[G.R. No. L-18216. October 30, 1962.

]
1. STOCKHOLDERS OF F. GUANZON AND SONS, INC., petitioners-appellants, vs.
REGISTER OF DEEDS OF MANILA,

FACTS:
5 stockholders of the F. Guanzon and Sons, Inc. executed a certificate of
liquidation of the assets of the corporation and adopting that in dissolving the
corporation, they have distributed among themselves in proportion to their
shareholdings, as liquidating dividends, the assets of said corporation, including
real properties located in Manila. The certificate of liquidation, when presented to
the Register of Deeds of Manila, was denied registration on the grounds, inter
alia, that the number of parcels not certified to in the acknowledgment. Appellants
contend that the certificate of liquidation is not a conveyance or transfer but
merely a distribution of the assets of the corporation which has ceased to exist
for having been dissolved. Not being a conveyance the certificate need not
contain a statement of the numbers of parcels of land involved in the distribution
in the acknowledgment appearing therein.
The Commissioner of Land Registration, however, concurred in the view
expressed by the register of deeds to the effect that the certificate of liquidation in
question, though it involves a distribution of the corporation's assets, in the last
analysis represents a transfer of said assets from the corporation to the
stockholders. Hence, in substance it is a transfer or conveyance.

ISSUE: Whether liquidation is a transfer and/or conveyance

RULING: YES. A share of stock only typifies an aliquot part of the corporation's
property, or the right to share in its proceeds to that extent when distributed
according to law and equity, but its holder is not the owner of any part of the
capital of the corporation. Nor is he entitled to the possession of any definite
portion of its property or assets. The stockholder is not a co-owner or tenant in
common of the corporate property.
On the basis of the foregoing authorities, it is clear that the act of liquidation
made by the stockholders of the F. Guanzon and Sons, Inc. of the latter's assets
is not and cannot be considered a partition of community property, but rather a
transfer or conveyance of the title of its assets to the individual stockholders.
Indeed, since the purpose of the liquidation, as well as the distribution of the
assets of the corporation, is to transfer their title from the corporation to the
stockholders in proportion to their shareholdings, — and this is in effect the
purpose which they seek to obtain from the Register of Deeds of Manila, — that
transfer cannot be effected without the corresponding deed of conveyance from
the corporation to the stockholders. It is, therefore, fair and logical to consider the
certificate of liquidation as one in the nature of a transfer or conveyance.

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

HONORABLE COURT OF APPEALS and ALBERTO V. ARELLANO,
respondents.
CRUZ

FACTS:
Filipinas Orient Airways was organized on the basis of the project study with the
petitioners Fermin and Rosa Caram as major stockholders and, together with
Barretto and Garcia, as principal officers. The said project study was made by
private respondent Alberto Arellano along with his technical services. For such
service, Arellano filed a complaint against petitioners.
The trial court ruled in favor of Arellano. However, petitioners contends that they
are only mere subsequent investors in the corporation that was later created and
thus should not be held solidarily liable with the Filipinas Orient Airways.

ISSUE: Whether or not petitioners should be held personally liable despite being
mere investors.

RULING:
NO. The Court held that petitioners were not really involved in the initial steps
that finally led to the incorporation of the Filipinas Orient Airways. The petitioners
were merely among the financiers whose interest was to be invited and who were
in fact persuaded, on the strength of the project study, to invest in the proposed
airline.
Significantly, there was no showing that the Filipinas Orient Airways was a
fictitious corporation and did not have a separate juridical personality, to justify
making the petitioners, as principal stockholders thereof, responsible for its
obligations. As abona fide corporation, the Filipinas Orient Airways should alone
be liable for its corporate acts as duly authorized by its officers and directors.
[G.R. No. L-56076. September 21, 1983.]
3. PALAY, INC. and ALBERT ONSTOTT, petitioner, vs. JACOBO C. CLAVE,
Presidential Executive Assistant, NATIONAL HOUSING AUTHORITY and
NAZARIO DUMPIT, respondents.
MELENCIO-HERRERA, J

FACTS:
Petitioner Palay, Inc., through its President, Albert Onstott, executed in favor of
private respondent, Nazario Dumpit, a Contract to Sell a parcel of Land owned by
said corporation. The contract provided for 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. Dumpit only paid a total of P13,722.50. 6
years later Dumpit offered to update all his overdue accounts with interest, and
seeking its written consent to the assignment of his rights to a certain Lourdes
Dizon. However, petitioner 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.
Dumpit then filed a complaint for reconveyance with the National Housing
Authority (NHA) or refund. NHA found that the automatic rescission of the
contract is void in the absence of either judicial or notarial demand. It ordered
Palay, Inc. and Alberto Onstott, to refund immediately to Nazario Dumpit the
payment he made. On appeal to the Office of the President respondent
Presidential Executive Assistant affirmed the decision of the NHA.
ISSUE: Whether the doctrine of piercing the veil of corporate fiction has application to
the case at bar.

