NATIONAL POWER ISSUE

CORPORATION VS. PHILIPP BROTHERS
Whether the Trial Court erred in awarding moral
OCEANIC, INC.
damages to PHIBRO.
369 SCRA 629 (2001)
FACTS OF THE CASE
RULING
National Power Corporation (NAPOCOR) issued
The award of moral damages is improper.  To
invitations to bid for the supply and delivery of
reiterate, NAPOCOR did not act in bad
120,000 metric tons of imported coal for its Batangas
faith.  Moreover, moral damages are not, as a general
Coal-Fired Thermal Power Plant of which Philipp
rule, granted to a corporation. While it is true that
Brothers Oceanic, Inc. (PHIBRO) bidded and was
besmirched reputation is included in moral damages, it
accepted. 
cannot cause mental anguish to a corporation, unlike
in the case of a natural person, for a corporation has no
reputation in the sense that an individual has, and
On July 10, 1987, PHIBRO told NAPOCOR
besides, it is inherently impossible for a corporation to
that disputes might soon plague Australia that will
suffer mental anguish. 
seriously hamper its ability to supply coal. On July 23
to July 31, 1987, PHIBRO informed NAPOCOR
that unless a "strike-free" clause is incorporated in the
In LBC Express, Inc. v. Court of Appeals, we ruled:
charter party or the contract of carriage, the ship
owners are unwilling to load their cargo. In order to “Moral damages are granted in recompense for
hasten the transfer of coal, they should share the physical suffering, mental anguish, fright, serious
burden of the "strike-free" clause but NAPOCOR anxiety, besmirched reputation, wounded feelings,
refused.  moral shock, social humiliation, and similar injury.

PHIBRO effected its first shipment only on November
17, 1987 which was supposed to be on the 30th day
after receipt of the letter of credit of which it received
on August 6, 1987.
Consequently, In October 1987: NAPOCOR once
more advertised for the delivery of coal to its Calaca
thermal plant of which PHIBRO applied but was
rejected since it was not able to satisfy the demand
for damages on its delay. PHIBRO filed
for damages in the RTC alleging that the rejection was
tainted with malice and bad faith.
A corporation, being an artificial person and having
existence only in legal contemplation, has no feelings,
no emotions, no senses; therefore, it cannot experience
physical suffering and mental anguish.  Mental
suffering can be experienced only by one having a
nervous system and it flows from real ills, sorrows,
and grief’s of life – all of which cannot be suffered by
respondent bank as an artificial person.”

After the trial, the trial court rendered a decision in

favor of PHIBRO, ordering the defendant NAPOCOR
to reinstate PHIBRO in the defendant National Power
Corporation’s list of accredited bidders and indemnify
the same actual, moral and exemplary damages. On
appeal, the CA affirmed in toto the decision of RTC.
FILIPINAS BROADCASTING NETWORK, INC., Moreover, where the broadcast is libelous per se, the
petitioner, vs. AGO MEDICAL AND law implies damages. In such a case, evidence of an
EDUCATIONAL CENTER-BICOL CHRISTIAN honest mistake or the want of character or reputation
COLLEGE OF MEDICINE, (AMEC-BCCM) and of the party libeled goes only in mitigation of
ANGELITA F. AGO, respondents. damages. Neither in such a case is the plaintiff
required to introduce evidence of actual damages as a
FACTS: Expos is a radio documentarY program
condition precedent to the recovery of some damages.
hosted by Carmelo Mel Rima (Rima) and Hermogenes
In this case, the broadcasts are libelous per se. Thus,
Jun Alegre (Alegre). Expos is aired every morning
AMEC is entitled to moral damages.
over DZRC-AM which is owned by Filipinas
Broadcasting Network, Inc. (FBNI). Expos is heard However, we find the award of P300,000 moral
over Legazpi City, the Albay municipalities and other damages unreasonable. The record shows that even
Bicol areas. though the broadcasts were libelous per se, AMEC has
not suffered any substantial or material damage to its
In the morning of 14 and 15 December 1989, Rima
reputation. Therefore, we reduce the award of moral
and Alegre exposed various alleged complaints from
damages from P300,000 to P150,000.
students, teachers and parents against Ago Medical
and Educational Center-Bicol Christian College of
Medicine (AMEC) and its administrators. Claiming
that the broadcasts were defamatory, AMEC and
Angelita Ago (Ago), as Dean of AMECs College of
Medicine, filed a complaint for damages against
FBNI, Rima and Alegre on 27 February 1990.
