corpo 1st set.doc

8/14/2019 corpo 1st set.doc

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G.R. No. 82797 February 27, 1991

GOOD EARTH EMPORIUM INC., an !IM "A PING, petitioners,vs.HONORA#!E COURT OF APPEA!$ an ROCE$%RE&E$ REA!T&INC., respondents.

A.E. Dacanay for petitioners.

Antonio Quintos Law Office for private respondent.

PARA$,J.:p

This is a petition for review on certiorariof the December 29, 1987decision 'of the Court of Appeals in CA!.". #o. 119$% entitled &"'C()

"(*() "(A+T*, #C. vs. -'#'"A+( /0D!( "(!'#A+ T"A+ C'0"T 'A#+A, "A#C- 33, !''D (A"T- (4'"0, #C. and + 5A 4#!&reversin6 the decision of respondent /ud6e ''of the "e6ional Trial Court ofanila, ranch 33 in Civil Case #o. 8%383, which reversed the resolutionof the etropolitan Trial Court 'f anila, ranch 28 in Civil Case #o.%9$9, ''' denin6 herein petitioners: motion to ;uash the aliaswrit ofehereinafter desi6nated as "'C()for brevit@ filed on 'ctober 13, 1983, an eectment case >0nlawfulDetainer@ a6ainst herein petitioners, !''D (A"T- (4'"0, #C. and +5A 4#!, hereinafter desi6nated as !((, >Rollo, p. 21? Anne< && of the4etition@. After the latter had tendered their responsive pleadin6, the lowercourt >TC, anila@ on motion of "oces rendered ud6ment on the pleadin6sdated April 17, 1983, the dispositive portion of which states=

/ud6ment is hereb rendered orderin6 defendants >hereinpetitioners@ and all persons claimin6 title under him to vacate thepremises and surrender the same to the plaintiffs >hereinrespondents@? orderin6 the defendants to pa the plaintiffs therental of 4$,%%%.%% a month be6innin6 arch 198 up to thetime defendants actuall vacate the premises and deliverpossession to the plaintiff? to pa attorne:s fees in the amount of4,%%%.%% and to pa the costs of this suit. >Rollo, p. 111?emorandum of "espondents@

'n a 1$, 1983, "oces filed a motion for e


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Appeal >Rollo, p. 112, Ibid.@. 'n /une 1, 1983, the trial court resolved suchmotion rulin6=

After considerin6 the motion for the issuance of a writ ofeherein respondents@and the opposition filed in relation thereto and findin6 that thedefendant failed to file the necessar supersedeas bond, this

court resolved to 6rant the same for bein6 meritorious. >Rollo, p.112@

'n /une 13, 1983, a writ of e


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ud6ment debt as havin6 been full paid andGor +i;uidated. >Rollo,p. 29@.

'n further appeal, the Court of Appeals reversed the decision of the"e6ional Trial Court and reinstated the "esolution of the etropolitan TrialCourt of anila, the dispositive portion of which is as follows=

E-("('"(, the ud6ment appealed from is hereb "((")(Dand the "esolution dated April 8, 198, of the etropolitan TrialCourt of anila ranch is hereb "(#)TAT(D. #opronouncement as to costs. >Rollo, p. 3%@.

!((:s otion for "econsideration of April , 1988 was denied >Rollo, p. [email protected], this petition.

The main issue in this case is whether or not there was full satisfaction ofthe ud6ment debt in favor of respondent corporation which would ustifthe ;uashin6 of the Erit of (petitioners:@ otion to Huash theErit of (


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Article 123% of the Civil Code of the 4hilippines provides that=

4ament shall be made to the person in whose favor theobli6ation has been constituted, or his successor in interest, oran person authoriBed to receive it.

n the case at bar, the supposed paments were not made to "oces"ees

"ealt, nc. or to its successor in interest nor is there positive evidence thatthe pament was made to a person authoriBed to receive it. #o such proofwas submitted but merel inferred b the "e6ional Trial Court >Rollo, p. 2@from arcos "oces havin6 si6ned the +ease Contract as 4resident whichwas witnessed b /esus arcos "oces. The latter, however, was no lon6er4resident or even an officer of "oces"ees "ealt, nc. at the time hereceived the mone >((Rollo, p. 2%, TCdecision@.

'n the other hand, /esus arcos "oces testified that the amount of 41million evidenced b the receipt >(or credits@ which is owned bthe corporation as a distinct le6al person >Concepcion a6sasa+abradorv. CA!.". #o. 81$8, December 19, 1989@. As a conse;uence of theseparate uridical personalit of a corporation, the corporate debt or credit

is not the debt or credit of the stocFholder, nor is the stocFholder:s debt orcredit that of the corporation >4rof. /ose #olledo:s &The Corporation Code ofthe 4hilippines, p. , 1988 (dition, citing4rofessor allantine@.

The absence of a note to evidence the loan is e)ec. >f@ "ule 11, "ules ofCourt@. t is for !(( and +im 5a 4in6 to prove otherwise. n other words, it isfor the latter to prove that the paments made were for the satisfaction oftheir ud6ment debt and not vice versa.

The fact that at the time pament was made to the two "oces brothers, !((was also indebted to respondent corporation for a lar6er amount, is not

supportive of the "e6ional Trial Court:s conclusions that the pament was infavor of the latter, especiall in the case at bar where the amount was notreceipted for b respondent corporation and there is absolutel noindication in the receipt from which it can be reasonabl inferred, that said


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pament was in satisfaction of the ud6ment debt. +iFewise, no suchinference can be made from the e(


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A(. Ma))er No. R%181%P *u+y 1, 1987

ADE!IO C. CRU-,complainant,vs.UITERIO !. DA!I$A&, De/u)y $0er, RTC, Man+a,respondents.

" ( ) ' + 0 T ' #

FERNAN,J.:

n a sworn complaint dated /ul 2, 1983, Adelio C. CruB char6ed Huiterio +.Dalisa, )enior Deput )heriff of anila, with &malfeasance in office, corruptpractices and serious irre6ularities& alle6edl committed as follows=

1. "espondent sheriff attached andGor levied the mone belon6in6 tocomplainant CruB when he was not himself the ud6ment debtor in the final

ud6ment of #+"C #C" Case #o. 8128991 sou6ht to be enforced butrather the compan Fnown as &Hualitrans +imousine )ervice, nc.,& a dulre6istered corporation? and,

2. "espondent liFewise caused the service of the alias writ of e


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his territorial urisdiction covers anila onl and does not e


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ACC'"D#!+*, we find "espondent Deput )heriff Huiterio +. Dalisa#(!+!(#T in the enforcement of the writ of e


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AppealsJ1Kand the April 28, 199 resolution denin6 petitionersL motion forreconsideration.

The factual bacF6round of the case is as follows=

'n a 1%, 199, (duardo 5. +itonua, )r. and Aurelio /. +itonua>+itonuas, for brevit@ filed a ComplaintJ2Kbefore the "e6ional Trial Court of4asi6 a6ainst the anF of America #TI)A and anF of America

nternational, +td. >defendant banFs for brevit@ alle6in6 that= the wereen6a6ed in the shippin6 business? the owned two vessels= Don Aurelio and(l Champion, throu6h their whollowned corporations? the deposited theirrevenues from said business to6ether with other funds with the branches ofsaid banFs in the 0nited 5in6dom and -on6Fon6 up to 1979? with theirbusiness doin6 well, the defendant banFs induced them to increase thenumber of their ships in operation, offerin6 them eas loans to ac;uire saidvessels?JKthereafter, the defendant banFs ac;uired, throu6h their>+itonuasL@ corporations as the borrowers= >a@ (l CarrierJ3K? >b@ (l !eneralJK?

>c@ (l Challen6erJ$K

? and >d@ (l Con;uerorJ7K

? the vessels were re6istered inthe names of their corporations? the operation and the funds derivedtherefrom were placed under the complete and edefendant [email protected]

The +itonuas claimed that defendant banFs as trustees did not fullrender an account of all the income derived from the operation of thevessels as well as of the proceeds of the subse;uent foreclosure sale?J1%K

because of the breach of their fiduciar duties andGor ne6li6ence of thepetitioners andGor the persons desi6nated b them in the operation ofprivate respondentsL si< vessels, the revenues derived from the operation ofall the vessels declined drasticall? the loans ac;uired for the purchase ofthe four additional vessels then matured and remained unpaid, promptin6defendant banFs to have all the si< vessels, includin6 the two vesselsori6inall owned b the private respondents, foreclosed and sold at publicauction to answer for the obli6ations incurred for and in behalf of theoperation of the vessels? the >+itonuas@ lost siBeable amounts of their own

personal funds e;uivalent to ten percent >1%M@ of the ac;uisition cost of thefour vessels and were left with the unpaid balance of their loans withdefendant banFs.J11KThe +itonuas praed for the accountin6 of the revenuesderived in the operation of the si< vessels and of the proceeds of the salethereof at the foreclosure proceedin6s instituted b petitioners? dama6esfor breach of trust? e1%@ das to file its Answer to the complaint.

N)' '"D("(D.OJ13K

nstead of filin6 an answer the defendant banFs went to the Court ofAppeals on a N4etition for "eview on CertiorariO J1Kwhich was aptl treated

b the appellate court as a petition for certiorari. The assailed the above;uoted order as well as the subse;uent denial of their otion for
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"econsideration.J1$K The appellate court dismissed the petition and deniedpetitionersL otion for "econsideration.J17K

-ence, herein petition anchored on the followin6 6rounds=

N1. "()4'#D(#T C'0"T ' A44(A+) A+(D T' C'#)D(" T-( ACTT-AT T-( )(4A"AT( 4(")'#A+T() ' T-( 4"AT( "()4'#D(#T) >("(

)T'C5-'+D(")@ A#D T-( '"(!# C'"4'"AT'#) >T-( "(A+'""'E(")@ C+(A"+* )044'"T, (*'#D A#* D'0T, T-( 4"'4')T'#T-AT T-( 4"AT( "()4'#D(#T) -A( #' 4(")'#A+T() T' )0(.

