corpo 1 instances where doctrine applied

8/10/2019 Corpo 1 Instances Where Doctrine Applied

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Instances where doctrine applied

THIRD DIVISION

[G.R. No. 138104. April 11, 2002]

MR HOLDINGS, LTD.,petitioner, vs. SHERIFF CARLOS . !A"AR,

SHERIFF FERDINAND M. "AND#SA$, SOLID!AN%

CORORATION, AND MARCOER MINING

CORORATION, respondents.

D E C I S I O N

SANDO&AL'G#TIERRE(,J.)

In the present Petition for Review on Certiorari, petitioner MR Holdings, Ltd. assailsthe *+Deision!"#dated $an%ar& ', "((( of the )o%rt of *ppeals in )*+.R. SP No.-(/ finding no grave a0%se of disretion on the part of $%dge Leonardo P. *nsaldo of theRegional Trial )o%rt 1RT)2, 3ranh (-, 3oa, Marind%4%e, in den&ing petitioner5s appliationfor a writ of preli6inar& in7%ntion8!#and +Resol%tion!9#dated Marh (, "((( den&ingpetitioner5s 6otion for reonsideration.

The fats of the ase are as follows:

;nder a ,BBB,BBB.BB was so%red fro6 *D35s ordinar& apitalreso%res, while the o6ple6entar& loan of ;SA >,BBB,BBB.BB was f%nded 0& the 3an? of NovaSotia, a partiipating finane instit%tion.

On even date, *D3 and Plaer Do6e, In., 1Plaer Do6e2, a foreign orporation whihowns -B of Maropper, e@e%ted a


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petitioner MR Holding, Ltd., ass%6ed Maropper5s o0ligation to *D3 in the a6o%nt of ;SA"',->9,->B.B. )onse4%entl&, in an


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Having learned of the shed%led a%tion sale, petitioner served an


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-/r * 7il * or r*7*io /o;Br i7 o rl ii9*l or *76*l 6

i9i*7 / :ori orpor*io7 iio o 9o o/r 67i77 i /

/ilippi7, 7*i9 7il * or r*7*io o7i67 9oi or *i i or

r*7*i 67i77 i / /ilippi7.

* *7 **i7 M*roppr :or ollio o: 76 o:

o :or !r*/ 2> o: / Rio*l Tri*l Co6r 9o9 *7 CiBil C*7 No.

>'80083. T/ 7o9 D9 o: A77i p6rpor9l 69 o Dr 28,

1? ;*7 r9 io r7i9 G*or *:r Soli9* /*9 :il9 i7 Moio

:or *ri*l S6*r "69, *:r / r9iio !r*/ 2> o: / Rio*l

Tri*l Co6r o: M*il* o: * *ri*l S6*r "69 *9 *:r / 7*i9 ri*l

o6r /*9 i7769 * ;ri o: 6io, *9 ;/i/ 569 ;*7 l*r *::ir9

/ Co6r o: App*l7. Fhile the assign6ents 1whih were not registered with theRegistr& of Propert& as re4%ired 0& *rtile "/> of the new )ivil )ode2 6a& 0e valid

0etween the parties thereof, it prod%es no effet as against third parties. Thep%rported e@e%tion of the Deeds of *ssign6ent in favor of petitioner was in violationof *rtile "9'G of the New )ivil )ode @ @ @. = 1E6phasis S%pplied2


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Hene, the present Petition for Review on Certiorari0& MR Holdings, Ltd. 6oored on thefollowing gro%nds:


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OF CREDITORS, ARTIC#LARL$ RESONDENT SOLID!AN%,

THE SAME !EING IN COMLETE DISREGARD OF, &I() 1+ THE

LA- AND ESTA!LISHED "#RISR#DENCE ON RIOR,

REGISTERED MORTGAGE LIENS AND ON REFERENCE OF

CREDITS, !$ REASON OF -HICH THERE EISTS NO CA#SAL

CONNECTION !ET-EEN THE SAID CONTRACTS AND THE

ROCEEDINGS IN CI&IL CASE NO. >'80083 2+ THAT THE ASIAN

DE&ELOMENT !AN% -ILL NOT OR CO#LD NOT HA&E

AGREED TO A SHAM SIM#LATED, D#!IO#S AND FRA#D#LENT

TRANSACTION AND 3+ THAT RESONDENT SOLID!AN%S

!IGGEST STOC%HOLDER, THE !AN% OF NO&A SCOTIA, -AS A

MA"OR !ENEFICIAR$ OF THE ASSIGNMENT AGREEMENT IN

J#ESTION.

F. THE HONORA!LE CO#RT OF AEALS COMMITS A

RE&ERSI!LE ERROR IN HOLDING THAT ETITIONER IS

-ITHO#T LEGAL CAACIT$ TO S#E AND SEE% REDRESS

FROM HILIINE CO#RTS, IT !EING THE CASE THAT

SECTION 133 OF THE CORORATION CODE IS -ITHO#T

ALICATION TO ETITIONER, AND IT !EING THE CASE THAT

THE SAID CO#RT MEREL$ RELIED ON S#RMISES AND

CON"ECT#RES IN OINING THAT ETITIONER INTENDS TO DO

!#SINESS IN THE HILIINES.

G. THE HONORA!LE CO#RT OF AEALS COMMITS A

RE&ERSI!LE ERROR IN HOLDING THAT RESONDENT

MARCOER, LACER DOME, INC., AND ETITIONER ARE ONE

AND THE SAME ENTIT$, THE SAME !EING -ITHO#T FACT#AL

OR LEGAL !ASIS.

H. THE HONORA!LE CO#RT OF AEALS COMMITS A

RE&ERSI!LE ERROR IN HOLDING ETITIONER G#ILT$ OF

FOR#M SHOING, IT !EING CLEAR THAT NEITHERLITIS

EN!ENTI"NOR#ES J$!IC"T"MA$ !AR THE INSTANT

REI&INDICATOR$ ACTION, AND IT !EING CLEAR THAT AS

THIRD'ART$ CLAIMANT, THE LA- AFFORDS ETITIONER

THE RIGHT TO FILE S#CH REI&INDICATOR$ ACTION.

I. THE HONORA!LE CO#RT OF AEALS COMMITS A

RE&ERSI!LE ERROR IN RENDERING A DECISION -HICH IN

EFFECT SER&ES AS "#DGMENT ON THE MERITS OF THE CASE.


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". THE SHERIFFS LE&$ AND SALE, THE SHERIFFS

CERTIFICATE OF SALE DATED OCTO!ER 12, 18, THE RTC'

MANILA ORDER DATED FE!R#AR$ 12, 1, AND THE RTC'

!OAC ORDER DATED NO&EM!ER 2@, 18 ARE N#LL AND &OID.

%. THE HONORA!LE CO#RT OF AEALS COMMITS ARE&ERSI!LE ERROR IN AFFIRMING THE DENIAL !$ THE RTC'

!OAC OF ETITIONERS ALICATION FOR RELIMINAR$

IN"#NCTION, THE SAME !EING IN TOTAL DISREGARD OF

ETITIONERS RIGHT AS ASSIGNEE OF A RIOR, REGISTERED

MORTGAGE LIEN, AND IN DISREGARD OF THE LA- AND

"#RISR#DENCE ON REFERENCE OF CREDIT.K

In its petition, petitioner alleges that it is not


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I

The )o%rt of *ppeals r%led that petitioner has no legal apait& to s%e in the Philippineo%rts 0ea%se it is a foreign orporation doing 0%siness here witho%t liense. * review of thisr%ling does not pose 6%h o6ple@it& as the priniples governing a foreign

orporation5s right to s%e in loal o%rts have long 0een settled 0& o%r )orporation Law.!"G#These priniples 6a& 0e ondensed in three state6ents, to wit: *+if a foreign orporation 9o767i77in the Philippines ;i/o6 * li7, it *o 760efore the Philippine o%rts8!"'#+if aforeign orporation is o 9oi 67i77in the Philippines, it97 o li7 o 760eforePhilippine o%rts on an isolated transation!"(#or on a a%se of ation entirel& independent of an&0%siness transation8!B#and +if a foreign orporation 9o7 67i77in the Philippines with there4%ired liense, it * 760efore Philippine o%rts on an& transation. *pparentl&, it is not thea0sene of the presri0ed liense 0%t the