ISSUE: WON CORP IS ENTITLED TO MORAL
DAMAGES. 
HELD: YES. FBNI contends that AMEC is not
entitled to moral damages because it is a corporation.
A juridical person is generally not entitled to moral
damages because, unlike a natural person, it cannot
experience physical suffering or such sentiments as
wounded feelings, serious anxiety, mental anguish or
moral shock. The Court of Appeals cites Mambulao
Lumber Co. v. PNB, et al. to justify the award of
moral damages. However, the Courts statement
in Mambulao that a corporation may have a good
reputation which, if besmirched, may also be a ground
for the award of moral damages is an obiter dictum.
Nevertheless, AMECs claim for moral damages falls
under item 7 of Article 2210 of the Civil Code. This
provision expressly authorizes the recovery of moral
damages in cases of libel, slander or any other form of
defamation. Article 2219(7) does not qualify whether
the plaintiff is a natural or juridical person. Therefore,
a juridical person such as a corporation can validly
complain for libel or any other form of defamation and
claim for moral damages.
(AMEC-BCCM) and ANGELITA F. AGO,
respondents.
Guillermo v. Uson and held answerable solidarily in a labor case, even
after final judgment and on execution, so long as it is
G.R. No. 198967, 7 March 2016
established that such persons have deliberately used
FACTS: the corporate vehicle to unjustly evade the judgment
obligation, or have resorted to fraud, bad faith or
On March 11, 1996, respondent Crisanto P. Uson malice in doing so.
(Uson) began his employment with Royal Class
Venture Phils., Inc. (Royal Class Venture) as an The records of the present case bear allegations and
accounting clerk. Eventually, he was promoted to the evidence that Guillermo, the officer being held liable,
position of accounting supervisor, with a salary of is the person responsible in the actual running of the
Php13,000.00 a month, until he was allegedly company and for the malicious and illegal dismissal of
dismissed from employment on December 20, 2000. the complainant; he, likewise, was shown to have a
The Labor Arbiter rendered a decision in favor of role in dissolving the original obligor company in an
Uson, RCVPI did not file an appeal but repeated obvious “scheme to avoid liability” which
issuances of Writs of Execution against the same jurisprudence has always looked upon with a
remained unsatisfied. Uson filed another Motion for suspicious eye in order to protect the rights of labor.
Alias Writ of Execution and to Hold Directors and Then, it is also clearly reflected in the records that it
Officers of Respondent Liable for the Decision. was Guillermo himself, as President and General
Manager of the company, who received the summons
Labor Arbiter granted the motion filed by respondent to the case, and who also subsequently and without
and held herein petitioner Jose Emmanuel Guillermo, justifiable cause refused to receive all notices and
in his personal capacity jointly and severally liable orders of the Labor Arbiter that followed.
with the corporation stating that the officers of the
corporation are jointly and severally liable for the Finally, the records likewise bear that Guillermo
obligations of the corporation (“piercing the veil of dissolved Royal Class Venture and helped incorporate
corporate fiction”) to the employees even if the said a new firm, located in the same address as the former,
officers were not parties to the case. wherein he is again a stockl1older. The foregoing
clearly indicate a pattern or scheme to avoid the
Guillermo filed a Motion for Reconsideration/To Set obligations to Uson and frustrate the execution of the
Aside the Order of the labor arbiter. His contentions judgment award, which this Court, in the interest of
were a) officers cannot be included as judgement justice, will not countenance.
obligor in a labor case for the first time only after the
decision of the Labor Arbiter had become final and
executory b) in piercing the veil of RCVPI, he was
allegedly discriminated against when he alone was
belatedly impleaded despite the existence of other
officers of RCVPI; c)that the labor arbiter has no
jurisdiction because the case is one of an intra-
corporate controversy, with the complainant Uson also
claiming to be a stockholder and director of the
corporation.
ISSUE:
Whether the twin doctrines of “piercing the veil of
corporate fiction” and personal liability of company
officers in labor cases apply.
RULING:
YES. The veil of corporate fiction can be pierced, and
responsible corporate directors and officers or even a
separate but related corporation, may be impleaded
LIVESEY VS BINSWANGER (G.R. NO. 177493
MARCH 19, 2014)
Livesey vs Binswanger Philippines Inc.