N2. T-( "()4'#D(#T C'0"T ' A44(A+) A+(D T' "(A+P( T-ATE-+( T-( 4"#C4+( ' '"0 #'# C'#(#(#) ) #'T A#DAT'"*,

T-("( A"(, -'E((", )'( !0D(+#() T' '++'E # D(T("##!E-(T-(" T-( C-'C( ' '"0 )-'0+D ( D)T0"(D. 0#D(" T-(C"C0)TA#C() )0""'0#D#! T-( #)TA#T CA)(, D)))A+ ' T-(C'4+A#T '# T-( !"'0#D ' '"0 #'#C'#(#(#) ) '"(

A44"'4"AT( A#D 4"'4(".

N. T-( 4"#C4+( ' "() /0DCATA ) #'T +T(D T' #A+ /0D!(#T# T-( 4-+44#(). # ACT, T-( 4(#D(#C* ' '"(!# ACT'# A* (

T-( +(!A+ A)) '" T-( D)))A+ ' T-( C'4+A#T +(D * T-(4"AT( "()4'#D(#T. C'"'++A"* T' T-), T-( "()4'#D(#T C'0"T 'A44(A+) A+(D T' C'#)D(" T-( ACT T-AT 4"AT( "()4'#D(#T) A"(!0+T* ' '"0 )-'44#!.O J18K

As to the first assi6ned error= 4etitioners ar6ue that the borrowers andthe re6istered owners of the vessels are the forei6n corporations and notprivate respondents +itonuas who are mere stocFholders? and that therevenues derived from the operations of all the vessels are deposited in theaccounts of the corporations. -ence, petitioners maintain that these forei6ncorporations are the le6al entities that have the personalities to sue and notherein private respondents? that private respondents, bein6 mereshareholders, have no claim on the vessels as owners since the merelhave an inchoate ri6ht to whatever ma remain upon the dissolution of thesaid forei6n corporations and after all creditors have been full paid and

satisfied?J19Kand that while private respondents ma have alle6edl spentamounts e;ual to 1%M of the ac;uisition costs of the vessels in ;uestion,their 1%M however represents their investments as stocFholders in theforei6n corporations.J2%K

Anent the second assi6ned error, petitioners posit that while theapplication of the principle of foru) non conveniens is discretionar on thepart of the Court, said discretion is limited b the 6uidelines pertainin6 tothe private as well as public interest factors in determinin6 whetherplaintiffsL choice of forum should be disturbed, as elucidated in 0ulf Oil

4orp. vs. 0ilbertJ21Kand iper Aircraft 4o. vs. Reyno#J22Kto wit=

N4rivate interest factors include= >a@ the relative ease of access to sources ofproof? >b@ the availabilit of compulsor process for the attendance ofunwillin6 witnesses? >c@ the cost of obtainin6 attendance of willin6witnesses? or >d@ all other practical problems that maFe trial of a case eas,eb@ the localinterest in havin6 localiBed controversies decided at home? >c@ the

avoidance of unnecessar problems in conflict of laws or in the applicationof forei6n law? or >d@ the unfairness of burdenin6 citiBens in an unrelatedforum with ur dut.OJ2K
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n support of their claim that the local court is not the proper forum,petitioners alle6e the followin6=

Ni@ The anF of America ranches involved, as clearl mentioned in theComplaint, are based in -on6Fon6 and (n6land. As such, the evidence andthe witnesses are not readil available in the 4hilippines?

Nii@ The loan transactions were obtained, perfected, performed,consummated and partiall paid outside the 4hilippines?

Niii@ The monies were advanced outside the 4hilippines. urthermore, themort6a6ed vessels were part of an offshore fleet, not based in the4hilippines?

Niv@ All the loans involved were 6ranted to the 4rivate "espondentsLforei6n C'"4'"AT'#)?

Nv@ The "estructurin6 A6reements were A++ 6overned b the laws of(n6land?

Nvi@ The subse;uent sales of the mort6a6ed vessels andthe application of the sales proceeds occurred and transpired outside the4hilippines, and the deliveries of the sold mort6a6ed vessels were liFewisemade outside the 4hilippines?

Nvii@ The revenues of the vessels and the proceeds of the sales of these

vessels were A++ deposited to the Accounts of theforei6n C'"4'"AT'#) abroad? and

Nviii@ anF of America nternational +td. is not licensed nor en6a6ed intrade or business in the 4hilippines.OJ23K

4etitioners ar6ue further that the loan a6reements, securitdocumentation and all subse;uent restructurin6 a6reements uniforml,unconditionall and ea@ +("A#

T"A#)4'"T #A!AT'#. )A.? >b@ ()-+(* C'4A#A #A("A )A., >c@ (+C-A++(#!(" )A? >d@ ()4"'#A )-44#! C'. )A? >e@ 4ACC #A!AT')C'"4. )A? >f@ (DD( #A!AT'# C'"4. )A? >6@ (D0A"D' 5. +T'#/0A I >h@A0"(+' 5. +T'#/0A.

N2.@ Civil action in (n6land in its -i6h Court of /ustice, HueenLs enchDivision, Commercial Court >1992olio #o. 223@ a6ainst >a@ (+
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C-A++(#!(" ).A., >b@ ()4"'#A )-44#! C'4A#* ).A., >c@ (D0A"D'5AT40#A# +T'#/0A and >d@ A0"(+' 5AT40#A# +T'#/0A.

N.@ Civil action in the )upreme Court of -on6Fon6 -i6h Court >Action #o.3%9 of 1992@, a6ainst >a@ ()-+(* C'4A#A #A("A ).A., >b@ (+C-A++(#!(" ).A., >c@ ()4"'#A )-44#! C'4A#* ).A., >d@ 4ACC#A!AT'") C'"4'"AT'# >e@ (DD( #A!AT'# C'"4'"AT'# ).A., >f@

+T'#/0A C-A"T("#! >(D*)-4@ C'., #C., >6@ A0"(+' 5AT40#A#+T'#/0A, /"., and >h@ (D0A"D' 5AT40#A# +T'#/0A.

N3.@ A civil action in the )upreme Court of -on6 5on6 -i6h Court >Action#o. 3%3% of 1992@, a6ainst >a@ ()-+(* C'4A#A #A("A ).A., >b@ (+C-A++(#!(" ).A., >c@ ()4"'#A )-44#! C'4A#* ).A., >d@ 4ACC#A!AT'") C'"4'"AT'# >e@ (DD( #A!AT'# C'"4'"AT'# ).A., >f@+T'#/0A C-A"T("#! >(D*)-4@ C'., #C., >6@ A0"(+' 5AT40#A#+T'#/0A, "/., and >h@ (D0A"D' 5AT40#A# +T'#/0A.O

and that private respondentsL alle6ed cause of action is alread barred bthe pendenc of another action or b litis pendentiaas shown above.J27K

'n the other hand, private respondents contend that certain materialfacts and pleadin6s are omitted andGor misrepresented in the presentpetition for certiorari? that the prefator statement failed to state that partof the securit of the forei6n loans were mort6a6es on a 9hectare piece ofreal estate located in the 4hilippines?J28Kthat while the complaint was filedonl b the stocFholders of the corporate borrowers, the latter are wholl

owned b the private respondents who are ilipinos and therefore under4hilippine laws, aside from the said corporate borrowers bein6 but theiraltere6os, the have interests of their own in the vessels.J29K4rivaterespondents also ar6ue that the dismissal b the Court of Appeals of thepetition for certiorari was ustified because there was neither alle6ation noran showin6 whatsoever b the petitioners that the had no appeal, nor anplain, speed, and ade;uate remed in the ordinar course of law from the'rder of the trial ud6e denin6 their otion to Dismiss? that the remedavailable to the petitioners after their otion to Dismiss was denied was tofile an Answer to the complaint?J%Kthat as upheld b the Court of Appeals,

the decision of the trial court in not applin6 the principle of foru) nonconveniensis in the lawful e


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discretion b the trial court? or >c@ appeal would not prove to be a speedand ade;uate remed as when an appeal would not promptl relieve adefendant from the inurious effects of the patentl mistaFen ordermaintainin6 the plaintiffLs baseless action and compellin6 the defendantneedlessl to 6o throu6h a protracted trial and clo66in6 the court docFetsb another futile case.OJ3K

"ecords show that the trial court acted within its urisdiction when itissued the assailed 'rder denin6 petitionersL motion to dismiss. Does thedenial of the motion to dismiss constitute a patent 6rave abuse ofdiscretionQ Eould appeal, under the circumstances, not prove to be aspeed and ade;uate remedQ Ee will resolve said ;uestions inconunction with the issues raised b the parties.

