Air Conditioning USA in the Philippines for the manufacture, distribution, sale, installation and maintenance of Fedders air conditioners. The respondent requested that Maxim honor the obligation of Aircon, but the latter refused. Hence, the respondent then instituted an action for specific performance with damages against Aircon, Fedders Air Conditioning USA, Inc., Maxim and petitioner Jardine Davies, Inc. Petitioner Jardine Davies, Inc. was impleaded as defendant, considering that Aircon was a subsidiary of the petitioner. PETITIONERS CONTENTION It was not a party to the contract between JRB Realty, Inc. and Aircon, and that it had a personality separate and distinct from that of Aircon. RTC DECISION Ordered defendants Jardine Davies, Inc., Fedders Air Conditioning USA, Inc. and Maxim Industrial and Merchandising Corporation, jointly and severally liable. CA DECISION Affirmed the trial courts ruling in toto. ISSUE WHETHER OR NOT PETITIONER JARDINE MAY BE HELD LIABLE SOLELY BECAUSE AIRCON WAS FORMERLY JARDINES INSTRUMENTALITY OR ALTER EGO? RULING NO. It is an elementary and fundamental principle of corporation law that a corporation is an artificial being invested by law with a personality separate and distinct from its stockholders and

from other corporations to which it may be connected. While a corporation is allowed to exist solely for a lawful purpose, the law will regard it as an association of persons or in case of two corporations, merge them into one, when this corporate legal entity is used as a cloak for fraud or illegality. This is the doctrine of piercing the veil of corporate fiction which applies only when such corporate fiction is used to defeat public convenience, justify wrong, protect fraud or defend crime. The rationale behind piercing a corporations identity is to remove the barrier between the corporation from the persons comprising it to thwart the fraudulent and illegal schemes of those who use the corporate personality as a shield for undertaking certain proscribed activities. While it is true that Aircon is a subsidiary of the petitioner, it does not necessarily follow that Aircons corporate legal existence can just be disregarded. A subsidiary has an independent and separate juridical personality, distinct from that of its parent company; hence, any claim or suit against the latter does not bind the former, and vice versa. In applying the doctrine, the following requisites must be established: (1) control, not merely majority or complete stock control; (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 acts in contravention of plaintiffs legal rights; and (3) the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of. The records bear out that Aircon is a subsidiary of the petitioner only because the latter acquired Aircons majority of capital stock. It, however, does not exercise complete control over Aircon; nowhere can it be gathered that the petitioner manages the business affairs of Aircon. Indeed, no management agreement exists between the petitioner and Aircon, and the latter is an entirely different entity from the petitioner. Based on each of their Articles of Incorporation, Petitioner is primarily a financial and trading company while Aircon is a manufacturing firm. The existence of interlocking directors, corporate officers and shareholders is not enough justification to pierce the veil of corporate fiction, in the absence of fraud or other public policy considerations. But even when there is dominance over the affairs of the subsidiary, the doctrine of piercing the veil of corporate fiction applies only when such fiction is used to defeat public convenience, justify wrong, protect fraud or defend crime. To warrant resort to this extraordinary remedy, there must be proof that the corporation is being used as a cloak or cover for fraud or illegality, or to work injustice. Any piercing of the corporate veil has to be done with caution. The wrongdoing must be clearly and convincingly established. It cannot just be presumed. In the instant case, there is no evidence that Aircon was formed or utilized with the intention of defrauding its creditors or evading its contracts and obligations. There was nothing fraudulent in the acts of Aircon in this case. 13. General Credit Corp. v. Alsons Development and Investment Corporation, G.R. No. 154975, January 29, 2007-Nadugo General Credit Corp v. Alsons Dev. and Investment Corp FACTS: Petitioner General Credit Corporation (GCC), then known as Commercial Credit Corporation(CCC), established CCC franchise companies in different urban centers of the country. In furtherance of its business, GCC was able to secure license from Central Bank (CB) and SEC to engage also in quasi-banking activities. On the other hand, respondent CCC Equity Corporation (EQUITY) was organized in by GCC for the purpose of, among other things, taking over the operations and management of the various f r a n c h i s e c o m p a n i e s . A t a t i m e m a t e r i a l h e r e t o , r e s p o n d e n t A l s o n s D e v e l o p m e n t a n d Investment Corporation (ALSONS) and the Alcantara family, each owned, just like GCC, shares in the aforesaid GCC franchise companies, e.g., CCC Davao and CCC Cebu .ALSONS and the Alcantara family, for a consideration of P2M, sold

their shareholdings (101,953shares), in the CCC franchise companies to EQUITY. EQUITY issued ALSONSe t a l , a " b e a r e r " promissory note for P2M with a one-year maturity date. 4 years later, the Alcantara family assigned its rights and interests over the bearer note to ALSONS which became the holder thereof. But even before the execution of the assignment deal aforestated, letters of demand for interest payment were already sent to EQUITY. EQUITY no longer then having assets or property to settle its obligation nor being extended financial support by GCC,and pleaded inability to pay. ALSONS, having failed to collect on the bearer note aforementioned, filed a complaint for a sum of money against EQUITY and GCC. GCC is being impleaded as party-defendant for any judgment ALSONS might secure against EQUITY and, under the doctrine of piercing the veil of corporate fiction, against GCC, EQUITY having been organized as a tool and mere conduit of GCC. .According to EQUITY (cross -claim against GCC): it acted merely as intermediary or bridge for loan transactions and other dealings of GCC to its franchises and the investing public; and is solely dependent upon GCC for its funding requirements. Hence, GCC is solely and directly liable to ALSONS, the former having failed to provide EQUITY the necessary funds to meet its obligations to ALSONS. GCC filed its answer to Cross-claim, stressing that it is a distinct and separate entity from EQUITY. RTC, finding that EQUITY was but an instrumentality or adjunct of GCC and considering the legal consequences and implications of such relationship, rendered judgment for Alson. CA affirmed. ISSUE: WON the doctrine of "Piercing the Veil of Corporate Fiction" should be applied in the case at bar. HELD: YES. The notion of separate personality, however, may be disregarded under the doctrine "piercing the veil of corporate fiction" as in fact the court will often look at the corporation as a mere collection of individuals or an aggregation of persons undertaking business as a group, disregarding the separate juridical personality of the corporation unifying the group. Another formulation of this doctrine is that when two (2) business enterprises are owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect the rights of third parties, disregard the legal fiction that two corporations are distinct entities and treat them as identical or one and the same. Authorities agreed on at least three (3) basic areas where piercing the veil, with which the law covers and isolates the corporation from any other legal entity to which it may be related, is allowed. These are: 1) defeat of public convenience, as when the corporate fiction is used as vehicle for the evasion of an existing 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. The Court agrees with the disposition of the CA on the application of the piercing doctrine to the transaction subject of this case. Per the Courts count, the trial court enumerated no less than 20 documented circumstances and transactions, which, taken as a package, indeed strongly supported the conclusion that respondent EQUITY was but an adjunct, an instrumentality or business conduit of petitioner GCC. This relation, in turn, provides justifying ground to pierce petitioners corporate existence as to ALSONS claim in question. Foremost of what the trial court referred to as "certain circumstances" are the commonality of directors, officers and stockholders and even sharing of office between petitioner GCC and respondent EQUITY; certain financing and management arrangements between the two, allowing the petitioner to handle the