G.R. No. 177493 March 19, 2014
J. Brion
Facts: In December 2001, petitioner Eric Godfrey
Stanley Livesey filed a complaint for illegal dismissal
with money claims against CBB Philippines Strategic
Property Services, Inc. (CBB) and Paul Dwyer. CBB
was a domestic corporation engaged in real estate
brokerage and Dwyer was its President.
Thereafter, the parties entered into a compromise
agreement which LA Reyno approved in an order
dated November 6, 2002. Under the agreement,
Livesey was to receive US$31,000.00 in full
satisfaction of LA Reyno’s decision, broken down into
US$13,000.00 to be paid by CBB to Livesey or his
authorized representative upon the signing of the
agreement; US$9,000.00 on or before June 30, 2003;
and US$9,000.00 on or before September 30, 2003.
Further, the agreement provided that unless and until
the agreement is fully satisfied, CBB shall not: (1)
sell, alienate, or otherwise dispose of all or
substantially all of its assets or business; (2) suspend,
discontinue, or cease its entire, or a substantial portion
of its business operations; (3) substantially change the
nature of its business; and (4) declare bankruptcy or
insolvency.
CBB paid Livesey the initial amount of
US$13,000.00, but not the next two installments as the
company ceased operations. In reaction, Livesey
moved for the issuance of a writ of execution. LA
Eduardo G. Magno granted the writ, but it was not
enforced. Livesey then filed a motion for the issuance
of an alias writ of execution, alleging that in the
process of serving respondents the writ, he learned
“that respondents, in a clear and willful attempt to
avoid their liabilities to complainant . . . have
organized another corporation, [Binswanger]
Philippines, Inc.” He claimed that there was evidence
showing that CBB and Binswanger Philippines, Inc.
(Binswanger) are one and the same corporation,
pointing out that CBB stands for Chesterton
Blumenauer Binswanger. Invoking the doctrine of
piercing the veil of corporate fiction, Livesey prayed
that an alias writ of execution be issued against
respondents Binswanger and Keith Elliot, CBB’s
former President, and now Binswanger’s President
and Chief Executive Officer (CEO).
Issue: Whether or not the doctrine of piercing the
corporate veil may be applied.
Held: Yes. It has long been settled that the law vests a
corporation with a personality distinct and separate
from its stockholders or members. In the same vein, a
corporation, by legal fiction and convenience, is an
entity shielded by a protective mantle and imbued by
law with a character alien to the persons comprising it.
43 Nonetheless, the shield is not at all times
impenetrable and cannot be extended to a point
beyond its reason and policy. Circumstances might
deny a claim for corporate personality, under the
“doctrine of piercing the veil of corporate fiction.”
Piercing the veil of corporate fiction is an equitable
doctrine developed to address situations where the
separate corporate personality of a corporation is
abused or used for wrongful purposes. Under the
doctrine, the corporate existence may be disregarded
where the entity is formed or used for non-legitimate
purposes, such as to evade a just and due obligation, or
to justify a wrong, to shield or perpetrate fraud or to
carry out similar or inequitable considerations, other
unjustifiable aims or intentions, in which case, the
fiction will be disregarded and the individuals
composing it and the two corporations will be treated
as identical.
In the present case, we see an indubitable link between
CBB’s closure and Binswanger’s incorporation. CBB
ceased to exist only in name; it re-emerged in the
person of Binswanger for an urgent purpose — to
avoid payment by CBB of the last two installments of
its monetary obligation to Livesey, as well as its other
financial liabilities. Freed of CBB’s liabilities,
especially that owing to Livesey, Binswanger can
continue, as it did continue, CBB’s real estate
brokerage business.
Livesey’s evidence, whose existence the respondents
never denied, converged to show this continuity of
business operations from CBB to Binswanger. It was
not just coincidence that Binswanger is engaged in the
same line of business CBB embarked on: (1) it even
holds office in the very same building and on the very
same floor where CBB once stood; (2) CBB’s key
officers, Elliot, no less, and Catral moved over to
Binswanger, performing the tasks they were doing at
CBB; (3) notwithstanding CBB’s closure,
Binswanger’s Web Editor (Young), in an e-mail
correspondence, supplied the information that
Binswanger is “now known” as either CBB
(Chesterton Blumenauer Binswanger or as Chesterton
Petty, Ltd., in the Philippines; (4) the use of
Binswanger of CBB’s paraphernalia (receiving stamp)
in connection with a labor case where Binswanger was
summoned by the authorities, although Elliot claimed
that he bought the item with his own money; and (5)
Binswanger’s takeover of CBB’s project with the
PNB.