2irst issue. Did the trial court commit 6rave abuse of discretion inrefusin6 to dismiss the complaint on the 6round that plaintiffs have nocause of action a6ainst defendants since plaintiffs are merel stocFholders

of the corporations which are the re6istered owners of the vessels and theborrowers of petitionersQ

#o. 4etitionersL ar6ument that private respondents, bein6 merestocFholders of the forei6n corporations, have no personalities to sue, andtherefore, the complaint should be dismissed, is untenable. A case isdismissible for lacF of personalit to sue upon proof that the plaintiff is notthe real partininterest. +acF of personalit to sue can be used as a6round for a otion to Dismiss based on the fact that the complaint, on theface thereof, evidentl states no cause of action. JKn (an Loren1o 6illage

Association# Inc. vs. 4ourt of Appeals#J$Kthis Court clarified that a complaintstates a cause of action where it contains three essential elements of acause of action, namel= >1@ the le6al ri6ht of the plaintiff, >2@ the correlativeobli6ation of the defendant, and >@ the act or omission of the defendant inviolation of said le6al ri6ht. f these elements are absent, the complaintbecomes vulnerable to a motion to dismiss on the 6round of failure to statea cause of action.J7KTo emphasiBe, it is not the lacF or absence of cause ofaction that is a 6round for dismissal of the complaint but rather the fact thatthe complaint states no cause of action.J8KN2ailure to state a cause of

actionO refers to the insufficienc of alle6ation in the pleadin6, unliFe N lac7of cause of actionO which refers to the insufficienc of factual basis for theaction. Nailure to state a cause of actionO ma be raised at the earlieststa6es of an action throu6h a motion to dismiss the complaint, while NlacF ofcause of actionO ma be raised an time after the ;uestions of fact havebeen resolved on the basis of stipulations, admissions or evidencepresented.J9K

n the case at bar, the complaint contains the three elements of a causeof action. t alle6es that= >1@ plaintiffs, herein private respondents, have the

ri6ht to demand for an accountin6 from defendants >herein petitioners@, astrustees b reason of the fiduciar relationship that was created betweenthe parties involvin6 the vessels in ;uestion? >2@ petitioners have theobli6ation, as trustees, to render such an accountin6? and >@ petitionersfailed to do the same.

4etitioners insist that the do not have an obli6ation to the privaterespondents as the are mere stocFholders of the corporation? that thecorporate entities have uridical personalities separate and distinct fromthose of the private respondents. 4rivate respondents maintain that the

corporations are wholl owned b them and prior to the incorporation ofsuch entities, the were clients of petitioners which induced them to ac;uireloans from said petitioners to invest on the additional ships.
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Ee a6ree with private respondents. As held in the )an +orenBo case,J3%K

N


15/88

acts? and >c@ the identit in the two cases should be such that the ud6mentwhich ma be rendered in one would, re6ardless of which part issuccessful, amount to res 5udicatain the other.J%K

n case at bar, not all the re;uirements for litis pendentiaarepresent. Ehile there ma be identit of parties, notwithstandin6 thepresence of other respondents,J1Kas well as the reversal in positions of

plaintiffs and defendantsJ2K

, still the other re;uirements necessar for litispendentiawere not shown b petitioner. t merel mentioned that civilcases were filed in -on6Fon6 and (n6land without however showin6 theidentit of ri6hts asserted and the reliefs sou6ht for as well as the presenceof the elements of res 5udicatashould one of the cases be adud6ed.

As the Court of Appeals aptl observed=

N


16/88

%%%$89, for alle6edl havin6 been rendered with 6rave abuse ofdiscretion.

4rivate respondents were emploees of petitioner Avon Dale !arments, nc.and its predecessorininterest, Avon Dale )hirt actor. ollowin6 a disputebrou6ht about b the rotation of worFers, a compromise a6reement wasentered into between petitioner and private respondents wherein the latter

were terminated from service and 6iven their correspondin6 separation pa.

-owever, upon refusal of the petitioner to include in the computation ofprivate respondents: separation pa the period durin6 which the latter wereemploed b Avon Dale )hirt actor, private respondents filed a complaintwith the labor arbiter claimin6 a deficienc in their separation pa >docFetedas #+"C#C"%%%2%%81%9@. Accordin6 to private respondents, theirprevious emploment with petitioner:s predecessorininterest, Avon Dale)hirt actor, should be credited in computin6 their separation pa

considerin6 that Avon Dale )hirt factor was not dissolved and the werenot in turn hired as new emploees b Avon Dale !arments, nc.

n its decision dated a 13, 199, the labor arbiter dismissed privaterespondents: complaint and held that Avon Dale )hirt actor and AvonDale !arments, nc. are not one and the same entit as the former was infact dissolved on December 27, 1978, when it filed its Articles of Dissolutionwith the )ecurities and (


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4etitioner failed to establish that Avon Dale !arments, nc., is a separateand distinct entit from Avon Dale )hirt actor, absent an showin6 thatthere was indeed an actual closure and cessation of the operations of thelatter. The mere filin6 of the Articles of Dissolution with the )ecurities and(


18/88

CONCEPT #UI!DER$, INC.,petitioner, vs. THE NATIONA! !A#ORRE!ATION$ COMMI$$ION, >Fr?) D@?onB an Norber)oMarabe, Roo+o Raue+, Cr?)oba+ Reo, Manue+ G++eo,Pa+6rono Gu6o?, Pero Aboar, Norber)o Co(enaor,Roe++o $a+u), E(+o Gar6a, *r., Marano Ro, Pau+na #a?ea,Areo A+bera, Pau)o $a+u), Do(no Guarno, Ro(eo Ga+@e,Do(naor $abna, Fe+/e Raana, Ga@no $ua+bo, MorenoE?6are?, Fernan Torre?, Fe+/e #a?+an, an RubenRoba+o?, respondents.

D E C I $ I O N

HERMO$I$IMA, *R.,J.:

The corporate masF ma be lifted and the corporate veil ma be piercedwhen a corporation is ust but the alter e6o of a person or of anothercorporation. Ehere bad6es of fraud e


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'n 'ctober 1$, 198$, the #+"C "esearch and nformation Departmentmade the findin6 that private respondentsL bacFwa6es amounted to4199,8%%.%%.

'n 'ctober 29, 198$, the +abor Arbiter issued a writ of e-44@ and not b respondent?

2. +ev was made upon personal properties he found in the premises?

. )ecurit 6uards with hi6hpowered 6uns prevented him from removin6the properties he had levied upon.3

The said special sheriff recommended that a NbreaFopen orderO beissued to enable him to enter petitionerLs premises so that he could proceed

with the public auction sale of the aforesaid personal propertieson #ovember 7, 1989.

'n #ovember $, 1989, a certain Dennis Cue6Fen6 filed a thirdpartclaim with the +abor Arbiter alle6in6 that the properties sou6ht to be leviedupon b the sheriff were owned b -dro >4hils.@, nc. >-44@ of which he isthe ice4resident.

'n #ovember 2, 1989, private respondents filed a Notion for ssuanceof a reaF'pen 'rder,O alle6in6 that -44 and petitioner corporation wereowned b the same incorporatorS stocFholders. The also alle6ed thatpetitioner temporaril suspended its business operations in order to evadeits le6al obli6ations to them and that private respondents were willin6 topost an indemnit bond to answer for an dama6es which petitioner and-44 ma suffer because of the issuance of the breaFopen order.

n support of their claim a6ainst -44, private respondents presenteddul certified copies of the !eneral nformations )heet, dated a 1, 1987,submitted b petitioner to the )ecurities and ()(C@and the !eneral nformation )heet, dated a $'# 1987, submitted b -44to the )ecurities and (


20/88

N 1. reaFdown of )ubscribed Capital

#ame of )tocFholder Amount )ubscribed

-44 4$,999,%%.%%

Antonio E. +im 2,9%%,%%%.%%

Dennis ). Cue6Fen6 %%.%%

(lisa C. +im 1%%,%%%.%%

Teodulo ". Dino 1%%.%%

ir6ilio '. Casino 1%%.%%

2. oard of Directors

Antonio E. +im Chairman

Dennis ). Cue6Fen6 ember

(lisa C. +im ember

Teodulo ". Dino ember

ir6ilio '. Casino ember

. Corporate 'fficers

Antonio E. +im 4resident

Dennis ). Cue6Fen6 Assistant to the 4resident

(lisa %. +im Treasurer

ir6ilio '. Casino Corporate )ecretar

3. 4rincipal 'ffice

asan "oad

alenBuela, etro anila.O

'n the other hand, the !eneral nformation )heet of -44 revealed thefollowin6=

N 1. reaFdown of )ubscribed Capital

#ame of )tocFholder Amount )ubscribed

Antonio E. +im 43%%,%%%.%%

(lisa C. +im 7,7%%.%%

AE+ Tradin6 3,%%%.%%

Dennis ). Cue6Fen6 3%,1%%.%%

Teodulo ". Dino 1%%.%%
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ir6ilio '. Casino 1%%.%%

2. oard of Directors

Antonio E. +im Chairman

(lisa C. +im ember

Dennis ). Cue6Fen6 ember

ir6ilio '. Casino ember

Teodulo ". Dino ember

. Corporate 'fficers

Antonio E. +im 4resident

Dennis ). Cue6Fen6 Assistant to the 4resident

(lisa '. +im Treasurer

ir6ilio '. Casino Corporate )ecretar

3. 4rincipal 'ffice

asan "oad, alenBuela, etro anila.O$

'n ebruar 1, 199%, -44 filed an 'pposition to private respondentsLmotion for issuance of a breaFopen order, contendin6 that -44 is acorporation which is separate and distinct from petitioner. -44 also alle6edthat the two corporations are en6a6ed in two different Finds of businesses,i.e., -44 is a manufacturin6 firm while petitioner was then en6a6ed inconstruction.

'n arch 2, 199%, the +abor Arbiter issued an 'rder which deniedprivate respondentsL motion for breaFopen order.

4rivate respondents then appealed to the #+"C. 'n April 2, 1992, the#+"C set aside the order of the +abor Arbiter, issued a breaFopen orderand directed private respondents to file a bond. Thereafter, it directed thesheriff to proceed with the auction sale of the properties alread leviedupon. t dismissed the thirdpart claim for lacF of merit.

4etitioner moved for reconsideration but the motion was denied b the#+"C in a "esolution, dated December , 1992.

-ence, the resort to the present petition.