funds of the latter; the virtual domination if not control wielded by the petitioner over the finances, business policies and practices of respondent EQUITY; and the establishment of respondent EQUITY by the petitioner to circumvent CB rules. Verily, indeed, as the relationships binding herein [respondent EQUITY and petitioner GCC] have been that of "parentsubsidiary corporations" the foregoing principles and doctrines find suitable applicability in the case at bar; and, it having been satisfactorily and indubitably shown that the saidrelationships had been used to perform certain functions not characterized with legitimacy, this Court feels amply justified to "pierce the veil of corporate entity" and disregard the separate existence of the parent and subsidiary the latter having been so controlled by the parent that its separate identity is hardly discernible thus becoming a mere instrumentality or alter ego of the former. 14. Concept Builders, Inc. v. NLRC, G.R. No. 108734, May 26, 1996Palmones FACTS: Concept Builders, Inc., (CBI) a domestic corporation, with principal office at 355 MaysanRoad,Valenzuela, Metro Manila, is engaged in the construction business while Norberto Marabe; Rodolfo Raquel,CristobalRiego, Manuel Gillego, PalcronioGiducos, Pedro Aboigar, Norberto Comendador, Rogelio Salut,Emilio Garcia, Jr., Mariano Rio, Paulina Basea, Alfredo Albera, PaquitoSalut, Domingo Guarino, Romeo Galve, Dominador Sabina, Felipe Radiana, GavinoSualibio, Moreno Escares, Ferdinand Torres, Felipe Basilan, and Ruben Robalos were employed by said company as laborers, carpenters and riggers. On November 1981, Marabe, et. al. were served individual written notices of termination of employment by CBI,effective on 30 November 1981. It was stated in the individual notices that their contracts of employment had expired and the project in which they were hired had been completed. The National Labor Relations Commission (NLRC) found it to be, the fact, however, that at the time of the termination of Marabe, et.al.'s employment, the project in which they were hired had not yet been finished and completed. CBI had toengage the services of subcontractors whose workers performed the functions of Marabe, et. al. Aggrieved,Marabe, et. al. filed a complaint for illegal dismissal, unfair labor practice and non-payment of their legal holiday pay, overtime pay and thirteenth-month pay against CBI. On 19 December 1984, the Labor Arbiter rendered judgment ordering CBI to reinstate Marabeet. al. and to pay them back wages equivalent to 1 year or 300 working days. On 27 November 1985, the NLRC dismissed the motion for reconsideration filed byCBI on the ground that the said decision had already become final and executory. On 16 October 1986, the NLRC Research and Information Department made the finding that Marabe, et. al.'sback wages amounted to P199,800.00. On 29 October 1986, the Labor Arbiter issued a writ of execution directing the sheriff to execute the Decision, dated 19 December 1984. The writ was partially satisfied through garnishment of sums from CBI's debtor, the Metropolitan Waterworks and Sewerage Authority, in the amount of P81,385.34. Said amount was turned over to the cashier of the NLRC. On 1 February 1989, an Alias Writ of Execution was issued by the Labor Arbiter directing the sheriff to collect from CBI the sum of P117,414.76, representing the balance of the judgment award, and to reinstate Marabe, et. al. to their former positions. On 13 July 1989, the sheriff issued a report stating that he tried to serve the alias writ of execution on petitioner through the security guard on duty but the service was refused on the ground that CBI no longer occupied the premises. On 26 September 1986, upon motion of Marabe, et. al., the Labor Arbiter issued a second alias writ of execution. The said writ had not been enforced by the special sheriff because, as stated in his progress report dated 2 November 1989, that all the employees inside CBI's premises claimed that they were employees of Hydro Pipes Philippines, Inc. (HPPI) and not by CBI; that levy was made upon personal properties he found in the premises; and that security guards with high-powered guns prevented him from removing the properties he had levied upon. The said special sheriff recommended that a "break-open order be issued to enable him to enter CBI's premises so that he could proceed with the public auction sale of the aforesaid personal properties on 7 November 1989. On 6 November 1989, a certain Dennis Cuyegkeng filed a third-party claim with the Labor Arbiter alleging that the properties sought to be levied

upon by the sheriff were owned by HPPI, of which he is the VicePresident. On 23 November 1989, Marabe, et. al. filed a "Motion for Issuance of a Break-Open Order," alleging that HPPI and CBI were owned by the same incorporator/stockholders. They also alleged that petitioner temporarily suspended its business operations in order to evade its legal obligations to them and that Marabe, et. al. were willing to post an indemnity bond to answer for any damages which CBI and HPPI may suffer because of the issuance of the break-open order. On2 March 1990, the Labor Arbiter issued an Order which denied Marabe, et. al.'s motion for break-open order.Marabe, et. al. then appealed to the NLRC. On 23 April 1992, the NLRC set aside the order of the Labor Arbiter, issued a break-open order and directed Marabe, et. al. to file a bond. Thereafter, it directed the sheriff to proceed with the auction sale of the properties already levied upon. It dismissed the third-party claim for lack of merit. CBI moved for reconsideration but the motion was denied by the NLRC in a Resolution, dated 3December 1992. Hence, the petition. Issue: Whether the NLRC was correct in issuing the break-open order to levy the HPPI properties located at CBI and/or HPPIs premises at 355 Maysan Road, Valenzuela, Metro Manila. Held: It is a fundamental principle of corporation law that a corporation is an entity separate and distinct from its stockholders and from other corporations to which it may be connected. But, this separate and distinct personality of a corporation is merely a fiction created by law for convenience and to promote justice. So, when the notion of separate juridical personality is used to defeat public convenience, justify wrong, protectfraud or defend crime, or is used as a device to defeat the labor laws, this separate personality of the corporation may be disregarded or the veil of corporate fiction pierced. This is true likewise when the corporation is merely an adjunct, a business conduit or an alter ego of another corporation. The conditions under which the juridical entity may be disregarded vary according to the peculiar facts and circumstances of each case. No hard and fast rule can be accurately laid down, but certainly, there are some probative factors of identity that will justify the application of the doctrine of piercing the corporate veil, to wit: (1) Stock ownership by one or common ownership of both corporations; (2) Identity of directors and officers; (3) The manner of keeping corporate books and records; and (4) Methods of conducting the business. The SEC en banc explained the "instrumentality rule" which the courts have applied in disregarding the separate juridical personality of corporations as "Where one corporation is so organized and controlled and its affairs are conducted so that it is, in fact, a mere instrumentality or adjunct of the other, the fiction of the corporate entity of the "instrumentality" may be disregarded. The control necessary to invoke the rule is not majority or even complete stock control but such domination of instances, policies and practices that the controlled corporation has, so to speak, no separate mind, will or existence of its own, and is but a conduit for its principal. It must be kept in mind that the control must be shown to have been exercised at the time the acts complained of took place. Moreover, the control and breach of duty must proximately cause the injury or unjust loss for which the complaint is made." The test in determining the applicability of the doctrine of piercing the veil of corporate fiction is as (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; (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 rights; and (3) The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of. The absence of anyone of these elements prevents "piercing the corporate veil." In applying the "instrumentality" or "alter ego" doctrine, the courts are concerned with reality and not form, with how the corporation operated and the individual defendant's relationship to that operation. Thus the question of whether a corporation is a mere alter ego, a mere sheet or paper corporation, a sham or a subterfuge is purely one of fact. Here, while CBI claimed that it ceased its business operations on 29 April 1986, it filed an Information Sheet with the Securities and Exchange Commission on

15 May 1987, stating that its office address is at 355 Maysan Road, Valenzuela,Metro Manila. On the other hand, HPPI, the third-party claimant, submitted on the same day, a similar information sheet stating that its office address is at 355 Maysan Road, Valenzuela, Metro Manila. Further,both information sheets were filed by the same Virgilio O. Casio as the corporate secretary of both corporations. Both corporations had the same president, the same board of directors, the same corporate officers, and substantially the same subscribers. From the foregoing, it appears that, among other things, the CBI and the HPPI shared the same address and/or premises. Under these circumstances, it cannot be said that the property levied upon by the sheriff were not of CBI's. Clearly, CBI ceased its business operations in order to evade the payment to Marabe, et. al. of back wages and to bar their reinstatement to their former positions. HPPI is obviously a business conduit of CBI and its emergence was skillfully orchestrated to avoid the financial liability that already attached to CBI. 15. Spouses Violago v. BA Finance Corp., G.R. No. 158262,July 21, 2008- Reboja THE CASE Petition for Review on Certiorari for the reversal of the appellate courts ruling which held Petitioners liable to respondent BA Finance Corporation (BA Finance) under a promissory note and a chattel mortgage and a prayer that respondent AvelinoViolago be adjudged directly liable to BA Finance. THE ANTECEDENTS Sometime in 1983, AvelinoViolago, President of Violago Motor Sales Corporation (VMSC), offered to sell a car to his cousin, Pedro F. Violago, and the latters wife, Florencia wherein the spouses would just have to pay a down payment of PhP 60,500 while the balance would be financed by respondent BA Finance. The spouses then agreed to purchase a Toyota Cressida Model 1983 from VMSC under the terms that they would pay the monthly installments to BA Finance while Avelino would take care of the documentation and approval of financing of the car. On August 4, 1983, the spouses and Avelino signed a promissory note under which they bound themselves to pay jointly and severally to the order of VMSC the amount of PhP 209,601 in 36 monthly installments of PhP 5,822.25 a month. Avelino prepared a Disclosure Statement of Loan/Credit Transportation which showed the net purchase price of the vehicle, down payment, balance, and finance charges. VMSC then issued a sales invoice in favor of the spouses with a detailed description of the Toyota Cressida car. In turn, the spouses executed a chattel mortgage over the car in favor of VMSC as security for the amount of PhP 209,601. VMSC, through Avelino, endorsed the promissory note to BA Finance without recourse. After receiving the amount of PhP 209,601, VMSC executed a Deed of Assignment of its rights and interests under the promissory note and chattel mortgage in favor of BA Finance. Meanwhile, the spouses remitted the downpayment of PhP 60,500 to VMSC through Avelino. The sales invoice was filed with the Land Transportation Office (LTO)-Baliwag Branch, which issued a Certificate of Registration in the name of Pedro on August 8, 1983. The spouses were unaware that the same car had already been sold in 1982 to EsmeraldoViolago, another cousin of Avelino, and registered in Esmeraldos name by the LTO-San Rafael Branch. Despite the spouses demand for the car and Avelinos repeated assurances, there was no delivery of the vehicle. Since VMSC failed to deliver the car, Pedro did not pay any monthly amortization to BA Finance. BA Finance filed with the Regional Trial Court (RTC), a complaint for Replevin with Damages against the spouses. In the meantime, Esmeraldo conveyed the vehicle to Jose V. Olvido who was then issued a Certificate of Registration by the LTO-Cebu City Branch on April 29, 1985. On May 8, 1987, Jose executed a Chattel Mortgage over the vehicle in favor of Generoso Lopez as security for a loan covered by a promissory note in the amount of PhP 260,664. This promissory note was later endorsed to BA Finance, Cebu City branch. The Violago spouses, with prior leave of court, filed a Third Party Complaint against Avelino praying that the veil of corporate fiction be set aside and Avelino be adjudged directly liable to BA

Finance and for damages for the fraud committed upon them. VMSC was not impleaded as third party defendant.