While the ostensible reason for Binswanger’s
establishment is to continue CBB’s business
operations in the Philippines, which by itself is not
illegal, the close proximity between CBB’s
disestablishment and Binswanger’s coming into
existence points to an unstated but urgent
consideration which, as we earlier noted, was to evade
CBB’s unfulfilled financial obligation to Livesey
under the compromise agreement.
Commissioner of Customs v. Oilink International
Corporation
G.R. No. 161759, 2 July 2014
FACTS:
Union Refinery Corporation (URC) was established
under the Corporation Code of the Philippines. In the
course of its business undertakings, URC imported oil
products into the country.
Oilink was incorporated for the primary purpose of
manufacturing, importing, exporting, buying, selling
or dealing in oil and gas, and their refinements and by-
products at wholesale and retail of petroleum. URC
and Oilink had interlocking directors when Oilink
started its business.
In applying for and in expediting the transfer of the
operator’s name for the Customs Bonded Warehouse
thenoperated by URC, Esther Magleo, the Vice-
President and General Manager of URC, sent a letter
to manifest that URC and Oilink had the same Board
of Directors and that Oilink was 100% owned by
URC.
A formal demand requiring URC to pay the taxes and
duties on its oil imports and to pay for the Value-
Added Taxes (VAT), special duties and excise taxes
were given. URC, challenged the demands made.
Customs Commissioner formally directed that URC
pay URC’s special duties, VAT and Excise Taxes that
it had failed to pay as well as other deficiency taxes.
Magleo, in behalf of URC, denied its liability,and
proposed for a compromise. The Commissioner
responded by rejecting Magleo’s proposal, and
directed URC to pay its due.
Manuel Co, URC’s President, conveyed URC’s
willingness to pay, of which the initial amount would
be taken from the collectibles of Oilink from the
National Power Corporation, and the balance to be
paid in monthly installments over a period ofthree
years to be secured with corresponding post-dated
checks and its future available tax credits.
Customs made a final demand upon URC and Oilink.
Oilink formally protested the assessment on the
ground that it was not the party liable for the assessed
deficiency taxes. Oilink appealed to the CTA, seeking
the nullification of the assessment. The CTA rendered
its decision declaring as null and void the assessment
of the Commissioner of Customs. Aggrieved, the
Commissioner of Customs brought a petition for
review in the CA alleging that the CTA gravely erred
in holding that the Commissioner of Customs could
not pierce the veil of corporate fiction. The CA ruled
in favor of the respondents. Thus, this instant petition.
ISSUE:
Whether or not the Commissioner of Customs could
lawfully pierce the veil of corporate fiction in order to
treat Oilink as the mere alter ego of URC.
RULING:
NO, there was no ground to pierce the veil of
corporate existence.
A corporation, upon coming into existence, is invested
by law with a personality separate and distinct from
those of the persons composing it as well as from any
other legal entity to which it may be related. For this
reason, a stockholder is generally not made to answer
for the acts or liabilities of the corporation, and
viceversa.
The separate and distinct personality of the
corporation is, however, a mere fiction established by
law for convenience and to promote the ends of
justice. It may not be used or invoked for ends that
subvert the policy and purpose behind its
establishment, or intended by law to which the It is also noteworthy that from the outset the
corporation owes its being. Commissioner of Customs sought to collect the
deficiency taxes and duties from URC, and that it was
This is true particularly when the fiction is used to
only on July 2, 1999 when the Commissioner of
defeat public convenience, to justify wrong, to protect
Customs sent the demand letter to both URC and
fraud, to defend crime, to confuse legitimate legal or
Oilink. That was revealing, because the failure of the
judicial issues, to perpetrate deception or otherwise to
Commissioner of Customs to pursue the remedies
circumvent the law.
against Oilink from the outset manifested that its
This is likewise true where the corporate entity is belated pursuit of Oilink was only an afterthought.
being used as an alter ego, adjunct, or business conduit
for the sole benefit of the stockholders or of another
corporate entity. In such instances, the veil of
corporate entity will be pierced or disregarded with
reference to the particular transaction involved.