RULING: NO. The court held that there were no badges of fraud on petitioners
part. They had literally relied, albeit mistakenly, on paragraph 6 of its contract
with private respondent when it rescinded the contract to sell extrajudicially and
had sold it to a third person.
In this case, petitioner Onstott was made liable because he was then the
President of the corporation and he appeared to be the controlling stockholder.
No sufficient proof exists on record that said petitioner used the corporation to
defraud private respondent. He cannot, therefore, be made personally liable just
because he "appears to be the controlling stockholder". 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.

[G.R. No. L-5081. February 24, 1954.]

4. MARVEL BUILDING CORPORATION, ET AL., plaintiffs-appellees, vs.
SATURNINO DAVID, in his capacity as Collector, Bureau of Internal Revenue,
defendant-appellant.
LABRADOR, J:

FACTS:
The action was brought by plaintiffs as stockholders of the Marvel Building
Corporation to enjoin the defendant Collector of Internal Revenue from selling at
public auction various properties described in the complaint, including three
parcels of land, with the buildings situated thereon, known as the Aguinaldo
Building, the Wise Building, and the Dewey Boulevard-Padre Faura Mansion, all
registered in the name of said corporation. Said properties were seized and
distrained by defendant to collect war profits taxes assessed against plaintiff
Maria B. Castro (Exhibit B). Plaintiffs allege that the said three properties (lands
and buildings) belong to the Marvel Building corporation and not to Maria B.
Castro, while the defendant claims that Maria B. Castro is the true and sole
owner of all the subscribed stock of the Marvel Building Corporation, including
those appearing to have been subscribed and paid for by the other members,
and consequently said Maria B. Castro is also the true and exclusive owner of
the properties seized. The trial court held that the evidence, which is mostly
circumstantial, fails to show to its satisfaction that Maria B. Castro is the true
owner of all the stock certificates of the corporation, because the evidence is
susceptible of two interpretations and an interpretation may not be made which
would deprive one of property without due process of law.

ISSUE: Whether Maria B. Castro is the sole and exclusive owner of all the
shares of stock of the Marvel Building Corporation.
RULING: YES. The existence of endorsed certificates, discovered by the internal
revenue agents between 1943 and 1949 in the possession of the Secretary-
Treasurer, the fact that twenty-five certificates were signed by the president of
the corporation, for no justifiable reason, the fact that two sets of certificates were
issued, the undisputed fact that Maria B. Castro had made enormous profits and,
therefore, had a motive to hide them to evade the payment of taxes, the fact that
the other subscribers had no incomes of sufficient magnitude to justify their big
subscriptions, the fact that the subscriptions were not receipted for and deposited
by the treasurer in the name of the corporation but were kept by Maria B. Castro
herself, the fact that the stockholders or the directors never appeared to have
ever met to discuss the business of the corporation, the fact that Maria B. Castro
advanced big sums of money to the corporation without any previous
arrangement or accounting, and the fact that the books of accounts were kept as
if they belonged to Maria B. Castro alone — these facts are of patent and potent
significance.
Maria B. Castro would not have asked them to endorse their stock certificates,
or be keeping these in her possession, if they were really the owners. They
never would have consented that Maria B. Castro keep the funds without
receipts or accounting, nor that she manages the business without their
knowledge or concurrence, were they owners of the stocks in their own rights.
Each and every one of the facts all set forth above, in the same manner, is
inconsistent with the claim that the stockholders, other than Maria B. Castro,
owned their shares in their own right. On the other hand, each and every one of
them, and all of them, can point to no other conclusion than that Maria B.
Castro was the sole and exclusive owner of the shares and that they were only
her dummies.

[G.R. No. L-15121. August 31, 1962.]

5. GREGORIO PALACIO, in his own behalf and in behalf of his minor child
MARIO PALACIO, plaintiffs-appellants, vs. FELY TRANSPORTATION
COMPANY, defendant-appellee.
REGALA, J  : p

Gregorio Palacio’s son, Mario Palacio was run over by Alfredo Carillo, driver hired
by Fely Transportation. For the expenses incurred petitioner filed a complaint for
damages against Fely Transportation. Respondent filed a motion to dismiss on the
ground that Alfredo Carillo had been convicted of the said crime long before Felt
Transportation bought the vehicle used in the accident. The trial court then dismissed
the case due to it being barred by prior judgment in the criminal case.
Petitioner for his part contends that the defendant corporation should be made
subsidiarily liable for damages in the criminal case because the sale to it of the
jeep in question, after the conviction of Alfredo Carillo was merely an attempt on
the part of Isabelo Calingasan, its president and general manager, to evade his
subsidiary civil liability.

ISSUE: Whether or not Fely Transportation should be held liable for damages.

RULING: YES. The Court agrees with the contention of the plaintiffs. Isabelo
Calingasan and defendant Fely Transportation may be regarded as one and the
same person. It is evident that Isabelo Calingasan's main purpose in forming the
corporation was to evade his subsidiary civil liability resulting from the conviction
of his driver, Alfredo Carillo. This conclusion is borne out by the fact that the
incorporators of the Fely Transportation are Isabelo Calingasan, his wife, his son,
Dr. Calingasan, and his two daughters. We believe that this is one case where
the defendant corporation should not be heard to say that it has a personality
separate and distinct from its members when to allow it to do so would be to
sanction the use of the fiction of corporate entity as a shield to further an end
subversive of justice. Furthermore, the failure of the defendant corporation to
prove that it has other property than the jeep (AC-687) strengthens the conviction
that its formation was for the purpose above indicated.
Accordingly, defendants Fely Transportation and Isabelo Calingasan should be
held subsidiarily liable for P500.00 which Alfredo Carillo was ordered to pay in
the criminal case and which amount he could not pay on account of insolvency.

[G.R. No. L-41337. June 30, 1988.]

6. TAN BOON BEE & CO., INC., petitioner, vs. THE HONORABLE HILARION U.
JARENCIO, PRESIDING JUDGE OF BRANCH XXIII of the Court of First
Instance of Manila, GRAPHIC PUBLISHING, INC., and PHILIPPINE AMERICAN
DRUG COMPANY, respondents
PARAS, J p:

FACTS:
Petitioner under the name and style of Anchor Supply Co., sold on credit to
herein private respondent Graphic Publishing, Inc. paper products amounting to
P55,214.73. A promissory note was executed to cover the balance of
P30,365.99. For failure to pay any installment, petitioner filed a complaint for a
Sum of Money against graphic. Due to Graphic’s failure to file an answer the
court declared the former as in default and after trial a writ of execution against
graphic was issued by the court. The executing sheriff levied upon one (1) unit
printing machine identified as "Original Heidelberg Cylinder Press" Type H 222,
NR 78048, found in the premises of GRAPHIC. Philippine American Drug
Company (PADCO for short) had informed the sheriff that the printing machine is
its property and not that of GRAPHIC and to cease and desist from carrying out
the scheduled auction sale. Notwithstanding the said letter, the sheriff proceeded
with the scheduled auction sale, sold the property to the petitioner, it being the
highest bidder, and issued a Certificate of Sale in favor of petitioner.

ISSUE: Whether PADCO’s identity should be pierced as it clearly shows that

PADCO was conveniently shielding under the theory of corporate fiction.

RULING: YES. The Court held that petitioner's 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. Petitioner likewise stressed that PADCO's own
evidence shows that the printing machine in question had been in the premises
of GRAPHIC since May, 1965, long before PADCO even acquired its alleged title
on July 11, 1966 from Capitol Publishing. That the said machine was allegedly
leased by PADCO to GRAPHIC on January 24, 1966, even before PADCO
purchased it from Capital Publishing on July 11, 1966, 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.

[G.R. No. 96490. February 3, 1992.]

7. INDOPHIL TEXTILE MILL WORKERS UNION-PTGWO, petitioner, vs.
VOLUNTARY ARBITRATOR TEODORICO P. CALICA AND INDOPHIL
TEXTILE MILLS, INC., respondents.
||| MEDIALDEA, J p:

FACTS:
Petitioner Indophil Textile Mill Workers Union-PTGWO is a legitimate labor
organization duly registered with the Department of Labor and Employment and
the exclusive bargaining agent of all the rank-and-file employees of Indophil
Textile Mills, Incorporated. When Indophil Acrylic Manufacturing Corporation
was formed and later on its employees formed its union, petitioner union
claimed that the plant facilities built and set up by Acrylic should be considered
as an extension or expansion of the facilities of private respondent Company
and thus Acrylic is part of the Indophil bargaining unit. The contention was
opposed by Indophil Textile Mills.
Petitioner union contends that the articles of incorporation of the two
corporations establish that the two entities are engaged in the same kind of
business and that they have practically the same incorporators, directors and
officers.
Public respondent ruled that the CBA does not extend to the employees of Acrylic
as an extension or expansion of Indophil Textile Mills, Inc.