RTC DECISION The RTC rendered a Decision finding for BA Finance but against the Violago spouses. The RTC, however, declared that they are entitled to be indemnified by Avelino. CA DECISION The CA set aside the trial courts order holding Avelino liable for damages to the spouses without prejudice to the action of the spouses against VMSC and Avelino in a separate action. ISSUE WHETHER OR NOT THE VEIL OF CORPORATE ENTITY MAY BE INVOKED AND SUSTAINED DESPITE THE FRAUD AND DECEPTION OF AVELINO? RULING NO. It is a fundamental principle of corporation law that a corporation is an entity separate and distinct from its stockholders and from other corporations to which it may be connected. But, this separate and distinct personality of a corporation is merely a fiction created by law for convenience and to promote justice. So, when the notion of separate juridical personality is used to defeat public convenience, justify wrong, protect fraud or defend crime, or is used as a device to defeat the labor laws, this separate personality of the corporation may be disregarded or the veil of corporate fiction pierced. This is true likewise when the corporation is merely an adjunct, a business conduit or an alter ego of another corporation. The test in determining the applicability of the doctrine of piercing the veil of corporate fiction is as follows: 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; 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 acts in contravention of plaintiffs legal rights; and 3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of. This case meets the foregoing test. VMSC is a familyowned corporation of which Avelino was president. Avelino committed fraud in selling the vehicle to petitioners, a vehicle that was previously sold to Avelinos other cousin, Esmeraldo. Nowhere in the pleadings did Avelino refute the fact that the vehicle in this case was already previously sold to Esmeraldo; he merely insisted that he cannot be held liable because he was not a party to the transaction. The fact that Avelino and Pedro are cousins, and that Avelino claimed to have a need to increase the sales quota, was likely among the factors which motivated the spouses to buy the car. Avelino, knowing fully well that the vehicle was already sold, and with abuse of his relationship with the spouses, still proceeded with the sale and collected the down payment from petitioners. The trial court found that the vehicle was not delivered to the spouses. Avelino clearly defrauded petitioners. His actions were the proximate cause of petitioners loss. He cannot now hide behind the separate corporate personality of VMSC to escape from liability for the amount adjudged by the trial court in favor of petitioners. 16. Enriquez Security Services v. Cabotaje, G.R. No. 147993,July 21, 2006- Siason Facts The case is a petition for review on certiorari.

Sometime in January 1979, respondent Victor A. Cabotaje was employed as a security guard by Enriquez Security and Investigation Agency (ESIA). On November 13, 1985, petitioner Enriquez Security Services, Inc. (ESSI) was incorporated. Respondent continued to work as security guard in petitioners agency. On reaching the age of 60 in respondent applied for retirement. Petitioner acknowledged that respondent was entitled to retirement benefits but opposed his claim that the computation of such benefits must be reckoned from January 1979 when he started working for ESIA. It claimed that the benefits must be computed only from November 13, 1985 when ESSI was incorporated. Respondent consequently filed a complaint in the National Labor Relations Commission (NLRC) seeking the payment of retirement benefits under Republic Act No. (RA) 7641, otherwise known as the Retirement Pay Law. The labor arbiter decided in respondents favor: On appeal, the NLRC set aside the labor arbiters award of one-month salary for every year of service for being excessive. It ruled that under RA 7641, respondent Cabotaje was entitled to retirement pay equivalent only to one-half month salary for every year of service. Issue 3. Whether or not the length of service of a retired employee in a dissolved company (his former employer) should be included in his length of service with his last employer for purposes of computing the retirement pay. the NLRC denied petitioners motion for reconsideration. On appeal for a special civil action for certiorari with the Court of Appeals. Appellate court affirmed the NLRC decision. It also denied the motion for reconsideration on May 8, 2001. Held Yes, It is a well-entrenched doctrine that the Supreme Court does not pass upon questions of fact in an appeal by certiorari under Rule 45. It is not our function to assess and evaluate the evidence all over again where the findings of the quasi-judicial agency and the appellate court on the matter coincide. The consistent rulings of the labor arbiter, the NLRC and the appellate court should be respected and petitioners veil of corporate fiction should likewise be pierced. These are based on the following uncontroverted facts: (1) respondent worked with ESIA and petitioner ESSI; (2) his employment with both security agencies was continuous and uninterrupted; (3) both agencies were owned by the Enriquez family and (4) petitioner ESSI maintained its office in the same place where ESIA previously held office. The attempt to make the security agencies appear as two separate entities, when in reality they were but one, was a devise to defeat the law and should not be permitted. Although respect for corporate personality is the general rule, there are exceptions. In appropriate cases, the veil of corporate fiction may be pierced as when it is used as a means to perpetrate a social injustice or as a vehicle to evade obligations. Petitioner was thus correctly ordered to pay respondents retirement under RA 7641, computed from January 1979 up to the time he applied for retirement in July 1997.

any would make the amount immediately demandable with an interest of 12% per annum. For failure of GRAPHIC to pay, Boon Bee filed a petition for collection of Sum of Money with CIF Manila Branch XXIII, presided over by Judge Jarencio. GRAPHIC was declared in default for failure to file its answer within the reglementaryperiod.The trial court ordered GRAPHIC to pay the petitioner with 12% interest from March 30, 1973 until fully paid. Upon motion, a writ of execution was issued and expired without the sheriff finding any property of Boon Bee. An alias writ was issued and pursuant to such, one unit printing machine Identified as "Original Heidelberg Cylinder Press" found in the premises of GRAPHIC was levied upon. In a Notice of Sale of Execution of Personal Property , auction sale was scheduled on July 26, 1974 but in a letter dated July 19, 1974, Philippine American Drug Company (PADCO) informed the sheriff that the printing machine is its property but the sheriff proceeded with the scheduled auction sale, sold the property to the petitioner. More than five hours after the auction sale and the issuance of the certificate of sale, PADCO filed an "Affidavit of Third Party Claim" with the Office of the City Sheriff and thereafter filed with CIF Manila, Branch XXIII, a Motion to Nullify Sale on Execution GRANTED. MR DENIED. *PETITIONERS CONTENTION - PADCO could not have litigated its claim in the same case, but in an independent civil proceeding. - the controlling stockholders of the Philippine American Drug Co. are also the same controlling stockholders of the Graphic Publishing, Inc. and, therefore, the levy upon the said machinery which was found in the premises occupied by the Graphic Publishing, Inc. Must be upheld. ISSUES: WON PADCO SHOULD FILE ITS CLAIM IN AN INDEPENDENT PROCEEDING. WON THE CORPORATE IDENTITY OF PADCO SHOULD BE PIERCED HAVING EVIDENCE SHOWING THAT PADCO WAS CONVENIENTLY SHIELDING UNDER THE THEORY OF CORPORATE PETITION. HELD: Bayer Philippines, Inc. vs. Agana ...the rights of third-party claimants over certain properties levied upon by the sheriff to satisfy the judgment should not be decided in the action where the third-party claims have been presented, but in the separate action instituted by the claimants. The two corporations were duly incorporated under the Corporation Law and each of them has a juridical personality distinct and separate from the other and the properties of one cannot be levied upon to satisfy the obligation of the other. However, the separate and distinct personality is merely a fiction created by law for convenience and to promote justice (Laguna Transportation Company vs. SSS, 107 Phil. 833 [1960]). 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 or when necessary for the protection of creditors (Sulong Bayan, Inc. vs. Araneta, Inc., 72 SCRA 347 [1976]). Corporations are composed of natural persons and the legal fiction of a separate corporate personality is not a shield for the commission of injustice and inequity (Chenplex Philippines, Inc., et al. vs. Hon. Pamatian et al., 57 SCRA 408 (19741). This is true when the corporation is merely an adjunct, business conduit or alter ego of another corporation. In such case, the fiction of separate and distinct corporation entities should be disregarded (Commissioner of Internal Revenue vs. Norton & Harrison, 11 SCRA 714 [1964]). Evidence established that PADCO was never engaged in the printing business; that the board of directors and the officers of GRAPHIC and PADCO were the same; and that PADCO holds 50% share of stock of GRAPHIC. The printing machine in question had