In Philippine National Bank v. Ritratto Group, Inc.,the
Court has outlined the following circumstances thatare
useful in the determination of whether a subsidiary is a
mere instrumentality of the parent-corporation, viz:
1. Control, not mere majority or complete control, but
complete domination, not only of finances butof
policy and business practice in respect to the
transaction attacked so that the corporate entity as to
this transaction had at the time no separatemind, will
or existence of its own;
2. Such control must have been used by the defendant
to commit fraud or wrong, to perpetrate the violation
of a statutory or other positive legal duty, or dishonest
and, unjust act incontravention of plaintiff’s legal
rights; and
3. The aforesaid control and breach of duty must
proximately cause the injury or unjust loss complained
of.
In applying the “instrumentality” or”alter ego”
doctrine, the courts are concerned with reality, not
form, and with how the corporation operated and the
individual defendant’s relationship to the
operation.Consequently, the absence of any one of the
foregoing elements disauthorizes the piercing of the
corporate veil.
Indeed, the doctrine of piercing the corporate veil has
no application here because the Commissioner of
Customs did not establish that Oilink had been set up
to avoid the payment of taxes or duties, or for
purposes that would defeat public convenience, justify
wrong, protect fraud, defend crime, confuse legitimate
legal or judicial issues, perpetrate deception or
otherwise circumvent the law.
International Academy of Management and Piercing the corporate veil may apply to non-stock
Economics v. Litton and Company, Inc. corporations.
G.R. No. 191525, 13 December 2017 In the United States, from which we have adopted our
law on corporations, non-profit corporations are not
FACTS:
immune from the doctrine of piercing the corporate
Atty. Emmanuel T. Santos (Santos), a lessee to two veil. Their courts view piercing of the corporation as
buildings owned by Litton, owed the latter rental an equitable remedy, which justifies said courts to
arrears as well as his share of the payment of realty scrutinize any organization however organized and in
taxes. Consequently, Litton filed a complaint for whatever manner it operates.
unlawful detainer against Santos before the MeTC of
Piercing the corporate veil may apply to natural
Manila. The MeTC ordered Santos to vacate A.I.D.
persons:
Building and Litton Apartments and to pay various
sums of money. a) When the corporation is the alter ego of a natural
person
It appears however that the judgment was not
executed. Litton subsequently filed an action for The piercing of the corporate veil may apply to natural
revival of judgment, which was granted by the RTC. persons involved with corporations. Corporate mask
Santos then appealed the RTC decision to the CA, may be lifted and the corporate veil may be pierced
which nevertheless affirmed the RTC. The said CA when a corporation is just but the alter ego of a person
decision became final and executory. or of another corporation.
The sheriff of the MeTC of Manila levied on a piece b) Reverse piercing of the corporate veil
of real property registered in the name of International
In a reverse piercing action, the plaintiff seeks to reach
Academy of Management and Economics
the assets of a corporation to satisfy claims against a
Incorporated (I/AME), in order to execute the
corporate insider. Reverse-piercing flows in the
judgment against Santos. The annotations on said
opposite direction of traditional corporate veil-
property indicated that such was “only up to the extent
piercing and makes the corporation liable for the debt
of the share of Emmanuel T. Santos.”
of the shareholders.
I/AME filed with MeTC a Motion to Lift or Remove
It has two types: outsider reverse piercing and insider
Annotations. I/AME claimed that it has a separate and
reverse piercing. Outsider reverse piercing occurs
distinct personality from Santos; hence, its properties
when a party with a claim against an individual or
should not be made to answer for the latter’s
corporation attempts to be repaid with assets of a
liabilities. The motion was denied.
corporation owned or substantially controlled by the
Upon motion for reconsideration of I/AME, the MeTC defendant. In contrast, in insider reverse piercing, the
reversed its earlier ruling and ordered the cancellation controlling members will attempt to ignore the
of the annotations of levy as well as the writ of corporate fiction in order to take advantage of a
execution. Litton then elevated the case to the RTC, benefit available to the corporation, such as an interest
which in turn reversed the Order granting I/AME’s in a lawsuit or protection of personal assets.
motion for reconsideration.
I/AME then filed a petition with the CA to contest the
judgment of the RTC, which was eventually denied by
the appellate court.
ISSUE:
Whether it is proper for the court to pierce the
corporate veil of I/AME and its property to answer for
the liability of Santos.
RULING: