PALAY, INC. VS.

CLAVE
Jerold I. Saddi

SPLAWBUS 34

NATURE
Petition questioning the decision of PEA Jacobo Clave. Ordering the petioner to pay jointly and severally the amount of Php 13, 722.50 and 12% per annum.

FACTS :
March 28, 1965 Palay, Inc. executed a contract to sell a parcel of land to Nazario Dumpit (respondent) Terms: Selling Price: 23,300.00 Downpayment: 4,660.00 Interest: 9% / annum Monthly Installment: 246.42

December 5, 1967 last payment made by respondent for installments up to September 1967. May 10, 1973 private respondent wrote petitioner offering to update all his overdue accounts with interest, and seeking its written consent to the assignment of his rights to a certain Lourdes Dizon. June 20, 1973 - petitioners informed respondent that his Contract to Sell had long been rescinded pursuant to paragraph 6 of the contract, and that the lot had already been resold.

Contract Provides
automatic extrajudicial rescission upon default in payment of any monthly installment after the lapse of 90 days from the expiration of the grace period of one month, without need of notice and with forfeiture of all installments paid.

Respondent Dumpit filed a letter of complaint to the NHA questioning the validity of the rescission contract. July 10, 1979 NHA said the rescission is void in the absence of judicial or notarial demand. ordered Palay, Inc to refund/pay jointly and severally the amount paid of the respondent with 12% interest from the filling of the complaint. October 23, 1979 Motion for Reconsideration was denied by NHA.

Issues:
(1) Whether or not the doctrine of piercing the veil of corporate fiction applies.
(2) Whether or not petitioner Onstott is solidarily liable with Palay, Inc. for the refund. (3) Whether notice or demand is not mandatory under the circumstances and therefore, may be dispensed w/ by the stipulation in a contract to sell. (4) Whether respondents Presidential Executive Assistant committed grave abuse of discretion in upholding the decision of respondent.

Held:
(1)No. The SC held that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related.

(1)No. The SC held that no sufficient proof exists on record that said petitioner used the corporation to defraud private respondent.

Ruling:
Questioned resolution of PEA is modified. Palay, Inc. is directed to refund the amount of 13, 272.50 to Nazario Dumpit with interest of 12% per annum from Nov. 8, 1974.

PALAY, INC. VS. CLAVE

Jerold I. Saddi

SPLAWBUS 34