17. Tan Boon Bee & Co, Inc. v. Jarencio, G.R. No. L-41337, June 30, 2008- Silverio FACTS: BOON BEE & CO., INC (Boon Bee), doing business under the name and style of Anchor Supply Co., sold on credit to Graphic Publishing, Inc. (Graphic) paper products. On December 20, 1972, GRAPHIC made partial payment by check. A promissory note was executed for the balance stipulating that the amount will be paid on monthly instalments and that failure to pay

been in the premises of GRAPHIC long before PADCO even acquired its alleged title from Capitol Publishing. That the said machine was allegedly leased by PADCO to GRAPHIC even before PADCO purchased it from Capitol Publishing only serves to show that PADCO's claim of ownership over the printing machine is not only farce and sham but also unbelievable. Considering the aforestated principles and the circumstances established in this case, respondent judge should have pierced PADCO's veil of corporate Identity. ORDER OF CIF MANILA ANNULED. 18. Heirs of Pajarillo v. CA, G.R. Nos. 155056-57, October 19, 2007tobias Facts: Panfilo V. Pajarillo (Panfilo) was the owner and operator of several buses plying certain routes in Metro Manila. He used the name PVP Liner in his buses. Private respondents were employed as drivers, conductors and conductresses by Panfilo. During their employment with Panfilo, private respondents they were not given emergency cost of living allowance (ECOLA), 13th month pay, legal holiday pay and service incentive leave pay. Thereafter, private respondents and several co-employees formed a union called SAMAHAN NG MGA MANGGAGAWA NG PANFILO V. PAJARILLO(respondent union). Upon learning of the formation of respondent union, private respondents refused to sign the said some documents offered by Panfilo, hence as a result, they were barred from working or were dismissed without hearing and notice. Respondent union and several employees filed a Complaint for unfair labor practice, illegal deduction and illegal dismissal. Respondent union and several employees also filed another Complaint for violation of labor standard laws claiming nonpayment. Notifications and summons with respect to the first case were addressed and sent to PANFILO V. PAJARILLO, President/Manager, and a signature therein appears on top of the signature of the name of the addressee. With regard to the second case, notifications and summonses wereaddressed and sent to THE PRESIDENT/MANAGER, PVP Liner Inc. and Panfilo V. Pajarillo, and was signed by a certain Irene G. Pajarillo as the addressees agent. Panfilo denied the charges in the complaints. Upon motion of Panfilo, the complaints in NLRC/NCR, the 2 cases were consolidated. Respondent union appealed to the NLRC, the NLRC reversed the decision and ordered the reinstatement of, and payment of some claims to private respondents. Panfilos counsel filed a motion for reconsideration which was partially granted by the NLRC but then it was later on said to remand the case for further hearing. Respondent union filed a motion for reconsideration and it was denied so they filed Certiorari under this court and it was granted. Panfilos counsel filed a motion for reconsideration of the said decision but this was denied by the appellate court. Issue:

1. Whether or not the CA erred that PVP Liner was improperly mispleaded which is non-existing corporation. 2. Whether or not the CA erred in piercing the veil of corporate entity of PVP Liner. Ruling: 1. Petitioners alleged that the notices and summons were received by a certain Irene G. Pajarillo (Irene) for and in behalf of the PVP Liner Inc.; that Irene was neither and could not have been the President/Manager of PVP Liner Inc., the latter being non-existent; and that Irene was not an officer of P.V. Pajarillo Liner. Records show that Irene received the summons for NLRC Case in behalf of PVP Liner Inc. Abel, one of the heirs of Panfilo and the Operations Manager of PVP Liner Inc., testified during the hearing before Arbiter Asuncion that Irene was one of the secretaries of PVP Liner Inc. Hence, there was a valid service of summons. Hence, PVP Liner was properly pleaded in this case. 2. It is a fundamental principle of corporation law that a corporation is an entity separate and distinct from its stockholders and from other corporations to which it may be connected. Hence, when the notion of separate juridical personality is used to defeat public convenience, justify wrong, protect fraud or defend crime, or is used as a device to defeat labor laws, this separate personality of the corporation may be disregarded or the veil of the corporate fiction pierced. This is true likewise when the corporation is merely an adjunct, a business conduit or an alter ego of another corporation. The corporate mask may be lifted and the corporate veil may be pierced when a corporation is but the alter ego of a person or another corporation. Petitioners posited that P.V. Pajarillo Liner Inc. is an independent corporation and cannot be considered as an adjunct or extension of Panfilo as the sole operator of PVP Liner buses; and that at the time P.V. Pajarillo Liner Inc. was established, it had no liability or obligation which it tried to shield or circumvent. It is apparent that Panfilo started his transportation business as the sole owner and operator of passenger buses utilizing the name PVP Liner for his buses. After being charged by respondent union of unfair labor practice, illegal deductions, illegal dismissal and violation of labor standard laws, Panfilo transformed his transportation business into a family corporation, namely, P.V. Pajarillo Liner Inc. Further, the license to operate or franchise of the sole proprietorship was merely transferred to P.V.Pajarillo Liner Inc. It is clear from the foregoing that P.V. Pajarillo Liner Inc. was a mere continuation and successor of the sole proprietorship of Panfilo. It is also quite obvious that Panfilo transformed his sole proprietorship into a family corporation in a surreptitious attempt to evade the charges of respondent union. Given these considerations, Panfilo and P.V. PajarilloLiner Inc. should be treated as one and the same person for purposes of liability.

19. Tomas Lao Construction v. NLRC, G.R. No. 116781,September 5, 1997- Vargas Facts: Petitioners Tomas Lao Corporation (TLC), Thomas and James Developers (T&J) and LVM Construction Corporation (LVM), referred

to as the Lao Group of Companies, are three entities comprising a business conglomerate exclusively controlled and managed by members of the Lao familyand which are engaged in the construction of public roads and bridges. Private respondents were hired by petitioners for various periods as construction workers in different capacities. Sometime in 1989, Andres Lao, Managing Director of LVM and President of T&J issued a memorandum requiring all workers and company personnel to sign employment contract forms and clearances which were issued to be used allegedly for audit purposes. The contracts expressly described the construction workers as project employees whose employments were for a definite period. However, except for Florencio Gomez, all private respondents refused to sign contending that this scheme was designed by their employer to downgrade their status from regular employees to mere project employees. Resultantly, their salaries were withheld and their services were terminated. Subsequently, private respondents individually filed complaints for illegal dismissal against petitioners with the NLRC Regional Arbitration Branch in Tacloban City, where the court dismissed said complaints. The decision of Labor Arbiter was reversed on appeal by the NLRC of Cebu City which found that private respondents were dismissed without just cause and denied due process. In granting monetary awards to complainants,NLRC disregarded the veil of corporate fiction and treated the three corporations as forming only one entity on the basis of the admission of petitioners that the three operated as one intermingling and commingling all its resources, including manpower facility. Issue: WON NLRC erred when it pierced the veil of corporate personality of petitioner-corporations Held: Public respondent NLRC did not err in disregarding the veil of separate corporate personality and holding petitioners jointly and severally liable for private respondents back wages and separation pay. The records disclose that the three (3) corporations were in fact substantially owned and controlled by members of the Lao family. A majority of the outstanding shares of stock in LVM and T&J is owned by the Lao family. T&J is 100% owned by the Laos as reflected in its Articles of Incorporation. The Lao Group of Companies therefore is a closed corporation where the incorporators and directors belong to a single family. Lao HianBeng is the same Tomas Lao who owns Tomas Lao Corporation and is the majority stockholder of T&J. Andres C. Lao is the Managing Director of LVM Construction, and President and Managing Director of the Lao Group of Companies. Petitioners are engaged in the same line of business under one management and use the same equipment including manpower services. In view of the peculiar circumstances of this case, the court disregarded the separate personalities of the three (3) corporations and at the same time declared the members of the corporations jointly and severally liable with the corporations for the monetary awards due to private respondents. The fiction of law that a corporation as a juridical entity has a distinct and separate personality was envisaged for convenience and to serve justice; therefore it should not be used as a subterfuge to commit injustice and circumvent labor laws. Petition is denied and the decision of the National Labor Relations Commission is affirmed. Doc:rine: Where it appears that [three] 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 the legal fiction that the [three] corporations are distinct entities, and treat them as identical. Thus, the

liability of petitioners extends to the responsible officers acting in the interest of the corporations. 20. Sianin Enterprises, Inc. v. Cupertino Realty Corp., G.R. No. 170782, June 22, 2009- Palaghicon

21. Litonjua Group of Companies v. Vigan, G.R. No. 143723,June 28, 2001- Gringo LITONJUA GROUP OF COMPANIES, EDDIE LITONJUA and DANILO LITONJUA, petitioners, vs. TERESITA VIGAN, respondent. FACTS: Vigans Version: She was hired by the Litonjua Group of Companies on February 2, 1979 as telex operator. Later, she was assigned as accounting and payroll clerk under the supervision of DaniloLitonjua. She had been performing well until 1995, when DaniloLitonjua who was already naturally a (sic) very ill-tempered, ill-mouthed and violent employer, became more so due to business problems. In fact, a complaint letter was sent by the Litonjua Employees to the father and his junior regarding the boorishness of their kin DaniloLitonjua but apparently the management just glossed over this. DaniloLitonjua became particularly angry with Vigan and threw a stapler at her when she refused to give him money upon the instructions of Eddie Litonjua. From then on, DaniloLitonjua had been rabid towards her berated and bad-mouthed her, calling her a mental case psycho, siraulo, etc. and even threatened to hit her for some petty matters. DaniloLitonjua even went so far as to lock her up in the comfort room and preventing others to help her out. Not contented, DaniloLitonjua would order the security guards to forcibly eject her or prevent her entry in the office premises whenever he was angry. This occurred twice in July of 1995, first on the 5th then on the 7th. The incidents prompted Vigan to write DaniloLitonjua letters asking why she was treated so and what was her fault. She suspected that DaniloLitonjua wanted her out for he would not let her inside the office such that even while abroad he would order the guards by phone to bar her. She pleaded for forgiveness or at least for explanation but it fell on deaf ears. Later, DaniloLitonjua changed tack and charged that Vigan had been hysterical, emotional and created scenes at the office. He even required her to secure psychiatric assistance. But despite proof that she was not suffering from psychosis or organic brain syndrome as certified to by a Psychiatrist of DaniloLitonjuas choice, still she was denied by the guards entry to her work upon instructions again of DaniloLitonjua. Left with no alternative, Vigan filed a case for illegal dismissal, alleging she was receiving a monthly salary of P8,000.00 at the time she was unlawfully terminated. Litonjuas Version: They negate the existence of the Litonjua Group of Companies and the connection of Eduardo Litonjua thereto. They contend that Vigan was employed by ACT Theater, Inc., where DaniloLitonjua is a Director. They dispute the charge of illegal dismissal for it was Vigan who ceased to report for work despite notices and likewise contest the P8,000.00 monthly salary alleged by Vigan, claiming it was merely P6,850.00. They claim that Vigan was a habitual absentee especially on Tuesdays that fell within three days before and after the 15th day and 30th day of every month. Her performance had been satisfactory, but then starting March 15, 1996 she had become