4etitioner alle6es that the #+"C committed 6rave abuse of discretionwhen it ordered the e


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t is a fundamental principle of corporation law that a corporation is anentit separate and distinct from its stocFholders and from othercorporations to which it ma be connected.8ut, this separate and distinctpersonalit of a corporation is merel a fiction created b law forconvenience and to promote ustice.9)o, when the notion of separate

uridical personalit is used to defeat public convenience, ustif wron6,protect fraud or defend crime, or is used as a device to defeat the laborlaws,1%this separate personalit of the corporation ma be disre6arded orthe veil of corporate fiction pierced.11This is true liFewise when thecorporation is merel an adunct, a business conduit or an alter e6o ofanother corporation.12

The conditions under which the uridical entit ma be disre6arded varaccordin6 to the peculiar facts and circumstances of each case. #o hardand fast rule can be accuratel laid down, but certainl, there are someprobative factors of identit that will ustif the application of the doctrine ofpiercin6 the corporate veil, to wit=

N1. )tocF ownership b one or common ownership of both corporations.

2. dentit of directors and officers.

. The manner of Feepin6 corporate booFs and records.

3. ethods of conductin6 the business.O1

The )(C en banc e in applying t!e >instru)entality? or >alter ego? doctrine# t!e courts are
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concerned wit! reality and not for)# wit! !ow t!e corporation operated andt!e individual defendant?s relations!ip to t!at operation.


24/88

consonance with )ection , "ule of the #+"C anual of (For(er+y Prou6er? #ano )0e P0+//ne? an MERCURIO RI;ERA,petitioners, vs.COURT OF APPEA!$, CAR!O$ E*ERCITO, n ?ub?))u)on oDEMETRIO DEMETRIA, an *O$E *ANO!O, respondents.

D E C I $ I O N

PANGANI#AN,J.

n the absence of a formal deed of sale, ma commitments 6iven bbanF officers in an e


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NE-("('"(, the decision of the lower court is 'D(D b theelimination of the dama6es awarded under para6raphs , 3 and $ of itsdispositive portion and the reduction of the award in para6raph thereof to47,%%%.%%, to be assessed a6ainst defendant banF. n all other aspects,said decision is hereb A"(D.

NAll references to the ori6inal plaintiffs in the decision and its dispositive

portion are deemed, herein and hereafter, to le6all refer to the plaintiffappellee Carlos C. (ercito.

NCosts a6ainst appellant banF.O

The dispositive portion of the trial courtLsJ2Kdecision dated /ul 1%, 1991,on the other hand, is as follows=

NE-("('"(, premises considered, ud6ment is hereb rendered in favorof the plaintiffs and a6ainst the defendants as follows=

N1. Declarin6 the e$@ parcels of land situated at Don /ose, )ta. "osa, +a6una with an areaof 1%1 hectares, more or less, covered b and embraced in TransferCertificates of Title #os. T1%$92 to T1%$97, inclusive, of the +and"ecords of +a6una, between the plaintiffs as buers and the defendant4roducers anF for an a6reed price of ive and 'ne -alf illion>4,%%,%%%.%%@ 4esos?

N2. 'rderin6 defendant 4roducers anF of the 4hilippines, upon finalit ofthis decision and receipt from the plaintiffs the amount of 4. illion, toe$@ parcels of land, and to immediatel deliver to theplaintiffs the ownerLs copies of T.C.T. #os. T1%$92 to T1%$97, inclusive,for purposes of re6istration of the same deed and transfer of the si< >$@titles in the names of the plaintiffs?

N. 'rderin6 the defendants, ointl and severall, to pa plaintiffs /ose A./anolo and Demetrio Demetria the sums of 4 2%%,%%%.%% each in moral

dama6es?

N3. 'rderin6 the defendants, ointl and severall, to pa plaintiffs the sumof 4 1%%,%%%.%% as e


26/88

4etitioner irst 4hilippine nternational anF >formerl 4roducers anF ofthe 4hilippines? petitioner anF, for brevit@ is a banFin6 institutionor6aniBed and epetitioner "ivera, for brevit@ is of le6al a6e andwas, at all times material to this case, -ead ana6er of the 4ropertana6ement Department of the petitioner anF.

"espondent Carlos (ercito >respondent (ercito, for brevit@ is of le6ala6e and is the assi6nee of ori6inal plaintiffsappellees Demetrio Demetriaand /ose /anolo.

"espondent Court of Appeals is the court which issued the Decision and"esolution sou6ht to be set aside throu6h this petition.

T0e Fa6)?

The facts of this case are summariBed in the respondent CourtLsDecision,JKas follows=

N>1@ n the course of its banFin6 operations, the defendant 4roducer anF ofthe 4hilippines ac;uired si< parcels of land with a total area of 1%1 hectareslocated at Don /ose, )ta. "osa, +a6una, and covered b Transfer Certificatesof Title #os. T1%$92 to T1%$97. The propert used to be owned b *(nvestment and Development Corporation which had them mort6a6ed withthe banF as collateral fora loan. The ori6inal plaintiffs, Demetrio Demetriaand /ose '. /anolo, wanted to purchase the propert and thus initiatedne6otiations for that purpose.

N>2@ n the earl part of Au6ust 1987 said plaintiffs, upon the su66estion of*( nvestmentLs le6al counsel, /ose aardo, met with defendant ercurio"ivera, ana6er of the 4ropert ana6ement Department of the defendantbanF. The meetin6 was held pursuant to plaintiffsL plan to bu the propert>T)# of /an. 1$, 199%, pp. 71%@. After the meetin6, plaintiff /anolo, followin6the advice of defendant "ivera, made a formal purchase offer to the banFthrou6h a letter dated Au6ust %, 1987 >(


27/88

y offer is for E(O(H 8REE ILLIO 2I6E CDRED 8OC(AD9;#'++#+++.++: E(O(# in cas!.

Gindly contact )e at 8elep!one u)ber %*$-$;,,.

N>@ 'n )eptember 1, 1987, defendant "ivera made on behalf of the banF aformal repl b letter which is hereunder ;uoted >((


28/88

0entle)enH

ursuant to our discussion last *& (epte)ber $%&"# we are pleased toinfor) you t!at we are accepting your offer for us to purc!ase t!e propertyat (ta. Rosa# Laguna# for)erly owned by 3y)e In-vest)ent# for a total priceof E(O(H 2I6E ILLIO 2I6E CDRED 8OC(AD 9'#'++#+++.++:.

8!an7 you.

N>$@ 'n 'ctober 12, 1987, the conservator of the banF >which has beenplaced under conservatorship b the Central anF since 1983@ was replacedb an Actin6 Conservator in the person of defendant +eonida T.(ncarnacion. 'n #ovember 3, 1987, defendant "ivera wrote plaintiffDemetria the followin6 letter >(7@ Ehat thereafter transpired was a series of demands b the plaintiffs forcompliance b the banF with what plaintiff considered as a perfectedcontract of sale, which demands were in one form or another refused b thebanF. As detailed b the trial court in its decision, on #ovember 17, 1987,plaintiffs throu6h a letter to defendant "ivera >(our@ perfected salea6reement.O Defendants refused to receive both the pament and theletter. nstead, the parcels of land involved in the transaction wereadvertised b the banF for sale to an interested buer >(


29/88

In be!alf of our client# t!erefore# we are )a7ing t!is for)al de)and uponyou to consu))ate and execute t!e necessary actionsBdocu)entationwit!in t!ree 9;: days fro) your receipt !ereof =e are ready to re)it t!eagreed a)ount of '.' )illion at your advice. Ot!erwise# we s!all beconstrained to file t!e necessary court action to protect t!e interest of ourclient.

=e trust t!at you will be guided accordingly.

N>8@ Defendant banF, throu6h defendant "ivera, acFnowled6ed receipt ofthe fore6oin6 letter and stated, in its communication of December 2,1987 >(9@ The fore6oin6 letter drew no response for more than four months. Then,on a , 1988, plaintiff, throu6h counsel, made a final demand forcompliance b the banF with its obli6ations under the considered perfectedcontract of sale >('ri6inal"ecord, p. $$@, in a repl letter dated a 12, 1988 >Anne< N3O ofdefendantLs answer to amended complaint@, the defendants throu6h Actin6Conservator (ncarnacion repudiated the authorit of defendant "ivera andclaimed that his dealin6s with the plaintiffs, particularl his counteroffer of

4. illion are unauthoriBed or ille6al. 'n that basis, the defendantsustified the refusal of the tenders of pament and the noncompliance withthe obli6ations under what the plaintiffs considered to be a perfectedcontract of sale.

N>1%@ 'n a 1$, 1988, plaintiffs filed a suit for specific performance withdama6es a6ainst the banF, its ana6er "ivera and Actin6 Conservator(ncarnacion. The basis of the suit was that the transaction had with thebanF resulted in a perfected contract of sale. The defendants tooF theposition that there was no such perfected sale because the defendant

"ivera is not authoriBed to sell the propert, and that there was no meetin6of the minds as to the price.O


30/88

'n arch 13, 1991, -enr +. Co >the brother of +uis Co@, throu6h counsel)cip )alaBar -ernandeB and !atmaitan, filed a motion to intervene in thetrial court, alle6in6 that as owner of 8%M of the anFLs outstandin6 sharesof stocF, he had a substantial interest in resistin6 the complaint. 'n /ul 8,1991, the trial court issued an order denin6 the motion to intervene on the6round that it was filed after trial had alread been concluded. t alsodenied a motion for reconsideration filed thereafter. rom the trial courtLsdecision, the anF, petitioner "ivera and conservator (ncarnacion appealedto the Court of Appeals which subse;uentl affirmed with modification thesaid ud6ment. -enr Co did not appeal the denial of his motion forintervention.

n the course of the proceedin6s in the respondent Court, Carlos(ercito was substituted in place of Demetria and /anolo, in view of theassi6nment of the lattersL ri6hts in the matter in liti6ation to said privaterespondent.