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s%pervision or ontrol of an& do6esti 0%siness, fir6, entit&, or orporation inthe Philippines8 *9 * o/r * or *7 /* ipl * oi6i o:ori*l 9*li7 or *rr*7, *9 opl* o /* /

pr:or* o: *7 or ;or7 or / ri7 o: 7o o: / :6io7

or*ll ii9 o, *9 i pror77iB pro76io o:, ori*l *i

or o: / p6rpo7 *9 o5 o: / 67i77 or*i*io8'rovided,ho(ever,That the phrase doing 0%siness5 shall not 0e dee6ed to inl%de6ere invest6ent as a shareholder 0& a foreign entit& in do6esti orporationsd%l& registered to do 0%siness, andor the e@erise of rights as s%h investor,nor having a no6inee diretor or offier to represent its interests in s%horporation, nor appointing a representative or distri0%tor do6iiled in thePhilippines whih transats 0%siness in its own na6e and for its ownao%nt.= 1E6phasis s%pplied2!>#

Li?ewise, Setion " of Rep%0li *t No. >->>,!/#provides that:


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single at 6a& still onstit%te


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single ontrat, sale, sale with the ta?ing of a note and 6ortgage in the state to se%re pa&6enttherefor, p%rhase, or note, or the 6ere o66ission of a tort. !99#In these instanes, there is op6rpo7to do an& other 0%siness within the o%ntr&.

II

Solid0an? ontends that fro6 the hronolog& and ti6ing of events, it is evident that theree@isted a pre+set pattern of response on the part of Maropper to defeat whatever o%rt r%ling that6a& 0e rendered in favor of Solid0an?.

Fe are not onvined.

Fhile it 6a& appear, at initial glane, that the assign6ent ontrats are in the nat%re offra%d%lent onve&anes, however, a loser loo? at the events that transpired prior to thee@e%tion of those ontrats gives rise to a different onl%sion. The o0vio%s flaw in the )o%rtof *ppeals5 Deision lies in its onstrited view of the fats o0taining in the ase. In its fat%al

narration, the )o%rt of *ppeals definitel& left o%t so6e events. Fe shall see later thesignifiane of those events.

*rtile "9'G of the )ivil )ode of the Philippines provides:

#

The


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Marh B, "((G.!9/#Solid0an? annot den& this fat onsidering that a s%0stantial portion of thesaid pa&6ent, in the s%6 of ;SA "9,''/,G(".B/, was re6itted in favor of the 3an? of NovaSotia, its 6a7or sto?holder.!9G#

The fats of the ase so far show that the assign6ent ontrats were e@e%ted in goodfaith. The e@e%tion of the ,(GB.G>/.'(.

It is said that the test as to whether or not a onve&ane is fra%d%lent is ++ does it pre7%diethe rights of reditors!9'#Fe annot see how Solid0an?5s right was pre7%died 0& the assign6entontrats onsidering that s%0stantiall& all of Maropper5s properties were alread& overed 0&the registered


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The reent ase of'hilippine -ational /ank vs. Ritratto Group &nc.,!-B#o%tlines their%6stanes whih are %sef%l in the deter6ination of whether a s%0sidiar& is 0%t a 6ereinstr%6entalit& of the parent+orporation, to wit:

*+ The parent orporation owns all or 6ost of the apital sto? of the s%0sidiar&.

+ The parent and s%0sidiar& orporations have o66on diretors or offiers.+ The parent orporation finanes the s%0sidiar&.

9+ The parent orporation s%0sri0es to all the apital sto? of the s%0sidiar& orotherwise a%ses its inorporation.

+ The s%0sidiar& has grossl& inade4%ate apital.

:+ The parent orporation pa&s the salaries and other e@penses or losses of the s%0sidiar&.

+ The s%0sidiar& has s%0stantiall& no 0%siness e@ept with the parent orporation or noassets e@ept those onve&ed to or 0& the parent orporation.

/+ In the papers of the parent orporation or in the state6ents of its offiers, the

s%0sidiar& is desri0ed as a depart6ent or division of the parent orporation, or its 0%sinessor finanial responsi0ilit& is referred to as the parent orporation5s own.

i+ The parent orporation %ses the propert& of the s%0sidiar& as its own.

5+ The diretors or e@e%tives of the s%0sidiar& do not at independentl& in the interest of thes%0sidiar&, 0%t ta?e their orders fro6 the parent orporation.

+ The for6al legal re4%ire6ents of the s%0sidiar& are not o0served.

I /i7 ** o: ir67*7, ;/* i7 ol * i / ror97 i7 / *r o: 7o

o;r7/ip. T/r *r o o/r :*or7 i9i*iB /* piior i7 * r i7r6*li

o: M*roppr or l*r Do. The 6ere fat that Plaer Do6e agreed, %nder the ter6s of the


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"((G R%les of )ivil Proed%res. This re6ed& has 0een reogniCed in a long line of asesdeided 0& this )o%rt.!-"#InRodrigue0 vs. Court o! "ppeals,!-#we held:

' of the "((G R%les of )ivil Proed%re provides:


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Petitioner5s right to stop the f%rther e@e%tion of the properties overed 0& the assign6entontrats is lear %nder the fats so far esta0lished. *n e@e%tion an 0e iss%ed onl& against apart& and not against one who did not have his da& in o%rt.!--#The d%t& of the sheriff is to lev&the propert& of the 7%dg6ent de0tor not that of a third person. Jor, as the sa&ing goes, one 6an5sgoods shall not 0e sold for another 6ans de0ts.!->#To allow the e@e%tion of petitioner5s

properties wo%ld s%rel& wor? in7%stie to it and render the 7%dg6ent on the reivindiator& ation,sho%ld it 0e favora0le, ineffet%al. In"rabay, &nc., vs. Salvador,!-/#this )o%rt held that anin7%ntion is a proper re6ed& to prevent a sheriff fro6 selling the propert& of one person for thep%rpose of pa&ing the de0ts of another8 and that while the general r%le is that no o%rt hasa%thorit& to interfere 0& in7%ntion with the 7%dg6ents or derees of another o%rt of e4%al oron%rrent or oordinate 7%risdition, however, it is not so when a third+part& lai6ant isinvolved. Fe 4%ote the instr%tive words of $%stie Q%er%0e ). Ma?alintal in"biera vs. Courto! "ppeals,!-G#th%s:


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THIRD DIVISION

[G.R. No. 141>1?. A667 14, 2001]

ADALIA !. FRANCISCO *9 MERR$LAND DE&ELOMENT

CORORATION,petitioners, vs. RITA C. ME"IA, *7 E6ri o:

T7* E7* o: ANDREA CORDO&A &DA. DE

G#TIERRE(, respondent.

D E C I S I O N

GON(AGA'RE$ES,J.)

In this petition for review 0& certiorari, petitioners pra& for the setting aside of the Deisionof the )o%rt of *ppeals pro6%lgated on "9 *pril "((( and its "> Dee60er "((( Resol%tion in)*+.R. )V No. "('".

*s %lled fro6 the deisions of the lower o%rts and the pleadings of the parties, the fat%al0a?gro%nd of this ase is as set o%t herein:

*ndrea )ordova Vda. de %tierreC 1%tierreC2 was the registered owner of a parel of landin )a6arin, )alooan )it& ?nown as Lot '/" of the Tala Estate. The land had an aggregate areaof twent&+five 1>2 hetares and was overed 0& Transfer )ertifiate of Title 1T)T2 No. >GG( of

the Registr& of Deeds of )alooan )it&. The propert& was later s%0divided into five lots with anarea of five hetares eah and p%rs%ant thereto, T)T No. >GG( was anelled and five newtransfer ertifiates of title were iss%ed in the na6e of %tierreC, na6el& T)T No. G"9 overingLot '/"+*, T)T No. G"- overing Lot '/"+3, T)T No. G"> overing Lot '/"+), T)T No.G"/ overing Lot '/"+D and T)T No. G"G overing Lot '/"+E.