emotional, hysterical, uncontrollable and created disturbances at the office with her crying and shouting for no reason at all. The incident was repeated on April 3, 1996, May 24, 1996 and on June 4, 1996. Thus alarmed, on July 24, 1996 Vigan was required by management to undergo medical and psychological examination at the companys expense and naming three doctors to attend to her. Dr. Baltazar Reyes and Dr. Tony Perlas of the Philippine General Hospital and Dr. Lourdes Ignacio of the Medical Center Manila. But they claim that Vigan refused to comply. On August 2, 1996, Vigan again had another breakdown, hysterical, shouting and crying as usual for about an hour, and then she just left the premises without a word. The next day, August 3, 1996, Saturday, she came to the office and explained she was not feeling well the day before. After that Vigan went AWOL and did not heed telegram notices from her employer made on August 26, 1996 and on September 9, 1996. She instead filed the instant suit for illegal dismissal. Labor Arbiters Decision: Vigan is diseased and unfit for work under Article 284 of the Labor Code and awarded the corresponding separation pay as follows: Separation pay (P4,000 x 18) years.= P72,000.00 Proportionate 13th month pay (P8,000 x 8 months over 12) = 4,666.66

RULING: Petitioners allege that the Litonjua group of companies cannot be a party to this suit for it is not a legal entity with juridical personality but is merely a generic name used to describe collectively the various companies in which the Litonjua family has business interest; that the real employer of respondent Vigan was the ACT theater Incorporated where DaniloLitonjua is a member of the Board of Directors while Eddie Litonjua was not connected in any capacity. Petitioners argument is meritorious. Only natural or juridical persons or entities authorized by law may be parties to a civil action and every action must be prosecuted and defended in the name of the real parties in interest.[9] Petitioners claim that Litonjua Group of Companies is not a legal entity with juridical personality hence cannot be a party to this suit deserves consideration since respondent failed to prove otherwise. In fact, respondent Vigans own allegation in her Memorandum supported petitioners claim that Litonjua group of companies does not exist when she stated therein that instead of naming each and every corporation of the Litonjua family where she had rendered accounting and payroll works, she simply referred to these corporations as the Litonjua group of companies, thus, respondent merely used such generic name to describe collectively the various corporations in which the Litonjua family has business interest. Considering the non-existence of the Litonjua group of companies as a juridical entity and petitioner Eddie Litonjuas denial of his connection in any capacity with the ACT Theater, the supposed company where Vigan was employed, petitioner Eddie Litonjuas should also be excluded as a party in this case since respondent Vigan failed to prove Eddie Litonjuas participation in the instant case. It is respondent Vigan, being the party asserting a fact, who has the burden of proof as to such fact[10] which however, she failed to discharge.

TOTAL AWARD. P76,666.66 All other causes of action are DISMISSED for lack of merit. Vigan filed a petition for certiorari with the respondent Court of Appeals. CA Decision: Ordered the respondents LITONJUA GROUP OF COMPANIES, EDDIE K. LITONJUA and DANILO LITONJUA jointly and severally to: (a) Reinstate complainant TERESITA Y. VIGAN if she so desires; or (b) pay her separation compensation in the sum of P8,000.00 multiplied by her years of service counted from February 2, 1979 up to the time this Decision becomes final; and in either case to pay Vigan; (c) full back wages from the time she was illegally dismissed up to the date of the finality of this Decision; (d) moral damages in the amount of P40,000.00; (e) exemplary damages in the amount of P15,000.00; and (f) attorneys fees of P10,000.00. SO ORDERED. Litonjuas appealed. ISSUE: Whether or not Litonjua Group of Companies, which has no juridical personality, but only a generic name to describe the various companies which the Litonjua family has interests, can be legally construed as respondents employer.

As to the issue of illegal dismissal or abandonment from work: SC hold that this was a case of illegal dismissal. Abandonment is a matter of intention and cannot be lightly inferred, much less legally presumed from certain equivocal acts. An employee who forthwith took steps to protest his dismissal cannot be said to have abandoned his work., as where the employee immediately filed a complaint for illegal dismissal to seek reinstatement. Note that in the instant case Vigan was even pleading to be allowed to work but she was prevented by the guards thereat upon the orders of DaniloLitonjua. The employer bears the burden of proof. To establish a case of abandonment, the employer must prove the employees deliberate and unjustified refusal to resume employment without any intention of returning. . .mere absence from work, especially where the employee has been verbally told not to report, cannot by itself constitute abandonment. In other words, Vigan is entitled to reinstatement. WHEREFORE, premises considered, the decision of the respondent Court of Appeals dated March 20, 2000 is hereby AFFIRMED with the MODIFICATION that Litonjua Group of Companies and Eddie Litonjua are dropped as parties in the instant case. SO ORDERED.

22. Republic of the Philippines v. CoalbrineInternationalPhilippines, Inc., G.R. No. 161838, April 7, 2010-alih Facts: The Export Processing Zone Authority (EPZA), predecessor of the Philippine Economic Zone Authority (PEZA), is the owner of the Bataan Hilltop Hotel and Country Club, located at

the Bataan Export Processing Zone, Mariveles, Bataan. Dante M. Quindoza is the Zone Administrator of the Bataan Economic Zone. On August 4, 1994, EPZA, now PEZA, and respondent Coalbrine International Philippines, Inc. entered into a contract in which the latter would rehabilitate and lease the Bataan Hilltop Hotel, Golf Course and Clubhouse for twenty-five (25) years, which commenced on January 1, 1994, and renewable for another twentyfive (25) years at the option of respondent Coalbrine. Respondent Sheila F. Neri was the Managing Director of the hotel. On July 11, 1996, the PEZA Board passed Resolution No. 96-231 rescinding the contract to rehabilitate and lease, on the ground of respondent Coalbrine's repeated violations and nonperformance of its obligations as provided in the contract. Subsequently, PEZA sent respondent Coalbrine a notice to vacate the premises and to pay its outstanding obligations to it. On April 3, 1998, respondent Coalbrine filed with the RTC of Manila a Complaint for specific performance with prayer for the issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction with damages against PEZA and/or Bataan Economic Zone wherein respondent Coalbrine sought to declare that PEZA had no valid cause to rescind the contract to rehabilitate and lease; and to enjoin PEZA from taking over the hotel and country club and from disconnecting the water and electric services to the hotel. On April 24, 2002, respondents Coalbrine and Neri filed with the RTC of Balanga, Bataan, a Complaint for damages with prayer for the issuance of a TRO and/or writ of preliminary prohibitory/mandatory injunction against Zone Administrator Quindoza. Respondent alleged that: in October 2001, Quindoza started to harass the hotel's operations by causing the excavation of the entire width of a cross-section of the only road leading to the hotel for the supposed project of putting up a one length steel pipe; that such project had been stopped, which, consequently, paralyzed the hotel's operations; respondent Neri undertook the construction of a temporary narrow access ramp in order that the hotel guests and their vehicles could pass through the wide excavations; Quindoza had also placed a big "ROAD CLOSED" sign near the hotel, which effectively blocked all access to and from the hotel and created an impression that the hotel had been closed; in the last week of March 2002, Quindoza cut the pipelines that supplied water to the hotel to the great inconvenience of respondents and the hotel guests, and, subsequently, the pipelines were reconnected. Respondents prayed for the payment of damages, for the issuance of a TRO and a writ of preliminary injunction to enjoin Quindoza from cutting or disconnecting the reconnected water pipelines to the hotel and from committing further acts of harassment; and to cause the construction of a reasonable access road at Quindoza's expense. In their Comment, respondents argue that the Republic of the Philippines was not a party to the civil case subject of this petition, hence, it has no personality to file the instant petition for review. In its Reply, petitioner argues that it has the personality to file this petition, since Administrator Quindoza is being sued for damages for certain acts he performed in an official capacity. Petitioner claims that respondent Neri's signature in the verification and certification against non-forum shopping attached to the complaint filed by respondents in the RTC was defective, since there was no proof of her authority to institute the complaint on behalf of the corporation; and that respondent Neri is not a real party-in-interest. Issue: 1) Is Neri's signature in the verification and certification against non-forum shopping attached to the complaint filed by respondents in the RTC defective, since there was no proof of her authority to institute the complaint on behalf of the corporation; and that respondent Neri is not a real party-ininterest? Is the Republic of the Philippines a party to the civil case subject of this petition even though Administrator Quindoza was the sole defendant therein and, thus, has personality to file this petition?