'n /ul 11, 1992, durin6 the pendenc of the proceedin6s in the Court ofAppeals, -enr Co and several other stocFholders of the anF, throu6hcounsel An6ara Abello Concepcion "e6ala and CruB, filed an action>hereafter, the N)econd CaseO@ purportedl a Nderivative suitO with the"e6ional Trial Court of aFati, ranch 13, docFeted as Civil Case #o. 921$%$, a6ainst (ncarnacion, Demetria and /anolo Nto declare an perfectedsale of the propert as unenforceable and to stop (ercito from enforcin6 orimplementin6 the sale.OJ3Kn his answer, /anolo ar6ued that the )econd Casewas barred b litis pendentiab virtue of the case then pendin6 in the Court

of Appeals. Durin6 the pretrial conference in the )econd Case, plaintiffsfiled a otion for +eave of Court to Dismiss the Case Eithout 4reudice.N4rivate respondent opposed this motion on the 6round, amon6 others, thatplaintiffLs act of forum shoppin6 ustifies the dismissal of both cases, withpreudice.OJK4rivate respondent, in his memorandum, averred that thismotion is still pendin6 in the aFati "TC.

n their 4etitionJ$Kand emorandum,J7Kpetitioners summariBed theirposition as follows=

I.

NThe Court of Appeals erred in declarin6 that a contract of sale wasperfected between (ercito >in substitution of Demetria and /anolo@ and thebanF.

II.

NThe Court of Appeals erred in declarin6 the e


31/88

I.

N4etitioners have en6a6ed in forum shoppin6.

II.

NThe factual findin6s and conclusions of the Court of Appeals are supported

b the evidence on record and ma no lon6er be ;uestioned in this case.

III.

NThe Court of Appeals correctl held that there was a perfected contractbetween Demetria and /anolo >substituted b respondent (ercito@ and thebanF.

I;.

NThe Court of Appeals has correctl held that the conservator, apart frombein6 estopped from repudiatin6 the a6enc and the contract, has noauthorit to revoFe the contract of sale.O

T0e I??ue?

rom the fore6oin6 positions of the parties, the issues in this case mabe summed up as follows=

1@ Eas there forumshoppin6 on the part of petitioner anFQ

2@ Eas there a perfected contract of sale between the partiesQ

@ Assumin6 there was, was the said contract enforceable under thestatute of fraudsQ

3@ Did the banF conservator have the unilateral power to repudiate theauthorit of the banF officers andGor to revoFe the said contractQ

@ Did the respondent Court commit an reversible error in its findin6s offactsQ

T0e Fr?) I??ue :a? T0ere Foru(%$0o//n

n order to prevent the ve,@ the pendenc of Civil Case #o. 921$%$before the "e6ional Trial Court of aFati, ranch 13, involvin6a derivativesuit filed b stocFholders of petitioner anF a6ainst theconservator and other defendants but which is the subect of a pendin6otion to Dismiss Eithout 4reudice.OJ9K

4rivate respondent (ercito vi6orousl ar6ues that in spite of thisverification, petitioners are 6uilt of actual forum shoppin6 because theinstant petition pendin6 before this Court involves Nidentical parties or
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32/88


33/88

Nn either of these situations >choice of venue or choice of remed@, theliti6ant actuall shops for a forum of his action. This was the ori6inalconcept of the term forum shoppin6.

N(ventuall, however, instead of actuall maFin6 a choice of the forum oftheir actions, liti6ants, throu6h the encoura6ement of their lawers, filetheir actions in all available courts, or invoFe all relevant remedies

simultaneousl. This practice had not onl resulted to >sic@ conflictin6adudications amon6 different courts and conse;uent confusion enimical>sic@ to an orderl administration of ustice. t had created enow Chief /ustice@ in inister of #atural"esources, et al. vs. -eirs of 'rval -u6hes, et al., Nas a reprehensiblemanipulation of court processes and proceedin6s < < other than b appeal or certiorari@in another. The principle applies not onl with respect to suits filed in thecourts but also in connection with liti6ations commenced in the courts while

an administrative proceedin6 is pendin6, as in this case, in order to defeatadministrative processes and in anticipation of an unfavorableadministrative rulin6 and a favorable court rulin6. This is speciall so, as inthis case, where the court in which the second suit was brou6ht, has no

urisdiction NJ18K

The test for determinin6 whether a part violated the rule a6ainst forumshoppin6 has been laid down in the 198$ case of uan vs. +opeB,J19Kalso bChief /ustice #arvasa, and that is, forumshoppin6 e


34/88

NAs alread observed, there is between the action at bar and "TC Case #o.8$$$, an identit as re6ards parties, or interests represented, ri6htsasserted and relief sou6ht, as well as basis thereof, to a de6ree sufficient to6ive rise to the 6round for dismissal Fnown asauter action pendantor lis

pendens. That same identit puts into operation the sanction of twindismissals ust mentioned. The application of this sanction will prevent anfurther dela in the settlement of the controvers which mi6ht ensue fromattempts to seeF reconsideration of or to appeal from the 'rder of the"e6ional Trial Court in Civil Case #o. 8$$$ promul6ated on /ul 1,198$, which dismissed the petition upon 6rounds which appear persuasive.O

Conse;uentl, where a liti6ant >or one representin6 the same interest orperson@ sues the same part a6ainst whom another action or actions for thealle6ed violation of the same ri6ht and the enforcement of the same reliefisGare still pendin6, the defense of litispendenciain one case is a bar to theothers? and, a final ud6ment in one would constitute res 5udicataand thus

would cause the dismissal of the rest. n either case, forum shoppin6 couldbe cited b the other part as a 6round to asF for summar dismissal of thetwoJ2%K>or more@ complaints or petitions, and for the imposition of the othersanctions, which are direct contempt of court, criminal prosecution, anddisciplinar action a6ainst the errin6 lawer.

Applin6 the fore6oin6 principles in the case before us and comparin6 itwith the )econd Case, it is obvious that there eherein private respondentand his predecessorsininterest@ a6ainst the seller >herein petitioners@ toenforce the alle6ed perfected sale of real estate. 'n the other hand, thecomplaintJ21Kin the )econd Case seeFs to declare such purported saleinvolvin6 the same real propert Nas unenforceable as a6ainst the anF,Owhich is the petitioner herein. n other words, in the )econd Case, themaorit stocFholders, in representation of the anF, are seeFin6 toaccomplish what the anF itself failed to do in the ori6inal case in the trial

court. n brief, the obective or the relief bein6 sou6ht, thou6h wordeddifferentl, is the same, namel, to enable the petitioner anF to escapefrom the obli6ation to sell the propert to respondent. n Danville ariti)e#Inc. vs. 4o))ission on Audit,J22Kthis Court ruled that the filin6 b a part oftwo apparentl different actions, but with the sa)e ob5ective, constitutedforum shoppin6=

Nn the attempt to maFe the two actions appear to be different, petitionerimpleaded different respondents therein 4#'C in the case before the lowercourt and the C'A in the case before this Court and sou6ht what seems tobe different reliefs. 4etitioner asFs this Court to set aside the ;uestionedletterdirective of the C'A dated 'ctober 1%, 1988 and to direct said bodto approve the emorandum of A6reement entered into b and betweenthe 4#'C and petitioner, while in the complaint before the lower courtpetitioner seeFs to enoin the 4#'C from conductin6 a rebiddin6 and fromsellin6 to other parties the vessel NTGT Andres onifacio,O and for aneitalics supplied@
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n an earlier case,J2Kbut with the same lo6ic and vi6or, we held=

Nn other words, the filin6 b the petitioners of the instant special civil actionfor certiorariand prohibition in this Court despite the pendenc of theiraction in the aFati "e6ional Trial Court, is a species of forumshoppin6.oth actions un;uestionabl involve the same transactions, the sameessential facts and circumstances. The petitionersL claim of absence of

identit simpl because the 4C!! had not been impleaded in the "TC suit,and the suit did not involve certain acts which transpired after itscommencement, is specious. n the "TC action, as in the action before thisCourt, the validit of the contract to purchase and sell of )eptember 1,198$, i.e., whether or not it had been efficaciousl rescinded, and thepropriet of implementin6 the same >b pain6 the pled6ee banFs theamount of their loans, obtainin6 the release of the pled6ed shares, etc.@were the basic issues. )o, too, the relief was the same= the prevention ofsuch implementation andGor the restoration of the status uo ante. Ehen

the acts sou6ht to be restrained tooF place anwa despite the issuance bthe Trial Court of a temporar restrainin6 order, the "TC suit did notbecome functus oflcio. t remained an effective vehicle for obtention ofrelief? and petitionersL remed in the premises was plain and patent= thefilin6 of an amended and supplemental pleadin6 in the "TC suit, so as toinclude the 4C!! as defendant and seeF nullification of the acts sou6ht tobe enoined but nonetheless done. The remed was certainl not theinstitution of another action in another forum based on essentiall the samefacts. The adoption of this latter recourse renders the petitioners amenableto disciplinar action and both their actions, in this Court as well as in theCourt a uo, dismissible.O

n the instant case before us, there is also identit of parties, or at least,of interests represented. Althou6h the plaintiffs in the )econd Case>-enr +. Co. et al.@ are not name parties in the irst Case, the representthe same interest and entit, namel, petitioner anF, because=

2irstly, the are not suin6 in their personal capacities, for the have nodirect personal interest in the matter in controvers. The are not

principall or even subsidiaril liable? much less are the direct parties inthe assailed contract of sale? and

(econdly, the alle6ations of the complaint in the )econd Case show that thestocFholders are brin6in6 a Nderivative suit.O n the caption itself, petitionersclaim to have brou6ht suit Nfor and in behalf of the 4roducers anF ofthe 4hilippines.OJ23Kndeed, this is the ver essence of a derivative suit=

NAn individual stocFholder is permitted to institute a derivative suit onbehalf of the corporation wherein he holds stocF in order to protect or

vindicate corporate ri6hts, whenever the officials of the corporation refuseto sue, or are the ones to be sued or hold the control of the corporation. nsuch actions, the suin6 stocFholder is re6arded as a nominal part, with thecorporation as the real part in interest. >!amboa v. ictoriano, 9% )C"A 3%,37 J1979K? italics supplied@.

n the face of the dama6in6 admissions taFen from the complaint in the)econd Case, petitioners, ;uite stran6el, sou6ht to den that the )econdCase was a derivative suit, reasonin6 that it was brou6ht, not b the

minorit shareholders, but b -enr Co et al., who not onl own, hold orcontrol over 8%M of the outstandin6 capital stocF, but also constitute themaorit in the oard of Directors of petitioner anF. That bein6 so, then
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the reall represent the anF. )o, whether the sued NderivativelO ordirectl, there is undeniabl an identit of interestsGentit represented.