ISSUE: Whether or not Indophil Acrylic Manufacturing Corporation is a separate

and distinct entity from respondent Indophil Textile Mill for purposes of union
representation.

RULING: YES. The Court held that the fact that the businesses of private
respondent and Acrylic are related, that some of the employees of the private
respondent are the same persons manning and providing for auxiliary services
to the units of Acrylic, and that the physical plants, offices and facilities are
situated in the same compound, it is our considered opinion that these facts are
not sufficient to justify the piercing of the corporate veil of Acrylic.
The legal corporate entity is disregarded only if it is sought to hold the officers
and stockholders directly liable for a corporate debt or obligation. In the instant
case, petitioner does not seek to impose a claim against the members of the
Acrylic.
 [G.R. No. 101897. March 5, 1993.]
8. LYCEUM OF THE PHILIPPINES, INC., petitioner, vs. COURT OF APPEALS
FELICIANO, J  : p

FACTS:
Petitioner instituted a proceeding to compel private respondents, which
are also educational institutions, to delete the word "Lyceum" from their
corporate names and permanently to enjoin them from using "Lyceum" as part
of their respective names. The SEC hearing officer sustained petitioner's claim
to an exclusive right to use the word "Lyceum." On appeal, the SEC En Banc,
reversed and did not consider the word "Lyceum" to have become so identified
with petitioner as to render use thereof by other institutions as productive of
confusion about the identity of the schools concerned in the mind of the general
public. It held that the attaching of geographical names to the word "Lyceum"
served sufficiently to distinguish the schools from one another, especially in
view of the fact that the campuses of petitioner and those of the private
respondents were physically quite remote from each other. Petitioner then went
on appeal to the Court of Appeals. In its Decision dated 28 June 1991,
however, the Court of Appeals affirmed the questioned Orders of the SEC En
Banc.

ISSUE: Whether the word Lyceum as a generic word cannot be appropriated by the
petitioner to the exclusion of others

RULING: YES. The Court ruled that the policy underlying the prohibition in
Section 18 against the registration of a corporate name which is "identical or
deceptively or confusingly similar" to that of any existing corporation or which
is "patently deceptive" or "patently confusing" or "contrary to existing laws," is
the avoidance of fraud upon the public which would have occasion to deal
with the entity concerned, the evasion of legal obligations and duties, and the
reduction of difficulties of administration and supervision over corporations. 
We do not consider that the corporate names of private respondent
institutions are "identical with, or deceptively or confusingly similar" to that of
the petitioner institution. True enough, the corporate names of private
respondent entities all carry the word "Lyceum" but confusion and deception
are effectively precluded by the appending of geographic names to the word
"Lyceum." Since "Lyceum" or "Liceo" denotes a school or institution of
learning, it is not unnatural to use this word to designate an entity which is
organized and operating as an educational institution.
G.R. No. L-30822. July 31, 1975.]
9. EDUARDO CLAPAROLS, ROMULO AGSAM and/or CLAPAROLS STEEL
AND NAIL PLANT, petitioners, vs.COURT OF INDUSTRIAL RELATIONS,
ALLIED WORKERS' ASSOCIATION and/or DEMETRIO GARLITOS, ALFREDO
ONGSUCO, JORGE SEMILLANO, SALVADOR DOROTEO, ROSENDO
ESPINOSA, LUDOVICO BALOPENOS, ASER AMANCIO, MAXIMO QUIOYO,
GAUDENCIO QUIOYO, and IGNACIO QUIOYO,respondents.
MAKASIAR, J p:

Found guilty of union busting and of illegally dismissing the respondent

workers, petitioners were ordered to reinstate the former with backwages from
date of dismissal to reinstatement. Petitioners opposed the execution of the
judgment as well as the order directing the court examiner to compute the
bonuses aside from backwages. They contended that the company had
ceased to operate and, therefore, pursuant to Sta. Cecilia Sawmills v. CIR (L-
19273, Feb. 20, 1964), the workers, assuming they are entitled to backwages,
should only be limited to three-months' pay. Respondent workers, however,
contended that the Claparols Steel and Nail Plant and Claparols Steel and
Nail Corporation are one and the same corporation controlled by the same
stockholders. The Court of Industrial Relations denied the opposition, and on
appeal, the Supreme Court sustained the industrial court.

ISSUE: Whether the the ruling in the Sta. Cecilia Sawmills should apply to the
instant case.