1)

2)

Yes. Notably, respondent Neri signed the verification/certification as one of the plaintiffs. However, we find that respondent Neri is not a real party-in- interest. A reading of the allegations in the complaint shows that the acts complained of and said to have been committed by petitioner against respondents have solely affected the hotel's operations where respondent Neri was the hotel's Managing Director and whose interest in the suit was incidental. Thus, we find that respondent Neri has no cause of action against petitioner. Consequently, the plaintiff in this case would only be respondent Coalbrine.A corporation has no power, except those expressly conferred on it by the Corporation Code and those that are implied or incidental to its existence. In turn, a corporation exercises said powers through its board of directors and/or its duly authorized officers and agents. Thus, it has been observed that the power of a corporation to sue and be sued in any court is lodged with the board of directors that exercises its corporate powers. In turn, physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of directors.In this case, respondent Coalbrine is a corporation. However, when respondent Neri filed the complaint in the RTC, there was no proof that she was authorized to sign the verification and the certification against non-forum shopping. Yes. Notably, Administrator Quindoza was sued for damages for certain acts that he allegedly committed while he was the Zone Administrator of the Bataan Export Processing Zone. Therefore, the complaint is in the nature of suit against the State, and the Republic has the personality to file the petition.

23. Carrascoso, Jr. v. CA, G.R. No. 123672, December 14, 2005Baccay

24. Sta. Monica Industrial and Development Corp. v. DAR Regional Director for Region III, G.R. No. 164846, June 18, 2008- Casimiro Facts: Trinidad is the owner of 5 parcels of agricultural land with a total area of 4.69 hectares in Iba Este, Calumpit, Bulacan. In 1976, Trinidad and Private respondent Basilio De Guzman entered leasehold contract denominated as Kasunduan ng Buwisan sa Sakahan. As an agricultural tenant De Guzman was then issued Cerficates of Land Transfer in 1981. Desiring to have an emancipation patent over the land under his tillage, De Guzman filed a petition for the issuance of patent in his name with the Office of the Regional Director of the DAR. Trinidad was given such notice for comment, but the latter filed a motion for bill of particulars. The Regional Director issued an order granting De Gruzmans Petition, placing under the coverage of Operation Land Transfer (OLT) pursuant to PD 27/Executive Order No. 228 the landholdings of Asuncion Trinidad. Trinidad file an MR. A year later Sta. Monica filed a petition for certiorari and prohibition with the CA assailing the order of the Regional Director claiming that while Trinidad was the former owner of the 83,689 square meters land, 39,547 square meters of such landholding was sold in 1986 to Petitioner with corresponding TCT issued in favor of the latter. That Sta. Monica was denied of due process when it was not furnished a notice of coverage under the CARP law. De Guzman argued that the alleged sale of the landholding is illegal due to the lack of requisite clearance from the DAR. The said clearance is required under P.D. No. 27 Tenant Emancipation Decree, which prohibits transfer of covered lands except to tenantbeneficiaries. Hence, Trinidad remained the owner of the disputed property.

2)

Ruling:

CA- dismissed Sta. Monicas Petition and held that Sta. Monica is not a real party-in-interest because it cannot be considered as an owner of the land it bought from Trinidad; that P.D. 27 prohibits such sale; even assuming, without admitting, that petitioner is the real party in interest by reason of the sale of the subject landholding in its favor, it cannot be said that petitioner was denied due process because Asuncion Trinidad is the treasurer of petitioner, there was at least constructive notice. Issue: WON the sale between Trinidad and Sta. Monica was valid. Ruling: Circumstances indicate that Trinidad has remained as the real owner of the agricultural land sold to Sta. Monica. The sale to Sta. Monica is not valid because it is prohibited under P.D. No. 27. More importantly, it must be deemed as a mere ploy to evade the applicable provisions of the agrarian law. These circumstances are: 1.)Sta. Monica is owned and controlled by Trinidad and her family. Records show that Trinidad, her husband and two sons own more than 98% capital stock, are all officers of the corporation; 2.) both Trinidad and Sta. Monica are represented by the same counsel, Atty. Ramon Gutierrez; 3.) only after an adverse decision against Trinidad that Sta. Monica suddenly filed a petition for certiorari with the CA questioning the lack of notice of coverage under the CARP law. 4.) Records show that De Guzman paid and continued to pay lease rentals to Trinidad even after she sold the land to Sta. Monica. Hence, corporate vehicle cannot be used as a shield to protect fraud or justify wrong. Thus, the veil of corporate fiction will be pierced when it is used to defeat public convenience and subvert public policy. Corporate law is resorted to by way of circling around the agrarian law. As this case illustrates, agricultural lands are being transferred, simulated or otherwise, to corporations which are fully or at least predominantly controlled by former landowners, now called stockholders. Through this strategy, it is anticipated that the corporation, by virtue of its corporate fiction, will shield the landowners from agricultural claims of tenant-farmers. The use of corporate fiction as a means to evade legal liability is not new. This scheme or device has long been perceived to be used in other fields of law, notably taxation to minimize payment of tax with varying degrees of success and acceptability. But the continued employment of the scheme in agrarian cases is not only deplorable; it is alarming. It is time to put a lid on the cap. 25. Hyatt Elevators and Escalators Corp. v. Goldstar Elevators, Phils., Inc., G.R. No. 161026, October 24, 2005- Dejesus Hyatt Elevators and Escalators Corp. v. Goldstar Elevators, Phils.,Inc G.R. No. 161026, October 24, 2005 Facts: As stated in its Articles of Incorporation, Hyatts Principal place of business is in Makati. On February 23, 1999, HYATT filed a Complaint for unfair trade practices and damages under Articles 19, 20 and 21 of the Civil Code of the Philippins angainst the respondents in Mandaluyong. The respondent filed a motion to dismiss on the ground that the venue was improperly made. The defense of the petitioner was that it had closed its Makati office and relocated to Mandaluyong City, and that respondent was well aware of those circumstances.

According to the CA, since Makati was the principal place of business of both respondent and petitioner, as stated in the latters Articles of Incorporation, that place was controlling for purposes of determining the proper venue. The fact that petitioner had abandoned its principal office in Makati years prior to the filing of the original case did not affect the venue where personal actions could be commenced and tried. Issue: WON the venue was improperly made Held: The venue was improperly made. SC said To insist that the proper venue is the actual principal office and not that stated in its Articles of Incorporation would indeed create confusion and work untold inconvenience. Enterprising litigants may, out of some ulterior motives, easily circumvent the rules on venue by the simple expedient of closing old offices and opening new ones in another place that they may find well to suit their needs. The choice of venue should not be left to the plaintiffs whim or caprice. He may be impelled by some ulterior motivation in choosing to file a case in a particular court even if not allowed by the rules on venue. 26. Professional services, Inc. v. CA, G.R. No. 126297, February 11, 2008- Del Rosario 27. Child Learning Center, Inc. v. Tngario, G.R. No. 150920,November 25, 2005 Ferreria FACTS: A tort case was filed with the Regional Trial Court of Makati by Timothy Tngorio and his parents, Basilio R. Tngorio and HerminiaTngorio against the CLC, the members of its Board of Directors, namely Spouses Edgardo and Sylvia Limon, Alfonso Cruz, Carmelo Narciso and Luningning Salvador, and the Administrative Officer of Marymount School, Ricardo Pilao,. The complaint alleged that during the school year 1990-1991, Timothy was a Grade IV student at Marymount School, an academic institution operated and maintained by Child Learning Center, Inc. (CLC). In the afternoon of March 5, 1991, between 1 and 2 p.m., Timothy entered the boys comfort room at the third floor of the Marymount building to answer the call of nature. He, however, found himself 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. When 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. ISSUE: WON there are basis to apply the legal principle of "piercing the veil of corporate entity" in resolving the issue of alleged liability of petitioners Edgardo L. Limon and Sylvia S. Limon? RULING: NO, there was no basis to pierce CLCs 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 plaintiffs 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. The evidence on record fails to show that these elements are present, especially given the fact that plaintiffs complaint had pleaded that CLC is a

corporation duly organized and existing under the laws of the Philippins 28. ABS-CBN Broadcasting Corporation v. CA, G.R. No.128690,January 21, 1999- Palaghicon FACTS: In 1990, ABS CBN and Viva executed a Film Exhibition Agreement whereby Viva gave ABS CBN an exclusive right to exhibit some Viva films. Said agreement contained a stipulation that ABS shall have the right of first refusal to the next 24 Viva films for TV telecast, provided that such right shall be exercised by ABS from the actual offer in writing. Hence, through this agreement, Viva offered ABS a list of 36 films from which ABS may exercise its right of first refusal. ABS however, through VP Concio, did not accept the list since she could only tick off 10 films. This rejection was embodied in a letter. In 1992, Viva ngain approached ABS with a list consisting of 52 original films where Viva proposed to sell these airing rights for P60M. Vivas Vic del Rosario and ABS general manager Eugenio Lopez III met at the Tamarind Grill to discuss this package proposal. What transcribed at that meeting was subject to conflicting versions. According to Lopez, he and del Rosario agreed that ABS was granted exclusive film rights to 14 films for P36M, and that this was put in writing in a napkin, signed by Lopez and given to del Rosario. On the other hand, del Rosario denied the existence of the napkin in which Lopez wrote something, and insisted that what he and Lopez discussed was Vivas film package of the 52 original films for P60M stated above, and that Lopez refused said offer, allegedly signifying his intent to send a counter proposal. When the counter proposal arrived, Vivas BoD rejected it, hence, he sold the rights to the 52 original films to RBS. Thus, ABS filed before RTC a complaint for specific performance with prayer for TROangainst RBS and Viva. RTC issued the TROaenjoining the airing of the films subject of controversy. After hearing, RTC rendered its decision in favor of RBS and Viva contending that there was no meeting of minds on the price and terms of the offer. The agreement between Lopez and del Rosario was subject to Viva BoD approval, and since this was rejected by the board, then, there was no basis for ABS demand that a contract was entered into between them. That the 1990 Agreement with the right of first refusal was already exercised by Ms.Concio when it rejected the offer, and such 1990 Agreement was an entirely new contract other than the 1992 alleged agreement at the Tamarind Grill. CA affirmed. Hence, this petition for certiorari with SC. Lopez claims that it had not fully exercised its right of first refusal over 24 films since it only chose 10. He insists that SC give credence to his testimony that he and del Rosario discussed the airing of the remaining 14 films under the right of first refusal agreement in Tamarind Grill where there was a contract written in the alleged napkin. ISSUE: Whether or not there was a perfected contract between Lopez and del Rosario.