4etitioner also tried to seeF refu6e in the corporate fiction that thepersonalit of the anF is separate and distinct from its shareholders. utthe rulin6s of this Court are consistent= NEhen the fiction is ur6ed as ameans of perpetratin6 a fraud or an ille6al act or as a vehicle for the

evasion of an ethe anF@ was the defendant in the >first@case while it was the plaintiff in the other >)econd Case@,O citin6 asauthorit 6ictronics 4o)puters# Inc. vs. Regional 8rial 4ourt# 3ranc! ;#a7ati# etc. et al.,J27Kwhere the Court held=

NThe rule has not been e


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conflictin6 decisions bein6 rendered b the different fora upon the sameissue. n this case, this is e


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the banF and it is also the Committee that submit to the Conservator forfinal approval and once approved, we have to eT)# of a 1,199%, pp. 2728@=

H= Ehen ou went to the 4roducers anF and talFed with r.ercurio "ivera, did ou asF him pointblanF his authorit to sellan propertQ

A= #o, sir. #ot point blanF althou6h it came from him. >E@hen asFed him how lon6 it would taFe because he was sain6 that thematter of pricin6 will be passed upon b the committee. And when asFed him how lon6 it will taFe for the committee to decide andhe said the committee meets ever weeF. f am not mistaFen

Eednesda and in about two weeFLs >sic@ time, in effect what hewas sain6 he was not the one who was to decide. ut he wouldrefer it to the committee and he would rela the decision of thecommittee to me.

H= 4lease answer the ;uestion.

A= -e did not sa that he had the authorit>.@ ut he said he wouldrefer the matter to the committee and he would rela the decisionto me and he did ust liFe that.

N4arentheticall, the Committee referred to was the 4ast Due Committee ofwhich +uis Co was the -ead, with /ose (ntereso as one of the members.

NEhat transpired after the meetin6 of earl Au6ust 1987 are consistent withthe authorit and the duties of "ivera and the banFLs internal procedure inthe matter of the sale of banFLs assets. As advised b "ivera, the plaintiffsmade a formal offer b a letter dated Au6ust 2%, 1987 statin6 that thewould bu at the price of 4. illion in cash. The letter was for theattention of ercurio "ivera who was tasFed to conve and accept such

offers. Considerin6 an aspect of the official dut of "ivera as some sort ofintermediar between the plaintiffsbuers with their proposed buin6 priceon one hand, and the banF Committee, the Conservator and ultimatel thebanF itself with the set price on the other, and considerin6 further thediscussion of price at the meetin6 of Au6ust resultin6 in a formal offer of4. illion in cash, there can be no other lo6ical conclusion than thatwhen, on )eptember 1, 1987, "ivera informed plaintiffs b letter that NthebanFLs counteroffer is at 4. illion for more than 1%1 hectares on lotbasis,O such counteroffer price had been determined b the 4ast DueCommittee and approved b the Conservator after "ivera had dul

presented plaintiffsL offer for discussion b the Committee of such mattersas ori6inal loan of borrower, bid price durin6 foreclosure, total claim of thebanF, and marFet value. Tersel put, under the established facts, the price


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of 4. illion was, as clearl worded in "iveraLs letter >(1@ Consent of the contractin6 parties? >2@

'bect certain which is the subect matter of the contract? >@ Cause ofthe obli6ation which is established.O

There is no dispute on re;uisite no. 2. The obect of the ;uestionedcontract consists of the si< >$@ parcels of land in )ta. "osa, +a6una with ana66re6ate area of about 1%1 hectares, more or less, and covered b

Transfer Certificates of Title #os. T1%$92 to T1%$97. There is, however,a dispute on the first and third re;uisites.

4etitioners alle6e that Nthere is no counteroffer made b the anF, andan supposed counteroffer which "ivera >or Co@ ma have made isunauthoriBed. )ince there was no counteroffer b the anF, there wasnothin6 for (ercito >in substitution of Demetria and /anolo@ toaccept.OJ%KThe disputed the factual basis of the respondent CourtLsfindin6s that there was an offer made b /anolo for 4. million, to which theanF counteroffered 4. million. Ee have perused the evidence butcannot find fault with the said CourtLs findin6s of fact. eril, in a petitionunder "ule 3 such as this, errors of fact if there be an are, as a rule, notreviewable. The mere fact that respondent Court >and the trial court as well@chose to believe the evidence presented b respondent more than that

presented b petitioners is not b itself a reversible error. in fact, suchfindin6s merit serious consideration b this Court, particularl where, as in


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this case, said courts carefull and meticulousl discussed their findin6s.This is basic.

e that as it ma, and in additionto the fore6oin6 dis;uisitions b theCourt of Appeals, let us review the ;uestion of "iveraLs authorit to act andpetitionerLs alle6ations that the 4. million counteroffer was ecitin6 #ational ood Authorit vs. ntermediate Appellate Court, 183 )C"A1$$@.

NA banF is liable for wron6ful acts of its officers done in the interests of thebanF or in the course of dealin6s of the officers in their representativecapacit but not for acts outside the scope of their authorit >9 C./.)., p.317@. A banF holdin6 out its officers and a6ents as worth of confidence willnot be permitted to profit b the frauds the ma thus be enabled to

perpetrate in the apparent scope of their emploment? nor will it bepermitted to shirF its responsibilit for such frauds, even thou6h no benefitma accrue to the banF therefrom >1% Am /ur 2d, p. 113@. Accordin6l, abanFin6 corporation is liable to innocent third persons where therepresentation is made in the course of its business b an a6ent actin6within the 6eneral scope of his authorit even thou6h, in the particular case,the a6ent is secretl abusin6 his authorit and attemptin6 to perpetrate afraud upon his principal or some other person, for his own ultimate benefit>cntosh v. DaFota Trust Co., 2 #D 72, 2%3 #E 818, 3% A+" 1%21@.

NApplication of these principles is especiall necessar because banFs havea fiduciar relationship with the public and their stabilit depends on theconfidence of the people in their honest and efficienc. )uch faith will beeroded where banFs do not eT)#, April 2$, 199%, pp. 1$17@?

>c@ "ivera received the buersL letter dated Au6ust %, 1987 offerin6 4.million >T)#, % /ul 199%, p. 11@?
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>d@ "ivera si6ned the letter dated )eptember 1, 1987 offerin6 to sell thepropert for 4. million >T)#, /ul %, p. 11@?

>e@ "ivera received the letter dated )eptember 17, 1987 containin6 thebuersL proposal to bu the propert for 43.2 million >T)#, /ul %, 199%, p.12@?

>f@ "ivera, in a telephone conversation, confirmed that the 4. millionwas the final price of the anF >T)#, /anuar 1$, 199%, p. 18@?

>6@ "ivera arran6ed the meetin6 between the buers and +uis Coon )eptember 28, 1987, durin6 which the anFLs offer of 4. million wasconfirmed b "ivera >T)#, April 2$, 199%, pp. 3@. At said meetin6, Co, amaor shareholder and officer of the anF, confirmed "iveraLs statement asto the finalit of the anFLs counteroffer of 4. million >T)#, /anuar 1$,199%, p. 21? T)#, April 2$, 199%, p. @?

>h@ n its newspaper advertisements and announcements, the anFreferred to "ivera as the officer actin6 for the anF in relation to partiesinterested in buin6 assets ownedGac;uired b the anF. n fact, "ivera wasthe officer mentioned in the anFLs advertisements offerin6 for sale thepropert in ;uestion >cf. (Att. )usana 4arFer@ acted in said criminal cases.