On " Dee60er "(/-, %tierreC and )ardale Jinaning and Realt& )orporation 1)ardale2e@e%ted a Deed of Sale with Mortgage relating to the lots overed 0& T)T Nos. G"-, G">,G"/ and G"G, for the onsideration of P'BB,BBB.BB. ;pon the e@e%tion of the deed, )ardalepaid %tierreC P"G",BBB.BB. It was agreed that the 0alane of P/(,BBB.BB wo%ld 0e paid inseveral install6ents within five &ears fro6 the date of the deed, at an interest of nine perent perann%6 9" to G>9- were iss%ed in favor of )ardale.

To se%re pa&6ent of the 0alane of the p%rhase prie, )ardale onstit%ted a 6ortgage onthree of the fo%r parels of land overed 0& T)T Nos. G>9", G>9 and G>99, eno6passingfifteen hetares of land.!"#The en%60rane was annotated %pon the ertifiates of title and theowner5s d%pliate ertifiates. The owner5s d%pliates were retained 0& %tierreC.

On / *%g%st "(/', owing to )ardale5s fail%re to settle its 6ortgage o0ligation, %tierreCfiled a o6plaint for resission of the ontrat with the Q%eCon )it& Regional Trial )o%rt 1RT)2,
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whih was do?eted as )ivil )ase No. Q+"9//.!#On B Oto0er "(/(, d%ring the penden& ofthe resission ase, %tierreC died and was s%0stit%ted 0& her e@e%tri@, respondent Rita ).Me7ia 1Me7ia2. In "(G", plaintiff5s presentation of evidene was ter6inated. However, )ardale,whih was represented 0& petitioner *dalia 3. Jraniso 1Jraniso2 in her apait& as Vie+President and Treas%rer of )ardale, lost interest in proeeding with the presentation of its

evidene and the ase lapsed into inative stat%s for a period of a0o%t fo%rteen &ears.In the 6eanti6e, the 6ortgaged parels of land overed 0& T)T Nos. G>9 and G>99

0ea6e delin4%ent in the pa&6ent of real estate ta@es in the a6o%nt of P"B,9BB.BB, while theother 6ortgaged propert& overed 0& T)T No. G>9" 0ea6e delin4%ent in the a6o%nt ofP'(,9".9G, whih %l6inated in their lev& and a%tion sale on " and " Septe60er "('9, insatisfation of the ta@ arrears. The highest 0idder for the three parels of land was petitionerMerr&land Develop6ent )orporation 1Merr&land2, whose President and 6a7orit& sto?holder isJraniso. * 6e6orand%6 0ased %pon the ertifiate of sale was then 6ade %pon the originalopies of T)T Nos. G>9" to G>99.

On "9 *%g%st "('-, 0efore the e@piration of the one &ear rede6ption period, Me7ia filed a

Motion for Deision with the trial o%rt. The hearing of said 6otion was deferred, however, d%eto a Motion for Postpone6ent filed 0& )ardale thro%gh Jraniso, who signed the 6otion in herapait& as 9" to G>99 and the iss%ane of newtransfer ertifiates of title 9" to G>99 had 0een levied %pon 0& the loal govern6ent of )alooan )it& and sold at a ta@delin4%en& sale. Jraniso f%rther lai6ed that the delin4%en& sale had rendered the iss%es in)ivil )ase No. Q+"9// 6oot and aade6i. *greeing with Jraniso, the trial o%rt dis6issedthe ase, e@plaining that sine the properties 6ortgaged to )ardale had 0een transferred toMerr&land whih was not a part& to the ase for resission, it wo%ld 0e 6ore appropriate for theparties to resolve their ontrovers& in another ation.

On "- $an%ar& "('G, Me7ia, in her apait& as e@e%tri@ of the Estate of %tierreC, filed withthe RT) of Q%eCon )it& a o6plaint for da6ages with pra&er for preli6inar& attah6ent against

Jraniso, Merr&land and the Register of Deeds of )alooan )it&. The ase was do?eted as)ivil )ase No. Q+-(G//. On "> *pril "('', the trial o%rt rendered a deision!>#in favor of thedefendants, dis6issing the o6plaint for da6ages filed 0& Me7ia. It was held that plaintiffMe7ia, as e@e%tri@ of %tierreC5s estate, failed to esta0lish 0& lear and onvining evidene herallegations that Jraniso ontrolled )ardale and Merr&land and that she had e6plo&ed fra%d 0&intentionall& a%sing )ardale to defa%lt in its pa&6ent of real propert& ta@es on the 6ortgagedproperties so that Merr&land o%ld p%rhase the sa6e 0& 6eans of a ta@ delin4%en&sale. Moreover, aording to the trial o%rt, the fail%re to reover the propert& s%07et of the
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Deed of Sale with Mortgage was d%e to Me7ia5s fail%re to ativel& p%rs%e the ation forresission 1)ivil )ase No. "9//2, allowing the ase to drag on for eighteen &ears. Th%s, it r%ledthat +

@@@ @@@ @@@

The at of not pa&ing or failing to pa& ta@es d%e the govern6ent 0& the defendant*dalia 3. Jraniso, as treas%rer of )ardale Jinaning and Realt& )orporation do not,

per se, onstit%te perpetration of fra%d or an illegal at. It do !si# not also onstit%tean at of evasion of an e@isting o0ligation 1to plaintiff2 if there is no lear showingthat s%h an at of non+pa&6ent of ta@es was deli0eratel& 6ade despite its 1)ardale5s2solven& and apa0ilit& to pa&. There is no evidene showing that )ardale Jinaningand Realt& )orporation was finaniall& apa0le of pa&ing said ta@es at the ti6e.


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that the ase is alwa&s set for hearing so that it 6a& 0e ad7%diated !at# the earliestpossi0le ti6e. This d%t& pertains to 0oth parties, 0%t plaintiff sho%ld have 0een 6oreassertive, as it was her o0ligation, si6ilar to the o0ligation of plaintiff relative to theservie of s%66ons in other ases. The fat that )ardale Jinaning and Realt&)orporation did not perfor6 its o0ligation as provided in the said


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SO ORDERED.

The )o%rt of *ppeals,!/#in its deision!G#pro6%lgated on "9 *pril "(((, reversed the trialo%rt, holding that the orporate veil of )ardale and Merr&land 6%st 0e piered in order to holdJraniso and Merr&land solidaril& lia0le sine these two orporations were %sed as d%66ies 0&

Jraniso, who e6plo&ed fra%d in allowing )ardale to defa%lt on the realt& ta@es for theproperties 6ortgaged to %tierreC so that Merr&land o%ld a4%ire the sa6e free fro6 all liensand en%60ranes in the ta@ delin4%en& sale and, as a onse4%ene thereof, fr%strating%tierreC5s rights as a 6ortgagee over the s%07et properties. Th%s, the )o%rt of *ppealspre6ised its findings of fra%d on the following ir%6stanes

@@@ @@@ @@@

@@@ *ppellee Jraniso ?new that )ardale of whih she was vie+president andtreas%rer had an o%tstanding o0ligation to %tierreC for the %npaid 0alane of the real

properties overed 0& T)T Nos. G>9" to G>99, whih )ardale p%rhased fro6

%tierreC whih ao%nt, as of Dee60er "('', alread& a6o%nted to P-,-"-,G".-91E@h. , pp. 9(+--, reord28 she also ?new that %tierreC had a 6ortgage lien on thesaid properties to se%re pa&6ent of the aforesaid o0ligation8 she li?ewise ?new thatthe said 6ortgaged properties were %nder litigation in )ivil )ase No. Q+"9// whihwas an ation filed 0& %tierreC against )ardale for resission of the sale andorreover& of said properties 1E@h. E2. Despite s%h ?nowledge, appellee Jraniso didnot infor6 %tierreC5s Estate or the E@e%tri@ 1herein appellant2 as well as the trialo%rt that the 6ortgaged properties had in%rred ta@ delin4%enies, and that Jinal

Noties dated $%l& (, "(' had 0een sent 0& the )it& Treas%rer of )alooande6anding pa&6ent of s%h ta@ arrears within ten 1"B2 da&s fro6 reeipt thereof

1E@hs. $ $+", pp. 9G+9', reord2. 3oth noties whih were addressed to

)ardale Jinaning Realt& )orporation o Merr&land Develop6ent)orporation

and sent to appellee Jraniso5s address at '9 atip%nan Road, Fhite Plains, Q%eCon)it&, gave warning that if the ta@es were not paid within the aforesaid period, the

properties wo%ld 0e sold at p%0li a%tion to satisf& the ta@ delin4%enies.