RULING: NO. The Court held that the ruling in the Sta. Cecilia Sawmills
case wherein the recoverable back wages were limited to only three (3)
months: because as in the Sta. Cecilia Sawmills case, the Claparols Steel and
Nail Plant ceased operations due to enormous business reverses should not
apply.
 Indeed the Claparols Steel and Nail Plant, which ceased operation was
SUCCEEDED by the Claparols Steel Corporation, when the latter finally
ceased to operate, were not disputed by petitioners. It is very clear that the
latter corporation was a continuation and successor of the first entity, and its
emergence was skillfully timed to avoid the financial liability that already
attached to its predecessor, the Claparols Steel and Nail Plant. Both
predecessors and successor were owned and controlled by petitioner
Eduardo Claparols and there was no break in the succession and continuity of
the same business. This "avoiding-the-liability" scheme is very patent,
considering that 90% of the subscribed shares of stocks of the Claparols Steel
Corporation (the second corporation) was owned by respondent (herein
petitioner) Claparols himself, and all the assets of the dissolved Claparols
Steel and Nail Plant were turned over to the emerging Claparols Steel
Corporation. It is very obvious that the second corporation seeks the
protective shield of a corporate fiction whose veil in the present case could,
and should, be pierced as it was deliberately and maliciously designed to
evade its financial obligation to its employees.

[G.R. No. 160039. June 29, 2004.]

10. RAYMUNDO ODANI SECOSA, EL BUENASENSO SY and DASSAD
WAREHOUSING and PORT SERVICES, INCORPORATED, petitioners, vs.
HEIRS OF ERWIN SUAREZ FRANCISCO
YNARES-SANTIAGO, J

FACTS:
Erwin Francisco was riding his motorcycle when he was ran over by the
cargo truck driven by Odani Secosa resulting to the instantaneous death of the
former. The truck was owned by petitioner, Dassad Warehousing and Port
Services, Inc. An action for damages was filed by the parents of Erwin against
Secosa, Dassad Warehousing and Port Services, Inc. and Dassad’s president, El
Buenasucenso Sy. The trial court ruled in favor of herein respondents. On
appeal, the CA affirmed the decision.

ISSUE: Whether Dassad’s president, El Buenasucenso Sy should be held

solidarily liable with the corporation.
 RULING; NO. The Court ruled that El Buenasenso Sy cannot be held
solidarily liable with his co-petitioners. While it may be true that Sy is the
president of petitioner Dassad Warehousing and Port Services, Inc., such fact is
not by itself sufficient to hold him solidarily liable for the liabilities adjudged
against his co-petitioners.
The so-called veil of corporation fiction treats as separate and distinct the affairs
of a corporation and its officers and stockholders. As a general rule, a
corporation will be looked upon as a legal entity, unless and until sufficient
reason to the contrary appears. When the notion of legal entity is used to defeat
public convenience, justify wrong, protect fraud, or defend crime, the law will
regard the corporation as an association of persons. For the separate juridical
personality of a corporation to be disregarded, the wrongdoing must be clearly
and convincingly established. 20 It cannot be presumed. 

[G.R. No. 97212. June 30, 1993.]

11. BENJAMIN YU, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION and JADE MOUNTAIN PRODUCTS COMPANY LIMITED, WILLY
CO, RHODORA D. BENDAL, LEA BENDAL, CHIU SHIAN JENG and CHEN HO-
FU,respondents.
FELICIANO, J p:

FACTS:
Petitioner Benjamin Yu was formerly the Assistant General Manager of the
marble quarrying and export business operated by a registered partnership with
the firm name of "Jade Mountain Products Company Limited". The partnership
was originally organized with Lea Bendal and Rhodora Bendal as general
partners. Yu alleged that he only received half of his stipulated monthly salary,
since he had accepted the promise of the partners that the balance would be
paid when the firm shall have secured additional operating funds from abroad.
Subsequently, when the partnership was acquired by Willy Co and Emmanuel
Zapanta, Yu was terminated from service and his unpaid salaries remained
unpaid. Yu then filed a complaint for illegal dismissal and recovery of unpaid
salaries against Jade Mountain, Mr. Willy Co and the other private respondents.
The partnership and Willy Co denied petitioner's charges, contending in the main
that Benjamin Yu was never hired as an employee by the present or new
partnership.
NLRC dismissed petitioner's complaint on the ground, inter alia, that
there was no law requiring the new partnership to absorb the employees of
the old partnership. Yu, therefore, had not been illegally dismissed by the new
partnership which had simply declined to retain him in his former managerial
position or any other position.

ISSUE: Whether Yu could assert his rights under his employment

contract as against the new partnership.

RULING: YES. The court held that a creditor of the old Jade Mountain, like
petitioner Benjamin Yu in respect of his claim for unpaid wages, is entitled to
priority vis-a-vis any claim of any retired or previous partner insofar as such
retired partner's interest in the dissolved partnership is concerned. Under Article
1840, Benjamin Yu is entitled to enforce his claim for unpaid salaries, as well as
other claims relating to his employment with the previous partnership, against
the new Jade Mountain.  

[G.R. No. 151438. July 15, 2005.]

12. JARDINE DAVIES, INC., petitioner, vs. JRB REALTY, INC., respondent.
CALLEJO, SR., J:

FACTS:
Respondent JRB Realty, Inc acquired from Aircon and Refrigeration Industries,
Inc. two (2) sets of Fedders Adaptomatic air conditioning equipment. 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 USA's technology for rotary
compressors for big capacity conditioners had not yet been perfected. The
parties thereby agreed to replace the units with reciprocating/semi-hermetic
compressors instead. Subsequently, when JRB learned that Maxim Industrial
and Merchandising Corporation was the new and exclusive licensee of Fedders
Air Conditioning USA in the Philippines it requested that Maxim honor the
obligation of Aircon, but the latter refused.
Respondent then filed an action for specific performance with damages against
Aircon & Refrigeration Industries, Inc., Fedders Air Conditioning USA, Inc.,
Maxim Industrial & Merchandising Corporation and petitioner Jardine Davies,
Inc. The latter was impleaded as defendant, considering that Aircon was a
subsidiary of the petitioner.
The trial court ruled in favor of JRB. Petitioner contends that 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. However, the CA affirmed the decision
of the trial court.

ISSUE: Whether petitioner should be liable for the breach made by ARI because
the latter was petitioner’s subsidiary.

RULING: NO. The Court held that while it is true that Aircon is a subsidiary of the
petitioner, it does not necessarily follow that Aircon's corporate legal existence
can just be disregarded. 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 plaintiff's 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 Aircon's 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.

[G.R. No. 182770. September 17, 2014.]

13. WPM INTERNATIONAL TRADING, INC. and WARLITO P. MANLAPAZ,
petitioners, vs. FE CORAZON LABAYEN,respondent.
BRION, J p:

FACTS:
WPM International Trading, Inc entered into a management agreement
with the respondent Fe Corazon Labayen, wherein the latter was tasked to look
for a contractor who would renovate the two existing Quickbite outlets.
Respondent then engaged the services of CLN Engineering Services (CLN) to
renovate Quickbite. When the renovation was completed it was found that only
P320,000.00 was paid to CLN, leaving a balance of P112,876.02.
CLN then filed a complaint for sum of money against respondent wherein the trial
court ruled in favor of CLN. A subsequent complaint for damages was filed by
respondent against WPM and its president Warlito P. Manlapaz alleging that she
was adjudged liable for a contract that she entered into for and in behalf of the
petitioners, to which she should be entitled to reimbursement.
Manlapaz contends that respondent had entered into the renovation
agreement with CLN in her own personal capacity and that since the respondent
had exceeded her authority as agent of WPM, the renovation agreement should
only bind her; and that since WPM has a separate and distinct personality,
Manlapaz cannot be made liable for the respondent's claim.

ISSUE: Whether WPM is a mere instrumentality, alter-ego, and business conduit

of Manlapaz and thus should be liable with WPM to the respondent for
reimbursement, damages and interest.

RULING: NO. The Court ruled that the attendant circumstances do not
establish that WPM is a mere alter ego of Manlapaz.
Aside from the fact that Manlapaz was the principal stockholder of WPM, records
do not show that WPM was organized and controlled, and its affairs conducted in
a manner that made it merely an instrumentality, agency, conduit or adjunct of
Manlapaz. That Manlapaz concurrently held the positions of president, chairman
and treasurer, or that the Manlapaz's residence is the registered principal office
of WPM, are insufficient considerations to prove that he had exercised absolute
control over WPM.
In this connection, we stress that the control necessary to invoke the
instrumentality or alter ego rule is not majority or even complete stock control but
such domination of finances, 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. 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.
Here, the respondent failed to prove that Manlapaz, acting as president, had
absolute control over WPM.

[G.R. No. 174938. October 1, 2014.]