4etitioners also alle6ed that DemetriaLs and /anoloLs 43.2 millioncounteroffer in the letter dated )eptember 17, 1987 eletter dated )eptember %, 1987@ RacceptedL"iveraLs counter offer of 4. million under Anne< R/L >letter dated

)eptember 17, 1987@,O citin6 the late /ustice 4aras,JKArt. 119 of the CivilCodeJ$Kand related )upreme Court rulin6s startin6 with 3eau)ont vs.rieto.J7K
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-owever, the abovecited authorities and precedents cannot appl in theinstant case because, as found b the respondent Court which reviewed thetestimonies on this point, what was NacceptedO b /anolo in his letter dated)eptember %, 1987 was the anFLs offer of 4. million as confirmed andreiterated to Demetria and Att. /ose aardo b "ivera and Co durin6 theirmeetin6 on )eptember 28, 1987. #ote that the said letter of )eptember %,1987 be6ins with N>p@ursuant to our discussion last 28 )eptember 1987 < 4lease see Article 13%J2K, Civil Code.@O

0pon the other hand, the respondent Court in its Decision >p. 13@ stated=

N< < < 'f course, the banFLs letter of )eptember 1, 1987 on the official priceand the plaintiffsL acceptance of the price on )eptember %, 1987, are not,in themselves, formal contracts of sale. The are however clearembodiments of the fact that a contract of sale was perfected between theparties, such contract bein6 bindin6 in whatever form it ma have beenentered into >case citations omitted@. )tated simpl, the banFsL letterof )eptember 1, 1987, taFen to6ether with plaintiffsL letter dated )eptember%, 1987, constitute in law a sufficient memorandum of a perfected contractof sale.O

The respondent Court could have added that the written communicationscommenced not onl from )eptember 1, 1987 but from /anoloLs Au6ust 2%,1987 letter. Ee a6ree that, taFen to6ether, these letters constitutesufficient memoranda since the include the names of the parties, theterms and conditions of the contract, the price and a description of thepropert as the obect of the contract.

ut let it be assumed arguendothat the counteroffer durin6 the meetin6on )eptember 28, 1987 did constitute a NnewO offer which was accepted b

/anolo on )eptember %, 1987. )till, the statute of frauds will not appl breason of the failure of petitioners to obect to oral testimon provin6petitioner anFLs counteroffer of 4. million. -ence, petitioners b suchutter failure to obect are deemed to have waived an defects of thecontract under the statute of frauds, pursuant to Article 13% of the CivilCode=

NArt. 13%. Contracts infrin6in6 the )tatute of rauds, referred to in #o. 2 ofArticle 13%, are ratified b the failure to obect to the presentation of oralevidence to prove the same, or b the acceptance of benefits under them.O

As private respondent pointed out in his emorandum, oral testimon onthe reaffirmation of the counteroffer of 4. million is aplent and the


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silence of petitioners all throu6hout the presentation maFes the evidencebindin6 on them thus=

A *es, sir. thinF it was )eptember 28, 1987 and was a6ainpresent because Att. Demetria told me to accompan him and wewere able to meet +uis Co at the anF.

sic@ final offerQ

A -e said in a da or two, he will maFe final acceptance, sir.

H Ehat is the response of r. +uis CoQ

A -e said he will wait for the position of Att. Demetria, sir.

JDirect testimon of Att. /ose aardo, T)#, /anuar 1$, 199%, at pp. 1821.K

%

H Ehat transpired durin6 that meetin6 between ou and r. +uis Coof the defendant anFQ

A Ee went strai6ht to the point because he bein6 a bus person,

told him if the amount of 4. million could still be reduced and hesaid that was alread passed upon b the committee. Ehat thebanF e


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A *es, sir, we did. Two das thereafter we sent our acceptance tothe banF which offer we accepted, the offer of the banF which is4. million.O

JDirect testimon of Att. Demetria, T)#, 2$ April 199%, at pp. 3$.K

%

H Accordin6 to Att. Demetrio Demetria, the amount of 4. millionwas reached b the Committee and it is not within his power toreduce this amount. Ehat can ou sa to that statement that theamount of 4. million was reached b the CommitteeQ

A t was not discussed b the Committee but it was discussedinitiall b +uis Co and the 6roup of Att. Demetrio Demetria andAtt. 4aardo >sic@, in that )eptember 28, 1987 meetin6, sir.O

JDirect testimon of ercurio "ivera, T)#, % /ul 199%, pp. 131.K

T0e Four)0 I??ue May the Conservator Revoethe Perfected and Enforceable Contract?

t is not disputed that the petitioner anF was under a conservatorplaced b the Central anF of the 4hilippines durin6 the time that thene6otiation and perfection of the contract of sale tooF place. 4etitionersener6eticall contended that the conservator has the power to revoFe oroverrule actions of the mana6ement or the board of directors of a banF,

under )ection 28A of "epublic Act #o. 2$ >otherwise Fnown as the CentralanF Act@ as follows=

NEhenever, on the basis of a report submitted b the appropriatesupervisin6 or e


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on )eptember %, 1987 >Anne< , petition@ which unilaterall repudiated not the contract but the authorit of "ivera to maFe a bindin6 offer andwhich unar6uabl came months after the perfection of the contract. )aidletter dated a 12, 1988 is reproduced hereunder=


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n the third place, while admittedl, the Central anF law 6ives vast andfarreachin6 powers to the conservator of a banF, it must be pointed outthat such powers must be related to the N>preservation of@ the assets of thebanF, >the reor6aniBation of@ the mana6ement thereof and >the restorationof@ its viabilit.O )uch powers, enormous and e8!e5urisdiction of t!e (upre)e 4ourt in cases broug!t to it fro) t!e 4ourt ofAppeals is li)ited to reviewing and revising t!e errors of law i)puted to it#

its findings of t!e fact being conclusive? >N4!an vs. 4ourt of Appeals# 0.R.o. L-*",& /une ;+# $%"+# ;; (4RA ";"# reiterating a long line ofdecisions. 8!is 4ourt !as e)p!atically declared t!at? >it is not t!e functionof t!e (upre)e 4ourt to analy1e or weig! suc! evidence all over again# its

5urisdiction being li)ited to reviewing errors of law t!at )ig!t !ave beenco))itted by t!e lower court? 98iongco v. De la erced# 0.R. o. L-*,,*# /uly *'# $%",# '& (4RA &% 4orona vs. 4ourt of Appeals# 0.R. o. L-*,&*# April * $%&;# $*$ (4RA &' 3aniued vs. 4ourt of Appeals# 0.R.o. L-,"';$# 2ebruary *+# $%&,# $*" (4RA '%:.? >3arring# t!erefore# a

s!owing t!at t!e findings co)plained of are totally devoid of support in t!erecord# or t!at t!ey are so glaringly erroneous as to constitute seriousabuse of discretion# suc! findings )ust stand# for t!is 4ourt is not expectedor reuired to exa)ine or contrast t!e oral and docu)entary evidence


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sub)itted by t!e parties? >N(anta Ana# /r. vs. ernande1# 0.R. o. L-$;%,# Dece)ber $"# $%# $& (4RA %"; Nat pp. $,,-$,'.@

+iFewise, in ernardo vs. Court of Appeals,J3$Kwe held=

NThe resolution of this petition invites us to closel scrutiniBe the facts of thecase, relatin6 to the sufficienc of evidence and the credibilit of witnesses

presented. This Court so held that it is not the function of the )upremeCourt to analBe or wei6h such evidence all over a6ain. The )upremeCourtLs urisdiction is limited to reviewin6 errors of law that ma have beencommitted b the lower court. The )upreme Court is not a trier of facts. < 1@ the NanFLs counteroffer price of 4. million had been determined bthe past due committee and approved b conservator "ome, after "iverapresented the same for discussionO and >2@ Nthe meetin6 with Co was not to

scale down the price and start ne6otiations anew, but a meetin6 on thealread determined price of 4. million.O -ence, citin6 4hilippine #ationalanF vs. Court of Appeals,J39Kpetitioners are asFin6 us to review and reversesuch factual findin6s.

The first point was clearl passed upon b the Court of Appeals,J%Kthus=

NThere can be no other lo6ical conclusion than that when, on )eptember 1,1987, "ivera informed plaintiffs b letter that Rthe banFLs counteroffer is at4. illion for more than 1%1 hectares on lot basis,L such counteroffer

price had been determined b the 4ast Due Committee and approved b theConservator after "ivera had dul presented plaintiffsL offer for discussionb the Committee < <


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and definitive price at which the banF was sellin6 the propert.O >p. 11, CADecision@


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eit@ for investments, deposits and well asemploment. As of /une 1987, the anFLs overdraft with the Central anFhad alread reached 41.%2 billion < < < and there were >other@ offers tobu the subect properties for a substantial amount of mone.O JK

Ehile we do not den our smpath for this distressed banF, at the sametime, the Court cannot emotionall close its ees to overridin6considerations of substantive and procedural law, liFe respect for perfectedcontracts, nonimpairment of obli6ations and sanctions a6ainst forumshoppin6, which must be upheld under the rule of law and blind ustice.

This Court cannot ust 6loss over private respondentLs submission that,while the subect properties ma currentl command a much hi6her price, itis e;uall true that at the time of the transaction in 1987, the price a6reedupon of 4. million was reasonable, considerin6 that the anF ac;uiredthese properties at a foreclosure sale for no more than 4 . million. J3KThatthe anF procrastinated and refused to honor its commitment to sell cannotnow be used b it to promote its own advanta6e, to enable it to escape itsbindin6 obli6ation and to reap the benefits of the increase in land values. Torule in favor of the anF simpl because the propert in ;uestion has

al6ebraicall accelerated in price durin6 the lon6 period of liti6ation is toreward lawlessness and delas in the fulfillment of bindin6 contracts.Certainl, the Court cannot stamp its imprimatur on such outra6eousproposition.

:HEREFORE, findin6 no reversible error in the ;uestioned Decision and"esolution, the Court hereb D(#() the petition. The assailed Decision isA"(D. oreover, petitioner anF is "(4"A#D(D for en6a6in6 inforumshoppin6 and EA"#(D that a repetition of the same or similar actswill be dealt with more severel. Costs a6ainst petitioners.

$O ORDERED.

arvasa# 4./. 94!air)an:# Davide# /r.# elo# and2rancisco# //.# concur.


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"epublic of the 4hilippines$UPREME COURT

anila)(C'#D D)'#

G.R. No. 144812 /une 2, 1999

FRANCI$CO MOTOR$ CORPORATION,petitioner,vs.COURT OF APPEA!$ an $POU$E$ GREGORIO an !I#RADAMANUE!, respondents.