To reiterate, notwithstanding reeipt of the aforesaid noties, appellee Jraniso did

not infor6 the Estate of %tierreC or her e@e%tri@ a0o%t the ta@ delin4%enies and ofthe i6pending a%tion sale of the said properties. Even a 6odi%6 of good faith andfair pla& sho%ld have eno%raged appellee Jraniso to at least advise %tierreC5sEstate thro%gh her e@e%tri@ 1herein appellant2 and the trial o%rt whih was hearingthe o6plaint for resission and reover& of said properties of s%h fat, so that theEstate of %tierreC, whih had a real interest on the properties as 6ortgagee and as

plaintiff in the resission and reover& s%it, o%ld at least ta?e steps to forestall the
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a%tion sale and there0& preserve the properties and protet its interests thereon. *ndnot onl& did appellee Jraniso allow the a%tion sale to ta?e plae, 0%t she %sed herother orporation 1Merr&land2 in partiipating in the a%tion sale and in a4%iring thever& properties whih her first orporation 1)ardale2 had 6ortgaged to%tierreC. *gain, appellee Jraniso did not thereafter infor6 the Estate of %tierreC

or its e@e%tri@ 1herein appellant2 a0o%t the a%tion sale, th%s prel%ding the Estatefro6 e@erising its right of rede6ption. *nd it was onl& after the e@piration of therede6ption period that appellee Jraniso filed a Manifestation in )ivil )ase No. Q+"9// 1E@h. I, p. 9/, reord2, in whih she dislosed for the first ti6e to the trial o%rtand appellant that the properties s%07et of the ase and on whih %tierreC or herEstate had a 6ortgage lien, had 0een sold in a ta@ delin4%en& sale. *nd in order tof%rther oneal her deeptive 6ane%ver, appellee Jraniso did not div%lge in heraforesaid Manifestation that it was her other orporation 1Merr&land2 that a4%ired the

properties in the a%tion sale.

Fe are not i6pressed 0& appellee5s s%06ission that no evidene was add%ed to provethat )ardale had the apait& to pa& the ta@ arrears and therefore she or )ardale 6a&not 0e fa%lted for the ta@ delin4%en& sale of the properties in 4%estion. *ppelleeJraniso5s 0ad faith or deeption did not neessaril& lie in )ardale5s or her fail%re tosettle the ta@ deli4%enies in 4%estion, 0%t in not dislosing to %tierreC5s estate or itse@e%tri@ 1herein appellant2 whih had a 6ortgage lien on said properties the ta@delin4%enies and the i6pending a%tion sale of the en%60ered properties.

*ppellee Jraniso5s deeption is f%rther shown 0& her oneal6ent of the ta@delin4%en& sale of the properties fro6 the estate or its e@e%tri@, th%s preventing thelatter fro6 availing of the right of rede6ption of said properties. That appelleeJraniso div%lged the a%tion sale of the properties onl& after s%h rede6ption

period had lapsed learl& 0etra&s her intention to ?eep %tierreC5s Estate or itsE@e%tri@ fro6 availing of s%h right. *nd as the evidene wo%ld f%rther show,appellee Jraniso had a hand in se%ring for Merr&land onsolidation of itsownership of the properties and in seeing to it that Merr&land5s torrens ertifiates forthe properties were free fro6 liens and en%60ranes. *ll these appellee Jranisodid even as she was f%ll& aware that %tierreC or her estate had a valid and s%0sisting6ortgage lien on the said properties.

It is li?ewise worth& of note that earl& on appellee Jraniso had testified in the ationfor resission of sale and reover& of possession and ownership of the propertieswhih %tierreC filed against )ardale 1)ivil )ase No. Q+"9//2 in her apait& asdefendant )ardale5s vie+president and treas%rer. 3%t then, for no pla%si0le reasonwhatsoever, she lost interest in ontin%ing with the presentation of evidene fordefendant )ardale. *nd then, when appellant Me7ia as e@e%tri@ of %tierreC5s Estatefiled on *%g%st "9, "('- a Motion for Deision in the aforesaid ase, appellee


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Jraniso 6oved to defer onsideration of appellant5s Motion on the prete@t thatdefendant )ardale needed ti6e to e6plo& another o%nsel. Signifiantl&, in heraforesaid Motion for Postpone6ent dated *%g%st "/, "('- whih appellee Jraniso

personall& signed as Offier+in+)harge of )ardale, she also did not dislose the fatthat the properties s%07et 6atter of the ase had long 0een sold at a ta@ delin4%en&

sale and a4%ired 0& her other orporation Merr&land.

*nd as if what she had alread& ao6plished were not eno%gh fra%d%lene, appelleeJraniso, ating in 0ehalf of Merr&land, a%sed the iss%ane of new transferertifiates of title in the na6e of Merr&land, whih did not an&6ore 0ear the6ortgage lien in favor of %tierreC. In the 6eanti6e, to f%rther avoid pa&6ent ofthe 6ortgage inde0tedness owing to %tierreC5s estate, )ardale orporation wasdissolved. Jinall&, to p%t the properties 0e&ond the reah of the 6ortgagee,%tierreC5s estate, Merr&land a%sed the s%0division of s%h properties, whih weres%0se4%entl& sold on install6ent 0asis.

In its petition for ertiorari, petitioners arg%e that there is no law re4%iring the 6ortgagor toinfor6 the 6ortgagee of the ta@ delin4%enies, if an&, of the 6ortgaged properties. Moreover,petitioners lai6 that )ardale5s fail%re to pa& the realt& ta@es,per se, does not onstit%te fra%dsine it was not proven that )ardale was apa0le of pa&ing the ta@es. Petitioners also ontendthat if Me7ia, as e@e%tri@ of %tierreC5s estate, was not re6iss in her d%t& to p%rs%e )ivil )aseNo. "9//, she o%ld have easil& learned of the non+pa&6ent of realt& ta@es on the s%07etproperties and of the a%tion sale that followed and th%s, have redee6ed the properties or availedof so6e other re6ed& to onserve the estate of %tierreC. In addition, Me7ia o%ld haveannotated a notie of lis pendenson the titles of the 6ortgaged properties, 0%t she failed to do so.It is the stand of petitioners that respondent has not add%ed an& proof that Jraniso ontrolled

0oth )ardale and Merr&land and that she %sed these two orporations to perpet%ate a fra%d %pon%tierreC or her estate. Petitioners 6aintain that the


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Sine then a good n%60er of ases have fir6l& i6planted this dotrine in Philippine7%rispr%dene.!""#One s%h ase is 2#ali v. Court o! "ppeals !"#wherein the )o%rt delared that

;nder the dotrine of piering the veil of orporate entit&, when valid gro%ndstherefore e@ist, the legal fition that a orporation is an entit& with a 7%ridial

personalit& separate and distint fro6 its 6e60ers or sto?holders 6a& 0edisregarded. In s%h ases, the orporation will 0e onsidered as a 6ere assoiation of

persons. The 6e60ers or sto?holders of the orporation will 0e onsidered as theorporation, that is, lia0ilit& will attah diretl& to the offiers and sto?holders. Thedotrine applies when the orporate fition is %sed to defeat p%0li onveniene,

7%stif& wrong, protet fra%d, or defend ri6e, or when it is 6ade as a shield to onf%sethe legiti6ate iss%es, or where a orporation is the 6ere alter ego or 0%siness ond%itof a person, or where the orporation is so organiCed and ontrolled and its affairs areso ond%ted as to 6a?e it 6erel& an instr%6entalit&, agen&, ond%it or ad7%nt ofanother orporation.