following requisites concur: (1) consent of the contracting parties (2) object certain which is the subject of the contract (3) cause of the obligation, which is established. Contracts that are consensual in nature are perfected upon mere meeting of the minds. Once there is concurrence between the offer and the acceptance upon the subject matter, consideration, and terms of payment, a contract is produced. The offer must be certain. To convert the offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional, and without variance of any sort from the proposal. A qualified acceptance, or one that involves a new proposal, constitutes a counter offer and is a rejection of the original offer. Consequently, when something is desired which is not exactly what is proposed in the offer, such acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer annuls the offer. In the case at bar, when del Rosario met with Lopez at the Tamarind Grill, the package of 52 films was Vivas offer to enter into a new Exhibition Agreement. But ABS, through its counter proposal sent to Viva, actually made a counter offer. Clearly, there was no acceptance. The acceptance should be unqualified. When Vivas BoD rejected the counter proposal, then no contract could have been executed. Assuming arguendo that del Rosario did enter into a contract with Lopez at Tamarind Grill, this acceptance did not bind Viva since there was no proof whatsoever that del Rosario had specific authority to do so. Under the Corporation Code, unless otherwise provided by said law, corporate powers, such as the power to enter into contracts, are exercised by the BoD. However, the board may delegate such powers to either an executive committee or officials or contracted managers. The delegation, except for the executive committee, must be for specific purposes. Delegation to officers makes the latter agents of the corporation, and accordingly, the general rules of agency ad to the binding effects of their acts would apply. For such officers to be deemed fully clothed by the corporation to exercise a power of the Board, the latter must specially authorize them to do so. That del Rosario did not have the authority to accept ABS counter offer was best evidenced by his submission of the counter proposal to Vivas BoD for the latters approval. In any event, there was no meeting of the minds between del Rosario and Lopez. The contention of Lopez that their meeting in Tamarind Grill was a continuation of their right of first refusal agreement over the remaining 14 films is untenable. ABS right of first refusal had already been exercised when Ms.Concio wrote to Viva choosing only 10 out of the 36 films offered by del Rosario. It already refused the 26 films. 29. Filipinas Broadcasting Networks, Inc. v. Ago Medical and Educational Center-Bicol , G.R. No. 141994, January 17, 2005, Lantin FACTS: "Expos" is a radio documentary4 program hosted by Carmelo Mel Rima ("Rima") and Hermogenes Jun Alegre ("Alegre").5 Expos is aired every morning over DZRC-AM which is owned by Filipinas Broadcasting Network, Inc. In the morning of 14 and 15 December 1989, Rima and Alegre exposed various alleged complaints from students, teachers and parents against Ago Medical and Educational Center-Bicol Christian College of Medicine ("AMEC") and its administrators. Claiming that the broadcasts were defamatory, AMEC and Angelita Ago ("Ago"), as

HELD: NO. A contract is a meeting of minds between 2 persons whereby one binds himself to give something or to render some service to another for a consideration. There is no contract unless the

Dean of AMECs College of Medicine, filed a complaint for damages7 against FBNI, Rima and Alegre on 27 February 1990. On 18 June 1990, FBNI, Rima and Alegre filed an Answer alleging that the broadcasts against AMEC were fair and true. FBNI, Rima and Alegre claimed that they were plainly impelled by a sense of public duty to report the "goings-on in AMEC, [which is] an institution imbued with public interest." The trial ensued and the latter found FBNI and Alegre liable for libel except Rima.The parties appealed to the Court of Appeals and the latter affirmed the trial courts judgment with modification. It made Rima solidarily liable with FBNI and Alegre. FBNI, Rima and ALegre filed a motion for reconsideration but was denied by the Court of Appeals. Hence, on petition. ISSUES: I. WHETHER THE BROADCASTS ARE LIBELOUS; II. WHETHER AMEC IS ENTITLED TO MORAL DAMAGES; III. WHETHER THE AWARD OF ATTORNEYS FEES IS PROPER; and IV. WHETHER FBNI IS SOLIDARILY LIABLE WITH RIMA AND ALEGRE FOR PAYMENT OF MORAL DAMAGES, ATTORNEYS FEES AND COSTS OF SUIT. RULING:

3. No. AMEC failed to justify satisfactorily its claim for

attorneys fees. AMEC did not adduce evidence to warrant the award of attorneys fees. Moreover, both the trial and appellate courts failed to explicitly state in their respective decisions the rationale for the award of attorneys fees. The power of the court to award attorneys fees under Article 2208 off the Civil Code demands factual, legal and equitable justification, without which the award is a conclusion without a premise, its basis being improperly left to speculation and conjecture.

4. Yes. The basis of the present action is a tort. Joint tort

feasors are jointly and severally liable for the tort which they commit.52 Joint tort feasors are all the persons who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it is done, if done for their benefit. As operator of DZRC-AM and employer of Rima and Alegre, FBNI is solidarily liable to pay for damages arising from the libelous broadcasts. As stated by the Court of Appeals, "recovery for defamatory statements published by radio or television may be had from the owner of the station, a licensee, the operator of the station, or a person who procures, or participates in, the making of the defamatory statements." In this case, Rima and Alegre were clearly performing their official duties as hosts of FBNIs radio program Expos when they aired the broadcasts. FBNI neither alleged nor proved that Rima and Alegre went beyond the scope of their work at that time. Moreover, there is insufficient evidence on record that FBNI exercised due diligence in the selection andsupervision of its employees, particularly Rima and Alegre. FBNI merely showed that it exercised diligence in theselection of its broadcasters without introducing any evidence to prove that it observed the same diligence in thesupervision of Rima and Alegre.

1. Yes. A libel23 is a public and malicious imputation of a

crime, or of a vice or defect, real or imaginary, or any act or omission, condition, status, or circumstance tending to cause the dishonor, discredit, or contempt of a natural or juridical person, or to blacken the memory of one who is dead. FBNI claims that Rima and Alegre were plainly impelled by their civic duty to air the students gripes. FBNI alleges that there is no evidence that ill will or spite motivated Rima and Alegre in making the broadcasts. FBNI further points out that Rima and Alegre exerted efforts to obtain AMECs side and gave Ago the opportunity to defend AMEC and its administrators. Every defamatory imputation is presumed malicious. Rima and Alegre failed to show adequately their good intention and justifiable motive in airing the supposed gripes of the students. As hosts of a documentary or public affairs program, Rima and Alegre should have presented the public issues "free from inaccurate and misleading information.

30. Manila Electric Co. v. T.E.A.M. Corp., G.R. No. 131723,December 13, 2007- Lofranco FACTS: Petitioner, MERALCO, and T.E.A.M. Electronics Corp. (TEC) were parties to two (2) contracts denominated as Agreements for the Sale of Electric Energy. Under the aforesaid agreements, petitioner undertook to supply TEC's building. During the lifetime of the contract, inspectors of petitioner conducted a surprise inspection of the electric meters of respondent. The two meters were found to be allegedly tampered with and did not register the actual power consumption in the two buildings (DCIM and NS). Hence, MERALCO demanded the payment of Php 7M+ representing TECs unregistered consumption; However, respondent failed to pay, thus, MERALCO disconnected the electricity supply to the building. TEC demanded from petitioner the reconnection of electrical service, claiming that it had nothing to do with the alleged tampering but the latter refused to heed the demand. TEC filed a complaint for damages before the RTC. The trial court found the evidence of petitioner insufficient to prove that TEC was guilty of tampering the meter installations [RTC ordered reimbursement from MERALCO + actual damages and 500K moral damages]. On appeal, the appellate court agreed with the RTC's conclusion. In addition, it considered petitioner negligent for failing to discover the alleged defects in the electric meters; in belatedly notifying respondents of the results of the inspection; and in disconnecting the electric power without prior notice. Hence, petition for review on certiorari.

2. Yes. A juridical person is generally not entitled to moral

damages because, unlike a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety,mental anguish or moral shock. AMECs claim for moral damages falls under item 7 of Article 221943 of the Civil Code. This provision expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. Article 2219(7) does not qualify whether the plaintiff is a natural or juridical person. Therefore, a juridical person such as a corporation can validly complain for libel or any other form of defamation and claim for moral damages.

ISSUE/S:

CCCC in the aggregate principal sum of not exceeding P300,000.00. Thereafter, or on 29 March 1979, Raymundo Crystal executed a promissory note for the amount of P300,000.00, also in favor of BPIButuan. Whether or not MERALCO was able to provide sufficient evidence regarding the tampering of TEC of its electric meter; whether the disconnection conducted was proper; and whether the award of moral damages is valid. - August 1979, CCCC renewed a previous loan, this time from BPI, Cebu City branch (BPI-Cebu City). The renewal was evidenced by a promissory note7 dated 13 August 1979, signed by the spouses in their personal capacities and as managing partners of CCCC. The promissory note states that the spouses are jointly and severally liable with CCCC. It appears that before the original loan could be granted, BPI-Cebu City required CCCC to put up a security. - CCCC had no real property to offer as security for the loan; hence, the spouses executed a real estate mortgage over their own real property on 22 September 1977. On 3 October 1977, they executed another real estate mortgage over the same lot in favor of BPI-Cebu City, to secure an additional loan of P20,000.00 of CCCC. -CCCC failed to pay its loans to both BPI-Butuan and BPI-Cebu City when they became due. CCCC, as well as the spouses, failed to pay their obligations despite demands. Thus, BPI resorted to the foreclosure of the chattel mortgage and the real estate mortgage. The foreclosure sale on the chattel mortgage was initially stalled with the issuance of a restraining order against BPI.However, following BPIs compliance with the necessary requisites of extrajudicial foreclosure, the foreclosure sale on the chattel mortgage was consummated on 28 February 1988, with the proceeds amounting to P240,000.00 applied to the loan from BPI-Butuan which had then reached P707,393.90.Meanwhile, on 7 July 1981, Insular Bank of Asia and America (IBAA), through its Vice-President for Legal and Corporate Affairs, offered to buy the lot subject of the two (2) real estate mortgages and to pay directly the spouses indebtedness in exchange for the release of the mortgages. BPI rejected IBAAs offer to pay -BPI filed a complaint for sum of money against CCCC and the spouses before the Regional Trial Court of Butuan City (RTC Butuan), seeking to recover the deficiency of the loan of CCCC and the spouses with BPI-Butuan. RTC

HELD:

(1) No. The SC is not a trier of facts and may not re-examine and weigh anew the respective evidence of the parties. Factual findings of the trial court, especially those affirmed by the Court of Appeals, are binding on this Court. However, for the sake of argument, the allegation of MERALCO was not proven, considering that the meters therein were enclosed in a metal cabinet. The metal seal of which was unbroken, with petitioner having sole access to the said meters. (2) No. The disconnection was made without prior notice. While it is true that petitioner sent a demand letter to TEC for the payment of differential billing, it did not include any notice that the electric supply would be disconnected. (3) No. The award of moral damages is improper. TEC's claim was premised allegedly on the damage to its goodwill and reputation. The records are bereft of any evidence that the name or reputation of TEC/TPC has been debased as a result of petitioner's acts. Besides, the trial court simply awarded moral damages in the dispositive portion of its decision without stating the basis thereof. DOCTRINE/S:

Award of moral damages; Generally, a corporation is not entitled. As a rule, a corporation is not entitled to moral damages because, not being a natural person, it cannot experience physical suffering or sentiments like wounded feelings, serious anxiety, mental anguish and moral shock. The only exception to this rule is when the corporation has a reputation that is debased, resulting in its humiliation in the business realm. But in such a case, it is imperative for the claimant to present proof to justify the award. It is essential to prove the existence of the factual basis of the damage and its causal relation to petitioner's acts.

-The trial court ruled in favor of BPI. Pursuant to the decision, BPI instituted extrajudicial foreclosure of the spouses mortgaged property

On 10 April 1985 - the spouses filed an action for Injunction With Damages, With A Prayer For A Restraining Order and/ or Writ of Preliminary Injunction. The spouses claimed that the foreclosure of the real estate mortgages is illegal because BPI should have exhausted CCCCs properties first, stressing that they are mere guarantors of the renewed loans.
-

SC RULING: The Supreme Court DENIED the petition. Decision of the CA was AFFIRMED with MODIFICATIONS DELETING the award of MORAL DAMAGES. 31. Crystal v. BPI, G.R. No. 172428, November 28, 2008- Loretcha FACTS: - 28 March 1978, spouses Raymundo and Desamparados Crystal obtained a P300,000.00 loan in behalf of the Cebu Contractors Consortium Co. (CCCC) from the Bank of the Philippine IslandsButuan branch (BPI-Butuan). The loan was secured by a chattel mortgage on heavy equipment and machinery of CCCC. On the same date, the spouses executed in favor of BPI-Butuan a Continuing Suretyshipwhere they bound themselves as surety of

-also prayed that they be awarded moral and exemplary damages, attorneys fees, litigation expenses and cost of suit. Subsequently, the spouses filed an amended complaint,additionally alleging that CCCC had opened and maintained a foreign currency savings account (FCSA-197) with bpi, Makati branch (BPI-Makati), and that said FCSA was used as security for a P450,000.00 loan also extended by BPI-Makati. The P450,000.00 loan was allegedly paid, and thereafter the spouses demanded the return of the FCSA passbook. BPI rejected the demand; thus, the spouses were unable to withdraw from the said account to pay for their other obligations to BPI.

- trial court dismissed the spouses complaint and ordered them to pay moral and exemplary damages and attorneys fees to BPI. It ruled that since the spouses agreed to bind themselves jointly and severally, they are solidarily liable for the loans; hence, BPI can validly foreclose the two real estate mortgages. Moreover, being guarantors-mortgagors, the spouses are not entitled to the benefit of exhaustion. Anent the FCSA, the trial court found that CCCC originally had FCDU SA No. 197 with BPI, Dewey Boulevard branch, which was transferred to BPI-Makati as FCDU SA 76/0035, at the request of Desamparados Crystal. FCDU SA 76/0035 was thus closed, but Desamparados Crystal failed to surrender the passbook because it was lost. The transferred FCSA in BPI-Makati was the one used as security for CCCCs P450,000.00 loan from BPI-Makati. CCCC was no longer allowed to withdraw from FCDU SA No. 197 because it was already closed. CA: - appealed the decision of the trial court -Dismissed -MR also denied

designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. The spouses complaint against BPI proved to be unfounded, but it does not automatically entitle BPI to moral damages. Although the institution of a clearly unfounded civil suit can at times be a legal justification for an award of attorney's fees, such filing, however, has almost invariably been held not to be a ground for an award of moral damages. The rationale for the rule is that the law could not have meant to impose a penalty on the right to litigate. Otherwise, moral damages must every time be awarded in favor of the prevailing defendant against an unsuccessful plaintiff. BPI may have been inconvenienced by the suit, but we do not see how it could have possibly suffered besmirched reputation on account of the single suit alone. Hence, the award of moral damages should be deleted. The awards of exemplary damages and attorneys fees, however, are proper. Exemplary damages, on the other hand, are imposed by way of example or correction for the public good, when the party to a contract acts in a wanton, fraudulent, oppressive or malevolent manner, while attorneys fees are allowed when exemplary damages are awarded and when the party to a suit is compelled to incur expenses to protect his interest. The spouses instituted their complaint against BPI notwithstanding the fact that they were the ones who failed to pay their obligations. Consequently, BPI was forced to litigate and defend its interest. For these reasons, BPI is entitled to the awards of exemplary damages and attorneys fees. WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals dated 24 October 2005 and 31 March 2006, respectively, are hereby AFFIRMED, with the MODIFICATION that the award of moral damages to Bank of the Philippine Islands is DELETED.

ISSUE: Whether or not the Court of Appeals erred in awarding moral damages to BPI, which is a corporation, as well as exemplary damages, attorneys fees and expenses of litigation HELD: BPI not entitled to moral damages. -. A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock.The Court of Appeals found BPI as "being famous and having gained its familiarity and respect not only in the Philippines but also in the whole world because of its good will and good reputation must protect and defend the same against any unwarranted suit such as the case at bench." In holding that BPI is entitled to moral damages, the Court of Appeals relied on the case of People v. Manero, wherein the Court ruled that "[i]t is only when a juridical person has a good reputation that is debased, resulting in social humiliation, that moral damages may be awarded." We do not agree with the Court of Appeals. A statement similar to that made by the Court in Manero can be found in the case of Mambulao Lumber Co. v. PNB, et al., thus: x xx Obviously, an artificial person like herein appellant corporation cannot experience physical sufferings, mental anguish, fright, serious anxiety, wounded feelings, moral shock or social humiliation which are basis of moral damages. A corporation may have good reputation which, if besmirched may also be a ground for the award of moral damages. x xx (Emphasis supplied) Nevertheless, in the more recent cases of ABS-CBN Corp. v. Court of Appeals, et al.,andFilipinas Broadcasting Network, Inc. v. Ago Medical and Educational Center-Bicol Christian College of Medicine (AMEC-BCCM), the Court held that the statements in Manero and Mambulao were mere obiter dicta, implying that the award of moral damages to corporations is not a hard and fast rule. Indeed, while the Court may allow the grant of moral damages to corporations, it is not automatically granted; there must still be proof of the existence of the factual basis of the damage and its causal relation to the defendants acts. This is so because moral damages, though incapable of pecuniary estimation, are in the category of an award