D E C I $ I O NQCI(C3I0# /.H

This petition for review on certiorari, under "ule 3 of the "ules of Court,

seeFs to annul the decision

1

of the Court of Appeals in C.A. !.". C #o.1%%13 affirmin6 the decision rendered b ranch 1, "e6ional Trial Courtof aFati, etro anila. The procedural antecedents of this petition are asfollows='n /anuar 2, 198, petitioner filed a complaint2a6ainst privaterespondents to recover three thousand four hundred twelve and si4,312.%$@, representin6 the balance of the eep bod purchasedb the anuels from petitioner? an additional sum of twent thousand fourhundred fiftfour and ei6ht centavos >42%,33.8%@ representin6 theunpaid balance on the cost of repair of the vehicle? and si< thousand pesos

>4$,%%%.%%@ for cost of suit and attorneLs fees.To the ori6inal balance onthe price of eep bod were added the costs of repair.4%,%%%@ which wasnot paid b the incorporators, directors and officers of the petitioner. Thetrial court decided the case on /une 2$, 198, in favor of petitioner in re6ardto the petitionerLs claim for mone, but also allowed the counterclaim ofprivate respondents. oth parties appealed. 'n April 1, 1991, the Court ofAppeals sustained the trial courtLs decision.5-ence, the present petition.

or our review in particular is the propriet of the permissive counterclaimwhich private respondents filed to6ether with their answer to petitionerLscomplaint for a sum of mone. 4rivate respondent !re6orio anuel alle6edas an affirmative defense that, while he was petitionerLs Assistant +e6al


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'fficer, he represented members of the rancisco famil in the intestateestate proceedin6s of the late enita Trinidad. -owever, even after thetermination of the proceedin6s, his services were not paid. )aid familmembers, he said, were also incorporators, directors and officers ofpetitioner. -ence to petitionerLs collection suit, he filed a counter permissivecounterclaim for the unpaid attorneLs fees.=

or failure of petitioner to answer the counterclaim, the trial court declaredpetitioner in default on this score, and evidence ex-partewas presented onthe counterclaim. The trial court ruled in favor of private respondents andfound that !re6orio anuel indeed rendered le6al services to the ranciscofamil in )pecial 4roceedin6s #umber 78% Nn the atter of ntestate(state of enita TrinidadO. )aid court also found that his le6al services werenot compensated despite repeated demands, and thus ordered petitioner topa him the amount of fift thousand >4%,%%%.%%@ pesos.7

Dissatisfied with the trial courtLs order, petitioner elevated the matter to theCourt of Appeals, posin6 the followin6 issues=

.

E-(T-(" '" #'T T-( D(C)'# "(#D("(D * T-( +'E(" C'0"T )#0++ A#D 'D A) T #((" ACH0"(D /0")DCT'# '(" T-( 4(")'#' T-( D((#DA#T.

.

E-(T-(" '" #'T 4+A#TA44(++A#T #'T (#! A "(A+ 4A"T* # T-(

A++(!(D 4("))( C'0#T("C+A )-'0+D ( -(+D +A+( T' T-(C+A ' D((#DA#TA44(++(().

.

E-(T-(" '" #'T T-("( ) A+0"( '# T-( 4A"T ' 4+A#TA44(++A#T T' A#)E(" T-( A++(!(D 4("))( C'0#T("C+A.8

4etitioner contended that the trial court did not ac;uire urisdiction over itbecause no summons was validl served on it to6ether with the cop of theanswer containin6 the permissive counterclaim. urther, petitioner

;uestions the propriet of its bein6 made part to the case because it wasnot the real part in interest but the individual members of the ranciscofamil concerned with the intestate case.

n its assailed decision now before us for review, respondent Court ofAppeals held that a counterclaim must be answered in ten >1%@ das,pursuant to )ection 3, "ule 11, of the "ules of Court? and nowhere does itstate in the "ules that a part still needed to be summoned anew if acounterclaim was set up a6ainst him. ailure to serve summons, saidrespondent court, did not effectivel ne6ate trial courtLs urisdiction over

petitioner in the matter of the counterclaim. t liFewise pointed out thatthere was no reason for petitioner to be e2@ dasprior to his withdrawal as counsel for petitioner. oreover when petitionerLsnew counsel, /ose #. A;uino, entered his appearance, three >@ das stillremained within the period to file an answer to the counterclaim. -avin6failed to answer, petitioner was correctl considered in default b the trialcourt.9 (ven assumin6 that the trial court ac;uired no urisdiction over

petitioner, respondent court also said, but havin6 filed a motion forreconsideration seeFin6 relief from the said order of default, petitioner wasestopped from further ;uestionin6 the trial courtLs urisdiction. 14


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'n the ;uestion of its liabilit for attorneLs fees owin6 to privaterespondent !re6orio anuel, petitioner ar6ued that bein6 a corporation, itshould not be held liable therefor because these fees were owed b theincorporators, directors and officers of the corporation in their personalcapacit as heirs of enita Trinidad. 4etitioner stressed that the personalitof the corporation, vis-a-visthe individual persons who hired the services ofprivate respondent, is separate and distinct, 11hence, the liabilit of saidindividuals did not become an obli6ation char6eable a6ainst petitioner.#evertheless, on the fore6oin6 issue, the Court of Appeals ruled as follows=

-owever, this distinct and separate personalit is merel a fiction createdb law for convenience and to promote ustice. Accordin6l, this separatepersonalit of the corporation ma be disre6arded, or the veil of corporatefiction pierced, in cases where it is used as a cloaF or cover for found >sic@ille6alit, or to worF an inustice, or where necessar to achieve e;uit orwhen necessar for the protection of creditors. >)ulo n6 aan, nc. vs.

Araneta, nc., 72 )C"A 37@ Corporations are composed of natural personsand the le6al fiction of a separate corporate personalit is not a shield forthe commission of inustice and ine;uit. >Chemple< 4hilippines, nc. vs.4amatian, 7 )C"A 3%8@.

n the instant case, evidence shows that the plaintiffappellant ranciscootors Corporation is composed of the heirs of the late enita Trinidad asdirectors and incorporators for whom defendant !re6orio anuel renderedle6al services in the intestate estate case of their deceased mother.Considerin6 the aforestated principles and circumstances established in this

case, e;uit and ustice demands plaintiffappellantLs veil of corporateidentit should be pierced and the defendant be compensated for le6alservices rendered to the heirs, who are directors of the plaintiffappellantcorporation. 12

#ow before us, petitioner assi6ns the followin6 errors=

.

T-( C'0"T ' A44(A+) (""(D # A44+*#! T-( D'CT"#( ' 4("C#!T-( (+ ' C'"4'"AT( (#TT*.

.

T-( C'0"T ' A44(A+) (""(D # A"#! T-AT T-("( EA)/0")DCT'# '(" 4(TT'#(" ET- "()4(CT T' T-( C'0#T("C+A. 1

4etitioner submits that respondent court should not have resorted topiercin6 the veil of corporate fiction because the transaction concerned onlrespondent !re6orio anuel and the heirs of the late enita Trinidad.Accordin6 to petitioner, there was no cause of action b said respondenta6ainst petitioner? personal concerns of the heirs should be distin6uished

from those involvin6 corporate affairs. 4etitioner further contends that thepresent case does not fall amon6 the instances wherein the courts ma looFbeond the distinct personalit of a corporation. Accordin6 to petitioner, theservices for which respondent !re6orio anuel seeFs to collect fees frompetitioner are personal in nature. -ence, it avers the heirs should have beensued in their personal capacit, and not involve the corporation. 12@ das before the former counsel for petitionerwithdrew his appearance, accordin6 to private respondents. The maintainthat the present petition is but a form of dilator appeal, to set off

petitionerLs obli6ations to the respondents b runnin6 up more interest itcould recover from them. 4rivate respondents therefore claim dama6esa6ainst petitioner. 17

To resolve the issues in this case, we must first determine the propriet ofpiercin6 the veil of corporate fiction.

asic in corporation law is the principle that a corporation has a separatepersonalit distinct from its stocFholders and from other corporations towhich it ma be connected. 18-owever, under the doctrine of piercin6 theveil of corporate entit, the corporationLs separate uridical personalit ma

be disre6arded, for e


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or where the corporation is so or6aniBed and controlled and its affairs are soconducted as to maFe it merel an instrumentalit, a6enc, conduit oradunct of another corporation, then its distinct personalit ma bei6nored. 19n these circumstances, the courts will treat the corporation as amere a66rupation of persons and the liabilit will directl attach to them.

The le6al fiction of a separate corporate personalit in those cited instances,for reasons of public polic and in the interest of ustice, will be ustifiablset aside.n our view, however, 6iven the facts and circumstances of this case, thedoctrine of piercin6 the corporate veil has no relevant application here."espondent court erred in permittin6 the trial courtLs resort to this doctrine.

The rationale behind piercin6 a corporationLs identit in a 6iven case is toremove the barrier between the corporation from the persons comprisin6 itto thwart the fraudulent and ille6al schemes of those who use the corporatepersonalit as a shield for undertaFin6 certain proscribed activities.-owever, in the case at bar, instead of holdin6 certain individuals or

persons responsible for an alle6ed corporate act, the situation has beenreversed. t is the petitioner as a corporation which is bein6 ordered toanswer for the personal liabilit of certain individual directors, officers andincorporators concerned. -ence, it appears to us that the doctrine has beenturned upside down because of its erroneous invocation. #ote thataccordin6 to private respondent !re6orio anuel his services were solicitedas counsel for members of the rancisco famil to represent them in theintestate proceedin6s over enita TrinidadLs estate. These estateproceedin6s did not involve an business of petitioner.

#ote also that he sou6ht to collect le6al fees not ust from certain ranciscofamil members but also from petitioner corporation on the claims that itsmana6ement had re;uested his services and he acceded thereto as anemploee of petitioner from whom it could be deduced he was alsoreceivin6 a salar. -is move to recover unpaid le6al fees throu6h acounterclaim a6ainst rancisco otors Corporation, to offset the unpaidbalance of the purchase and repair of a eep bod could onl result from anobvious misapprehension that petitionerLs corporate assets could be used toanswer for the liabilities of its individual directors, officers, and

incorporators. )uch result if permitted could easil preudice thecorporation, its own creditors, and even other stocFholders? hence, clearline;uitous to petitioner.

urthermore, considerin6 the nature of the

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