Fith speifi regard to orporate offiers, the general r%le is that the offier annot 0e heldpersonall& lia0le with the orporation, whether ivill& or otherwise, for the onse4%enes of hisats, if he ated for and in 0ehalf of the orporation, within the sope of his a%thorit& and in goodfaith. In s%h ases, the offier5s ats are properl& attri0%ted to the orporation.!"9#However, if itis proven that the offier has %sed the orporate fition to defra%d a third part&, !"-#or that he hasated negligentl&, 6aliio%sl& or in 0ad faith, !">#then the orporate veil shall 0e lifted and he shall0e held personall& lia0le for the parti%lar orporate o0ligation involved.

The )o%rt, after an assid%o%s st%d& of this ase, is onvined that the totalit& of their%6stanes appertaining ond%e to the inevita0le onl%sion that petitioner Jraniso ated

in 0ad faith. The events leading %p to the loss 0& the %tierreC estate of its 6ortgage se%rit&attest to this. It has 0een esta0lished that )ardale failed to o6pl& with its o0ligation to pa& the0alane of the p%rhase prie for the fo%r parels of land it 0o%ght fro6 %tierreC overed 0&T)T Nos. G>9" to G>9-, whih o0ligation was se%red 0& a 6ortgage %pon the lands overed 0&T)T Nos. G>9", G>9 and G>99. This pro6pted %tierreC to file an ation for resission of theDeed of Sale with Mortgage 1)ivil )ase No. Q+"9//2, 0%t the ase dragged on for a0o%tfo%rteen &ears when )ardale, as represented 0& Jraniso, who was Vie+President and Treas%rerof the sa6e,!"/#lost interest in o6pleting its presentation of evidene.

Even 0efore "('- when Me7ia, in her apait& as e@e%tri@ of %tierreC5s estate, filed aMotion for Deision with the trial o%rt, there is no 4%estion that Jraniso ?new that theproperties s%07et of the 6ortgage had 0eo6e ta@ delin4%ent. In fat, as treas%rer of )ardale,

Jraniso herself was the offier harged with the responsi0ilit& of pa&ing the realt& ta@es on theorporation5s properties. This was ad6itted 0& the trial o%rt in its deision. !"G#In addition, notiesdated ( $%l& "(' fro6 the )it& Treas%rer of )alooan de6anding pa&6ent of the ta@ arrears onthe s%07et properties and giving warning that if the realt& ta@es were not paid within the givenperiod then s%h properties wo%ld 0e sold at p%0li a%tion to satisf& the ta@ delin4%enies weresent diretl& to Jraniso5s address in Fhite Plains, Q%eCon )it&. !"'#Th%s, as earl& as "(',Jraniso o%ld have infor6ed the %tierreC estate or the trial o%rt in )ivil )ase No. Q+"9//of the ta@ arrears and of the notie fro6 the )it& Treas%rer so that the estate o%ld have ta?en the
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neessar& steps to prevent the a%tion sale and to protet its interests in the 6ortgaged properties,0%t she did no s%h thing. Jinall&, in "('9, the properties were levied %pon and sold at p%0lia%tion wherein Merr&land + a orporation where Jraniso is a sto?holder!"(#and on%rrentl&ats as President and diretor!B#+ was the highest 0idder.

Fhen Me7ia filed the Motion for Deision in )ivil )ase No. Q+"9//, !"#the period for

redee6ing the properties s%07et of the ta@ sale had not &et e@pired. !#;nder the Realt& Propert&Ta@ )ode,!9#p%rs%ant to whih the ta@ lev& and sale were prose%ted, !-#0oth the delin4%entta@pa&er and in his a0sene, an& person holding a lien or lai6 over the propert& shall have theright to redee6 the propert& within one &ear fro6 the date of registration of the sale. !>#However,if these persons fail to redee6 the propert& within the ti6e provided, then the p%rhaser a4%iresthe propert&


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SECOND DIVISION

[G.R. No. 163981. August 12, 2005]

CONSTRUCTION & DEE!O"#ENT COR"ORATION O$ T%E"%I!I""INES 'o( "%I!I""INE NATIONA! CONSTRUCTIONCOR"ORATION),petitioner, vs.RODO!$O #. CUENCA *'+#A!AAN INSURANCE CO., INC., respondents.

D E C I S I O N

CA!!E-O, SR., J.

Before this Court is a petition for review on certiorariof the Decision[1]of the Court ofAppeals (CA in CA!"#$# CV No# %%&&' an its $esolution en)in* a +otion forreconsieration thereof#

T/ *+4o

,ltra International -rain* Corporation (,I-C applie for a suret) .on fro+

/ala)an Insurance Co#0 Inc# (/ICI0 to *uarantee its creits0 ine.teness0 o.li*ationsan lia.ilities of an) in to "oo)ear -ire an $u..er Co+pan) of the 2hilippines("oo)ear# /ICI approve the application an issue /ICO Bon No# &345%[6]for ana+ount not e7ceein* 2&''0'''#''# -he suret) .on was vali for 16 +onths0 an wasrenewe several ti+es0 the last ti+e .ein* on /a) 130 1895# [5]

-o protect /ICI:s interests0 ,I-C0 Eil.erto Cuenca0 an $oolfo Cuenca0 hereinresponent0 e7ecute an Ine+nit) A*ree+ent [%]in favor of /ICI# Eil.erto was thenthe 2resient0 while $oolfo was a +e+.er of the Boar of Directors of ,I-C# Eil.ertosi*ne the ine+nit) a*ree+ent in his official an personal capacit)0 while $oolfosi*ne in his personal capacit) onl)# In the sai a*ree+ent0 ,I-C0 Eil.erto an$oolfo .oun the+selves ;ointl) an severall) to ine+nif) /ICI of an) pa)+ent itwoul +ae uner the suret) .on#

On


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On /a) 50 18950 /ICI sent a e+an letter to ,I-C0 Eil.erto an $oolfo forrei+.urse+ent of the pa)+ent it +ae to "oo)ear0 plus le*al interest# [9],I-C repliethat Construction > Develop+ent Corporation of the 2hilippines (CDC20 now 2hilippineNational Construction Corporation (2NCC0 ha initiate a co+plete review of ,I-C:sfinancial plans to ena.le it to pa) its creitors0 lie /ICI# [8],I-C was a su.siiar) of

petitioner 2NCC0[1']

with the latter ownin* aroun 49? of the for+er:s shares of stoc#[11],I-C re=ueste /ICI to ela) the filin* of an) suit a*ainst it0 to *ive it ti+e to worout an accepta.le repa)+ent plan#[16]/ICI a*ree an *ave ,I-C until /a) 6'0 1895 toco+e up with an offer#[15]

@owever0 ,I-C0 Eil.erto an $oolfo still faile to pa) /ICI# On ul) 10 18950 /ICIfile a Co+plaint[1%]for su+ of +one) a*ainst ,I-C0 Eil.erto an $oolfo0 pra)in* forine+nit) of the a+ount it pai to "oo)ear0 plus interest per annu+ co+poune=uarterl) fro+ April 630 1895 until full) pai0 an 6'? of the a+ount involve asattorne):s fees an costs of the suit#

On ul) 650 18950 ,I-C wrote /ICI proposin* the followin*

a. I66ediate pa&6ent of P">B,BBB.BB.

0. 3alane pa&a0le P>B,BBB.BB per 6onth %ntil the o0ligation is f%ll& li4%idated.

. Interest and penalt& harges are to 0e waived.[13]

In the +eanti+e0 $oolfo file +otion for leave to file a thir!part) co+plaint whichthe trial court *rante#[1&]-he thir!part) co+plaint[14]a*ainst CDC2 alle*e that it haassu+e $oolfo:s lia.ilit) uner the ine+nit) a*ree+ent as inicate in a .oarresolution# In support of this alle*ation0 he presente in evience a certification of

Antonio $o=ue0 Assistant Corporate Secretar) of CDC20 attestin* to the correctness ofan e7cerpt fro+ the +inutes of the Boar of Directors: +eetin* of anuar) 1'0 18490which reas

;*R*NTEE M*DE 3 )D)P REPRESENT*TIVES IN OTHER)ORPOR*TIONS

In fairness to the )D)P 3oard Me60ers andor Offiers who represent the)orporation in other affiliated orporations and who are 6ade to sign 7ointl& and

severall& g%arantees for and in s%pport of said affiliated orporations, the 3oard%nder Res. No. 3D+>(+GGG' 6ade of reord )D)P5s ass%6ption of all saidg%arantees and the lia0ilities and responsi0ilities arising therefro6. In the sa6e vein,an& g%arant& fee that 6a& 0e pa&a0le to said representatives shall ar%e to )D)P.[19]

On Au*ust 6&0 18950 ,I-C re+itte to /ICI 213'0'''#'' as partial pa)+ent of itso.li*ation#[18]Nonetheless0 the parties faile to reach an a+ica.le settle+ent of theirrespective clai+s#
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On anuar) &0 188%0 the $e*ional -rial Court ($-C of /anila0 Branch 310 renerea ecision holin* ,I-C an 2NCC0 ;ointl) an soliaril) lia.le to /ICI uner theine+nit) a*ree+ent# -he trial court rule that ,I-C was .oun .) the ine+nit)a*ree+ent entere into .) its two officers0 even thou*h there was no .oar resolutionspecificall) authoriin* the+ to o so .ecause it ha0 in effect0 ratifie the acts of the

sai officers# /oreover0 ,I-C has acnowle*e its o.li*ation to /ICI in the letters itsent to the latter0 an when it ha re+itte213'0'''#'' as partial pa)+ent# It also hel2NCC soliaril) lia.le with ,I-C on the .asis of the .oar resolution attestin* to the factthat 2NCC ha assu+e all lia.ilities arisin* fro+ the *uarantees +ae .) its officers inother affiliate corporations#[6']-he trial court is+isse the co+plaint as a*ainst theCuencas# -he ispositive portion of the $-C ecision reas

FHEREJORE, in view of all the foregoing, 7%dg6ent is here0& rendered in favor ofplaintiff Mala&an Ins%rane )o., In. and against defendant ;LTR* and Third+Part&defendant PN)), ordering the latter to pa& 7ointl& and solidaril& the for6er thefollowing:

a2 The s%6 of P/BB,BBB.BB 0%t onsidering that defendant ;LTR* hadalread& advaned the a6o%nt of P">B,BBB.BB to plaintiff, their lia0ilit&has then red%ed to the s%6 of P->B,BBB.BB with legal interest fro6 thedate of the filing of the o6plaint %ntil f%ll& paid8

02 The s%6 e4%ivalent to B of all the a6o%nts d%e and de6anda0le asand for attorne&5s fees8 and

2 The osts of s%it.

The o6plaint against defendants Edil0erto )%ena and Rodolfo )%ena and theiro%nter+lai6s are here0& dis6issed for la? of 6erit.

SO ORDERED.[61]

,I-C an 2NCC appeale the ecision to the CA0 .ut /ICI i not# On Octo.er 6906''50 the CA affir+e in totothe appeale ecision#[66]-he appellate court hel that,I-C ha i+pliel) authorie Eil.erto an $oolfo to procure the suret) .on an theine+nit) a*ree+ent hence0 ,I-C was lia.le# /oreover0 ,I-C was estoppe fro+=uestionin* Eil.erto an $oolfo:s authorit) to enter into the ine+nit) a*ree+ent in

its .ehalf0 consierin* that it ha alrea) partiall) pai 213'0'''#'' to /ICI# -heappellate court ae that Eil.erto an $oolfo0 havin* si*ne the ine+nit)a*ree+ent also in their personal capacit)0 woul orinaril) .e personall) lia.le unerthe sai a*ree+ent .ut .ecause /ICI faile to appeal the ecision0 it ha effectivel)waive its ri*ht to hol the+ lia.le on its clai+#[65]

-he CA further affir+e the trial court:s finin* that 2NCC was lia.le uner theine+nit) a*ree+ent# -he appellate court note that ,I-C was a su.siiar) co+pan)
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of 2NCC .ecause the latter hols al+ost 49? of ,I-C:s stocs# As such0 ,I-C woulpurchase +aterials fro+ suppliers such as "oo)ear0 in .ehalf of 2NCC#


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not fall uner the instances enu+erate uner Article 66'9 of the Civil Coe whenattorne):s fees are proper#[68]


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plainti!!+s co#plaint. Fere it not for this provision of the R%les of )o%rt, it wo%ldhave to 0e filed independentl& and separatel& fro6 the original o6plaint 0& thedefendant against the third+part&. 3%t the R%les per6it defendant to 0ring in a third+

part& defendant or so to spea?, to litigate his separate a%se of ation in respet ofplaintiff5s lai6 against a third part& in the original and prinipal ase with the o07et

of avoiding ir%itr& of ation and %nneessar& proliferation of laws%its and ofdisposing e@peditio%sl& in one litigation the entire s%07et 6atter arising fro6 one

parti%lar set of fats. U Fhen leave to file the third+part& o6plaint is properl&granted, the )o%rt renders in effet two 7%dg6ents in the sa6e ase, one on the

plaintiff5s o6plaint and the other on the third+part& o6plaint. Fhen he findsfavora0l& on 0oth o6plaints, as in this ase, he renders 7%dg6ent on the prinipalo6plaint in favor of plaintiff against defendant and renders another 7%dg6ent on thethird+part& o6plaint in favor of defendant as third+part& plaintiff, ordering the third+

part& defendant to rei60%rse the defendant whatever a6o%nt said defendant is orderedto pa& plaintiff in the ase. *ailure o! any o! said parties in such a case to appeal the

1udg#ent as against hi# #akes such 1udg#ent !inal and eecutoryU.[55]

It follows then that the plaintiff in the +ain action +a) not .e re*are as a part) tothe thir!part) co+plaint[5%]nor +a) the thir!part) efenant .e re*are as a part) tothe +ain action# As for the efenant0 he is part) to .oth the +ain action an the thir!part) co+plaint .ut in ifferent capacities G in the +ain action0 he is the efenant inthe thir!part) co+plaint0 he is the plaintiff#

In the present case0 the petitioner 2NCC which was the thir!part) efenantappeale .efore this Court fro+ the ecision of the CA# Case law is that if onl) thethir!part) efenant files an appeal0 the ecision in the +ain case .eco+es final#

[53]-herefore0 the CA:s ecision in the +ain action0 holin* ,I-C lia.le to /ICI anis+issin* the case as a*ainst the Cuencas0 .eca+e final an e7ecutor) when none ofthe sai parties file an appeal with this Court#

He o not a*ree with the CA rulin* that the petitioner is lia.le uner the ine+nit)a*ree+ent# On this point0 the CA ratiocinate that the petitioner is lia.le0 consierin*that it is the +a;orit) stocholer of ,I-C an the +aterials fro+ "oo)ear werepurchase .) ,I-C for an in its .ehalf#

-his is clearl) erroneous# -he petitioner cannot .e +ae irectl) lia.le to /ICIuner the ine+nit) a*ree+ent on the *roun that it is ,I-C:s +a;orit) stocholer# It.ears stressin* that the petitioner was not a part) efenant in the +ain action# /ICI

i not assert an) clai+ a*ainst the petitioner0 nor was the petitioner i+pleae in thethir!part) co+plaint on the *roun of its irect lia.ilit) to /ICI# In the latter case0 itwoul .e as if the thir!part) efenant was itself irectl) i+pleae .) the plaintiff as aefenant#[5&]In the present case0 petitioner 2NCC was .rou*ht into the action .)responent Cuenca si+pl) for a re+e) over#J [54]No cause of action was asserte .)/ICI a*ainst it# -he petitioner:s lia.ilit) coul onl) .e .ase on its alle*e assu+ptionof responent Cuenca:s lia.ilit) uner the ine+nit) a*ree+ent#
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In an) case0 petitioner 2NCC0 as +a;orit) stocholer0 +a) not .e hel lia.le for,I-C:s o.li*ation# A corporation0 upon co+in* into e7istence0 is investe .) law with apersonalit) separate an istinct fro+ those persons co+posin* it as well as fro+ an)other le*al entit) to which it +a) .e relate# [59]-he veil of corporate fiction +a) onl) .eisre*are in cases where the corporate vehicle is .ein* use to efeat pu.lic

convenience0 ;ustif) a wron*0 protect frau0 or efen a cri+e#[58]

/ere ownership .) asin*le stocholer or .) another corporation of all or nearl) all of the capital stoc of acorporation is not of itself sufficient *roun for isre*arin* the separate corporatepersonalit)#[%']-o isre*ar the separate ;uriical personalit) of a corporation0 thewron*oin* +ust .e clearl) an convincin*l) esta.lishe# [%1]

Neither can the petitioner .e +ae lia.le uner the ine+nit) a*ree+ent on the*roun that it ha assu+e the personal lia.ilit) of responent Cuenca# -o reiterate0the ecision of the CA is+issin* the case a*ainst responent Cuenca has alrea).eco+e final an e7ecutor)# -he Court has0 liewise0 pointe out that responentCuenca i+pleae the petitioner as a re+e) over0 an not as one irectl) lia.le to/ICI# Since the petitioner:s lia.ilit) is *roune on that of responent Cuenca:s0 it is

i+perative that the latter .e first a;u*e lia.le to /ICI .efore the petitioner +a) .ehel lia.le# Inee0 the Court rule in Samala v. Victor0[%6]thus

U It is not indispensa0le in the pre6ises that the defendant 0e first ad7%dged lia0le tothe plaintiff 0efore the third+part& defendant 6a& 0e held lia0le to the plaintiff, as

preisel&, the theor& of defendant is that it is the third part& defendant, and not he,who is diretl& lia0le to plaintiff. The sit%ation onte6plated 0& appellants wo%ld

properl& pertain to sit%ation 1a2 a0ove wherein the third part& defendant is 0eing s%edfor ontri0%tion, inde6nit& or s%0rogation, or si6pl& stated, for a defendant5s


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-@I$D DIVISION

[G.R. No. 153886. -*'u*47 1, 200]

#E! . E!ARDE,petitioner, vs. !O"E, INC., respondent.

D E C I S I O N

CAR"IO:#ORA!ES, J.

-his petition for review on certiorariuner $ule %3 of the $ules of Court0 which

sees to review the ecision[1]

an resolution[6]

of the Court of Appeals0 raises the issue ofwhether the efenant in a co+plaint for collection of su+ of +one) can raise acounterclai+ for retire+ent .enefits0 unpai salaries an incentives0 an other.enefits arisin* fro+ services renere .) hi+ in a su.siiar) of the plaintiff corporation#

On anuar) &0 18840 Eu*enio ope r#0 then 2resient of responent ope0 Inc#0as ENDE$0 an petitioner /el Velare0 then "eneral /ana*er of S) VisionCorporation (S) Vision0 a su.siiar) of responent0 as BO$$OHE$0 for*e anotarie loan a*ree+ent coverin* the a+ount of ten +illion (21'0'''0'''#'' pesos#-he a*ree+ent e7pressl) provie for0 a+on* other thin*s0 the +anner of pa)+ent anthe circu+stances constitutin* efault which woul *ive the lener the ri*ht to eclarethe loan to*ether with accrue interest i++eiatel) ue an pa)a.le# [5]

Sec# & of the a*ree+ent etaile what constitute an event of efaultJ as follows

Setion /

Eah of the following events and o%rrenes shall onstit%te an Event of Defa%lt 1


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2etitioner proteste the co+putation inicate in the ul) 130 1889 letter0 heassertin* that the i+pute unli=uiate avances fro+ S) Vision ha alrea) .eenproperl) li=uiate#[&]

On Au*ust 190 18890 responent file a co+plaint for collection of su+ of +one)with a+a*es at the $e*ional -rial Court ($-C of 2asi* Cit) a*ainst petitioner0 alle*in*

that petitioner violate the a.ove!=uote Section & of the loan a*ree+ent as he faile toput up the neee collateral for the loan an pa) the install+ents as the) .eca+e ue0an that espite his receipt of letters of e+an ate Dece+.er 10 1884 [4]an anuar)150 18890[9]he refuse to pa)#

In his answer0 petitioner alle*e that the loan a*ree+ent i not reflect his truea*ree+ent with responent0 it .ein* +erel) a cover ocu+entJ to evience the rewarto hi+ of ten +illion pesos (21'0'''0'''#'' for his lo)alt) an e7cellent perfor+anceas "eneral /ana*er of S) Vision an that the pa)+ent0 if an) was e7pecte0 was inthe for+ of continue service an that it was when he was co+pelle .) responent toretire that the for+ of pa)+ent a*ree upon was renere i+possi.le0 pro+ptin* the

late Eu*enio ope0 r# to a*ree that his retire+ent .enefits fro+ S) Vision woulinstea .e applie to the loan# [8]

B) wa) of co+pulsor) counterclai+0 petitioner clai+e that he was entitle toretire+ent .enefits fro+ S) Vision in the a+ount of 289069'0'''#''0 unpai salaries inthe a+ount of 2604%'0'''#''0 unpai incentives in the a+ount of23''0'''0 unpai share fro+ the netinco+e of 2laintiff corporation0J e=uit) in hisservice vehicle in the a+ount of 2103''0'''0 reasona.le return on the stoc ownershipplan for services renere as "eneral /ana*er0 an +oral a+a*es an attorne):sfees#[1']

2etitioner thus pra)e for the is+issal of the co+plaint an the awar of the

followin* su+s of +one) in the for+ of co+pulsor) counterclai+s

". P"B9,BB,BBB.BB, PL;S the val%e of Defendant5s sto? options and %npaid sharefro6 the net ino6e with Plaintiff orporation 1to 0e o6p%ted2 as at%alda6ages8

. P">,BBB,BBB.BB, as 6oral da6ages8 and

9. P",>BB,BBB.BB, as attorne&5s fees pl%s appearane fees and the osts of s%it.!""#

$esponent file a +anifestation an a +otion to is+iss the

counterclai+ for want of ;urisiction0 which rew petitioner to assert in his co++ent anopposition thereto that the veil of corporate fiction +ust .e pierce to hol responentlia.le for his counterclai+s#

B) Orer of anuar) 50 6'''0 Branch 133 of the $-C of 2asi* enie responent:s+otion to is+iss the counterclai+ on the followin* pre+ises A counterclai+ .ein*essentiall) a co+plaint0 the principle that a +otion to is+iss h)potheticall) a+its thealle*ations of the co+plaint is applica.le the counterclai+ is co+pulsor)0 hence0 within
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its ;urisiction an there is ientit) of interest .etween responent an S) Vision to+erit the piercin* of the veil of corporate fiction# [16]

$esponent:s +otion for reconsieration of the trial court:s Orer of anuar) 506''' havin* .een enie0 it file a 2etition for Certiorariat the Court of Appeals whichhel that responent is not the real part)!in!interest on the counterclai+ an that there

was failure to show the presence of an) of the circu+stances to ;ustif) the application ofthe principle of piercin* the veil of corporate fiction#J -he Orers of the trial court werethus set asie an the counterclai+s of petitioner were accorin*l) is+isse# [15]

-he Court of Appeals havin* enie petitioner:s +otion for reconsieration0 theinstant 2etition for $eview was file which assi*ns the followin* errors

I.

THE )O;RT OJ *PPE*LS R*VEL ERRED IN R;LIN TH*T THE RT) 3R*N)H ">>*LLEEDL *)TED FITH R*VE *3;SE OJ DIS)RETION IN ISS;IN THE ORDERSD*TED $*N;*R 9, BBB *ND O)TO3ER (, BBB )ONSIDERIN TH*T THE RO;NDS

R*ISED 3 RESPONDENT LOPE, IN). IN ITS PETITION JOR )ERTIOR*RIINVOLVED MERE ERRORS OJ $;DMENT *ND NOT ERRORS OJ $;RISDI)TION.

II.

THE )O;RT OJ *PPE*LS R*VEL ERRED IN R;LIN TH*T RESPONDENT LOPE,IN). IS NOT THE RE*L P*RT+IN+INTEREST *S P*RT+DEJEND*NT ON THE)O;NTER)L*IMS OJ PETITIONER VEL*RDE )ONSIDERIN TH*T THE JILIN OJRESPONDENT LOPE, IN).5S M*NIJEST*TION *ND MOTION TO DISMISS)O;NTER)L*IM H*D THE EJJE)T OJ HPOTHETI)*LL *DMITTIN THE TR;THOJ THE M*TERI*L *VERMENTS OJ THE *NSFER, FHI)H M*TERI*L *VERMENTS

S;JJI)IENTL *LLEED TH*T RESPONDENT LOPE, IN). )OMMITTED *)TSFHI)H SHOF TH*T ITS S;3SIDI*R, S VISION, F*S * MERE 3;SINESS)OND;IT OR *LTER EO OJ THE JORMER, TH;S, $;STIJIN THE PIER)IN OJTHE VEIL OJ )ORPOR*TE JI)TION.

III.

THE )O;RT OJ *PPE*LS R*VEL ERRED IN R;LIN TH*T THE )O;NTER)L*IMSOJ PETITIONER VEL*RDE *RE NOT )OMP;LSOR.!"-#

Hhile petitioner correctl) invoes the rulin* inAtiena v. Court of Appeals!"#$to

postulate that not ever) enial of a +otion to is+iss can .e correcte .) certiorariuner $ule &3 an that0 as a *eneral rule0 the re+e) fro+ such enial is to appeal inue course after a ecision has .een renere on the +erits0 there are e7ceptionsthereto0 as when the court in en)in* the +otion to is+iss acte without or in e7cess of

;urisiction or with patent *rave a.use of iscretion0 [1&]or when the assaile interlocutor)orer is patentl) erroneous an the re+e) of appeal woul not affor ae=uate ane7peitious relief0[14]or when the *roun for the +otion to is+iss is i+proper venue0 [19]res

;uicata0[18]or lac of ;urisiction[6']as in the case at .ar#
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Earl) on0 it .ears notin*0 when the case was still with the trial court0 responent filea +otion to is+iss the counterclai+s to assail its;urisiction0 responent assertin* thatthe counterclai+s0 .ein* +one) clai+s arisin* fro+ a la.or relationship0 are within thee7clusive co+petence of the National a.or $elations Co++ission#[61]On the otherhan0 petitioner alle*e that ue to the tortuous +anner he was coerce into retire+ent0

it is the $e*ional -rial Courts ($-Cs an not the National a.or $elations Co++issionwhich has e7clusive ;urisiction over his counterclai+s#

In eter+inin* which has ;urisiction over a case0 the aver+ents of theco+plaintFcounterclai+0 taen as a whole0 are consiere# [66]In his counterclai+0petitioner alle*e that

7 7 7

(. It was onl& on $%l& ">, "((' that LopeC, In. s%06itted a o6p%tation of theretire6ent 0enefit d%e to the Defendant. 1)op& attahed as *NNE -2. I66ediatel& afterreeiving this o6p%tation, Defendant i66ediatel& infor6ed Plaintiff of the erroneo%s fig%re

%sed as salar& in the o6p%tation of 0enefits. This was done in a telephone onversation with aertain *tt&. *6ina *6ado of LopeC, In.

(." The Defendant also infor6ed her that the so alled


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At the heart of petitioner:s counterclai+ is his alle*e force retire+ent which isalso the .asis of his clai+ for0 a+on* other thin*s0 unpai salaries0 unpai incentives0reasona.le return on the stoc ownership plan0 an other .enefits fro+ a su.siiar)co+pan) of the responent#

Section 3(c of 2#D# 8'6!A (as a+ene .) $#A# 94880 the Securities $e*ulation

Coe applies to a corporate officer:s is+issal#


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acts in contravention of plaintiff:s le*al ri*hts an (5 the aforesai control an .reachof ut) +ust pro7i+atel) cause the in;ur) or un;ust loss co+plaine of# [68]

Nowhere0 however0 in the pleain*s an other recors of the case can it .e*athere that responent has co+plete control over S) Vision0 not onl) of finances .utof polic) an .usiness practice in respect to the transaction attace0 so that S) Vision

ha at the ti+e of the transaction no separate +in0 will or e7istence of its own# -hee7istence of interlocin* irectors0 corporate officers an shareholers is not enou*h

;ustification to pierce the veil of corporate fiction in the a.sence of frau or other pu.licpolic) consierations#

-his Court is thus not convince that the real part)!in!interest with re*ar to thecounterclai+ for a+a*es arisin* fro+ the alle*e tortuous +anner .) which petitionerwas force to retire as "eneral /ana*er of S) Vision is responent#

2etitioner +ules the issues .) ar*uin* that responent frauulentl) tooavanta*e of the control over the +atter of co+pensation an .enefits of an e+plo)eeof S) Vision to eceive petitioner into si*nin* the loan a*ree+ent on the +isleain*

assurance that it was +erel) for the purpose of ocu+entin* the rewar to hi+ of ten+illion pesos# -his ar*u+ent oes not persuae# 2etitioner0 .ein* a law)er0 is presu+eto now the le*al an .inin* effects of loan a*ree+ents#

It .ears e+phasis that S) Vision:s involve+ent in the transaction su.;ect of thecase spran* onl) after a proposal was apparentl) proffere .) petitioner that hisretire+ent .enefits fro+ S) Vision .e use in partial pa)+ent of his loan fro+responent as *athere fro+ the ul) 130 1889 letter[5']of $o++el Duran0 Vice!2resient an "eneral /ana*er of responent0 to petitioner reain*

Dear Mr. Velarde:

*s re4%ested, we have 6ade o6p%tations on the o%tstanding a6o%nt of &o%r loan with LopeC,In. sho%ld &o%r retire6ent 0enefits fro6 S?& Vision )orporation)entral )*TV, In.'>,(".'/ will 0e i66ediatel& d%e and de6anda0le. The a6o%nt of PG,>'>,(".'/represents the o%tstanding prinipal and interest d%e as of $%l& ">, "(('.
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Fitho%t the appliation of &o%r retire6ent 0enefits to the partial pa&6ent of &o%r loan, thea6o%nt of P"",'>B,BBB.BB is d%e as of $%l& ">, "(('. Fe reiterate o%r de6and for f%ll pa&6entof &o%r o%tstanding o0ligation i66ediatel&. 1;ndersoring s%pplied2

As for the trial court:s rulin* that the a*ree+ent to set!off is an a+en+ent of the

loan a*ree+ent resultin* to an ientit) of interest .etween responent an S) Visionan0 therefore0 sufficient to pierce the veil of corporate fiction0 it is untena.le# -hea.ove=uote letter is clear that0 to effect a set!off0 it is a conition sine %ua non that theapproval thereof .) S)FCentralJ +ust .e o.taine0 an that petitioner li=uiate hisavances fro+ S) Vision# -hese conitions harl) +anifest that responent possessethat e*ree of control over S) Vision as to +ae the latter its +ere instru+entalit)0a*enc) or a;unct#

%ERE$ORE0 the instant petition for review on certiorariis here.) DENIED#

SO ORDERED.


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corpo 1 instances where doctrine applied

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