14. GERARDO LANUZA, JR. AND ANTONIO O. OLBES, petitioners, vs. BF
CORPORATION, SHANGRI-LA PROPERTIES, INC., ALFREDO C. RAMOS,
RUFO B. COLAYCO, MAXIMO G. LICAUCO III, AND BENJAMIN C. RAMOS,
respondents.
LEONEN, J p:

FACTS:
BF Corporation and Shangri-La entered into agreements wherein the former
undertook to construct for Shangri-La a mall and a multilevel parking structure
along EDSA. BF Corp. alleged that Shangri-La induced BF Corporation to
continue with the construction of the buildings using its own funds and credit
despite Shangri-La's default. When the construction of the building was
completed and Shangri-La was still not able to pay, BF Corp. filed a collection
complaint against the former and the members of its board of directors for the
balance it owed to them. It also alleged that the Shangri-La's directors were in
bad faith in directing Shangri-La's affairs. Therefore, they should be held jointly
and severally liable with Shangri-La for its obligations as well as for the damages
that BF Corporation incurred.
Herein petitioners as directors of Shangri-La filed a motion to suspend the
proceedings in view of BF Corporation's failure to submit its dispute to arbitration,
in accordance with the arbitration clause provided in its contract. The trial court
denied the motion but the same was reversed by the CA and ordered the
submission of the dispute to arbitration. 
ISSUE: Whether petitioners as directors of Shangri-La cannot be forced to
submit to the jurisdiction of the Arbitration Tribunal as they did not sign the
arbitration agreement in any capacity.

RULING: NO. The Court ruled that as a general rule, a corporation's

representative who did not personally bind himself or herself to an arbitration
agreement cannot be forced to participate in arbitration proceedings made
pursuant to an agreement entered into by the corporation. He or she is generally
not considered a party to that agreement. However, there are instances when the
distinction between personalities of directors, officers, and representatives, and
of the corporation, are disregarded. We call this piercing the veil of corporate
fiction.
Among the persons who may be treated as the corporation itself under certain
circumstances are its directors and officers. Section 31 of the Corporation
Code provides the instances when directors, trustees, or officers may become
liable for corporate acts.
Hence, when the directors, as in this case, are impleaded in a case against a
corporation, alleging malice or bad faith on their part in directing the affairs of the
corporation, complainants are effectively alleging that the directors and the
corporation are not acting as separate entities. They are alleging that the acts or
omissions by the corporation that violated their rights are also the directors' acts
or omissions. 
It is because the personalities of petitioners and the corporation may later be
found to be indistinct that we rule that petitioners may be compelled to submit to
arbitration.
Thus, in cases alleging solidary liability with the corporation or praying for the
piercing of the corporate veil, parties who are normally treated as distinct
individuals should be made to participate in the arbitration proceedings in order
to determine if such distinction should indeed be disregarded and, if so, to
determine the extent of their liabilities.

[G.R. No. 198967. March 7, 2016.]

15. JOSE EMMANUEL P. GUILLERMO, petitioner, vs. CRISANTO P. USON,
respondent.
PERALTA, J p:

FACTS:
Crisanto Uson was the accounting the accounting supervisor of Royal Class
Venture Phils., Inc when he was terminated from the service. This led for Uson to
file a case for illegal dismissal against RCVPI with the Sub-Regional Arbitration
Branch of NLRC. The Labor Arbiter ruled in favor of Uson and ordered RCVPI to
reinstate Uson and pay backwages etc. A writ of execution was issued by the LA
but the judgment remained unsatisfied. This prompted Uson to file a motion to
hold Directors and Officers of Respondent Liable for Satisfaction of the Decision
which was granted by the Labor Arbiter. The order held that officers of a
corporation are jointly and severally liable for the obligations of the corporation to
the employees. Thus, the Labor Arbiter pierced the veil of corporate fiction of
RCVPI and held herein petitioner Jose Emmanuel Guillermo (Guillermo), in his
personal capacity, jointly and severally liable with the corporation for the
enforcement of the claims of Uson.

ISSUE: Whether the twin doctrines of "piercing the veil of corporate fiction"
and personal liability of company officers in labor cases apply.

RULING: The Court held that personal liability attaches only when, as
enumerated by the said Section 31 of the Corporation Code, there is a wilfull and
knowing assent to patently unlawful acts of the corporation, there is gross
negligence or bad faith in directing the affairs of the corporation, or there is a
conflict of interest resulting in damages to the corporation.
It also bears emphasis that in cases where personal liability attaches, not even
all officers are made accountable. Rather, only the "responsible officer," i.e., the
person directly responsible for and who "acted in bad faith" in committing the
illegal dismissal or any act violative of the Labor Code, is held solidarily liable, in
cases wherein the corporate veil is pierced.
The records of the present case bear allegations and evidence that Guillermo,
the officer being held liable, is the person responsible in the actual running of the
company and for the malicious and illegal dismissal of the complainant; he,
likewise, was shown to have a role in dissolving the original obligor company in
an obvious "scheme to avoid liability" which jurisprudence has always looked
upon with a suspicious eye in order to protect the rights of labor. 
16. [G.R. No. 165442. August 25, 2010.]
NASECO GUARDS ASSOCIATION-PEMA (NAGA-PEMA), petitioner, vs.
NATIONAL SERVICE CORPORATION (NASECO), respondent.
VILLARAMA, JR., J p:

FACTS:
Respondent National Service Corporation (NASECO) is a wholly-owned
subsidiary of the Philippine National Bank (PNB) which supplies security and
manpower services to different clients. Petitioner NASECO Guards Association-
PEMA (NAGA-PEMA) is the collective bargaining representative of the regular
rank and file security guards of respondent while NASECO Employees Union-
PEMA (NEMU-PEMA) is the collective bargaining representative of the regular
rank and file (non-security) employees of respondent. Petitioner as well as
NEMU-PEMA filed a notice of strike before the National Conciliation and
Mediation Board (NCMB) against respondent and PNB due to a bargaining
deadlock and unfair labor practices respectively. 
Petitioner contends that PNB should be held liable to shoulder the CBA benefits
awarded to them by virtue of it being a company having full financial,
managerial and functional control over respondent as its subsidiary, and by
reason of the unique "no loss, no profit" scheme implemented between
respondent and PNB.

ISSUE: Whether PNB being the undisputed owner of and exercising control
over respondent, should be made liable to pay the CBA benefits awarded to
the petitioner.

RULING: NO. The Court ruled that there was no reason to pierce the
corporate veil of respondent and go beyond its legal personality. Control, by
itself, does not mean that the controlled corporation is a mere instrumentality
or a business conduit of the mother company. Even control over the financial
and operational concerns of a subsidiary company does not by itself call for
disregarding its corporate fiction. There must be a perpetuation of fraud
behind the control or at least a fraudulent or illegal purpose behind the control
in order to justify piercing the veil of corporate fiction. Such fraudulent intent is
lacking in this case.
[G.R. No. 199687. March 24, 2014.]
PACIFIC REHOUSE CORPORATION, petitioner, vs. COURT OF APPEALS and
EXPORT AND INDUSTRY BANK, INC., respondents.
REYES, J p:
FACTS:
Petitioner filed a complaint against EIB Securities, Inc. for unauthorized sale of their
32,180,000 DMCI shares. The trial court ordered EIB to return the said shares to private
respondents. The writ of execution was returned unsatisfied. Private respondents then
moved for the issuance of an alias writ of execution to hold Export and Industry Bank,
Inc. liable for the judgment obligation as E-Securities is "a wholly-owned controlled and
dominated subsidiary of Export and Industry Bank, Inc., and is thus, a mere alter ego
and business conduit of the latter. E-Securities argued that it has a corporate
personality that is separate and distinct from petitioner.
The trial court granted the motion on the ground that E-Securities is a mere business
conduit or alter ego of Export and Industry Bank, Inc, the dominant parent corporation,
which justifies piercing of the veil of corporate fiction.

ISSUE: Whether Export and Industry Bank, Inc should be held liable in this case.

RULING: NO. The Court has laid down a three-pronged control test to establish
when the alter ego doctrine should be operative:
(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 right; and
(3) The aforesaid control and breach of duty must [have] proximately caused
the injury or unjust loss complained of. 63
The absence of any one 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. 64 Hence, all three elements should
concur for the alter ego doctrine to be applicable. 
Albeit the RTC bore emphasis on the alleged control exercised by Export Bank
upon its subsidiary E-Securities, "[c]ontrol, by itself, does not mean that the
controlled corporation is a mere instrumentality or a business conduit of the
mother company. Even control over the financial and operational concerns of a
subsidiary company does not by itself call for disregarding its corporate fiction.
There must be a perpetuation of fraud behind the control or at least a fraudulent
or illegal purpose behind the control in order to justify piercing the veil of
corporate fiction. Such fraudulent intent is lacking in this case." 70
Moreover, there was nothing on record demonstrative of Export Bank's wrongful
intent in setting up a subsidiary, E-Securities. If used to perform legitimate
functions, a subsidiary's separate existence shall be respected, and the liability of
the parent corporation as well as the subsidiary will be confined to those arising
in their respective business. 71 To justify treating the sole stockholder or holding
company as responsible, it is not enough that the subsidiary is so organized and
controlled as to make it "merely an instrumentality, conduit or adjunct" of its
stockholders. It must further appear that to recognize their separate entities
would aid in the consummation of a wrong.

18. [G.R. No. 167530. March 13, 2013.]

PHILIPPINE NATIONAL BANK, petitioner, vs. HYDRO RESOURCES
CONTRACTORS CORPORATION,respondent.
LEONARDO-DE CASTRO, J  : p

FACTS: