1. Francisco Motors vS CA, GR 100812, June 25, 1999°.................................

1
2. Total Petroleum vs Lim, June 23, 2020 *.....................................................4
3. [WPM International Trading vs Labayon, Sept. 17, 2014*............................4
4. Maricalum Mining vs Florentino, July 23. 2018*.........................................7
5. Enano-Bote vs Alvarez, GR 223572, Nov. 10, 2020*..................................16
6. ABS-CBN vs Hilario, GR 193136, July 10, 2019*......................................17
7. Zaragosa vs Tan, GR 225544, Dec. 4, 2017°.............................................20
8. Cua vs Ng Wee, GR 220926, March 21, 2018*..........................................21
9. Sps Fernandez vs Smart Communications, GR 212885, July 17, 2019*....24
10. HSBC vs Sps Galang. GR 199565. June 30, 2021*...................................27
11. The Linden Suites vs Meridien Far East, GR 211969. Oct. 4, 2021*..........28
12. | Symex Security vs Rivera, GR 202613. Nov. 8. 2017*.............................28
13. Hongkong & Shanghai Bank vs Sps Galang, GR 199565, June 30, 202....29
14. Colegio Medicofarmaceutico vs Lim, July 2, 2018°....................................29
15. Rev. Ao-As vs CA, June 20, 2006*.............................................................29
16. Cacho vs Balagtas, GR 202974. Feb. 7. 2018*..........................................29
17. Malcaba vs Prohealth, GR 209085, June 5, 2018*....................................29
18. Lapu Lapu Foundation vs CA. Jan. 29. 2004*...........................................29
19. Advance Paper Corp vs Arma Traders, Dec. 11, 2013*..............................29
20. Agro vs Vitarich (en banc), GR 217454. Jan. 11, 2021°.............................29
21. Terp Construction vs Banco Filipino, GR 221771, Sept. 18, 2019*............29
22. Jorgenetics Swine vs Thick & Thin. GR 201044, May 5. 2021...................29
23. GOnzada VS COA. GR 244816 June 29. 2024 (en bandy..........................29

1. Francisco Motors vS CA, GR 100812, June 25, 1999°

Facts:
 Petitioner Francisco Motors Corp filed a complaint to recover from
respondent spouses Manuel the unpaid balance of the jeepney bought by
the latter from them.
 As their answer, respondent spouses interposed a counterclaim for unpaid
legal services by Gregorio Manuel which was not paid by petitioner
corporation’s directors and officers.
 Respondent Manuel alleges that he represented members of the Francisco
family who were directors and officers of herein petitioner corporation in an
intestate estate proceeding but even after its termination, his services were
not paid.
 The trial court ruled in favor of petitioner but also allowed respondent
spouses’ counterclaim.
 CA affirmed.
Issue:
Whether or not petitioner corporation may be held liable for the liability
incurred by its directors and officers in their personal capacity.
Ruling: 

NO, petitioner corporation may not be held liable for the liability incurred
by its directors and officers in their personal capacity.
In our view, however, given the facts and circumstances of this case, the
doctrine of piercing the corporate veil has no relevant application here.
Respondent court erred in permitting the trial court’s resort to this doctrine.
In the case at bar, instead of holding certain individuals or persons responsible
for an alleged corporate act, the situation has been reversed. It is the petitioner
as a corporation which is being ordered to answer for the personal liability of
certain individual directors, officers and incorporators concerned. Hence, it
appears to us that the doctrine has been turned upside down because of its
erroneous invocation.
Note that according to private respondent Gregorio Manuel his services were
solicited as counsel for members of the Francisco family to represent them in
the intestate proceedings over Benita Trinidad’s estate. These estate
proceedings did not involve any business of petitioner.
Furthermore, considering the nature of the legal services involved, whatever
obligation said incorporators, directors and officers of the corporation had
incurred, it was incurred in their personal capacity. When directors and
officers of a corporation are unable to compensate a party for a personal
obligation, it is far-fetched to allege that the corporation is perpetuating fraud
or promoting injustice, and be thereby held liable therefore by piercing its
corporate veil
Syllabus:

Corporation Law; “Piercing the Veil of Corporate Entity” Doctrine;

Basic in corporation law is the principle that a corporation has a
separate personality distinct from its stockholders and from other
corporations to which it may be connected.—Basic in corporation law
is the principle that a corporation has a separate personality distinctfrom
its stockholders and from other corporations to which it may be
connected. However, under the doctrine of piercing the veil of corporate
entity, the corporation’s separate juridical personality may be
disregarded, for example, when the corporate identity is used to defeat
public convenience, justify wrong, protect fraud, or defend crime. Also,
where the corporation is a mere alter ego or business conduit of a
person, or where the corporation is so organized and controlled and its
affairs are so conducted as to make it merely an instrumentality, agency,
conduit or adjunct of another corporation, then its distinct personality
may be ignored. In these circumstances, the courts will treat the
corporation as a mere aggrupation of persons and the liability will
directly attach to them. The legal fiction of a separate corporate
personality in those cited instances, for reasons of public policy and in
the interest of justice, will be justifiably set aside.

The rationale behind piercing a corporation’s identity in a given

case is to remove the barrier between the corporation from the
persons comprising it to thwart the fraudulent and illegal schemes
of those who use the corporate personality as a shield for
undertaking certain proscribed activities.—In our view, however, given
the facts and circumstances of this case, the doctrine of piercing the
corporate veil has no relevant application here. Respondent court erred
in permitting the trial court’s resort to this doctrine. The rationale behind
piercing a corporation’s identity in a given case is to remove the barrier
between the corporation from the persons comprising it to thwart the
fraudulent and illegal schemes of those who use the corporate
personality as a shield for undertaking certain proscribed activities.
However, in the case at bar, instead of holding certain individuals or
persons responsible for an alleged corporate act, the situation has been
reversed. It is the petitioner as a corporation which is being ordered to
answer for the personal liability of certain individual directors, officers
and incorporators concerned. Hence, it appears to us that the doctrine
has been turned upside down because of its erroneous invocation. Note
that according to private respondent Gregorio Manuel his services were
solicited as counsel for members of the Francisco family to represent
them in the intestate proceedings over Benita Trinidad’s estate. These
estate proceedings did not involve any business of petitioner.

If corporate assets could be used to answer for the liabilities of its

individual directors, officers, and incorporators, the same could
easily prejudice the corporation, its own creditors, and even other
stockholders.—Note also that he sought to collect legal fees not just
from certain Francisco family members but also from petitioner
corporation on the claims that its management had requested his
services and he acceded thereto as an employee of petitioner from whom
it could be deduced he was also receiving a salary. His move to recover
unpaid legal fees through a counterclaim against Francisco Motors
Corporation, to offset the unpaid balance of the purchase and repair of a
jeep body could only result from an obvious misapprehension that
petitioner’s corporate assets could be used to answer for the liabilities of
its individual directors, officers, and incorporators. Such result if
permitted could easily prejudice the corporation, its own creditors, and
even other stockholders; hence, clearly inequitous to petitioner.

When directors and officers of a corporation are unable to

compensate a party for a personal obligation, it is farfetched to
allege that the corporation is perpetuating fraud or promoting
injustice, and be thereby held liable therefor by piercing its
corporate veil.—Considering the nature of the legal services involved,
whatever obligation said incorporators, directors and officers of the
corporation had incurred, it was incurred in their personal capacity.
When directors and officers of a corporation are unable to compensate a
party for a personal obligation, it is far-fetched to allege that the
corporation is perpetuating fraud or promoting injustice, and be thereby
held liable therefor by piercing its corporate veil. While there are no hard-
and-fast rules on disregarding separate corporate identity, we must
always be mindful of its function and purpose. A court should be careful
in assessing the milieu where the doctrine of piercing the corporate veil
may be applied. Otherwise an injustice, although unintended, may result
from its erroneous application.

Actions; Attorney’s Fees; Parties; Counterclaims; A claim for legal

fees against the concerned individual incorporators, officers and
directors could not be properly directed against the corporation
without violating basic principles governing corporations. Every
action—including a counterclaim—must be prosecuted or defended
in the name of the real party in interest.—The personality of the
corporation and those of its incorporators, directors and officers in their
personal capacities ought to be kept separate in this case. The claim for
legal fees against the concerned individual incorporators, officers and
directors could not be properly directed against the corporation without
violating basic principles governing corporations. Moreover, every action
—including a counterclaim—must be prosecuted or defended in the
name of the real party in interest. It is plainly an error to lay the claim
for legal fees of private respondent Gregorio Manuel at the door of
petitioner (FMC) rather than individual members of the Francisco family.
2. Total Petroleum vs Lim, June 23, 2020 *

3. [WPM International Trading vs Labayon, Sept. 17, 2014*

Facts:

 Labayen is the owner of a management and consultant firm.

 WPM is a domestic corporation engaged in the restaurant
business, while Manlapaz is its president.
 WPM entered a management agreement with Labayen
(respondent was authorized to operate, manage and rehabilitate
Quickbite).
 As part of her tasks, Labayen engaged the services of CLN
Engineering Services (CLN) to renovate one branch.
 When renovation was finally completed, only P320K was paid
leaving a balance of P112K. CLN filed a complaint for sum of
money and damages before the RTC. RTC found Labayen liable
to pay CLN actual damages.
 Labayen then instituted a complaint for damages against the
petitioners. The respondent alleged that she was adjudged
liable for a contract that she entered for and in behalf of
the petitioners, to which she should be entitled to
reimbursement.
 In his defense, Manlapaz claims that since Labayen had
exceeded her authority as agent of WPM, the renovation
agreement should only bind her; and that since WPM has a
separate and distinct personality, Manlapaz cannot be made
liable for Labayen's claim
 RTC held that the respondent is entitled to indemnity from
Manlapaz. CA affirmed the decision.

Issues: Whether WPM is a mere instrumentality, alter ego, and business
conduit of Manlapaz ergo he is jointly and severally liable with WPM to
the respondent

Ruling:

NO. Petition is Modified. Manlapaz is absolved.

Piercing the corporate veil based on the alter ego theory requires
the concurrence of three elements:
 (1) Control, not mere majority or complete stock control, but
complete domination, not only of finances but of policy and
business practice in respect to the transaction attacked so that the
corporate entity as to this transaction had at the time no separate
mind, will or existence of its own;

(2) Such control must have been used by the defendant to commit
fraud or wrong, to perpetuate the violation of a statutory or other
positive legal duty, or dishonest and unjust act in contravention of
plaintiff's legal right; and

(3) The aforesaid control and breach of duty must have proximately
caused the injury or unjust loss complained of.

The absence of any of these elements prevents piercing the

corporate veil.

Aside from the fact that Manlapaz was the principal stockholder of WPM,
records do not show that WPM was organized and controlled, and its affairs
conducted in a manner that made it merely an instrumentality, agency,
conduit or adjunct of Manlapaz. As held in Martinez v. Court of Appeals, 438
SCRA 130 (2004), the mere ownership by a single stockholder of even all or
nearly all of the capital stocks of a corporation is not by itself a sufficient
ground to disregard the separate corporate personality. To disregard the
separate juridical personality of a corporation, the wrongdoing must be clearly
and convincingly established.

We stress that the control necessary to invoke the instrumentality or alter ego
rule is not majority or even complete stock control but such domination of
finances, policies and practices that the controlled corporation has, so to
speak, no separate mind, will or existence of its own, and is but a conduit for
its principal. The control must be shown to have been exercised at the time the
acts complained of took place. Moreover, the control and breach of duty must
proximately cause the injury or unjust loss for which the complaint is made.

Syllabus:

Piercing the Corporate Veil; The doctrine of piercing the corporate veil
applies only in three (3) basic instances.—Incidentally, the doctrine of
piercing the corporate veil applies only in three (3) basic instances, namely: a)
when the separate and distinct corporate personality defeats public
convenience, as when the corporate fiction is used as a vehicle for the evasion
of an existing obligation; b) in fraud cases, or when the corporate entity is used
to justify a wrong, protect a fraud, or defend a crime; or c) is used in alter ego
cases, i.e., where a corporation is essentially a farce, since it is a mere alter ego
or business conduit of a person, or where the corporation is so organized and
controlled and its affairs so conducted as to make it merely an instrumentality,
agency, conduit or adjunct of another corporation.

Alter-Ego Theory; Piercing the corporate veil based on the alter ego theory
requires the concurrence of three (3) elements; The absence of any of
these elements prevents piercing the corporate veil.—Piercing the
corporate veil based on the alter ego theory requires the concurrence of three
elements, namely: (1) Control, not mere majority or complete stock control, but
complete domination, not only of finances but of policy and business practice
in respect to the transaction attacked so that the corporate entity as to this
transaction had at the time no separate mind, will or existence of its own; (2)
Such control must have been used by the defendant to commit fraud or wrong,
to perpetuate the violation of a statutory or other positive legal duty, or
dishonest and unjust act in contravention of plaintiff’s legal right; and (3) The
aforesaid control and breach of duty must have proximately caused the injury
or unjust loss complained of. The absence of any of these elements prevents
piercing the corporate veil.

Separate Personality; As held in Martinez v. Court of Appeals, 438 SCRA

130 (2004), the mere ownership by a single stockholder of even all or
nearly all of the capital stocks of a corporation is not by itself a sufficient
ground to disregard the separate corporate personality.—Aside from the
fact that Manlapaz was the principal stockholder of WPM, records do not show
that WPM was organized and controlled, and its affairs conducted in a manner
that made it merely an instrumentality, agency, conduit or adjunct of
Manlapaz. As held in Martinez v. Court of Appeals, 438 SCRA 130 (2004), the
mere ownership by a single stockholder of even all or nearly all of the capital
stocks of a corporation is not by itself a sufficient ground to disregard the
separate corporate personality. To disregard the separate juridical personality
of a corporation, the wrongdoing must be clearly and convincingly established.

The control necessary to invoke the instrumentality or alter ego rule is

not majority or even complete stock control but such domination of
finances, policies and practices that the controlled corporation has, so to
speak, no separate mind, will or existence of its own, and is but a conduit
for its principal.—We stress that the control necessary to invoke the
instrumentality or alter ego rule is not majority or even complete stock control
but such domination of finances, policies and practices that the controlled
corporation has, so to speak, no separate mind, will or existence of its own,
and is but a conduit for its principal. The control must be shown to have been
exercised at the time the acts complained of took place. Moreover, the control
and breach of duty must proximately cause the injury or unjust loss for which
the complaint is made.

The piercing of the veil of corporate fiction is frowned upon and thus,
must be done with caution.—We emphasize that the piercing of the veil of
corporate fiction is frowned upon and thus, must be done with caution. It can
only be done if it has been clearly established that the separate and distinct
personality of the corporation is used to justify a wrong, protect fraud, or
perpetrate a deception. The court must be certain that the corporate fiction
was misused to such an extent that injustice, fraud, or crime was committed
against another, in disregard of its rights; it cannot be presumed.

4. Maricalum Mining vs Florentino, July 23. 2018*

Facts:

 The Philippine National Bank (PNB, a former government-owned-and-

controlled corporation) and the Development Bank of the Philippines
(DBP) transferred their ownership of Maricalum Mining to the National
Government for disposition or privatization because it had become a
non-performing asset.
 The National Government thru the Asset Privatization Trust (APT)
executed a Purchase and Sale Agreement (PSA) with G Holdings, a
domestic corporation primarily engaged in the business of owning and
holding shares of stock of different companies.
 G Holding bought 90% of Maricalum Mining’s shares and financial
claims in the form of company notes. In exchange, the PSA obliged G
Holdings to pay APT the amount of P673,161,280.00, with a down
payment of P98,704,000.00 and with the balance divided into four
tranches payable in installment over a period of ten years.
 G Holdings also assumed Maricalum Mining’s liabilities in the form of
company notes.
 The said financial liabilities were converted into three Promissory Notes
which were secured by mortgages over some of Maricalum Mining’s
properties.
 These PNs obliged Maricalum Mining to pay G Holdings the stipulated
amount of P550,000,000.00.
 Upon the signing of the PSA and paying the stipulated down payment, G
Holdings immediately took physical possession of Maricalum Mining’s
Sipalay Mining Complex, as well as its facilities, and took full control of
the latter’s management and operations.
 The Sipalay General Hospital, Inc. (Sipalay Hospital) was duly
incorporated to provide medical services and facilities to the general
public.
 Afterwards, some of Maricalum Mining’s employees retired and
formed several manpower cooperatives.
 Each of the said cooperatives executed identical sets of Memorandum of
Agreement with Maricalum Mining wherein they undertook, among
others, to provide the latter with a steady supply of workers, machinery
and equipment for a monthly fee.
 Maricalum Mining’s Vice President and Resident Manager wrote a
Memorandum to the cooperatives informing them that Maricalum Mining
has decided to stop its mining and milling operations in order to avert
continuing losses brought about by the low metal prices and high
cost of production.
 The properties of Maricalum Mining, which had been mortgaged to
secure the PNs, were extrajudicially foreclosed and eventually sold to
G Holdings as the highest bidder.
 Some of Maricalum Mining’s workers, including complainants, and some
of Sipalay General Hospital’s employees jointly filed a Complaint with the
LA against G Holdings, its president, and officer-in-charge, and the
cooperatives and its officers for illegal dismissal, underpayment and
nonpayment of salaries, underpayment of overtime pay, underpayment of
premium pay for holiday, nonpayment of separation pay, underpayment
of holiday pay, nonpayment of service incentive leave pay, nonpayment of
vacation and sick leave, nonpayment of 13th month pay, moral and
exemplary damages, and attorneys fees.
 Complainants and CeMPC, one of the cooperatives formed, Chairman
Alejandro H. Sitchon filed the complaint for illegal dismissal and
corresponding monetary claims with the LA against G Holdings, its
officer-in-charge and CeMPC. Thereafter, the complaints were
consolidated by the LA.
 During the hearings, complainants presented the affidavits which
attested that, prior to the formation of the manpower cooperatives, their
services were terminated by Maricalum Mining as part of its
retrenchment program. They claimed that, in 1999, they were called by
the top executives of Maricalum Mining and G Holdings and informed
that they will have to form a cooperative for the purpose of providing
manpower services in view of the retrenchment program. Thus, they were
“rehired” only after their respective manpower cooperative services were
formed.
 Complainants claim that they have not received any increase in wages
since they were allegedly rehired. Except for Sipalay Hospital’s
employees, they worked as an augmentation force to the security guards
charged with securing Maricalum Mining’s assets which were acquired
by G Holdings.
  Maricalum Mining’s assets have been exposed to pilferage by some of its
rank-and-file employees whose claims for collective bargaining benefits
were undergoing litigation.
 The Sipalay Hospital is purportedly “among the assets” of Maricalum
Mining acquired by G Holdings. The payrolls for their wages were
supposedly prepared by G Holdings’ accounting department. Since the
second half of April 2007, they have not been paid their salary and some
of their services were dismissed without any due process.
 Complainants posited that the manpower cooperatives were mere alter
egos of G Holdings organized to subvert the “tenurial rights” of the
complainants. G Holdings implemented a retrenchment scheme to
dismiss the caretakers it hired before the foreclosure of Maricalum
Mining’s assets and G Holdings was their employer because it allegedly
had the power to hire, pay wages, control working methods and dismiss
them.
 G Holdings maintained that it was Maricalum Mining who entered into
an agreement with the manpower corporations for the employment of
complainants’ services for auxiliary or seasonal mining activities.
 The manpower cooperatives were the ones who paid the wages, deducted
social security contributions, withheld taxes, provided medical benefits
and had control over the working means and methods of complainants;
despite Maricalum Mining’s decision to stop its mining and milling
operations, complainants still continued to render their services for the
orderly winding down of the mines’ operations; Maricalum Mining should
have been impleaded because it is supposed to be the indispensable
party in the present suit; (e) Maricalum Mining, as well as the manpower
cooperatives, each have distinct legal personalities and that their
individual corporate liabilities cannot be imposed upon each other; and
there was no employer-employee relationship between G Holdings and
complainants.
 Likewise, the manpower cooperatives jointly filed their Position Paper24
arguing that: complainants had exhibited a favorable response when
they were properly briefed of the nature and benefits of working under a
cooperative setup; complainants received their fair share of benefits;
complainants were entitled to cast their respective votes in deciding the
affairs of their respective cooperatives; complainants, as member of the
cooperatives, are also co-owners of the said cooperative and they cannot
bargain for higher labor benefits with other co-owners; and the LA has no
jurisdiction over the case because there is no employer-employee
relationship between a cooperative and its members.

LA Ruling:
 The LA ruled in favor of complainants. It held that G Holdings is guilty of
labor-only contracting with the manpower cooperatives thereby making
all of them solidarily and directly liable to complainants.

The LA reasoned that G Holdings connived with Marcalum Mining in

orchestrating the formation of manpower cooperatives to circumvent
complainants’ labor standards rights. The LA found it highly unlikely
that complainants (except Sipalay Hospital’s employees) would
spontaneously form manpower cooperatives on their own and in unison
without the guidance of G Holdings and Maricalum Mining and
complainants effectively became the employees of G Holdings because
their work had changed from assisting in the mining operations to
safeguarding the properties in the Sipalay Mining Complex, which had
already been acquired by G Holding.

On the other hand, the LA denied the claims of complainants Nenet Arita
and Domingo Lavida for lack of factual basis. The parties filed their
respective appeals to the NLRC. On July 18, 2011, Maricalum Mining
filed its Appeal-in-Intervention seeking to: (a) reverse and set aside the
Labor Arbiter’s Decision; (b) declare Maricalum Mining as the true and
proper party-in-interest; (c) remand the case back to the Labor Arbiter
for proper computation of the money claims of the complainants; and (d)
give Maricalum Mining the opportunity to settle with the complainants.

NLRC Ruling:

The NLRC modified the LA ruling.

It held that Dr. Welilmo T. Neri, Erlinda L. Fernandez and Edgar M.

Sobrino are not entitled to the monetary awards because they were not
able to establish the fact of their employment relationship with G
Holdings or Maricalum Mining because Sipalay Hospital has a separate
and distinct corporate personality. As to the remaining complainants,
it found that no evidence was adduced to prove that the salaries/wages
and the 13th month pay had been paid.

However, the NLRC imposed the liability of paying the monetary awards
imposed by the LA against Maricalum Mining, instead of G Holdings,
stating that it was Maricalum Mining-not G Holdings-who entered into
service contracts by way of a Memorandum of Agreement with each of
the manpower cooperatives.

The NLRC found that complainants continued rendering their services at

the insistence of Maricalum Mining through their cooperatives and
 Maricalum Mining never relinquished possession over the Sipalay Mining
Complex.

Further, the NLRC observed that Maricalum Mining continuously availed

of the services of complainants through their respective manpower
cooperatives. Citing G Holdings, Inc. vs. National Mines and Allied
Workers Union Local 103 (NAMAWU), et al. (NAMA WU Case), the SC
already held that G Holdings and Maricalum Mining have separate and
distinct corporate personalities.

Complainants and Maricalum Mining filed their respective motions for

reconsideration before the NLRC. The NLRC issued a resolution
modifying its previous decision and partially granted the intervenor’s
Motion for Reconsideration. The monetary awards adjudged in favor of
complainants Wilfredo Taganile and Bartholomew T. Jamboy were
cancelled.

Undaunted, the parties filed their respective petitions for certiorari before
the CA.

CA Ruling:

The CA affirmed the NLRC in all respects.

The CA denied the petitions and affirmed the decision of the NLRC. It
ratiocinated that factual issues are not fit subjects for review via the
extraordinary remedy of certiorari.

The CA emphasized that the NLRC’s factual findings are conclusive and
binding on the appellate courts when they are supported by substantial
evidence. Thus, it maintained that it cannot review and re-evaluate the
evidence all over again because there was no showing that the NLRC’s
findings of facts were reached arbitrarily.

Hence, the consolidated petitions before the SC.

Issue/s:

Whether or not piercing the veil based on alter ego theory applies in a
holding company for violations of a subsidiary

Whether or not mere presence of control and full ownership of a parent

over a subsidiary is enough to pierce the veil of corporate fiction
 Whether or not the existence of payment of wages and evidence of
dismissal would still require examination of the element of control where
the companies involved are not affiliated

SC Ruling:

The SC affirmed in toto the Decision of the CA.

Complainants argue that the CA committed several reversible errors. The

CA failed to consider that G Holdings had already acquired all of
Maricalum Mining’s assets and that Teodoro G. Bernardino
(Bernardino) was now the president and controlling stockholder of
both corporations. The CA failed to take into account that Maricalum
Mining was allowed to intervene only on appeal even though it was not a
real party-in-interest. The CA failed to appreciate the LA’ s findings that
Maricalum Mining could not have hired complainants because G
Holdings had already acquired in an auction sale all the assets in the
Sipalay Mining Complex. It failed to consider that all resident managers
of the Sipalay Mining Complex were employed by G Holdings.

The complainants argued further that the foreclosure of the assets

in the Sipalay Mining Complex was intended to bring the said
properties outside the reach of complainants and that the Sipalay
Hospital had been existing as a hospital for Maricalum Mining’s
employees long before G Holdings arrived. Dr. Welilmo T. Neri, Erlinda
L. Fernandez, Edgar M. Sobrino and Wilfredo C. Taganile, Sr. were all
hired by Maricalum Mining but were dismissed by G Holdings. Sipalay
Hospital existed without a board of directors and its employees were
receiving orders from Maricalum Mining and, later on, replaced by G
Holdings’ officer-in-charge and Maricalum Mining and G Holdings
controlled the affairs of Sipalay Hospital.

Maricalum Mining contended that the CA committed grave abuse of

discretion because the monetary awards were improperly computed. It
claims that complainants had stopped rendering their services since
September 23, 2010, hence, their monetary claims covering the second
half of April 2007 up to July 2007 have already prescribed as provided
pursuant to Article 291 of the Labor Code. Moreover, it also stressed that
the NLRC should have remanded the case to the LA for the determination
of the manpower cooperatives’ net surpluses and how these amounts
were distributed to their members to aid the proper determination of the
total amount of the monetary award. Finally, Maricalum Mining avers
that the awards in favor of some of the complainants are “improbable”
and completely unfounded.
 G Holdings argued that piercing the corporate veil of Maricalum
Mining is not proper because it did not acquire all of Maricalum
Mining’s assets. It is primarily engaged in the business of owning and
holding shares of stocks of different companies-not participating in the
operations of its subsidiaries. Maricalum Mining, the actual employers of
complainants, had already manifested its willingness to settle the correct
money claims. Bernardino is not a controlling stockholder of Maricalum
Mining because the latter’s corporate records show that almost all of its
shares of stock are owned by the APT.

Further, G Holdings averred that Joost Pekelharing-not Bernardino-

is G Holdings’ president. In the NAMA WU Case, it was already held
that control over Maricalum Mining was exercised by the APT and not G
Holdings. The NLRC did not commit any grave abuse of discretion when
it allowed Maricalum Mining to intervene after the LA’s decision was
promulgated. The cash vouchers, payment schedule, termination letters
and caretaker schedules presented by complainants do not prove the
employment relationship with G Holdings because the signatories thereto
were either from Maricalum Mining or the manpower cooperatives. The
pronouncements in the NAMA WU Case and in Republic vs. G Holdings,
Inc. prove that Maricalum Mining never relinquished possession of the
Sipalay Mining Complex in favor of G Holdings. Dr. Welilmo T. Neri,
Erlinda L. Fernandez, Edgar M. Sobrino and Wilfredo C. Taganile, Sr.
were employees of the Sipalay Hospital, which is a separate business
entity, and were not members in any of the manpower cooperatives,
which entered into a labor-only arrangement with Maricalum Mining.

Syllabus

Mercantile Law; Corporations; Piercing the Veil of Corporate Fiction; The

doctrine of piercing the corporate veil applies only in three (3) basic areas,
namely: (a) defeat of public convenience as when the corporate fiction is used
as a vehicle for the evasion of an existing obligation; (b) fraud cases or when
the corporate entity is used to justify a wrong, protect fraud, or defend a crime;
or (c) alter ego cases, where a corporation is merely a farce since it is a mere
alter ego or business conduit of a person, or where the corporation is so
organized and controlled and its affairs are so conducted as to make it merely
an instrumentality, agency, conduit or adjunct of another corporation.—The
doctrine of piercing the corporate veil applies only in three (3) basic areas,
namely: (a) defeat of public convenience as when the corporate fiction is used
as a vehicle for the evasion of an existing obligation; (b) fraud cases or when
the corporate entity is used to justify a wrong, protect fraud, or defend a crime;
or (c) alter ego cases, where a corporation is merely a farce since it is a mere
alter ego or business conduit of a person, or where the corporation is so
organized and controlled and its affairs are so conducted as to make it merely
an instrumentality, agency, conduit or adjunct of another corporation. This
principle is basically applied only to determine established liability. However,
piercing of the veil of corporate fiction is frowned upon and must be done with
caution. This is because a corporation is invested by law with a personality
separate and distinct from those of the persons composing it as well as from
that of any other legal entity to which it may be related.

Holding Companies; A parent or holding company is a corporation which owns

or is organized to own a substantial portion of another company’s voting shares
of stock enough to control or influence the latter’s management, policies or
affairs thru election of the latter’s board of directors or otherwise.—A parent or
holding company is a corporation which owns or is organized to own a
substantial portion of another company’s voting shares of stock enough to
control or influence the latter’s management, policies or affairs thru election of
the latter’s board of directors or otherwise. However, the term “holding
company” is customarily used interchangeably with the term “investment
company” which, in turn, is defined by Section 4(a) of Republic Act (RA) No.
2629 as “any issuer (corporation) which is or holds itself out as being engaged
primarily, or proposes to engage primarily, in the business of investing,
reinvesting, or trading in securities.” In other words, a “holding company” is
organized and is basically conducting its business by investing substantially in
the equity securities of another company for the purposes of controlling their
policies (as opposed to directly engaging in operating activities) and “holding”
them in a conglomerate or umbrella structure along with other subsidiaries.
Significantly, the holding company itself — being a separate entity — does not
own the assets of and does not answer for the liabilities of the subsidiary or
affiliate. The management of the subsidiary or affiliate still rests in the hands of
its own board of directors and corporate officers. It is in keeping with the basic
rule a corporation is a juridical entity which is vested with a legal personality
separate and distinct from those acting for and in its behalf and, in general,
from the people comprising it. The corporate form was created to allow
shareholders to invest without incurring personal liability for the acts of the
corporation.

A holding corporation has a separate corporate existence and is to be

treated as a separate entity; unless the facts show that such separate
corporate existence is a mere sham, or has been used as an instrument for
concealing the truth.—While the veil of corporate fiction may be pierced
under certain instances, mere ownership of a subsidiary does not justify the
imposition of liability on the parent company. It must further appear that to
recognize a parent and a subsidiary as separate entities would aid in the
consummation of a wrong. Thus, a holding corporation has a separate
corporate existence and is to be treated as a separate entity; unless the facts
show that such separate corporate existence is a mere sham, or has been used
as an instrument for concealing the truth.

Piercing the Veil of Corporate Fiction; Piercing the corporate veil based
on the alter ego theory requires the concurrence of three (3) elements:
control of the corporation by the stockholder or parent corporation, fraud
or fundamental unfairness imposed on the plaintiff, and harm or damage
caused to the plaintiff by the fraudulent or unfair act of the corporation.—
The elements of the alter ego theory were discussed in Philippine National
Bank v. Hydro Resources Contractors Corporation, 693 SCRA 294 (2013), to
wit:

The first prong is the “instrumentality” or “control” test. This test requires
that the subsidiary be completely under the control and domination of the
parent. It examines the parent corporation’s relationship with the subsidiary. It
inquires whether a subsidiary corporation is so organized and controlled and
its affairs are so conducted as to make it a mere instrumentality or agent of the
parent corporation such that its separate existence as a distinct corporate
entity will be ignored. It seeks to establish whether the subsidiary corporation
has no autonomy and the parent corporation, though acting through the
subsidiary in form and appearance, “is operating the business directly for
itself.”

The second prong is the “fraud” test. This test requires that the parent
corporation’s conduct in using the subsidiary corporation be unjust,
fraudulent or wrongful. It examines the relationship of the plaintiff to the
corporation. It recognizes that piercing is appropriate only if the parent
corporation uses the subsidiary in a way that harms the plaintiff creditor. As
such, it requires a showing of “an element of injustice or fundamental
unfairness.”

The third prong is the “harm” test. This test requires the plaintiff to show that
the defendant’s control, exerted in a fraudulent, illegal or otherwise unfair
manner toward it, caused the harm suffered. A causal connection between the
fraudulent conduct committed through the instrumentality of the subsidiary
and the injury suffered or the damage incurred by the plaintiff should be
established. The plaintiff must prove that, unless the corporate veil is pierced,
it will have been treated unjustly by the defendant’s exercise of control and
improper use of the corporate form and, thereby, suffer damages. To
summarize, piercing the corporate veil based on the alter ego theory requires
the concurrence of three elements: control of the corporation by the
stockholder or parent corporation, fraud or fundamental unfairness imposed
on the plaintiff, and harm or damage caused to the plaintiff by the fraudulent
or unfair act of the corporation. The absence of any of these elements prevents
piercing the corporate veil.
Mere ownership by a single stockholder or by another corporation of all or
nearly all of the capital stock of a corporation is not of itself sufficient
ground for disregarding the separate corporate personality.—Mere presence
of control and full ownership of a parent over a subsidiary is not enough to
pierce the veil of corporate fiction. It has been reiterated by this Court time and
again that mere ownership by a single stockholder or by another corporation of
all or nearly all of the capital stock of a corporation is not of itself sufficient
ground for disregarding the separate corporate personality.

The corporate veil may be lifted only if it has been used to shield fraud,
defend crime, justify a wrong, defeat public convenience, insulate bad
faith or perpetuate injustice.—The corporate veil may be lifted only if it has
been used to shield fraud, defend crime, justify a wrong, defeat public
convenience, insulate bad faith or perpetuate injustice. To aid in the
determination of the presence or absence of fraud, the following factors in the
“Totality of Circumstances Test” may be considered, viz.:

1) Commingling of funds and other assets of the corporation with those of the
individual shareholders;
2) Diversion of the corporation’s funds or assets to non-corporate uses (to the
personal uses of the corporation’s shareholders);
3) Failure to maintain the corporate formalities necessary for the issuance of or
subscription to the corporation’s stock, such as formal approval of the stock
issue by the board of directors;
4) An individual shareholder representing to persons outside the corporation
that he or she is personally liable for the debts or other obligations of the
corporation;
5) Failure to maintain corporate minutes or adequate corporate records;
6) Identical equitable ownership in two entities;
7) Identity of the directors and officers of two entities who are responsible for
supervision and management (a partnership or sole proprietorship and a
corporation owned and managed by the same parties);
8) Failure to adequately capitalize a corporation for the reasonable risks of the
corporate undertaking;

9) Absence of separately held corporate assets;

10) Use of a corporation as a mere shell or conduit to operate a single venture
or some particular aspect of the business of an individual or another
corporation;
11) Sole ownership of all the stock by one individual or members of a single
family;
12) Use of the same office or business location by the corporation and its
individual shareholder(s);
13) Employment of the same employees or attorney by the corporation and its
shareholder(s);
14) Concealment or misrepresentation of the identity of the ownership,
management or financial interests in the corporation, and concealment of
personal business activities of the shareholders (sole shareholders do not
reveal the association with a corporation, which makes loans to them without
adequate security);
15) Disregard of legal formalities and failure to maintain proper arm’s length
relationships among related entities;
16) Use of a corporate entity as a conduit to procure labor, services or
merchandise for another person or entity; 17) Diversion of corporate assets
from the corporation by or to a stockholder or other person or entity to the
detriment of creditors, or the manipulation of assets and liabilities between
entities to concentrate the assets in one and the liabilities in another; 18)
Contracting by the corporation with another person with the intent to avoid the
risk of nonperformance by use of the corporate entity; or the use of a
corporation as a subterfuge for illegal transactions; and 19) The formation and
use of the corporation to assume the existing liabilities of another person or
entity.

Settled is the rule that where one (1) corporation sells or otherwise
transfers all its assets to another corporation for value, the latter is not,
by that fact alone, liable for the debts and liabilities of the transferor.—
Settled is the rule that where one corporation sells or otherwise transfers all its
assets to another corporation for value, the latter is not, by that fact alone,
liable for the debts and liabilities of the transferor. In other words, control or
ownership of substantially all of a subsidiary’s assets is not by itself an
indication of a holding company’s fraudulent intent to alienate these assets in
evading labor-related claims or liabilities. As discussed earlier, the PSA was not
designed to evade the monetary claims of the complainants. Although there
was proof that G Holdings has an office in Maricalum Mining’s premises and
that that some of their assets have been commingled due to the PSA’s
unavoidable consequences, there was no fraudulent diversion of corporate
assets to another corporation for the sole purpose of evading complainants’
claim.

5. Enano-Bote vs Alvarez, GR 223572, Nov. 10, 2020*

y
6. ABS-CBN vs Hilario, GR 193136, July 10, 2019*
Facts m

 Petitioner is a domestic corporation primarily engaged in the business of

international and local broadcasting of television and radio content.
 ABS-CBN’s Scenic Department initially handled the design, construction
and provision of the props and sets for its different shows and programs.
 Subsequently, petitioner engaged independent contractors to create,
provide and construct its different sets and props requirements.
 One of the independent contractors engaged by petitioner was Mr.
Edmund Ty (Ty).
 In 1995, CCI was formed and incorporated by Ty together with some
officers of petitioner, namely, Mr. Eugenio Lopez III, Charo Santos-
Concio, Felipe S. Yalong and Federico M. Garcia.
 It was organized to engage in the business of conceptualizing, designing
and constructing sets and props for use in television programs, theater
presentations, concerts, conventions and/or commercial advertising.
 Ty became the Vice-President and Managing Director of CCI.
 On or about the time of CCI’s incorporation, the Scenic Department of
petitioner was abolished and CCI was engaged by petitioner to provide
props and set design for its shows and programs.
 March 6, 1995, respondent Honorato was hired by CCI as Designer. He
rose from the ranks until he became Set Controller, receiving a monthly
salary of P9,973.24 as of October 5, 2003. Respondent Banting, on the
other hand, was engaged by CCI as Metal Craftsman in April 1999. He
likewise rose from the ranks and became Assistant Set Controller, with a
monthly salary of P8,820.73 as of October 5, 2003.
 Ty decided to retire as an officer of CCI, by virtue of his retirement, and
his paramount contribution to the company has been missing due to his
absence, the board of directors of CCI, decided to shorten the corporate
existence of CCI,by amending the articles, and such amendment was
approved by the Board of directors.
 TY decided to create a new corporation, engaged in similar business with
CCI, namely Ty organized and created Dream Weaver Visual Exponents,
Inc. (DWVEI).
 nLike CCI, DWVEI is primarily engaged in the business of
conceptualizing, designing and constructing sets and props for use in
television programs and similar projects. With the incorporation of
DWVEI, petitioner engaged the services of DWVEI.
 Due to the cessation of the corporate business, the respondents received
a letter informing them that they are now dismissed from work due to the
cessation of the business, though not performing badly to incur losses,
but the business is merely on a break-even scenario, hence is justified
for its closure. The respondent’s received separation pay and quitclaims,
however, they filed an illegal dismissal against the petitioner,and
contended that the foreclosure of the said corporation was intended to
 circumvent labor laws, and unduly violated the security of tenure, under
the guise of a valid cessation of business. The LA, NLRC and CA,
affirmed in consensus and contended that Petitioner, indeed,
illegally dismissed the private respondents.

ISSUE: Whether or Not the Petitioner illegally dismissed the respondents.

Ruling:

Yes, The Court held that the private respondents were illegally dismissed.

The Contention of Petitioner that the cessation of CCI weire done in good
faith failed to convince the court of such. It can be shown from the facts
that cessation of business must fulfil the requirements provided for by
law. Specifically under Art 298. It provided three requirements; a) service
of a written notice to the employees and to the DOLE at least one month
before the intended date thereof; (b) the cessation of business must be
bona fide in character; and (c) payment of the employees of termination
pay amounting to one month pay or at least one-half month pay for every
year of service, whichever is higher.

Though the requirements were present it must be done in good faith. As

can be shown, there is a necessity to pierce the veil of corporate
fiction, as such would tend to circumvent existing laws. The doctrine
of piercing the corporate veil applies only in three (3) basic areas,
namely:

(1) defeat public convenience as when the corporate fiction is used

as a vehicle for the evasion of an existing obligation;

(2) fraud cases or when the corporate entity is used to justify a

wrong, protect fraud, or defend a crime; or

(3) alter ego cases, where a corporation is merely a farce since it is

a mere alter ego or business conduit of a person, or where the
corporation is so organized and controlled and its affairs are so
conducted as to make it merely an instrumentality, agency,
conduit or adjunct of another corporation.

CCI and DWEIVEX consists of the same set of board of directors and
employees, and are employed by Petitioner ABS CBN, which the board of
directors of the latter is also the board of directors of CCI, which the
cessation of CCI shows that it is only intended to unduly remove some of
its employees, while hiding under the corporate fiction so as to avoid
liability.
 Since the third instance of piercing the veil is present, it is only proper to
see to it, that CCI and Ty, be treated as one and the same person,
together with the petitioner, thereby the court, rendered its judgment
holding the petitioner guilty of illegal dismissal of private respondents

Syllabus:

Corporations; Separate Legal Personality; Doctrine of Piercing the Veil of

Corporate Fiction; The doctrine of piercing the veil of corporate fiction is
a legal precept that allows a corporation’s separate personality to be
disregarded under certain circumstances so that a corporation and its
stockholders or members, or a corporation and another related
corporation should be treated as a single entity.-
—The doctrine of piercing the veil of corporate fiction is a legal precept that
allows a corporation’s separate personality to be disregarded under certain
circumstances so that a corporation and its stockholders or members, or a
corporation and another related corporation should be treated as a single
entity. In PNB v. Hydro Resources Contractors Corp., 693 SCRA 294 (2013),
the Court said that: The doctrine of piercing the corporate veil applies only in
three (3) basic areas, namely: (1) defeat public convenience as when the
corporate fiction is used as a vehicle for the evasion of an existing obligation;
(2) fraud cases or when the corporate entity is used to justify a wrong, protect
fraud, or defend a crime; or (3) alter ego cases, where a corporation is merely a
farce since it is a mere alter ego or business conduit of a person, or where the
corporation is so organized and controlled and its affairs are so conducted as to
make it merely an instrumentality, agency, conduit or adjunct of another
corporation.

The corporate mask may be removed or the corporate veil pierced when
the corporation is just an alter ego of a person or of another corporation.-
—The present case falls under the third instance where a corporation is merely
a farce since it is a mere alter ego or business conduit of person or in this case
a corporation. “The corporate mask may be removed or the corporate veil
pierced when the corporation is just an alter ego of a person or of another
corporation.” By looking at the circumstances surrounding the creation,
incorporation, management and closure and cessation of business operations
of CCI, it cannot be denied that CCI’s existence was dependent upon Ty and
petitioner. First, the internal Scenic Department which initially handled the
props and set designs of petitioner was abolished and shut down and CCI was
incorporated to cater to the props and set design requirements of petitioner,
thereby transferring most of its personnel to CCI. Notably, CCI was a
subsidiary of petitioner and was incorporated through the collaboration of Ty
and the other major stockholders and officers of petitioner. CCI provided
services mainly to petitioner and its other subsidiaries. When Edmund Ty
organized his own company, petitioner hired him as consultant and eventually
engaged the services of his company DWVEI. As a result of which CCI decided
to close its business operations as it no longer carried out services for the
design and construction of sets and props for use in the programs and shows
of petitioner, thereby terminating respondents and other employees of CCI.
Petitioner clearly exercised control and influence in the management and
closure of CCI’s operations, which justifies the ruling of the appellate court and
labor tribunals of disregarding their separate corporate personalities and
treating them as a single entity.

7. Zaragosa vs Tan, GR 225544, Dec. 4, 2017°

FACTS:

 Petitioner Rogel N. Zaragoza, an Area Sales Manager of Consolidated

Distillers of the Far East Incorporated (Condis) in Bicol Region, filed an
illegal dismissal case with money claims against Condis, Winston Co and
Dominador D. Hidalgo.
 Petitioner then filed a motion for issuance of alias writ of execution with
notice of appearance, arguing that he is likewise entitled to accrued
salaries by reason of the order of reinstatement, which amounted to
P2,294,897.47.
 He prayed that respondent Tan, as President of Condis, should be held
personally liable for the awards; and that respondent EDI should also be
held jointly and solidarily liable with Condis for the judgment award as
the transfer of manufacturing business of the latter to the former was
done in bad faith in order to evade payment/satisfaction of their
liabilities in the labor case, applying the doctrine of piercing the veil of
corporate fiction.
ISSUE:
Can the monetary award in favor of petitioner be enforced against
respondent Tan in her capacity as president of Condis and against
respondent EDI even though they were not impleaded in said labor case?

RULING:

No, the monetary award in favor of petitioner cannot be enforced against

respondent Tan and EDI.
 The Court speaking through Justice Peralta declared that the
respondents are not liable for the separation pay owed by MAC to
complainants because Section 31 of the Corporation Code (Batas
Pambansa Big. 68) provides that in order to hold a director or officer
personally liable for corporate obligations, the complainant must allege
in the complaint that the director or officer assented to patently
unlawful acts of the corporation, or that the officer was guilty of
gross negligence or bad faith; and the complainant must clearly and
convincingly prove such unlawful acts, negligence or bad faith.

Therefore, Respondent Tan was not at all impleaded in the illegal

dismissal case for it was not shown at all that she assented to patently
unlawful acts of the corporation, or that she was guilty of gross
negligence or bad faith. It also could not be alleged that respondent EDI
was organized with the intention of evading Condis' obligations to
petitioner since its agreements with the latter were executed prior to
petitioner's dismissal on December 3, 2007.

8. Cua vs Ng Wee, GR 220926, March 21, 2018*

FACTS:

 Ng Wee is a client of Westmont Bank. He was persuaded by the bank

manager to make money placements with Westmont Investment
Corporation (Wincorp), a domestic corporation organized and licensed
to operate as an investment house, and one of the bank’s affiliates.

 The bank manager offered him “sans recourse” transactions with the
following mechanics:

A corporate borrower who needs financial assistance to run

its business is screened by Wincorp.

That when qualified after the screening, Wincorp will enter

into a Credit Line Agreement for a specific amount with the
corporation which the latter can draw upon in a series of
availments over a period of time.

 Wincorp searched for investors who are willing to provide the funds
needed by the accredited borrower. The investor is matched with the
accredited borrower.
 Because of the assurance in the representations that the “sans
recourse” transactions are safe, stable, high-yielding, and involve little
to no risk, Ng Wee placed investments.

 His initial investments were matched with Hottick Holdings

Corporation (Hottick). Hottick was extended a credit facility with a
maximum drawdown of P1.5 billion. Hottick fully availed of the loan
facility but it defaulted in paying its outstanding obligations when the
Asian financial crisis struck.

 As a result, Wincorp filed a collection suit. Virata offered to

guarantee the full payment of the loan embodied in the Memorandum
of Agreement between him and Wincorp to make the parties settle.

 Wincorp then executed a Waiver and Quitclaim in favor of Virata,

releasing the latter from any obligation, except for his obligation to
transfer 40% equity of UEM Development Philippines, Inc. (UDPI) and
forty percent (40%) of UDPI’s interest in the tollway project to
Wincorp.

 Ng Wee was alarmed by the news of Hottick’s default and financial

distress which made him confront Wincorp and asked about the
status of his investments.

 Wincorp assured him that the losses from the Hottick account will be
absorbed by the company and that his investments would be
transferred instead to a new borrower account.

 Thus, Ng Wee continued making money placements, rolling over his

previous investments in Hottick and even increased his stakes in the
new borrower account Power Merge.

 Virata is the majority stockholder of said corporation.

 Ng Wee, however, file a complaint claiming that he fell prey to the

intricate scheme of fraud and deceit that was hatched by Wincorp and
Power Merge.

 As he later discovered, Power Merge’s default was inevitable from the

very start since it only had subscribed capital in the amount of P37.5
million, of which only P9.375 million is actually paid up. He then
attributed gross negligence, if not fraud and bad faith, on the part of
Wincorp and its directors for approving Power Merge’s credit line
application and its subsequent increase to the amount of P2.5 billion
despite its glaring inability to pay.
  Wincorp directors argued that they can only be held liable under
Section 31 of the Corporation Code, if they assented to a patently
unlawful act, or are guilty of either gross negligence or bad faith in
directing the affairs of the corporation.

 They explained that the provision is inapplicable since the approval of

Power Merge’s credit line application was done in good faith and that
they merely relied on the vetting done by the various departments of
the company.
ISSUE:

Whether or not directors of Wincorop are liable in their personal

capacity.

DECISION:

The board of directors is expected to be more than mere rubber stamps

of the corporation and its subordinate departments. It wields all
corporate powers bestowed by the Corporation Code, including the
control over its properties and the conduct of its business. Being
stewards of the company, the board is primarily charged with protecting
the assets of the corporation in behalf of its stakeholders.

Cua and the Cualopings failed to observe this fiduciary duty when they
assented to extending a credit line facility to Power Merge. In a separate
case, the SEC discovered that Power Merge is actually Wincorp’s largest
borrower at about 30% of the total borrowings. It was then incumbent
upon the board of directors to have been more circumspect in approving
its credit line facility, and should have made an independent evaluation
of Power Merge’s application before agreeing to expose it to a P2.5 billion
risk.

Had it fulfilled its fiduciary duty, the obvious warning signs would have
cautioned it from approving the loan in haste. To recapitulate: (1) Power
Merge has only been in existence for two years when it was granted a
credit facility; (2) Power Merge was thinly capitalized with only
P37,500,000.00 subscribed capital; (3) Power Merge was not an ongoing
concern since it never secured the necessary permits and licenses to
conduct business, it never engaged in any lucrative business, and it did
not file the necessary reports with the SEC; and (4) no security other
than its Promissory Notes was demanded by Wincorp or was furnished
by Power Merge in relation to the latter’s drawdowns
 It cannot also be ignored that prior to Power Merge’s application for a
credit facility, its controller Virata had already transacted with Wincorp.
A perusal of his records with the company would have revealed that
he was a surety for the Hottick obligations that were still unpaid at
that time. This means that at the time the Credit Line Agreement was
executed, Virata still had direct obligations to Wincorp under the Hottick
account. But instead of impleading him in the collection suit against
Hottick, Wincorp’s board of directors effectively released Virata from
liability, and, ironically, granted him a credit facility in the amount of
P1.3 billion on the very same day.

This only goes to show that even if Cua and the Cualopings are not guilty
of fraud, they would nevertheless still be liable for gross negligence in
managing the affairs of the company, to the prejudice of its clients and
stakeholders. Under such circumstances, it becomes immaterial whether
or not they approved of the Side Agreements or authorized Reyes to sign
the same since this could have all been avoided if they were vigilant
enough to disapprove the Power Merge credit application. Neither can the
business judgment rule apply herein for it is elementary in corporation
law that the doctrine admits of exceptions: bad faith being one of them,
gross negligence, another.

Syllabus

Corporations; Separate Legal Personality; Piercing the Veil of Corporate

Fiction; When the notion of separate juridical personality is used (1) to
defeat public convenience, justify wrong, protect fraud or defend crime;
(2) as a device to defeat the labor laws; or (3) when the corporation is
merely an adjunct, a business conduit or an alter ego of another
corporation, this separate personality of the corporation may be
disregarded or the veil of corporate fiction pierced.—Concept Builders, Inc.
v. NLRC, 257 SCRA 149 (1996), instructs that as a fundamental principle of
corporation law, a corporation is an entity separate and distinct from its
stockholders and from other corporations to which it may be connected. But,
this separate and distinct personality of a corporation is merely a fiction
created by law for convenience and to promote justice. Thus, authorities
discuss that when the notion of separate juridical personality is used (1) to
defeat public convenience, justify wrong, protect fraud or defend crime; (2) as a
device to defeat the labor laws; or (3) when the corporation is merely an
adjunct, a business conduit or an alter ego of another corporation, this
separate personality of the corporation may be disregarded or the veil of
corporate fiction pierced.
 9. Sps Fernandez vs Smart Communications, GR 212885, July 17,
2019*(Piercing the veil of Corporate Fiction, ife board, husband president
signatory to the contract)

Facts:

 Everything Online, Inc. (OL) is a corporation that offers internet

services nationwide through franchisees.

 Smart, on the other hand, is a mobile phone service provider.

 Nolasco and Maricris Fernandez were the CEO and Member of the
Board of Directors of EOL, respectively.

 As alleged in the Amended Complaint, EOL sought SMART

sometime in 2006 to provide the mobile communication
requirements for its expansion.

 Series of meetings ensued between the parties where it was

determined that EOL would be needing approximately 2,000 post-
paid lines with corresponding cell phone units.

 Nineteen of these lines shall be under the corporate account of

EOL while the rest of the lines and phones shall be distributed to
EOL's franchisees.

 In a letter dated September 13, 2006 (Letter Agreement), SMART

specified the terms of the agreement over the 1,119 phone
lines it already issued in favor of EOL. In addition to the Letter
Agreement, EOL executed an Undertaking (EOL Undertaking)
where it affirmed its availment of 1,119 SMART cell phones and
services. EOL also agreed to assume full responsibility for the
charges incurred on the use of all these units. The pertinent
portion of the EOL Undertaking signed by Samaco III and
petitioner Nolasco provides:

 xxxx

3. Everything Online, Inc. agrees that it shall be fully responsible

for the settlement of whatever charges to be incurred under the
above mobile numbers and shall fully comply with the terms and
conditions pertaining to the Smart Corporate Service Application
Form and other related Subscription Contracts. Likewise,
Everything Online, Inc. shall bind itself to be continuously
responsible regardless of assignment and movements of its
 designated users until such time that the units are validly
transferred, after the expiration of the lock-in period, after twenty
four (24) months for nineteen (19) lines at Plan 1200 and after
thirty six (36) months for one thousand one hundred (1,100) lines
at Plan 500, respectively.

xxxx

9. The President and each one of the directors and officers of

Everything Online, Inc. shall be held solidarity liable in their
personal capacity with the franchisee or assignee for all charges for
the use of the SMART cellphone units acquired by Everything
Online, Inc.13 (Emphases supplied)

 SMART averred that after the execution of the EOL Undertaking,

its credit and collection department sent, by email, phone bills to
EOL that had been previously returned to SMART.

 These bills were for the collection of the monthly payment due on
the lines that were supposedly given to EOL's franchisees.
However, EOL allegedly refused to receive the bills, stating
that it was not liable for the payment of bills of phone lines
assigned to franchisees.

 SMART failed to collect from EÖL despite repeated demands. Thus,

on an Amended Complaint with an application for a writ of
preliminary attachment was filed by SMART before the RTC for
Collection of Sum of Money against EOL and all its directors and
officers including the Spouses Fernandez.

 Spouses Fernandez filed a Motion to Dismiss With a Very Urgent

Motion to Lift and Discharge Writ of Preliminary Attachment
issued against them.

 Petitioners averred that they are not the real party in interest in
the case. Maricris claimed that the only allegation holding the
directors and officers personally and solidarily liable with EOL was
the alleged provisions in the Letter Agreements and EOL
Undertaking.

 The Letter Agreements and EOL Undertaking failed to show that

she expressly agreed to be bound by the provisions contained
therein.
  Accordingly, the complaint against her must be dismissed. With
respect to Nolasco, he contended that he is not the real party in
interest in this case because he was no longer an Officer/Director
of EOL at the time the complaint was filed as their entire share
was already assigned to one of EOL's directors.

RTC issued an Order granting the motions to dismiss.

During appeal, CA found grave abuse on the part of the trial court in
dismissing the complaint against individual defendants. It ruled
that there was overwhelming evidence indicating that SamacollI and
Spouses Fernandez expressly bound themselves to be solidarily
liable with EOL to SMART. MR denied; hence this petition.

Issue:

WoN the Spouses Fernandez are not solidarily liable with EOL?

Ruling:

Maricris is not solidarily liable while Nolasco is.

As a general rule, a corporation's representatives are not bound by the

terms of the contract executed by the corporation. "They are not
personally liable for obligations and liabilties incurred on or in
behalf of the corporation.

There are instances, however, when the distinction between personalities

of directors, officers, and representatives, and of the corporation, are
disregarded. This is piercing the veil of corporate fiction.

The doctrine of piercing the veil of corporate fiction is a legal

precept that allows a corporation's separate personality to be
disregarded under certain circumstances, so that a corporation and
its stockholders or members, or a corporation and another related
corporation could be treated as a single entity. It is meant to apply
only in situations where the separate corporate personality of a
corporation is being abused or being used for wrongful purposes.

The piercing of the corporate veil must be done with caution. To justify
the piercing of the veil of corporate fiction, "it must be shown by clear
and convincing proof that the separate: and distinct personality of the
corporation was purposefully emploved to evade a legitimate and binding
commitment and perpetuate a fraud or like wrongdoings."
A corporate director, trustee, or officer is to be held solidarity liable with the
corporation in the following instances:

1. When directors and trustees or, in appropriate cases, the officers of a

corporation:

(a) vote for or assent to patently unlawful acts of the corporation;

(b) act in bad faith or with gross negligence in directing the
corporate affairs;
(c) are guilty of conflict of interest to the prejudice of the
corporation, its stockholders or members, and other persons;

2. When a director or officer has consented to the issuance of watered stocks

or who, having knowledge thereof, did not forthwith file with the corporate
secretary his written objection thereto;

3) When a director, trustee or officer has contractually agreed or stipulated

to hold himself personally and solidarily liable with the Corporation; or

4) When a director, trustee or officer is made, by specific provision of law,

personally liable for his corporate action

These instances have not been shown in the case of Maricris. While the
Amended Complaint alleged that EOL fraudulently refused to pay the amount
due, nothing in the said pleading or its annexes would show the basis of
Maricris' alleged fraudulent act that warrants piercing the corporate veil.

This is not the case with petitioner Nolasco. Nolasco, as CEO, signed the EOL
Undertaking purportedly binding himself to be "held solidarily liable in his
personal capacity with the franchisee or assignee for all charges for the use of
SMART cell phone units acquired by Everything Online, Inc." Such allegation
proffers hypothetically admitted ultimate facts, which would warrant an action
for a collection for sum of money based on the provision of the EOL
Undertaking

10. HSBC vs Sps Galang. GR 199565. June 30, 2021*

DOCTRINE:
A subsidiary company's separate corporate personality may be disregarded
when the evidence shows that such separate personality was being used by its
parent or holding corporation to perpetrate a fraud or evade an existing
obligation

FACTS:

 Maria Theresa Ofelia G. Galang was a regular employee of

petitioner Hongkong and Shanghai Banking Corporation, Ltd.
(HSBC), a foreign banking institution duly licensed to do business
in the Philippines.

 HSBC offered benefit plans for its employees, including housing

loans, administered and managed by Hongkong and Shanghai
Banking Corporation, Ltd. Staff Retirement Plan (HSBC-SRP).

 Maria Theresa applied for a P400,000.00 housing loan with

HSBC-SRP.

 Based on the HSBC Retirement Plan Rules and Regulations,

upon termination of Ma. Theresa's employment with HSBC,
her loan balance automatically became due and demandable.

 After her dismissal from the corporation, she was not able to
satisfy the monthly amortizations for the housing loans.

 Spouses Galang were then given demand letters and Installment

Overdue Reminders. This resulted to the foreclosure of their
mortgage by HSBC-SRP.

 On December 20, 1996, Spouses Galang sued HSBC and HSBC-

SRP for Annulment of Sale with Damages and Preliminary
Injunction before the Regional Trial Court (RTC)-Pasig City.

RTC Ruling:

The Court resolves to DISMISS this case for reason of prematurity. However, in
the interest ot justice and fair play, the Court resolves not to dissolve [sic] the
Temporary Restraining Order until the issues between the parties shall have
been finally decided

CA Ruling:
The Court of Appeals ruled in favor of Spouses Galang, declaring as void the
foreclosure of mortgage on their property,

ISSUE/S:

WON HSBC and HSBC SRC are different entities.

RULING:
Yes, They are different Entities.

Though a subsidiary company's separate corporate personality may be

disregarded when the evidence shows that such separate personality was being
used by its parent or holding corporation to perpetrate a fraud or evade an
existing obligation, none of these circumstances were alleged or proved by
Spouses Galang.

They simply claimed that HSBC-SRP and HSBC acted in bad faith when they
foreclosed the mortgaged property though they (Spouses Galang) were up to
date in their payments.

More, the insistence of Spouses Galang that HSBC was privy to the
Mortgage Agreement for its interests are so intertwined with those of
HSBC- SRP that they have become identical — constitutes a collateral
attack on the corporate personality of HSBC-SRP which is prohibited by
the Corporation Code of the Philippines.

Such an inquiry into the legal personality of a corporation may only be made
by the Solicitor General in a Quo Warranto proceeding.

At any rate, HSBC correctly argues that it had no participation in the

foreclosure proceedings. The parties even stipulated during the pre-trial that
HSBC was not a signatory to any contract between Spouses Galang and HSBC-
SRP. Its role was limited to determining who among its employees were eligible
to apply for housing loans, processing and approval of which were left to the
discretion of HSBC-SRP.

Considering, too, that Spouses Galang are not entitled to damages, there is
simply no reason to pierce the corporate veil as they would have nothing to
collect or regain from HSBC. Otherwise stated, Spouses Galang do not have a
cause of action against HSBC.
 11. The Linden Suites vs Meridien Far East, GR 211969. Oct. 4, 2021*

Facts:

 The Linden Suites Inc (petitioner) filed on November 18. 2005 a

complaint for damages against respondent Meridien Far East
Properties, Inc. (respondent) before the RTC, Branch 70 of Pasig
City, which was docketed as Civil Case No. 69023. Petitioner
averred that while doing excavation works for the construction of
the Linden Suites in Ortigas, Pasig City, it discovered that the
concrete retaining wall of the adjacent building, One Magnificent
Mile (OMM), owned by respondent, had encroached on its property
line

 Meridiem Far East was adjudged liable for the cost of the
demolition, actual and compensatory damages, and attorney's fees.

 Thereafter, on April 5 and 14, 2010, Sheriff Marco A. Boco

attempted to serve the writ on respondent in its office address in
Makati City but failed.

 Petitioner then advised the sheriff to serve the writ to respondent

at 2/F, Soho Central Condominium located in Mandaluyong City,
its registered address in its 2006 General Information Sheet
(GIS) that was tiled before the Securities and Exchange
Commission (SEC).

 On June 3, 2010, Sheriff Boco proceeded to the said condominium

to serve the writ. However, Atty. Rufo B. Baculi (Atty. Baculi), the
Legal and Administrative Officer of Meridien East Realty and
Development Corporation (MERDC), informed him that it was
Meridien Development Group, Inc. (MDGI), not MERIDIEN FAR
EAST PROPERTIES, INC., which owned the office in the said
address. Atty. Baculi showed a GIS issued by the SEC as proof
that the occupant of the said address was indeed MDGI.

 As a result, Sheriff Boco returned the writ unserved as per Sheriffs

Return dated June 18, 2010.

 Petitioner observed that the 2006 GIS of Meridien Far East and
2009 GIS of Meridiean Development stated the same officers, to
wit: (a) Jose E.B. Antonio as Chairman; (b) Ricardo P. Cueva as
Chief Executive Officer; (c) Rafael G. Yaptinchay as President; (d)
Benito A. Obra, Jr. as Vice-President and President; (e) Efrenilo C.
 Cayanga as Corporate Secretary; and (f) Ma. Melinda A. Zuniga as
Assistant Corporate Secretary. The officers were likewise
shareholders of both corporations and had similar residential
addresses.

 Thus, on November 8, 2010, petitioner filed an Urgent Motion to

Examine Judgment Obligor before RTC of Pasig City, the same
trial court which rendered the final judgment.

 It prayed that respondent's officers be directed to appear before

the court for an examination of the income and properties
owned by respondent for the satisfaction of the RTC Decision.
Petitioner also sought the grant by the trial court of other reliefs as
are just and equitable.

 Respondent, on the other hand, argued for the dismissal of the

motion alleging that the persons sought to be examined are not the
judgment obligors in the RTC Decision.

 It also claimed that their examination is a violation of the doctrine

of separate corporate personality. Respondent further asserted that
the officers cannot be required to appear before RTC Pasig City as
they reside in Makati City, where respondent's office sits.

RTC Ruling

Plaintiff's Urgent Motion to Examine Judgment Obligor is hereby DENIED for

being devoid of merit

CA Ruling:

the CA dismissed the petition for lack of grave abuse of discretion on the part
of the RTC. It held that under Section 36, Rule 39 of the Rules of Court, a
judgment obligor cannot be compelled to appear before a court or
commissioner outside the province or city in which he or she resides or is
found.

ISSUE:
WON the officers may be called to be examined in the motion for examination
of judgment obligor?

Ruling:
YES, the officers may be called to be examined in the motion for examination of
judgment obligor

The doctrine of separate juridical personality is inapplicable in the case at

bench.

To recall, one of the grounds for the denial by the RTC of petitioner's motion for
examination is that the examination of respondent's officers would constitute a
violation of the doctrine of separate juridical personality.

The trial court held that the doctrine applies even if the officers would be
examined for the sole purpose of ascertaining respondent's properties and
income.

The Court finds the trial court's pronouncement misplaced.

The doctrine of separate juridical personality provides that a corporation has a

legal personality separate and distinct from those individuals acting for and in
its behalf and, in general, from those comprising it.

Any obligation incurred by the corporation, acting through its directors, officers
and employees, is therefore its sole liability.

This legal fiction may only be disregarded if it is used as a means to perpetrate

fraud or an illegal act, or as a vehicle for the evasion of an existing obligation,
the circumvention of statutes, or to confuse legitimate issues.

The well-settled doctrine is inapplicable in the case at bench. Petitioner wanted

the officers to be examined not for the purpose of passing unto them the
liability of respondent as its judgment obligor.

In fact, it never averred in the motion any intention to make the officers liable
for respondent's obligation due to the latter's purported attempts to evade the
execution of the final judgment.

What is clear therein is that the sole objective of the examination of the officers
was to ascertain the properties and income of respondent which can be
subjected for execution in order to satisfy the final judgment and nothing else.
 12. | Symex Security vs Rivera, GR 202613. Nov. 8. 2017*

FACTS:

 MAGDALINO O. RIVERA, JR. AND ROBERTO B. YAGO alleged that they

had been employed as security guards by petitioner Symex sometime in
May 1999.

 Petitioner Symex is engaged in the business of investigation and security

services. Its President and Chairman of the Board is petitioner RAFAEL
Y. ARCEGA.

 They were both assigned at the offices and premises of Guevent

Industrial Development Corporation (Guevent), a client of petitioner
Symex.

 They had a twelve-hour duty, but they were not paid their overtime pay.
Respondents were likewise not given a rest day, and not paid their five-
day service incentive leave pay, and 13th month pay. They were required
to report for work during legal holidays, but they were not paid holiday
premium pay. Respondents filed a complaint for nonpayment of
holiday pay, premium for rest day, 13th month pay, illegal
deductions and damages.

 Respondents went to the head office where Capt. Arcego Cura,

Operation Manager of Symex, told them that they would be relieved from
the post because Guevent reduced the number of guards on duty. Capt.
Cura told them to go back on March 17, 2003 for their reassignment.

 On March 17, 2003, Capt. Cura told respondents that they would not be
given a duty assignment unless they withdrew the complaint they filed
before the LA. Respondents were made to choose between resignation or
forcible leave. They both refused to obey Capt. Cura, who then told them
that they were dismissed.

 The next day respondents amended their complaint before the LA to

include illegal dismissal.

 In their defense, petitioners Symex and Arcega maintained that they did
not illegally dismiss respondents. They claimed that respondents are still
 included in petitioner Symex's roll of security guards. They shifted the
blame to respondents, arguing that respondents refused to accept
available postings.

LA Ruling:

The LA found that respondents were merely relieved from their post by Capt.
Cura. According to the LA, a relief order in itself does not sever the employment
relationship between a security guard and the agency.
but ordered petitioner Symex to pay respondents' their proportionate 13th
month pay.

NLRC Ruling:

Aggrieved, respondents appealed to the NLRC. The NLRC ruled in favor of the
respondents.

CA Ruling:
The CA affirmed the ruling of the NLRC. Hence, this petition.

Rafael Arcega was held solidarily liable with Symex

ISSUE:

Whether or not petitioner Arcega, as the President and Chairman of the Board
should be held solidarily liable with petitioner Symex for respondents'
monetary awards.

RULING:

NO. The Court notes that there was no showing that Arcega, as President
of Symex, willingly and knowingly voted or assented to the unlawful acts of the
company.

In Guillermo v. Uson, the Court resolved the twin doctrines of piercing

the veil of corporate fiction and personal liability of company officers in labor
cases. According to the Court:

The common thread running among the aforementioned cases, however,

is that the veil of corporate fiction can be pierced, and responsible
corporate directors and officers or even a separate but related
corporation, may be impleaded and held answerable solidarily in a
labor case, even after final judgment and on execution, so long as it
 is established that such persons have deliberately used the
corporate vehicle to unjustly evade the judgment obligation, or have
resorted to fraud, bad faith or malice in doing so. When the shield of
a separate corporate identity is used to commit wrongdoing and
opprobriously elude responsibility, the courts and the legal authorities in
a labor case have not hesitated to step in and shatter the said shield and
deny the usual protections to the offending party, even after final
judgment.

The key element is the presence of fraud, malice or bad faith. Bad
faith, in this instance, does not connote bad judgment or negligence but
imparts a dishonest purpose or some moral obliquity and conscious
doing of wrong; it means breach of a known duty through some motive or
interest or ill will; it partakes of the nature of fraud.

As the foregoing implies, there is no hard and fast rule on when

corporate fiction may be disregarded; instead, each case must be
evaluated according to its peculiar circumstances. For the case at bar,
applying the above criteria, a finding of personal and solidary liability
against a corporate officer like Guillermo must be rooted on a
satisfactory showing of fraud, bad faith or malice, or the presence of any
of the justifications for disregarding the corporate fiction.75 (Emphasis
supplied)

A corporation is a juridical entity with a legal personality separate and

distinct from those acting for and in its behalf and, in general, from the people
comprising it. Thus, as a general rule, an officer may not be held liable for the
corporation's labor obligations unless he acted with evident malice and/or bad
faith in dismissing an employee.?

Section 31 of the Corporation Code is the governing law on personal

liability of officers for the debts of the corporation.

To hold a director or officer personally liable for corporate obligations,

two requisites must concur:

(1) it must be alleged in the complaint that the director or officer

a. assented to patently unlawful acts of the corporation or
b. that the officer was guilty of gross negligence or bad faith; and

(2) there must be proof that the officer acted in bad faith.

Based on the records, respondents failed to specifically allege either in their

complaint or position paper that Arcega, as an officer of Symex, willfully and
knowingly assented to the acts of Capt. Cura, or that Arcega had been guilty of
gross negligence or bad faith in directing the affairs of the corporation. In fact,
there was no evidence at all to show Arcega's participation in the illegal
dismissal of respondents.

Clearly, the twin requisites of allegation and proof of bad faith, necessary to
hold Arcega personally liable for the monetary awards to the respondents, are
lacking.

Arcega is merely one of the officers of Symex and to single him out and require
him to personally answer for the liabilities of Symex are without basis. The
Court has repeatedly emphasized that the piercing of the veil of corporate
fiction is frowned upon and can only be done if it has been clearly established
that the separate and distinct personality of the corporation is used to justify a
wrong, protect fraud, or perpetrate a deception.80 To disregard the separate
juridical personality of a corporation, the wrongdoing must be established
clearly and convincingly. It cannot be presumed.

Mercantile Law; Corporations; Liability of Corporate Officers; As a general rule,

an officer may not be held liable for the corporation’s labor obligations unless
he acted with evident malice and/or bad faith in dismissing an employee.—A
corporation is a juridical entity with a legal personality separate and distinct
from those acting for and in its behalf and, in general, from the people
comprising it. Thus, as a general rule, an officer may not be held liable for the
corporation’s labor obligations unless he acted with evident malice and/or bad
faith in dismissing an employee. Section 31 of the Corporation Code is the
governing law on personal liability of officers for the debts of the corporation.
To hold a director or officer personally liable for corporate obligations, two
requisites must concur: (1) it must be alleged in the complaint that the director
or officer assented to patently unlawful acts of the corporation or that the
officer was guilty of gross negligence or bad faith; and (2) there must be proof
that the officer acted in bad faith.

Same; Same; Piercing the Veil of Corporate Fiction; The Supreme Court (SC)
has repeatedly emphasized that the piercing of the veil of corporate fiction is
frowned upon and can only be done if it has been clearly established that the
separate and distinct personality of the corporation is used to justify a wrong,
protect fraud, or perpetrate a deception.—The Court has repeatedly
emphasized that the piercing of the veil of corporate fiction is frowned upon
and can only be done if it has been clearly established that the separate and
distinct personality of the corporation is used to justify a wrong, protect fraud,
or perpetrate a deception. To disregard the separate juridical personality of a
corporation, the wrongdoing must be established clearly and convincingly. It
cannot be presumed.
 13. Hongkong & Shanghai Bank vs Sps Galang, GR 199565, June 30,
202

(See above Case)

14. Colegio Medicofarmaceutico vs Lim, July 2, 2018°

COLEGIO MEDICO-FARMACEUTICO DE FILIPINAS, INC., petitioner, vs. LILY

LIM and ALL PERSONS CLAIMING UNDER HER, respondents.

FACTS:
 Petitioner Colegio Medico Farmaceutico de Filipinas, Inc. (petitioner) is
the registered owner of a building located in Sampaloc, Manila.

 Petitioner filed before MeTC Manila a Complaint for Ejectment with

Damages against respondent Lily Lim (respondent), the
President/Officer-in-charge of St. John Berchman School of Manila
Foundation (St. John).

 Colegio Medico alleged, that in June 2005, it entered into a Contract of

Lease for the period June 2005 to May 2006 with Lily Lim;

o that after expiration, petitioner, represented by its then President Dr.

Del Castillo, sent respondent another Contract of Lease for the period
June 2006 to May 2007 for her approval; that despite several follow-
ups, respondent failed to return the Contract of Lease;

o that during a board meeting in December 2007. petitioner informed

respondent of the decision of the Board of Directors (Board) not to
renew the Contract of Lease;

o that on March 5, 2008, Del Castillo wrote a demand letter to

respondent demanding the payment of her back rentals and
utility bills in the total amount of P604,936.35, with a request to
vacate the subject property on or before March 16, 2008; and that
respondent refused to comply with the demand.
  For her part, respondent alleged that St. John, represented by Jean Li
Yao, entered into a 10-year Contract of Lease with petitioner;

o that on May 3, 2005, due to financial difficulties, the Board of

Trustees of St. John assigned the rights and interest of the school
in her favor;

o that the assignment of rights was with the knowledge and

approval of petitioner; that to ensure advance payment of the
rentals, petitioner persuaded her to execute a one-year Contract of
Lease for the period of June 2005 to May 2006, with advance
payment of rentals for the said period;

o that the said contract was executed with no intention of amending,

repealing, or shortening the original 10-year lease;

o that she occupied the subject property even after May 2006
without any objection from petitioner because, as agreed by the
parties, the term of the lease would continue until the year 2013;

o that she sent several letters to petitioner for the immediate repairs
of the library, the toilets of the school building, and the basketball
court; and that she suspended the payment of the rentals due
to the refusal of petitioner to act on all her letters.

MeTC:

Dismissed the Complaint for lack of a valid demand letter. The MeTC
considered the demand letter dated March 5, 2008 as legally non-
existent for failure of petitioner to show that Del Castillo was duly
authorized by the Board to issue the same.

RTC

Reversed the MeTC Decision. The RTC ruled that the issuance of the
demand letter was done by Del Castillo in the usual course of business
and that the issuance of the same was ratified by petitioner when it
passed the Board Resolution authorizing Del Castillo to file a case
against respondent.

CA:
Reversed the RTC Decision. Petitioner's failure to attach the said Board
Resolution to the Complaint was a fatal defect.
ISSUE:

Does the president of a corporation have the authority to act for and to
bind the said corporation?

HELD:
Yes. the Court laid down an exception to the general rule that no
person, not even its officers, can validly bind a corporation without an
express authority from the board of directors.

In that case, the Court sustained the authority of the president to

bind the corporation for the reason that the president has the power to
perform acts within the scope of his or her usual duties. The Court
explained that: "Being a juridical entity, a corporation may act through
its board of directors, which exercises almost all corporate powers, lays
down all corporate business policies and is responsible for the efficiency
of management. Under Sec. 23 of the Corporation Code, the power and
the responsibility to decide whether the corporation should enter into a
contract that will bind the corporation is lodged in the board, subject to
the articles of incorporation, by-laws, or relevant provisions of law.

However, just as a natural person may authorize another to do

certain acts for and on his behalf, the board of directors may validly
delegate some of its functions and powers to officers, committees or
agents.

The authority of such individuals to bind the corporation is

generally derived from law, corporate by laws or authorization from the
board, either expressly or impliedly by habit, custom or acquiescence in
the general course of business.

Accordingly, the appellate court ruled in this case that the

authority to act for and to bind a corporation may be presumed from acts
of recognition in other instances, wherein the power was in fact exercised
without any objection from its board or shareholders.

Apparent authority is derived not merely from practice. Its

existence may be ascertained through
(1) the general manner in which the corporation holds out an
officer or agent as having the power to act or, in other words, the
apparent authority to act in general, with which it clothes him; or
(2) the acquiescence in his acts of a particular nature, with
actual or constructive knowledge thereof, whether within or
beyond the scope of his ordinary powers.
 It requires presentation of evidence of similar act(s) executed either
in its favor or in favor of other parties. It is not the quantity of similar
acts which establishes apparent authority, but the vesting of a corporate
officer with the power to bind the corporation.

In this case, the issuance of the demand letter dated March 5,

2008 to collect the payment of unpaid rentals from respondent and
to demand the latter to vacate the subject property was done in the
ordinary course of business, and thus, within the scope of the
powers of Del Castillo. In fact, it was his duty as President to manage
the affairs of petitioner, which included the collection of receivables.

Article IV, Section 2 of the Bylaws of petitioner expressly states

that the President has the power to exercise general supervision,
control, and direction of the business affairs of the Colegio. In any
case, even if, for the sake of argument, Del Castillo acted beyond the
scope of his authority in issuing the demand letter dated March 5, 2008,
the subsequent issuance of the Board Resolution dated May 13, 2008
cured any defect possibly arising therefrom as it was a clear indication
that the Board agreed to, consented to, acquiesced in, or ratified the
issuance of the said demand letter

Syllabus:

Corporations; The issuance of the demand letter dated March 5, 2008 to collect
the payment of unpaid rentals from respondent and to demand the latter to
vacate the subject property was done in the ordinary course of business, and
thus, within the scope of the powers of Del Castillo.—In this case, the issuance
of the demand letter dated March 5, 2008 to collect the payment of unpaid
rentals from respondent and to demand the latter to vacate the subject
property was done in the ordinary course of business, and thus, within the
scope of the powers of Del Castillo. In fact, it was his duty as President to
manage the affairs of petitioner, which included the collection of receivables.
Article IV, Section 2 of the Bylaws of petitioner expressly states that the
President has the power to: x x x x b. Exercise general [supervision], control
and direction of the business and affairs of the Colegio; x x x x e. Execute in
behalf of the Colegio, bonds, mortgages, and all other contracts and
agreements which the Colegio may enter into; x x x x j. Exercise or perform
such other duties as are incident to his office or such powers and duties as the
Board may from time to time [prescribe].

15. Rev. Ao-As vs CA, June 20, 2006*

Facts:
  This petition involves an intra-corporate dispute concerning the
management of the Lutheran Church of the Philippines (LP), a
religious organization which led SEC to organize and create a
Management Committee.

 Subsequent to the establishment of the said committee, LCP held a

national convention where members initiated an election, in line with the
organization's By-Laws for a new set of church leaders because the
incumbent directors were enjoined to act as Board.

 As provided for in the LCP By-Laws, directors are elected by division,

to the exception of the President which is elected through the National
Convention. The governing body of the LCP is its national board of
directors (hereinafter referred to as the LCP Board) which was originally
composed of seven (7) members serving a term of two years. Six members
of the LCP Board are elected separately in district conferences held in
each district, with two members representing each district – the elected
district president becomes the clergy representative to the LCP Board
and the other is a lay representative to the LCP Board. The seventh
member of the Board is the National President of the LCP who is elected
at large in a national convention held in October of every even-numbered
year.

 Various issues were raised by the parties before the SEC, which were all
denied in favor of the SEC Management Committee.

 When appealed to the CA, the latter aside from ruling on other relevant
issues also nullified the manner of election conducted by LCP for
being in violation of the Corporation Code which requires the
presence of majority of the members entitled to vote at the election.
Hence, this petition.

Issue: Whether or not the manner of election of the BOD of LCP as provided in
its By-Laws is invalid.

Ruling:

No

The matter of how the directors or other leaders of a church shall be chosen
is a matter of ecclesiastical law or custom which is outside the jurisdiction of
civil courts.
 In any case, the stipulation in the By-Laws is not contrary to the
Corporation Code. Section 89 of the Corporation Code pertaining to non-stock
corporations provides that "(t)he right of the members of any class or classes
(of a non-stock corporation) to vote may be limited, broadened or denied to
the extent specified in the articles of incorporation or the by-laws.
This is an exception to Section 6 of the same code where it is provided
that "no share may be deprived of voting rights except those classified and
issued as 'preferred' or 'redeemable' shares, unless otherwise provided in this
Code."
The stipulation in the By-Laws providing for the election of the Board of
Directors by districts is a form of limitation on the voting rights of the members
of a non-stock corporation as recognized under the aforesaid Section 89.
Section 24, which requires the presence of a majority of the members entitled
to vote in the election of the board of directors, applies only when the directors
are elected by the members at large, such as is always the case in stock
corporations by virtue of Section 6.

16. Cacho vs Balagtas, GR 202974. Feb. 7. 2018*

Facts:

 This case stemmed from a Complaint for constructive dismissal filed by

respondent Virginia D. Balagtas against petitioners North Star
International Travel, Inc. and its President Norma D. Cacho before
the Labor Arbiter.

 Balagtas alleged that she was a former employee of respondent TQ3

Travel Solutions/North Star International Travel, Inc. that she was one
of the original incorporators-directors of the said corporation and,
when it started its operations in 1990, she was the General Manager
and later became the Executive Vice President/Chief Executive Officer.

 After 14 years of service in the said corporation, petitioner was placed

under 30 days preventive suspension pursuant to a Board Resolution
passed by the Board of Directors of the respondent Corporation due to
her alleged questionable transactions.

 While under preventive suspension, petitioner wrote a letter to private

respondent Norma Cacho informing the latter that she was assuming her
position as Executive Vice-President/Chief Executive Officer effective on
that date; however, she was prevented from re-assuming her position
and inquired about the status of the examination of the financial
 statement of respondent corporation for the year 2003, which request
was, however, ignored.

 Consequently, petitioner filed a complaint before the Labor Arbiter

claiming that she was constructively and illegally dismissed.

 Respondents alleged that petitioner violated her suspension when, on

several occasions, she went to the respondent corporation's office and
insisted on working despite respondent Norma Cacho's protestation.
Respondents also alleged that the complaint for constructive dismissal
was groundless. They asserted that petitioner was not illegally dismissed
but was merely placed under preventive suspension.

LA Ruling

The Labor Arbiter found that respondent Balagtas was illegally dismissed
from North Star,

NLRC Ruling:

The NLRC ruled that respondent Balagtas was a corporate officer of

North Star at the time of her dismissal and not a mere employee. A corporate
officer's dismissal is always an intra-corporate controversy, a subject matter
falling within the Regional Trial Court's (RTC) jurisdiction.12 Thus, the Labor
Arbiter and the NLRC do not have jurisdiction over Balagtas's Complaint

CA Ruling:

In ruling that the present case does not involve an intra-corporate controversy,
the Court of Appeals applied a two-tier test, viz.: (a) the relationship test, and
(b) the nature of controversy test.

Applying the relationship test, the Court of Appeals explained that no intra-
corporate relationship existed between respondent Balagtas and North Star.
On the other hand, the Court of Appeals elucidated that based on the
allegations in herein respondent Balagtas's complaint filed before the Labor
Arbiter, the present case involved labor issues. Thus, even using the nature of
controversy test, it cannot be regarded as an intra-corporate dispute.18

Issue:

W/N the Balagtas is a corporatte officer

Ruling:

Balagtas's dismissal is an intra-corporate controversy.

A two-tier test must be employed to determine whether an intra-corporate

controversy exists in the present case, viz.: (a) the relationship test, and (b) the
nature of the controversy test.

A dispute is considered an intra-corporate controversy under the relationship

test when the relationship between or among the disagreeing parties is any one
of the following:
a. between the corporation, partnership, or association and the
public;
b. between the corporation, partnership, or association and its
stockholders, partners, members, or officers;
c. between the corporation, partnership, or association and the State
as far as its franchise, permit or license to operate is concerned;
and
d. among the stockholders, partners, or associates themselves.

In the present case, petitioners Cacho and North Star allege that respondent
Balagtas, as petitioner North Star's Executive Vice President, was its corporate
officer. On the other hand, while respondent Balagtas admits to have occupied
said position, she argues she was Executive Vice President merely by name and
she did not discharge any of the responsibilities lodged in a corporate officer.

o
In Easy call Communications Phils., Inc. v. King, the Court ruled that a
corporate office is created by the charter of the corporation and the
officer is elected thereto by the directors or stockholders.

In other words, one shall be considered a corporate officer only if two

conditions are met, viz.:
1. the position occupied was created by charter/by-laws, and
2. the officer was elected (or appointed) by the corporation's board of
directors to occupy said position.

1. The Executive Vice President position is one of the corporate offices provided
in petitioner North Star's By-laws

The rule is that corporate officers are those officers of a corporation who
are given that character either by the Corporation Code or by the
corporation's by-laws.
 Section 25 of the Corporation Code explicitly provides for the election
of the corporation's president, treasurer, secretary, and such
other officers as may be provided for in the by-laws.

In interpreting this provision, the Court has ruled that if the position is
other than the corporate president, treasurer, or secretary, it must be
expressly mentioned in the bylaws in order to be considered as a
corporate office.

In this regard, petitioner North Star's by-laws provides the following:

ARTICLE IV

OFFICERS

Section 1. Election/Appointment - Immediately after their election,

the Board of Directors shall formally organize by electing the
Chairman, the President, one or more Vice-President (sic), the
Treasurer, and the Secretary, at said meeting.

The Board may, from time to time, appoint such other officers as it
may determine to be necessary or proper.

Any two (2) or more positions may be held concurrently by the

same person, except that no one shall act as President and
Treasurer or Secretary at the same time.

Clearly, there may be one or more vice president positions in petitioner

North Star and, by virtue of its by-laws, all such positions shall be
corporate offices.

Consequently, the next question that begs to be asked is whether or not

the phrase "one or more vice president" in the above-cited provision of
the by-laws includes the Executive Vice President position held by
respondent Balagtas.

In ruling that respondent Balagtas was not a corporate officer of

petitioner North Star, the Court of Appeals pointed out that the NLRC
should not have assumed that the "Vice President" position is the same
as the "Executive Vice President" position that Balagtas admittedly
occupied.

In other words, that the exact and complete name of the position
must appear in the by-laws, otherwise it is an ordinary office whose
occupant shall be regarded as a regular employee rather than a
corporate officer.
 The appellate court's interpretation of the phrase "one or more vice
president" unduly restricts one of petitioner North Star's inherent
corporate powers, viz.: to adopt its own by-laws, provided that it is not
contrary to law, morals, or public policy for its internal affairs, to
regulate the conduct and prescribe the rights and duties of its members
towards itself and among themselves in reference to the management of
its affairs.

The use of the phrase "one or more" in relation to the establishment of

vice president positions without particular exception indicates an
intention to give petitioner North Star's Board ample freedom to make
several vice-president positions available as it may deem fit and in
consonance with sound business practice.

To require that particular designation/variation of each vice-president

(i.e., executive vice president) be specified and enumerated is to
invalidate the by-laws' true intention and to encroach upon petitioner
North Star's inherent right and authority to adopt its own set of rules
and regulations to govern its internal affairs. Whether the creation of
several vice-president positions in a company is reasonable is a question
of policy that courts of law should not interfere with. Where the
reasonableness of a by-law is a mere matter of judgment, and one upon
which reasonable minds must necessarily differ, a court would not be
warranted in substituting its judgment instead of the judgment of those
who are authorized to make bylaws and who have exercised their
authority.37

Thus, by name, the Executive Vice President position is embraced by the

phrase "one or more vice president" in North Star's by-laws.

2. Respondent Balagtas was appointed by the Board as petitioner North Star's

Executive Vice President

While a corporate office is created by an express provision either in the

Corporation Code or the By-laws, what makes one a corporate officer is
his election or appointment thereto by the board of directors. Thus, there
must be documentary evidence to prove that the person alleged to be a
corporate officer was appointed by action or with approval of the
board.38

In the present case, petitioners Cacho and North Star assert that
respondent Balagtas was elected as Executive Vice President by
the Board as evidenced by the Secretary's Certificate dated April
22, 2003, which provides:
 I, MOLINA A. CABA, of legal age, Filipino citizen, x x x after being
duly sworn to in accordance with law, depose and state: That —
I am the duly appointed Corporate Secretary of North Star
International Travel, Inc. x x x.

As such Corporate Secretary of the Corporation, I hereby certify

that at the Regular/Special meeting of the Board of Directors and
Stockholders of the Corporation which was held on March 31,
2003 during which meeting a quorum was present and majority of
the stockholders were in attendance, the following resolutions were
unanimously passed and adopted:

"RESOLVED, AS IT IS HEREBY RESOLVED, that during a meeting

of the Board of Directors held last March 31, 2003, the following
members of the Board were elected to the corporate position
opposite their names:"

NAME
POSITION
NORMA D. CACHO
Chairman
VIRGINIA D. BALAGTAS
Executive Vice President39
(Emphasis supplied)

On the other hand, respondent Balagtas assails the validity of the above-
cited Secretary's Certificate for being forged and fabricated.

However, aside from these bare allegations, the NLRC observed that she
did not present other competent proof to support her claim.

To the contrary, respondent Balagtas even admitted that she was elected
by the Board as petitioner North Star's Executive Vice President and
argued that she could not be removed as such without another valid
board resolution to that effect. To support this claim, respondent
Balagtas submitted the very same Secretary's Certificate as an
attachment to her Position Paper before the Labor Arbiter. That she is
now casting doubt over a document she herself has previously relied on
belies her own claim that the Secretary's Certificate is a fake.

Thus, the above-cited Secretary's Certificate overcomes respondent

Balagtas's contention that she was merely the Executive Vice President
by name and was never empowered to exercise the functions of a
corporate officer. Notably, she did not offer any proof to show that her
 duties, functions, and compensation were all determined by petitioner
Cacho as petitioner North Star's President.

In any case, that the Executive Vice President's duties and

responsibilities are determined by the President instead of the Board is
irrelevant. In determining whether a position is a corporate office, the
board of directors' appointment or election thereto is controlling. Article
IV, Section 4 of North Star's By-laws provides:
Section 4. The Vice-President(s) - If one or more Vice-Presidents
are appointed, he/they shall have such powers and shall perform
such duties as may from time to time be assigned to him/them by
the Board of Directors or by the President. [Emphasis supplied.]
When Article IV, Section 4 is read together with Section 1 thereof,
it is clear that while petitioner North Star may have one or more
vice presidents and the President is authorized to determine each
one's scope of work, their appointment or election still devolves
upon the Board.

At this point, it is best to emphasize that the manner of creation (i.e.,

under the express provisions of the Corporation Code or by-laws) and the
manner by which it is filled (i.e., by election or appointment of the board
of directors) are sufficient in vesting a position the character of a
corporate office.

Respondent Balagtas also denies her status as one of petitioner North Star's
corporate officers because she was not listed as such in petitioner North Star's
2003 General Information Sheet (GIS).

This is of no moment.

The GIS neither governs nor establishes whether or not a position is an

ordinary or corporate office. At best, if one is listed in the GIS as an officer of a
corporation, his/her position as indicated therein could only be deemed a
regular office, and not a corporate office as it is defined under the Corporation
Code.

Based on the above discussion, as Executive Vice President, respondent

Balagtas was one of petitioner North Star's corporate officers. Thus, there is an
intra-corporate relationship existing between the parties.

17. Malcaba vs Prohealth, GR 209085, June 5, 2018*

The dismissal of a corporate officer is considered an intra-corporate dispute, not

a labor dispute; hence, the jurisdiction belongs to regular courts. In this case,
petitioner was the president of the corporation; thus, a corporate officer.
Therefore, he erred when he filed his complaint for illegal dismissal before the
labor arbiter. 

Facts:

 ProHealth Pharma Philippines, Inc. (ProHealth) is a corporation engaged

in the sale of pharmaceutical products and health food on a wholesale
and retail basis. Generoso Del Castillo (Del Castillo) is the Chair of the
Board of Directors and Chief Executive Officer while Dante Busto (Busto)
is the Executive Vice President. Malcaba, Tomas Adona, Jr. (Adona),
Nepomuceno, and Palit-Ang were employed as its President, Marketing
Manager, Business Manager, and Finance Officer, respectively.
 Malcaba had been employed with ProHealth since it started in 1997. He
was one of its incorporators together with Del Castillo and Busto, and
they were all members of the Board of Directors in 2004. He held
1,000,000 shares in the corporation. He was initially the Vice President
for Sales then became President in 2005.
 Malcaba alleged that Del Castillo did acts that made his job difficult. He
asked to take a leave on October 23, 2007. When he attempted to return
on November 5, 2007, Del Castillo insisted that he had already resigned
and had his things removed from his office. He attested that he was paid
a lower salary in December 2007 and his benefits were withheld.6 On
January 7, 2008, Malcaba tendered his resignation effective February 1,
2008.
 Malcaba filed Complaints18 before the Labor Arbiter for illegal dismissal,
nonpayment of salaries and 13th month pay, damages, and attorney's
fees.

LA Ruling:
The Labor Arbiter found that Malcaba was constructively dismissed. He found
that ProHealth never controverted the allegation that Del Castillo made it
difficult for Malcaba to effectively fulfill his duties. He likewise ruled that
ProHealth's insistence that Malcaba's leave of absence in October 2007 was an
act of resignation was false since Malcaba continued to perform his duties as
President through December 2007.
NLRC Ruling:
On September 29, 2010, the National Labor Relations Commission rendered its
Decision,25 affirming the Labor Arbiter's April 5, 2009

CA Ruling:
The Court of Appeals held that there was no employer-employee relationship
between Malcaba and ProHealth since he was a corporate officer. Thus, he
should have filed his complaint with the Regional Trial Court, not with the
Labor Arbiter, since his dismissal from service was an intra-corporate dispute.

Issue:

WON Malcaba is a corporate officer

Ruling:

Under Section 25 of the Corporation Code, the President of a corporation

is considered a corporate officer. The dismissal of a corporate officer is
considered an intra-corporate dispute, not a labor dispute.
Thus, a corporate officer’s dismissal is always a corporate act, or an
intracorporate controversy, and the nature is not altered by the reason or
wisdom with which the Board of Directors may have in taking such action.
Also, an intracorporate controversy is one which arises between a
stockholder and the corporation. There is no distinction, qualification, nor any
exemption whatsoever. The provision is broad and covers all kinds of
controversies between stockholders and corporations
The clear weight of jurisprudence clarifies that to be considered a
corporate officer, the office must be created by the charter of the corporation,
and second, the officer must be elected by the board of directors or by the
stockholders.
Petitioner Malcaba was an incorporator of the corporation and a member
of the Board of Directors. Respondent corporation’s By-Laws creates the office
of the President. That foundational document also states that the President is
elected by the Board of Directors.
Finding that petitioner Malcaba is the President of respondent
corporation and a corporate officer, any issue on his alleged dismissal is
beyond the jurisdiction of the Labor Arbiter or the National Labor Relations
Commission. Their adjudication on his money claims is void for lack of
jurisdiction. As a matter of equity, petitioner Malcaba must, therefore, return
all amounts received as judgment award pending final adjudication of his
claims. The Court’s dismissal of petitioner Malcaba’s claims, however, is
without prejudice to his filing of the appropriate case in the proper forum.

18. Lapu Lapu Foundation vs CA. Jan. 29. 2004*

DOCTRINE:,

It is a familiar doctrine that if a corporation knowingly permits one of its

officers, or any other agent, to act within the scope of an apparent
authority, it holds him out to the public as possessing the power to do
those acts; and thus, the corporation will,

FACTS:,

 Sometime in 1977, petitioner Elias Tan then President of the co-

petitioner Lapulapu Foundation, Inc., obtained four loans from the
respondent Allied Banking Corporation covered by four promissory notes
in the amounts of ₱100,000 each.
 As of January 23, 1979, the entire obligation amounted to ₱493,566.61
and despite demands made on them by the respondent Bank, the
petitioners failed to pay the same.
 The respondent Bank was constrained to file with RTC a complaint
seeking payment by the petitioners, jointly and solidarily, of the sum of
₱493,566.61 representing their loan obligation
 Lapu Lapu Foundation denied incurring indebtedness from the Bank
alleging that the loans were obtained by petitioner Tan in his personal
capacity, for his own use and benefit.
 The Foundation maintained that it never authorized petitioner Tan to co-
sign in his capacity as its President any promissory note and that the
Bank fully knew that the loans contracted were made in petitioner Tan’s
personal capacity and for his own use and that the petitioner Foundation
never benefited, directly or indirectly.
 Tan admitted that he contracted the loans from the respondent Bank in
his personal capacity.
 The parties, however, agreed that the loans were to be paid from the
proceeds of petitioner Tan’s shares of common stocks in the Lapulapu
Industries Corporation
 According to petitioner Tan, one of the Bank’s employees required him to
affix two signatures on every promissory note, assuring him that the loan
documents would be filled out in accordance with their agreement.
 After he signed and delivered the loan documents, the Foundation was
included as party to the loan

RTC Ruling:

Tan and Lapulapu Foundation, Inc. are jointly and solidarily to Allied Bank

CA Ruling:

Affirmed RTC’s decision

ISSUE/S:,

Whether or not petitioners jointly and solidarily liable

RULING:,

Yes.

The appellate court did not err in holding the petitioners jointly and
solidarily liable as it applied the doctrine of piercing the veil of corporate entity.
The petitioner Foundation asserts that it has a personality separate and
distinct from that of its President, petitioner Tan, and that it cannot be held
solidarily liable for the loans of the latter.

The Court agrees with the CA that the petitioners cannot hide behind the
corporate veil under the following circumstances:

 The evidence shows that Tan has been representing himself as the
President of Lapulapu Foundation, Inc.
 He opened a savings account and a current account in the names of
the corporation, and signed the application form as well as the
necessary specimen signature cards (Exhibits "A," "B" and "C") twice,
for himself and for the foundation.
 He submitted a notarized Secretary’s Certificate (Exhibit "G") from
the corporation, attesting that he has been authorized, inter alia, to
sign for and in behalf of the Lapulapu Foundation any and all checks,
drafts or other orders with respect to the bank; to transact business
with the Bank, negotiate loans, agreements, obligations, promissory
notes and other commercial documents; and to initially obtain a loan
for ₱100,000.00 from any bank (Exhibits "G-1" and "G-2").

Under these circumstances, the defendant corporation is liable for the

transactions entered into by Tan on its behalf.

Per its Secretary’s Certificate, the petitioner Foundation had given its
President, petitioner Tan, ostensible and apparent authority to inter alia
deal with the respondent Bank. Accordingly, the petitioner Foundation is
estopped from questioning petitioner Tan’s authority to obtain the subject
loans from the respondent Bank.

It is a familiar doctrine that if a corporation knowingly permits one of

its officers, or any other agent, to act within the scope of an apparent
authority, it holds him out to the public as possessing the power to do
those acts; and thus, the corporation will, as against anyone who has in
good faith dealt with it through such agent, be estopped from denying the
agent’s authority.21
In fine, there is no cogent reason to deviate from the CA’s ruling that the
petitioners are jointly and solidarily liable for the loans contracted with the
respondent Bank.

19. Advance Paper Corp vs Arma Traders, Dec. 11, 2013*

Facts

 Arma Traders is a distributor of school of supplies, and has been

engaging with Advance Paper as its supplier for 14 years.
 Antonio Tan (Tan) was formerly the President while respondent Uy Seng
Kee Willy (Uy) is the Treasurer of Arma Traders.7 They represented Arma
Traders when dealing with its supplier, Advance Paper, for about 14
years.
 On the other hand, respondents Manuel Ting, Cheng Gui and Benjamin
Ng worked for Arma Traders as Vice-President, General Manager and
Corporate Secretary, respectively.
 I On various dates from September to December 1994, Arma Traders
purchased on credit notebooks and other paper products amounting to
₱7,533,001.49 from Advance Paper. 10

 Upon the representation of Tan and Uy, Arma Traders also obtained
three loans from Advance Paper in November 1994 in the amounts of
₱3,380,171.82, ₱1,000,000.00, and ₱3,408,623.94 or a total of
₱7,788,796.76.11 Arma Traders needed the loan to settle its obligations
to other suppliers because its own collectibles did not arrive on time.12
Because of its good business relations with Arma Traders, Advance Paper
extended the loans.13

 As payment for the purchases on credit and the loan transactions, Arma
Traders issued 82 postdated checks payable to cash or to Advance Paper.
Tan and Uy were Arma Traders’ authorized bank signatories who signed
and issued these checks which had the aggregate amount of
₱15,130,636.87.15
.
 Advance Paper presented the checks to the drawee bank but these were
dishonored either for "insufficiency of funds" or "account closed. Arma
Traders failed to settle.

 On December 29, 1994, the petitioners filed a complaint17 for collection

of sum of money with application for preliminary attachment against
Arma Traders, Tan, Uy, Ting, Gui, and Ng.
  Arma’s defense was that (1) There was no delivery of the paper products
and (2) Pres. Tan and Treas. Uy were the only ones responsible since
they acted in excess of their authority since and such are without
approval of the BoD.

RTC Ruling:

The RTC held that the respondents failed to present hard, admissible and
credible evidence to prove that the sale invoices were forged or fictitious, and
that the loan transactions were personal obligations of Tan and Uy.
Nonetheless, the RTC dismissed the complaint against Tan, Uy, Ting, Gui and
Ng due to the lack of evidence showing that they bound themselves, either
jointly or solidarily, with Arma Traders for the payment of its account.

CA Ruling:

The CA set aside the RTC’s order for Arma Traders to pay Advance Paper the
sum of ₱15,321,798.25, ₱1,500,000.00 for attorney’s fees, plus cost of suit.

Issue:

WON Arma Traders is liable for the loans from Advance paper

Ruling:

Arma Traders is liable to pay the loans on the basis of the doctrine of apparent
authority.

The doctrine of apparent authority provides that a corporation will be

estopped from denying the agent’s authority if it knowingly permits one of its
officers or any other agent to act within the scope of an apparent authority,
and it holds him out to the public as possessing the power to do those acts.
The doctrine of apparent authority does not apply if the principal did not
commit any acts or conduct which a third party knew and relied upon in good
faith as a result of the exercise of reasonable prudence. Moreover, the agent’s
acts or conduct must have produced a change of position to the third party’s
detriment.

In Inter-Asia Investment Industries v. Court of Appeals, we explained:

Under this provision [referring to Sec. 23 of the Corporation Code], the

power and responsibility to decide whether the corporation should enter
into a contract that will bind the corporation is lodged in the board,
 subject to the articles of incorporation, bylaws, or relevant provisions of
law.

However, just as a natural person who may authorize another to do

certain acts for and on his behalf, the board of directors may validly
delegate some of its functions and powers to officers, committees or
agents.

The authority of such individuals to bind the corporation is generally

derived from law, corporate bylaws or authorization from the board,
either expressly or impliedly by habit, custom or acquiescence in the
general course of business, viz.:

A corporate officer or agent may represent and bind the corporation in

transactions with third persons to the extent that [the] authority to do so
has been conferred upon him, and this includes powers as, in the usual
course of the particular business, are incidental to, or may be implied
from, the powers intentionally conferred, powers added by custom and
usage, as usually pertaining to the particular officer or agent, and such
apparent powers as the corporation has caused person dealing with the
officer or agent to believe that it has conferred

[A]pparent authority is derived not merely from practice. Its existence

may be ascertained through

(1) the general manner in which the corporation holds out an officer or
agent as having the power to act or, in other words the apparent
authority to act in general, with which it clothes him; or
(2) the acquiescence in his acts of a particular nature, with actual or
constructive knowledge thereof, within or beyond the scope of his
ordinary powers.

It requires presentation of evidence of similar act(s) executed either in its

favor or in favor of other parties. It is not the quantity of similar acts
which establishes apparent authority, but the vesting of a corporate
officer with the power to bind the corporation. [emphases and
underscores ours]

In People’s Aircargo and Warehousing Co., Inc. v. Court of Appeals, we ruled

that the doctrine of apparent authority is applied when the petitioner, through
its president Antonio Punsalan Jr., entered into the First Contract without first
securing board approval. Despite such lack of board approval, petitioner did
not object to or repudiate said contract, thus "clothing" its president with
the power to bind the corporation.
"Inasmuch as a corporate president is often given general supervision and
control over corporate operations, the strict rule that said officer has no
inherent power to act for the corporation is slowly giving way to the realization
that such officer has certain limited powers in the transaction of the usual and
ordinary business of the corporation."

"In the absence of a charter or bylaw provision to the contrary, the president is
presumed to have the authority to act within the domain of the general
objectives of its business and within the scope of his or her usual duties."

In the present petition, we do not agree with the CA’s findings that Arma
Traders is not liable to pay the loans due to the lack of board resolution
authorizing Tan and Uy to obtain the loans.

To begin with, Arma Traders’ Articles of Incorporation provides that the

corporation may borrow or raise money to meet the financial requirements of
its business by the issuance of bonds, promissory notes and other evidence of
indebtedness.

Likewise, it states that Tan and Uy are not just ordinary corporate officers and
authorized bank signatories because they are also Arma Traders’ incorporators
along with respondents Ng and Ting, and Pedro Chao.

Furthermore, the respondents, through Ng who is Arma Traders’ corporate

secretary, incorporator, stockholder and director, testified that the sole
management of Arma Traders was left to Tan and Uy and that he and the other
officers never dealt with the business and management of Arma Traders for 14
years.

He also confirmed that since 1984 up to the filing of the complaint against
Arma Traders, its stockholders and board of directors never had its meeting.

Thus, Arma Traders bestowed upon Tan and Uy broad powers by

allowing them to transact with third persons without the necessary
written authority from its non-performing board of directors. Arma
Traders failed to take precautions to prevent its own corporate officers from
abusing their powers. Because of its own laxity in its business dealings, Arma
Traders is now estopped from denying Tan and Uy’s authority to obtain loan
from Advance Paper.

We also reject the respondents’ claim that Advance Paper, through Haw,
connived with Tan and Uy. The records do not contain any evidence to prove
that the loan transactions were personal to Tan and Uy. A different conclusion
might have been inferred had the cashier’s checks been issued in favor of Tan
and Uy, and had the postdated checks in favor of Advance Paper been either
Tan and/or Uy’s, or had the respondents presented convincing evidence to
show how Tan and Uy conspired with the petitioners to defraud Arma
Traders.84 We note that the respondents initially intended to present Sharow
Ong, the secretary of Tan and Uy, to testify on how Advance Paper connived
with Tan and Uy. As mentioned, the respondents failed to present her on the
witness stand.

20. Agro vs Vitarich (en banc), GR 217454. Jan. 11, 2021°

 On October 5, 1995, Agro and Vitarich simultaneously executed two

agreements:.first, a Memorandum of Agreement (MOA) under which
Vitarich offered to buy Agro's chicken dressing plant located in
Bulacan; and second, a Toll Agreement under which Agro agreed to
dress the chickens supplied by Vitarich for a toll fee.

 Pursuant to the MOA, Vitarich paid P20 million as deposit to Agro and
was given a period of forty-five (45) days within which to evaluate the
dressing plant facilities.

 At the end of the period, Vitarich formally made its offer to purchase, but
Agro did not accept the offer. Thus, Agro needed to return the P20
million deposit.

 Since Vitarich was obligated to pay toll fees to Agro pursuant to the Toll
Agreement, the parties agreed that the manner of returning the P20
million deposit shall be through deductions of fifteen percent (15%) of the
gross receipts on the weekly billings of the toll fees.

 In other words, the P20 million deposit shall be continuously offset with
fifteen percent (15%) of the toll fees to be paid by Vitarich until the
obligation is satisfied. During that period, Vitarich also sold on credit
live broiler chickens to Agro.

 More than two (2) years later, Vitarich filed a complaint for sum of money
with damages against Agro before the RTC alleging that Agro was liable
for the following amounts: first, P4,770,916.82 plus interest,
representing the balance from the P20 million deposit, and second,
P4,322,032.36 plus interest, representing the balance on the sale oflive
broiler chickens to Agro.15

 Regarding the first amount, which is the relevant amount in the Petition,
Vitarich stated that it was based not only on the toll fees reflected on the
original Toll Agreement, but also on the verbal amendments to the toll
 fees made and implemented by the parties thrice from 1996 to
1997.

 Agro disputed the computation made by Vitarich.17 It argued that the

amount of P4,770,916.82 was inaccurate as it was based on the alleged
verbal amendments to the toll fees, which amendments were not binding
on Agro as they were entered into by Vitarich and Agro's Finance
Manager, Chito del Castillo (del Castillo), which allegedly had no
authority to amend the original Toll Agreement from Agro's board of
directors.18

RTC Ruling:

the trial court held that the amendments did not bind Agro considering the
lack of any signature or conforme to the documentary evidence presented by
Vitarich.19 Consequently, Vitarich was not entitled to its claim.

CA Ruling:

The appellate court, in its assailed Decision, set aside the December 29, 2005
Decision of the RTC and held that the verbal amendments to the toll fees were
valid and obligatory on Agro, pursuant to the principle that contracts are
obligatory in whatever form they may have been entered into.

Issue:

Won Agro is liable to Vitarich based on the amended contract

Ruling:

After carefully examining the evidence presented by Vitarich and passed upon
by the appellate court in arriving at its ruling, as reflected in the assailed
Decision, We find the appellate court's application of the doctrine of apparent
authority well-supported by the law and the evidence, thus:

The Brief for the Appellant thrusts:

 plaintiff-appellant Vitarich was able to prove by preponderance of
evidence that the parties agreed to the changes in the dressing fees;
while the MOA did not contain the signature of the authorized
representatives of defendant-appellee Agro Food, defendant-appellee Agro
concurred in, and implemented the amendments, as evidenced by
defendan-tappellee Agro Food's 89 weekly billings;
 the changes in the billing statements occurred thrice in the span of 89
weeks since the start of the Toll Agreement;
 changes in the rates began [on] I June 1996, or on the 22nd week of the
transactions, and could not be solely attributed as a mistake of
defendant-appellee Agro Food's accounting department; defendant-
appellee Agro Food used the original rates, indicated in the Toll
Agreement, for its weekly billings from, 6-12 January 1996 to 25-31 May
1996, or for 21 weeks; however, beginning 1-7 June 1996 to 27 July - 2
August 1996, or for 9 weeks, defendant-appellee Agro Food's billing
statements used reduced rates (i.e., Php 6.75/k.g. for fresh chilled; and
Php 4.95/k.g. for gallantina); from 3-9 August 1996 to 26 Ju1y to 1
August 1997, the weekly billings showed a rate of Php 6.05/kg. for fresh
chilled, and Php 4.55/k.g. for gallantina;
 aside from the changes in the dressing rates, the rate of the billing fees
deducted from the deposit, was correspondingly reduced; defendant-
appellee Agro Food deducted from its billings the amount equivalent to
10%, and not 15%; starting on 3-9 August 1996, until 6-7 December
1997, only 7.5% of the billings was deducted;
 upon receipt of the letters requiring payment of the obligation,
defendant-appellee Agro Food's authorized representatives did not
protest, nor did they question the authority of Del Castillo if there was
really an underpayment, defendant-appellee Agro Food should have
protested immediately after the receipt of the letters but the defendant-
appellee Agro Food raised the alleged underpayment for the first time
only in its amended Answer;
 the authorization of an officer of the corporation need not be express,
and it may be implied (i.e., by the acquiescence of its board of directors);
 under the doctrine of apparent authority, defendant-appellee Agro Food
cannot deny the authority of Del Castillo to make the adjustments, as
Del Castillo was fully aware of the changes, and continuously reflected
the reduced dressing fees in the billing statements;
 only the defendant-appellee Agro Food prepared the billing statements,
and plaintiff-appellant Vitarich did not participate in the preparation of
the statements;
 Del Castillo testified that he was authorized make the adjustments in the
dressing fees; considering that Del Castillo (defendant appellee Agro
Food's Finance Manager) sent 89 weekly billing statements to plaintiff-
appellant Vitarich in a span of two years, and the transaction involved a
huge amount of money, it was presumed that the defendant-appellee
Agro Food's Board of Directors concurred in the amendments;
 since the defendant-appellee Agro Food accepted the benefits of the
reduced fees, then defendant-appellee Agro Food was bound by the oral
amendments and cannot repudiate the same; in the original
agreement, defendant-appellee Agro Food was supposed to apply
15% of the gross receipts as partial payment for the Php
20,000,000.00 deposit, but because of the verbal agreements,
defendant-appellee Agro Food deducted from the gross receipts a
 lower percentage; the statute of frauds does not apply to contracts
executed fully or partially; considering the mu1tiple transactions, it was
incredulous to assert that defendant-appellee Agro Food only committed
a mistake; the preparation and submission of the billings were presumed
to be regular, and defendant-appellee Agro Food failed to overthrow the
presumption of regularity of the transactions.42 (Citation omitted,
emphasis supplied.)

Thus, evaluating the evidence presented by Vitarich, the conduct by which

Agro clothed del Castillo with authority is evident on the following:

a. first, in over a span of two (2) years, with over eighty nine (89) billings
and three (3) instances of amendments, Agro never contested the
amended toll fees;
b. second, even after receipt of several demand letters from Vitarich, Agro
never made an issue of the amended toll fees, and only raised the same
in its Answer; and
c. third, Agro accepted the benefits arising from the amendments through
the extension of the period for its payment of the P20 million deposit
(brought about by the decrease in the percentage of billings to be
deducted from the P20 million deposit), not to mention Agro's
corresponding increase in profits due to the increase or amendment in
the price of gallantina (type of chicken supplied by Agro) in the third
amendment.

It bears stressing that the existence of apparent authority may be ascertained

not only through the "general manner in which the corporation holds out an
officer or agent as having the apparent authority to act in general", but also
through the corporation's "acquiescence in his acts of a particular nature, with
actual or constructive knowledge thereof, whether within or beyond the scope
of his ordinary powers".

Here, it is easy to see that Agro, reasonably appearing to have knowledge

of the amendments, acquiesced to the same. Indeed, Agro never contested
nor protested the amendments; on the contrary, it even accepted the
benefits arising therefrom.

"When a corporation intentionally or negligently clothes its officer with

apparent authority to act in its behalf, it is estopped from denying its officer's
apparent authority as to innocent third parties who dealt with this officer in
good faith."

Considering the foregoing, We do not find a reversible error in the appellate

court's finding that the amendments were binding on Agro under the doctrine
of apparent authority.
 21. Terp Construction vs Banco Filipino, GR 221771, Sept. 18, 2019*

Facts:

 Sometime in 1995, Terp Construction planned to develop a housing

project called the Margarita Eastville and a condominium called
Margarita Plaza.

 To finance the projects, Terp Construction, Home Insurance Guaranty

Corporation, and Planters Bank agreed to raise funds through the
issuance of bonds worth P400 million called the Margarita Bonds.

 The three companies entered into a Contract of Guaranty in which they

agreed that Terp Construction would sell the Margarita Bonds and
convey the funds generated into an asset pool named the Margarita Asset
Pool Formation and Trust Agreement.

 Planters Bank, as trustee, would be the custodian of the assets in the

asset pool with the corresponding obligation to pay the interests and
redeem the bonds at maturity.

 Home Insurance Guaranty Corporation, as guarantor, would pay

investors the value of the bond at maturity plus 8.5% interest per year.

 Banco Filipino purchased Margarita Bonds for P100 million. It asked for
additional interest other than the guaranteed 8.5% per annum,
based on the letters written by Terp Construction Senior Vice
President Escalona.

 Terp Construction began constructing Margarita Eastville and Margarita

Plaza.

 After the economic crisis in 1997, however, it suffered unrealized income

and could not proceed with the construction.

 When the Margarita Bonds matured, the funds in the asset pool were
insufficient to pay the bond holders.

 Pursuant to the Contract of Guaranty, Planters Bank conveyed the asset

pool funds to Home Insurance Guaranty Corporation, which then paid
Banco Filipino interest earnings of 8.5% per year.
  Banco Filipino, on the other hand, alleged that it was induced into
buying the Margarita Bonds after Terp Construction, through its
senior vice president's letters, committed to pay 15.5% interest on
a P50 million bond that Banco Filipino held for a client and 16.5%
interest on a P50 million bond it held for another client. It alleged
that Terp Construction paid the additional interest twice during the
Margarita Bonds' holding period

 Banco Filipino, however, sent Terp Construction a demand letter alleging

that it was entitled to a 15.5% interest on its investment and that it was
entitled to a 7% remaining unpaid interest.

 Terp Construction refused to pay the demanded interest.

 Terp Construction filed a Complaint for declaration of nullity of interest,

damages, and attorney's fees against Banco Filipino. It alleged that it
only agreed to pay the seven percent (7%) additional interest on the
condition that all the asset pool funds would be released to Terp
Construction for it to pay the additional interest. However, it could not
have paid the additional interest since the funds of the asset pool were
never released to it.


RTC ruled in favor of Terp Construction.

CA set aside the RTC decision.

Issue:

Whether or not the Terp Construction expressly agreed to be bound to

respondent Banco Filipino Savings Mortgage Bank for additional interest in the
bonds it purchased.

Ruling:

In any case, there was no error in the factual findings of the Court of
Appeals. Petitioner categorically committed itself to pay respondent over
and above the guaranteed interest of 8.5% per annum.

Relevant portions of the letters sent by its then Senior Vice President Escalona
to respondent, as reproduced in the Court of Appeals Decision read:

[February 3, 1997 letter]:

 ... We hereby commit a guaranteed floor rate of 16.5% as project
proponent. This would commit us to pay the differential interest earnings
to be paid by Planters Development Bank as Trustee every 182 days from
purchase date of period of three (3) years until maturity date....

[April 8, 1997 letter]:

Terp Construction commit (sic) that the yield to you for this
investment is 15.5%. The difference between the yield approved by the
Project Governing Board will be paid for by, Terp Construction Corp.

Petitioner disavows this obligation and contends that it was merely an

unauthorized offer made by one (1) of its officers during the negotiation stage of
a contract. Petitioner, however, does not deny that it paid respondent the
additional interest during the Margarita Bonds' holding period, not just once,
but twice.

A corporation exercises its corporate powers through its board of directors. This
power may be validly delegated to its officers, committees, or agencies. "The
authority of such individuals to bind the corporation is generally derived from
law, corporate bylaws or authorization from the board, either expressly or
impliedly by habit, custom or acquiescence in the general course of business[.]"

The authority of the board of directors to delegate its corporate powers may
either be: (1) actual; or (2) apparent.

Actual authority may be express or implied. Express actual authority refers

to the corporate powers expressly delegated by the board of directors. Implied
actual authority, on the other hand, "can be measured by his or her prior acts
which have been ratified by the corporation or whose benefits have been
accepted by the corporation."

Petitioner's subsequent act of twice paying the additional interest Escalona

committed to during the term of the Margarita Bonds is considered a
ratification of Escalona's acts.

Petitioner's only defense that they were "erroneous payment[s]" since it never
obligated itself from the start cannot stand.Corporations are bound by errors of
their own making.

Escalona likewise had apparent authority to transact on behalf of petitioner. In

Yao Ka Sin Trading v. Court of Appeals:
 The rule is of course settled that "[a]lthough an officer or agent acts
without, or in excess of, his actual authority if he acts within the scope of
an apparent authority with which the corporation has clothed him by
holding him out or permitting him to appear as having such authority,
the corporation is bound thereby in favor of a person who deals with him
in good faith in reliance on such apparent authority, as where an officer
is allowed to exercise a particular authority with respect to the business,
or a particular branch of its continuously and publicly, for a considerable
time."

Apparent authority is ascertained through:

(1) the general manner by which the corporation holds out an officer or
agent as having power to act or, in other words, the apparent authority
with which it clothes him to act in general, or
(2) the acquiescence in his acts of a particular nature, with actual or
constructive knowledge thereof, whether within or without the scope of
his ordinary powers.50 (Citation omitted)

Here, respondent relied on Escalona's apparent authority to promise interest

payments over and above the guaranteed 8.5%, considering that Escalona was
petitioner's then senior vice president. His apparent authority was further
demonstrated by petitioner paying respondent what Escalona promised during
the Margarita Bonds' term.

It should likewise be noted that at the time this Petition was filed, Escalona
signed the Verification and Certification as the president of the corporation,
signifying that petitioner did not consider his alleged unauthorized acts as fatal
to his continued involvement in corporate affairs.

22. Jorgenetics Swine vs Thick & Thin. GR 201044, May 5. 2021

Facts:

 On November 10, 2008, TTAI filed a complaint for replevin with damages
against Jorgenetics Swine Improvement Corporation (Jorgenetics),
seeking possession of 4,765 heads of hogs that were the subject of a
chattel mortgage between the parties.
 In its complaint, TTAI alleged that the parties entered into an agreement
where TTAI would supply, on credit, feeds and other supplies necessary
for Jorgenetics' hog raising business.
 As security for payment of their obligation amounting to
Php20,000,000.00, Jorgenetics executed a chattel mortgage over its hog
livestock inventories in favor of TTAI.
 While TTAI delivered feeds and supplies pursuant to the agreement,
Jorgenetics failed to pay for the same despite demand.
 The complaint was raffled to the Regional Trial Court (RTC) of Quezon
City, Branch 92. The next day, the trial court issued a writ of replevin
and required Jorgenetics to post a bond in the amount of
Php40,000,000.00.
 While the writ of replevin was served on May 29, 2009, the return
thereon indicated that the writ, together with a copy of TTAI's affidavit
and bond, as well as the summons and TTAI's complaint, were served on
petitioner's farm through its purchasing officer Rowena Almirol (Almirol),
who refused acknowledgment of the documents.
 The return likewise stated that the 4,765 heads of hog livestock subject
of the writ were seized and delivered to respondent.
 Jorgenetics moved to dismiss the complaint for replevin on the ground of
invalid service of summons since service was made on its farm in Rizal
instead of its place of business in Quezon City, and in view of the lack of
justification from the sheriff for availing of substituted service to the
person of Almirol
 . In its motion to dismiss, Jorgenetics likewise prayed for the quashal of
the writ of replevin and for the replevin bond to be made wholly
answerable for the damages it allegedly suffered
 The case was re-raffled to Branch 93 and subsequently to Branch 75.
Thereafter, the trial court issued the February 4, 2010 Order, directing
the dismissal of the complaint for replevin for failure to acquire
jurisdiction over the person of Jorgenetics by reason of the invalid service
of summons.
 TTAI moved for reconsideration. However, this was denied by the trial
court.
 Aggrieved, TTAI filed a Petition for Certiorari under Rule 65 against
Jorgenetics and Hon. Alexander S. Balut (Judge Balut) in his capacity as
presiding judge of Branch 75.
 In the petition docketed as CA G.R. SP. No. 114682, TTAI faulted the trial
court for taking cognizance of the Motion for the Issuance of a Writ of
Execution with Application for Damages and continuing to conduct trial
on the merits in the guise of execution proceedings despite the dismissal
of the case.
 TTAI thus prayed for the annulment of the February 4, 2010 and May 6,
2010 Orders of the trial court, which dismissed the complaint for
replevin, in view of Jorgenetics' voluntary submission to the jurisdiction
of the trial court.
 Ruling of the Court of Appeals in CA-G.R. SP. No. 114682 (now G.R. No.
201044):
  On March 29, 2011, the appellate court issued the Decision30 in CA-
G.R. SP No. 114682 nullifying the order of dismissal and reinstating
TTAI's complaint for replevin.
 Jorgenetics moved for reconsideration, which was denied in a February
29, 2012 Resolution.34 Thus, on May 8, 2012, it filed a Petition for
Review on Certiorari before this Court, assailing the CA's reinstatement
of the replevin case. This was docketed as G.R. No. 201044.
 TTAI contends that Mr. Romeo J. Jorge, the chairperson and president of
petitioner, had no authority to file the Petition in G.R. No. 201044 on
behalf of Jorgenetics at the time of the filing thereof, and that the belated
submission of the Board Resolution indicating Mr. Jorge's authority and
ratifying the filing of the Petition will not cure the defect.

Ruling:

We disagree.

In Cagayan Valley Drug Corp. v. Commissioner of Internal Revenue, this Court

ruled that certain officials or employees of a corporation can sign the
verification and certification on its behalf without need of a board resolution,
such as but not limited to the chairperson of the board of directors, the
president of a corporation, the general manager or acting general manager,
personnel officer, and an employment specialist in a labor case. Moreover, the
"lack of authority of a corporate officer to undertake an action on behalf of the
corporation may be cured by ratification through the subsequent issuance of a
board resolution, recognizing the validity of the action or the authority of the
concerned officer."

Given the foregoing, Mr. Jorge, as the chairperson and president of petitioner,
is sufficiently authorized to sign the verification and certification on behalf of
Jorgenetics. Any doubt on his authority to sign the verification and certification
is likewise obviated by the secretary's certificate it submitted upon the orders
of this Court, which ratified Mr. Jorge's authority to represent petitioner and
file the Petition in G.R. No. 201044.

23. GOnzada VS COA. GR 244816 June 29. 2024 (en bandy

Facts

 The PICCI is a government-owned or controlled corporation (GOCC)

created under Presidential Decree (P.D.) No. 520, as amended by P.D. No.
710,with the Bangko Sentral ng Pilipinas (BSP) as its sole stockholder.
 Section 2 of P.D. No. 520 provides that the governing powers and
authority of the corporation shall be vested in, and exercised by the
 Board of Directors, which shall have the power to promulgate rules and
regulations in a Code of By-Laws, on matters involving the organization,
annual meetings of the Board, whether regular or special, and the
powers and duties of its officers, among others.
 Section 6 of the same law provides that the provisions of the Corporation
Code, as amended, not inconsistent with P.D. No. 520, shall apply
suppletorily to PICCI.
 Pursuant to P.D. No. 520, PICCI issued its 1994 By-Laws which
stipulates, among others, that directors, as such, shall not receive
any salary for their services, but only a per diem, for every meeting
actually attended. Thereafter, the said By-Laws was amended in 2000
(Amended By-Laws), which provided for the following Section:

Section 8. Compensation - Directors, as such, shall not receive

any salary for their services but shall receive a per diem and
allowances in such amounts as may be fixed by a majority of all
the members of the Board of Directors in a regular or special
meeting and approved by the Monetary Board. Nothing herein
contained shall be construed to preclude any director from serving
the Corporation in any other capacity and receiving compensation
therefor.

 For the Calendar Years (CYs) 2010 and 2011, part of the members of the
Board of Directors of PICCI were petitioners Eloisa A. Lim (Lim), Shirley
S. Ong (Ong), Socorro R. Quirino (Quirino), Araceli E. Villanueva
(Villanueva), and Ruby C. Tuason (Tuason). Petitioner Melpin A. Gonzaga
(Gonzaga) is the Corporate Secretary, with petitioner Victoria Berciles
(Berciles) as a Director of the Administrative Department, and petitioner
Antonio A. Bernardo, Jr. (Bernardo, Jr.) as the comptroller of PICCI.
 In its findings, the COA found that for CYs 2009 and 2010, PICCI
incurred net losses in its operations. Notwithstanding, the PICCI Board
of Directors submitted its Proposed Budget for 2010 on November 24,
2009, which included the following particulars: a) Director's Allowance,
b) Director's Per Diem, c) Director's Christmas Bonus, and d) Director's
Anniversary Bonus, among others.17 The BSP Monetary Board approved
the Proposed 2010 Budget on December 29, 2009.18
 During their term as members of the Board of Directors, Lim, Ong,
Quirino, Villanueva, and Tuason, received the following benefits and
allowances from January 2010 up to January 2011,
 Gonzaga, as the Corporate Secretary, approved the payment of the
January 2011 Representation Allowance.
 Meanwhile, Bernardo, Jr., the comptroller at that time, certified that the
bonuses and allowances given to petitioners were necessary, lawful,
appropriate, and duly substantiated by proper receipts.
  Likewise, Berciles, as Director of the Administrative Department during
the material period, approved the payment of said benefits.
 On March 22, 2013, the Supervising Auditor (SA) and the Audit Team
Leader (ATL) issued an Audit Observation Memorandum No. PICCI-2012-
04, which flagged the grant of Representation Allowance, Medical
Reimbursement, Christmas Bonus, and Anniversary Bonus to
petitioners as irregular because it contravened Section 30 of the
Corporation Code, which states, "[i]n no case, shall the total yearly
compensation of directors, as such directors, exceed ten (10%)
percent of the net income before income tax of the corporation
during the preceding year."
 The SA and ATL opined that since PICCI incurred net losses and no net
income for CYs 2009 and 2010, the grant of the benefits and allowances
aforementioned for the succeeding CYs 2010 and 2011 violated the law.
 Consequently, they issued ND Nos. PICCI-13-002-(12),24 PICCI-13-003-
(12),25 PICCI-13-004-(12),26 PICCI-13-005-(12)27 and PICCI-13-006-
(12), all dated December 6, 2013 against petitioners, which disallowed
the payment of the benefits aforesaid to the petitioners who are part of
the Board of Directors of PICCI in the total amount P882,902.06,29
which NDs Gonzaga received on December 11, 2013.
 Feeling aggrieved, petitioners appealed before the Office of the Cluster
Director of the Corporate Government Sector-Cluster 1 (OCD-CGS-1)
where they argued that the disallowed benefits should be permitted
based on the following grounds:
o first, Section 30 of the Corporation Code applies only to close
corporations;
o second, PICCI is not a close corporation;
o third, the allowances granted to petitioners are approved by the
Monetary Board;
o and fourth, assuming that Section 30 of the Corporation Code
applies to PICCI, the disallowed benefits were received in good
faith, hence, they need not refund the same.
 On the contrary, the Audit Team refuted the contentions above-stated in
this manner:
o first, there is no such provision in the Corporation Code saying
that it only applies to close corporations;
o second, the additional compensation paid to petitioners for CYs
2010 and 2011 notwithstanding the net losses during the
preceding years 2009 and 2010, is contrary to Section 30 of the
Corporation Code;
o and lastly, the claim of good faith cannot be sustained following
the principle of solutio indebiti provided under Article 2154 of the
Civil Code.

Ruling of the COA Director

On appeal, Director Emelita R. Quirante (COA Director) of the OCD CGS-1
found the disallowance to be proper,

Ruling of the COA-CP

As aforementioned, the COA-CP affirmed the ruling of the COA Director.

Petitioners moved for reconsideration of the aforesaid ruling, but it was

similarly denied by the COA-CP, in its Resolution dated September 27, 2018.

Ruling:

Petitioners are mistaken.

Unlike RATA, which is expressly authorized by R.A. No. 6758 and imposes no
conditions, the grant of other bonuses and benefits received by the members of
the Board of Directors of PICCI must comply with existing regulations, failure
of which equates to an unauthorized disbursement.

It is well to reiterate that "PICCI is a GOCC subsidiary of BSP." PICCI was

organized pursuant to P.D. No. 520, as amended, with BSP as its sole
stockholder.1

In Land Bank of the Philippines v. Commission on Audit, the Court

emphatically explained that the power of governing Boards of GOCCs and
Government Financial Institutions, or any other corporation created by a
special law to adopt a compensation and benefit scheme, is limited to the
specifications indicated in the legislative act. The consistent rule is that the
organic law must expressly provide the allowances and benefits due to the
Board of Directors; entitlement thereto can never be implied.1

Here, P.D. No. 520 is silent with respect to the benefits and allowances owing
to petitioners as members of the PICCI Board of Directors. It nevertheless
authorizes the Board of Directors of PICCI to promulgate rules and regulations
in a Code of By-Laws and to fix the compensation of all officers, staff and
personnel of PICCI. An Amended By-Laws of PICCI was thereafter passed by
the Board of Directors, granting unto themselves, allowances when its By-Laws
decreed under Section 8, the following:

Section 8. Compensation – Directors, as such, shall not receive any

salary for their services but shall receive a per diem and allowances in
such amounts as may be fixed by a majority of all the members of the
Board of Directors in a regular or special meeting and approved by the
 Monetary Board. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor. (Underscoring supplied)

Other than per diem, and RATA as authorized by R.A. No. 6758 and MBoard
Resolution No. 1901, the grant of allowances must not simply be based on the
discretion of the members of the Board of Directors of the PICCI. Any allowance
to be given by the PICCI Board must be one which is specifically authorized by
law. This is because the law mandates that "[n]o money shall be paid out of
any public treasury or depository except in pursuance of an appropriation law
or other specific statutory authority."

[F]iscal autonomy alone will not justify the questioned grants. Again,
the benefits must either be explicitly indicated under applicable law or
specifically authorized by a DBM issuance.

In this case, DBM Circular Letter No. 2002-02 dated January 2, 2002, provides
among others, that members of the Board of Directors of agencies are not
salaried officials of the government.

As non-salaried officials, they are not entitled to PERA, ADCOM, YEB, and
retirement benefits unless expressly provided by law. While the DBM Circular
applies to PICCI, being a GOCC, the bonuses that were disallowed by COA in
this case do not partake the nature of the benefits that are prohibited by DBM
Circular Letter No. 2002-02.

The bonuses received by the members of the Board of Directors of PICCI

are the Christmas and Anniversary bonuses that are considered as a
form of compensation, which the Board of Directors of PICCI may fix in
accordance with P.D. No. 520.

By definition, "bonus" is a gratuity or act of liberality of the giver. It is

something given in addition to what is ordinarily received by or strictly due the
recipient. It is granted and paid to an employee for his/her industry and loyalty
which contributed to the success of the employer's business and made possible
the realization of profits. It is not a gift, but a sum paid for services, or upon
some other consideration, but in addition to or in excess of that which would
ordinarily be given.

Verily, bonus is a form of compensation for services rendered, which is

nevertheless covered by the limitation imposed by Section 30 of the
Corporation Code, which reads:

Section 30. Compensation of directors. – In the absence of any

provision in the by-laws fixing their compensation, the directors shall not
 receive any compensation, as such directors, except for reasonable per
diems: Provided, however, That any such compensation other than per
diems may be granted to directors by the vote of the stockholders
representing at least a majority of the outstanding capital stock at a
regular or special stockholders' meeting. In no case shall the total yearly
compensation of directors, as such directors, exceed ten (10%) percent of
the net income before income tax of the corporation during the preceding
year.

Here, despite the Monetary Board's approval of the budget of PICCI, which
included the grant of Anniversary and Christmas bonuses to the members of
the Board of Directors of PICCI, it is not disputed that PICCI incurred losses for
the CYs 2009 and 2010. Without a net income derived from the previous year,
there will be no valid appropriation for which the bonuses of the members of
the Board of Directors of PICCI may be taken from, which could be disbursed
for CY 2010-2011. With the limitation imposed by Section 30 of the
Corporation Code, any form of compensation that may be extended to the
Board of Directors of PICCI must be premised on the presence of a net income
produced by PICCI in the previous year. It cannot simply rely on the approval
of the Monetary Board as the Corporation Code requires the presence of a net
income before any compensation may be given by the Board of Directors unto
themselves. Thus, the Anniversary and Christmas bonuses were properly
disallowed by COA.

Petitioners who are recipients of the disallowed amounts are liable to refund
the same.

Recipients, on the other hand, are liable to refund, regardless of good faith, on
the basis of solutio indebiti and unjust enrichment. The metamorphosis of the
rules governing accountability for disallowances, especially payee liability for
the amount actually received, strives to create a harmonious interplay of the
provisions of the Administrative Code, the principles of unjust enrichment and
solutio indebiti under the Civil Code, and the policy of social justice in
disallowance cases.
1

Petitioners Antonio A. Bernardo, Jr., Victoria C. Berciles and the members of

the Board of Directors of PICCI, Eloisa A. Lim, Shirley S. Ong, Socorro R.
Quirino, Araceli E. Villanueva, and Ruby C. Tuason are SOLIDARILY LIABLE to
RETURN the disallowed amount corresponding to the Christmas and
Anniversary Bonuses and Medical Reimbursement received by Eloisa A. Lim,
Shirley S. Ong, Socoro R. Quirino, Araceli E. Villanueva, and Ruby C. Tuason,
within fifteen (15) days from finality of this Decision and via a mode of payment
deemed just and proper by the Commission on Audit; and
24. Espiritu vs Petron, Nov. 24, 2009*

The Facts and the Case

 Respondent Petron Corporation (Petron) sold and distributed liquefied

petroleum gas (LPG) in cylinder tanks that carried its trademark "Gasul."
Respondent Carmen J. Doloiras owned and operated Kristina Patricia
Enterprises (KPE), the exclusive distributor of Gasul LPGs in the whole
of Sorsogon. Jose Nelson Doloiras (Jose) served as KPE’s manager.

 Bicol Gas Refilling Plant Corporation (Bicol Gas) was also in the business
of selling and distributing LPGs in Sorsogon but theirs carried the
trademark "Bicol Savers Gas." Petitioner Audie Llona managed Bicol Gas.

 In the course of trade and competition, any given distributor of LPGs at

times acquired possession of LPG cylinder tanks belonging to other
distributors operating in the same area. They called these "captured
cylinders."

 According to Jose, KPE’s manager, in April 2001 Bicol Gas agreed with
KPE for the swapping of "captured cylinders" since one distributor could
not refill captured cylinders with its own brand of LPG.

 At one time, in the course of implementing this arrangement, KPE’s Jose

visited the Bicol Gas refilling plant. While there, he noticed several
Gasul tanks in Bicol Gas’ possession. He requested a swap but Audie
Llona of Bicol Gas replied that he first needed to ask the permission
of the Bicol Gas owners. That permission was given and they had a
swap involving around 30 Gasul tanks held by Bicol Gas in exchange for
assorted tanks held by KPE.

 KPE’s Jose noticed, however, that Bicol Gas still had a number of Gasul
tanks in its yard. He offered to make a swap for these but Llona declined,
saying the Bicol Gas owners wanted to send those tanks to Batangas.
Later Bicol Gas told Jose that it had no more Gasul tanks left in its
possession. Jose observed on almost a daily basis, however, that Bicol
Gas’ trucks which plied the streets of the province carried a load of Gasul
tanks. He noted that KPE’s volume of sales dropped significantly from
June to July 2001.

 On August 4, 2001 KPE’s Jose saw a particular Bicol Gas truck on the
Maharlika Highway. While the truck carried mostly Bicol Savers LPG
 tanks, it had on it one unsealed 50-kg Gasul tank and one 50-kg
Shellane tank.

 Jose followed the truck and when it stopped at a store, he asked the
driver, Jun Leorena, and the Bicol Gas sales representative, Jerome
Misal, about the Gasul tank in their truck. They said it was empty but,
when Jose turned open its valve, he noted that it was not.

 Misal and Leorena then admitted that the Gasul and Shellane tanks on
their truck belonged to a customer who had them filled up by Bicol Gas.
Misal then mentioned that his manager was a certain Rolly Mirabena.

 Because of the above incident, KPE filed a complaint for violations of

Republic Act (R.A.) 623 (illegally filling up registered cylinder tanks), as
amended, and Sections 155 (infringement of trade marks) and 169.
(unfair competition) of the Intellectual Property Code (R.A. 8293).

 The complaint charged the following: Jerome Misal, Jun Leorena, Rolly
Mirabena, Audie Llona, and several John and Jane Does, described as
the directors, officers, and stockholders of Bicol Gas. These directors,
officers, and stockholders were eventually identified during the
preliminary investigation.

Provincial Prosecutor

Subsequently, the provincial prosecutor ruled that there was probable cause
only for violation of R.A. 623 (unlawfully filling up registered tanks) and that
only the four Bicol Gas employees, Mirabena, Misal, Leorena, and petitioner
Llona, could be charged.

 The charge against the other petitioners who were the stockholders and
directors of the company was dismissed.

Office of the Regional State Prosecutort

Dissatisfied, Petron and KPE filed a petition for review with the Office of the
Regional State Prosecutor, Region V, which initially denied the petition but
partially granted it on motion for reconsideration. The Office of the Regional
State Prosecutor ordered the filing of additional informations against the four
employees of Bicol Gas for unfair competition. It ruled, however, that no case
for trademark infringement was present. The Secretary of Justice denied the
appeal of Petron and KPE and their motion for reconsideration.

Court of Appeals
 In its Decision dated October 17, 2005, the Court of Appeals ruled,
however, that Atty. Cruz’s certification constituted sufficient compliance.
As to the substantive aspect of the case, the Court of Appeals reversed
the Secretary of Justice’s ruling. It held that unfair competition does not
necessarily absorb trademark infringement. Consequently, the court
ordered the filing of additional charges of trademark infringement against
the concerned Bicol Gas employees as well.

 Since the Bicol Gas employees presumably acted under the direct order
and control of its owners, the Court of Appeals also ordered the
inclusion of the stockholders of Bicol Gas in the various charges,
bringing to 16 the number of persons to be charged, now including
petitioners Manuel C. Espiritu, Jr., Freida F. Espiritu, Carlo F. Espiritu,
Rafael F. Espiritu, Rolando M. Mirabuna, Hermilyn A. Mirabuna, Kim
Roland A. Mirabuna, Kaye Ann A. Mirabuna, Ken Ryan A. Mirabuna,
Juanito P. de Castro, Geronima A. Almonite, and Manuel C. Dee
(together with Audie Llona), collectively, petitioners Espiritu, et al.

 The court denied the motion for reconsideration of these employees and
stockholders in its Resolution dated January 6, 2006, hence, the present
petition for review6 before this Court.

ISSUE: WON the Stockholders and members of the Corporation should

be included in the complaint.

Ruling:

The only point left is the question of the liability of the stockholders and
members of the board of directors of Bicol Gas with respect to the charge
of unlawfully filling up a steel cylinder or tank that belonged to Petron.
The Court of Appeals ruled that they should be charged along with the
Bicol Gas employees who were pointed to as directly involved in overt
acts constituting the offense.1avvphi1none

Bicol Gas is a corporation. As such, it is an entity separate and distinct

from the persons of its officers, directors, and stockholders. It has been
held, however, that corporate officers or employees, through whose act,
default or omission the corporation commits a crime, may themselves be
individually held answerable for the crime.15
 Jose claimed in his affidavit that, when he negotiated the swapping of
captured cylinders with Bicol Gas, its manager, petitioner Audie Llona,
claimed that he would be consulting with the owners of Bicol Gas about
it. Subsequently, Bicol Gas declined the offer to swap cylinders for the
reason that the owners wanted to send their captured cylinders to
Batangas. The Court of Appeals seized on this as evidence that the
employees of Bicol Gas acted under the direct orders of its owners and
that "the owners of Bicol Gas have full control of the operations of the
business."16

The "owners" of a corporate organization are its stockholders and they

are to be distinguished from its directors and officers. The petitioners
here, with the exception of Audie Llona, are being charged in their
capacities as stockholders of Bicol Gas. But the Court of Appeals forgets
that in a corporation, the management of its business is generally vested
in its board of directors, not its stockholders.
Stockholders are basically investors in a corporation. They do not have a
hand in running the day-to-day business operations of the corporation
unless they are at the same time directors or officers of the corporation.
Before a stockholder may be held criminally liable for acts committed by
the corporation, therefore, it must be shown that he had knowledge of
the criminal act committed in the name of the corporation and that he
took part in the same or gave his consent to its commission, whether by
action or inaction.

The finding of the Court of Appeals that the employees "could not have
committed the crimes without the consent, [abetment], permission, or
participation of the owners of Bicol Gas" is a sweeping speculation
especially since, as demonstrated above, what was involved was just one
Petron Gasul tank found in a truck filled with Bicol Gas tanks. Although
the KPE manager heard petitioner Llona say that he was going to consult
the owners of Bicol Gas regarding the offer to swap additional captured
cylinders, no indication was given as to which Bicol Gas stockholders
Llona consulted. It would be unfair to charge all the stockholders
involved, some of whom were proved to be minors. No evidence was
presented establishing the names of the stockholders who were charged
with running the operations of Bicol Gas. The complaint even failed to
allege who among the stockholders sat in the board of directors of the
company or served as its officers.

25. Stradcom vs Orpilla, GR 206800, July 2, 2018*

This involves a claim for constructive dismissal case filed by Stradcom’s
Human Resource Administration Department (HRAD) Head, Orpilla Joyce
Anabelle L. Orpilla (Orpilla).

There are two versions of events:

A.) Version of Orpilla

According to Orpilla she was employed by Stradcom as Human Resources

Administration Department (HRAD) Head with duties involving administrative
and training matters.

Chua, the President and Chief Executive Officer (CEO) of Stradcom, issued a
Memorandum addressed to the Chief Operating Officer (COO), Ramon G. Reyes
(Reyes), and Chief Financial Officer (CFO), Raul C. Pagdanganan
(Pagdanganan), announcing the reorganization of the HRAD. The
reorganization states that the Training Section of the Department shall be
spinned off and will form part of the Business Operations. The Training Section
should be called Human Resources Training and Development. Under the said
reorganization, the Human Resources Training and Development shall be
reporting to Mr. Ramon G. Reyes, COO, the Personnel and Administration shall
be reporting to Mr. Raul Pagdangan, CFO and Orpilla and the Training Section
will be reporting directly to the COO.

After the tum-over of the documents and equipment of HRAD, Orpilla inquired
from Chua as to her status in the light of the said reorganization. Chua, on the
other hand, replied that the management has lost its trust and confidence in
her and it would be better if she resigned. Orpilla protested the resignation and
insisted that if there were charges against her, she was open for formal
investigation. Chua, however, was not able to come up with any charges.

Thereafter, a meeting was held wherein, Atty. Eric Gene Pilapil (Atty. Pilapil),
the Chief Legal Officer (CLO) offered a settlement to Orpilla in exchange for her
employment, otherwise, Orpilla would have to undergo the burden of litigation
in pursuing the retention of her employment. Atty. Pilapil set another meeting
on January 13, 2003 with Orpilla, and told her to take a leave in the meantime
to think about the settlement offer. Atty. Pilapil also assured Orpilla that she
would continue to receive her salary. Subsequently, per advice of Atty. Pilapil,
Orpilla reported for work but the guards refused her entry and advised her to
take a leave of absence.

Orpilla claimed that she was informed by Accounting Manager, Mr. Arnold C.
Ocampo, that her January 15, 2003 salary was already deposited in her bank
account which included the proportionate 13th month pay for the year 2003
and was her last and final pay. After such, Orpilla no longer received any kind
of payment from Stradcom, et al. Orpilla claimed that she was constructively
dismissed on January 2, 2003 and turned into an actual dismissal on January
15, 2003, when she received her last pay.

Orpilla filed a complaint for constructive dismissal with monetary claims of

backwages, attorney’s fees and damages.

B.) Version of Stradcom

Sometime in December 2002, Pagdanganan gave instructions to Orpilla to

commence preparations for Stradcom’s 2002 Christmas party. Chua also gave
instructions to Orpilla to include the Land Registration Systems, Inc. (Lares)
officers and employees, an affiliate of Stradcom in the Christmas party, to
foster camaraderie and working relations between the two companies.

Contrary to Chua’s instruction, Orpilla then called a staff lunch meeting for
Stradcom’s 2002 Christmas party, wherein Orpilla conveyed her intention of
easing out Lares’ employees from the party.

Later, it had come to Stradcom’s attention that Orpilla was not comfortable
with the idea to include Lares in the Christmas party, as Orpilla appeared
evasive on the queries about the event made by Ms. May Marcelo, the Head
Personnel and Administration of Lares. This matter was brought to the
attention of Chua, who decided to strip Orpilla of any responsibility in
organizing the Christmas party and transferred the same to another
committee. As part of the turnover, Orpilla furnished the committee with a
copy of the initial budget which included the catering services from G& W
Catering Services at P250 per head.

The Christmas Party Committee was surprised to find out that the price of the
food was actually P200 per head and not P250 per head as represented by
Orpilla. Suspicious about the correct pricing, Samson and Galgana reported
the matter to the Stradcom’s management. Stradcom began its investigation
and interviewed some employees regarding the conduct of Orpilla.

After the investigation, Stradcom also discovered that Orpilla required her staff
to prepare presentation/training materials/manuals using company resources
for purposes not related to the affairs of the company, on overtime and on
Sundays. Subsequently, Pagdanganan called for a conference with Orpilla, and
discussed Orpilla’s non-inclusion of Lares in Stradcom’s Christmas party, the
overpricing of the food, and her moonlighting. Orpilla made a bare denial.

Chua notified his employees about the reorganization of the HRAD and the
Business Operations Department. On the same date and as part of routine
procedure, Orpilla turned-over the necessary documents and equipment.
Orpilla reported to Reyes, her new immediate superior and secured the latter’s
approval for her leave of absence on the dates of January 3 in the afternoon up
to January 6, 2003, due to personal reasons. Reyes approved her leave.

However, before Orpilla’s scheduled leave, she approached Chua to discuss the
reorganization and her previous conference with Pagdanganan regarding her
said infractions. Chua told Orpilla that the management has lost its trust and
confidence in her due to her willful disobedience in excluding the employees of
Lares in the Stradcom’s Christmas party and for willful breach of trust in
connection with the canvassing of the caterer.

Orpilla explained her side and asked Chua for his advice. Chua replied that
considering her position is one that requires the trust and confidence of the
management, it would be difficult to force herself on the management. Thus,
Orpilla conveyed her willingness to resign. In view of this, Stradcom’s officers
agreed that any formal investigation on Orpilla was unnecessary in view of her
willingness to resign.

However, Orpilla reported for work and suprisedly informed Stradcom that she
would not resign. When Chua found out about Orpilla’s retraction of her
statement to resign, he instructed Atty. Pilapil to talk things through with
Orpilla.

Atty. Pilapil invited Orpilla for dinner outside the company premises. Orpilla
was given another chance regarding her said infractions. Orpilla then
requested for four days leave to think things through and Atty. Pilapil adhered
to request and assured her that she will receive her pay while on leave. They
likewise agreed that they would meet again outside the office to discuss
Orpilla’s final decision. Stradcom, et al. were shocked when they found out that
Orpilla had filed a complaint for constructive dismissal with monetary claims of
backwages, attorney’s fees and damages.

Stradcom, et al. contended that the dismissal of Orpilla was for just cause on
the ground of loss of trust and confidence and the same was in compliance
with the due process requirements. Stradcom, et al. further contended that the
acts that caused the loss of trust and confidence of Stradcom, et al. in the
Orpilla were her mishandling of Stradcom’s 2002 Christmas party, dishonesty
in preparing the budget thereof, misrepresentation in her application for
employment, and using company personnel and resources for purposes not
beneficial to the interest of Stradcom.

LA Ruling:
The LA rendered a Decision, which ruled that Orpilla was illegally dismissed
and Chua is solidarily liable with Stradcom for the payment of the monetary
awards to Orpilla.

Aggrieved, Stradcom, et al. seasonably filed a memorandum of appeal before

the NLRC.

NLRC Ruling:

The NLRC issued its Decision. It partially granted the appeal filed by Stradcom,
et al. and modified the Decision of the LA. The NLRC ruled that Orpilla was
validly dismissed on the ground of loss and trust confidence, due to her
mishandling of the 2002 budget for the Christmas party. The NLRC awarded
Orpilla her unpaid salary for the period when she was formally advised of her
disengagement from service. Attorney’s fees were also awarded.

Orpilla sought to reconsider the above-mentioned Decision but it was denied by

the NLRC for lack of merit. Dismayed, Orpilla filed a petition for review on
certiorari under Rule 65 with the CA.

CA Ruling:

The CA reversed and set aside the NLRC and ruled that Orpilla was illegally
dismissed. Stradcom, et al. promptly filed a Motion for Reconsideration but it
was denied by the CA.

Hence, the present petition before the SC.

Issue:

Ruling:

It is well-settled that a corporation has its own legal personality separate and
distinct from those of its stockholders, directors or officers. Absence of any
evidence that a corporate officer and/or director has exceeded their authority,
or their acts are tainted with malice or bad faith, they cannot be held
personally liable for their official acts. Here, there was neither any proof that
Chua acted without or in excess of his authority nor was motivated by personal
ill will towards respondent to be solidarily liable with the company.

We quote with affirmation the NLRC's pronouncement, viz:

Finally, on the issue of whether or not the Labor Arbiter committed manifest
error in ordering appellant Chua solidarily liable with appellant corporation, we
have to rule in the affirmative. Appellant Chua cannot be made solidarily liable
with appellant corporation for any award in favor of appellee. Appellant
corporation is separate and distinct from Appellant Chua.

xxxx

Appellant Chua's acts were official acts, done in his capacity as an officer of
appellant corporation on its behalf. There is no showing of any act, or that he
acted without or in excess of his authority or was motivated by personal ill-will
toward appellee. Stated simply, appellant Chua was merely doing his job. In
fact, he even tried to save appelle from undue embarrassment.

26. Polymer Rubber , Ang vs Salamuding, July 24, 2013*

Facts:

 Herein respondent Bayolo Salamuding (Salamuding), Mariano Gulanan

and Rodolfo Raif (referred to as the complainants) were employees of
petitioner Polymer Rubber Corporation (Polymer), who were dismissed
after allegedly committing certain irregularities against Polymer.

 On July 24, 1990, the three employees filed a complaint against Polymer
and Ang (petitioners) for unfair labor practice, illegal dismissal, non-
payment of overtime services, violation of Presidential Decree No. 851,
with prayer for reinstatement and payment of back wages, attorney’s
fees, moral and exemplary damages.4

LA Decision:

Judgment is hereby rendered dismissing the complainant unfair labor practice

(sic) but directing the respondent the following:

1. Reinstate complainants to their former position with full back wages from
the time they were illegally dismissed up to the time of reinstatement.

2. To pay individual complainants their 13th month pay and for the year 1990
in the following amount:cralavvonlinelawlibrary

a. Mariano Gulanan.................[P]3,194
b. Rodolfo Raif.......................[P]3,439
c. Bayolo Salam[u]ding.............[P]3,284
3. To pay individual complainants overtime in the amount of [P]1,335 each.

4. To pay individual complainants overtime in the amount of [P]6,608.80 each.

5. To pay individual complainants moral and exemplary damages in the

amount of [P]10,000 each.

6. To pay attorney’s fee equivalent to ten (10) percent of the total monetary
award of the complainants.

A writ of execution was subsequently issued on April 18, 1991 to implement

the aforesaid judgment.6

NLRC Decision

On April 7, 1992, the NLRC affirmed the decision of the LA with modifications.
The NLRC deleted the award of moral and exemplary damages, service
incentive pay, and modified the computation of 13th month pay.7 The
corresponding Entry of Judgment was made on September 25, 1992,8 and an
alias writ of execution was issued on October 29, 1992, based on the NLRC
decision.9

The case was subsequently elevated to the Supreme Court (SC) on a

petition for certiorari. In a Resolution dated September 29, 1993, the
Court affirmed the disposition of the NLRC with the further modification
that the award of overtime pay to the complainants was deleted.

 On September 30, 1993, Polymer ceased its operations.

 Upon a motion dated November 11, 1994, the LA a quo issued a writ of
execution on November 16, 1994 based on the SC resolution.
 Since the writ of execution was returned unsatisfied, another alias writ of
execution was issued on June 4, 1997
 In the latter part of 2004, Polymer with all its improvements in the
premises was gutted by fire.
 On December 2, 2004, the complainants filed a Motion for
Recomputation and Issuance of Fifth (5th) Alias Writ of Execution.
 The Research and Computation Unit of the NLRC came up with the total
amount of P2,962,737.65. Due to the failure of the petitioners to
comment/oppose the amount despite notice, the LA approved said
amount.14
 Thus, on April 26, 2005, the LA issued a 5th Alias Writ of Execution15
prayed for commanding the sheriff to collect the amount.
  In the implementation of this alias writ of execution dated April 26, 2005,
the shares of stocks of Ang at USA Resources Corporation were
levied.

 On November 10, 2005, the petitioners moved to quash the 5th alias writ
of execution, and to lift the notice of garnishment.
 They alleged that: a) Ang should not be held jointly and severally liable
with Polymer since it was only the latter which was held liable in the
decision of the LA, NLRC and the Supreme Court; b) the computation of
the monetary award in favor of the complainants in the amount of
P2,962,737.65 was misleading, anomalous and highly erroneous; and c)
the decision sought to be enforced by mere motion is already barred by
the statute of limitations.
 In an Order dated December 16, 2005, the LA granted the motion. The
LA ordered the quashal and recall of the writ of execution, as well as the
lifting of the notice of levy on Ang’s shares of stocks.
 The LA ruled that the Decision dated November 21, 1990 did not contain
any pronouncement that Ang was also liable.
 To hold Ang liable at this stage when the decision had long become final
and executory will vary the tenor of the judgment, or in excess of its
terms. As to the extent of the computation of the backwages, the same
must only cover the period during which the company was in actual
operation. Further, the LA found that the complainant’s motion to
execute the LA’s decision was already barred by the statute of
limitations.
 On appeal, the NLRC affirmed the findings of the LA in a Decision20
dated September 27, 2006. It, however, made a pronouncement that the
complainants did not sleep on their rights as they continued to file series
of motions for the execution of the monetary award and are, thus, not
barred by the statute of limitations. The appeal on the aspect of the
lifting of the notice of levy on the shares of stocks of Ang was dismissed.
 On January 12, 2007, the NLRC denied the motion for reconsideration of
the foregoing decision.22

Undeterred, Salamuding filed a Petition for Certiorari23 before the CA.

 On June 30, 2008, the CA found merit with the petition.

 The CA stated that there has to be a responsible person or persons
working in the interest of Polymer who may also be considered as the
employer, invoking the cases of NYK Int’l. Knitwear Corp. Phils. v. NLRC
and A.C. Ransom Labor Union-CCLU v. NLRC.2
 Since Ang as the director of Polymer was considered the highest ranking
officer of Polymer, he was therefore properly impleaded and may be held
jointly and severally liable for the obligations of Polymer to its dismissed
employees.
  Let the records of the case be remanded to the Labor Arbiter for
execution of the Decision dated November 21, 1990 as modified by the
NLRC against the respondents Polymer Rubber Corporation and Joseph
Ang.27

Issue: WON Joseph Ang should be held liable.

Ruling:
“A corporation, as a juridical entity, may act only through its directors, officers
and employees. Obligations incurred as a result of the directors’ and officers’
acts as corporate agents, are not their personal liability but the direct
responsibility of the corporation they represent. As a rule, they are only
solidarily liable with the corporation for the illegal termination of services of
employees if they acted with malice or bad faith.”29

To hold a director or officer personally liable for corporate obligations, two

requisites must concur: (1) it must be alleged in the complaint that the director
or officer assented to patently unlawful acts of the corporation or that the
officer was guilty of gross negligence or bad faith; and (2) there must be proof
that the officer acted in bad faith.30

In the instant case, the CA imputed bad faith on the part of the petitioners
when Polymer ceased its operations the day after the promulgation of the SC
resolution in 1993 which was allegedly meant to evade liability. The CA found
it necessary to pierce the corporate fiction and pointed at Ang as the
responsible person to pay for Salamuding’s money claims. Except for this
assertion, there is nothing in the records that show that Ang was responsible
for the acts complained of. At any rate, we find that it will require a great
stretch of imagination to conclude that a corporation would cease its
operations if only to evade the payment of the adjudged monetary awards in
favor of three (3) of its employees.

The dispositive portion of the LA Decision dated November 21, 1990 which
Salamuding attempts to enforce does not mention that Ang is jointly and
severally liable with Polymer. Ang is merely one of the incorporators of Polymer
and to single him out and require him to personally answer for the liabilities of
Polymer is without basis. In the absence of a finding that he acted with malice
or bad faith, it was error for the CA to hold him responsible.

In Aliling v. Feliciano,31 the Court explained to wit:cralavvonlinelawlibrary

The CA held the president of WWWEC, Jose B. Feliciano, San Mateo and
Lariosa jointly and severally liable for the monetary awards of Aliling on the
ground that the officers are considered “employers” acting in the interest of the
corporation. The CA cited NYK International Knitwear Corporation Philippines
(NYK) v. National Labor Relations Commission in support of its argument.
Notably, NYK in turn cited A.C. Ransom Labor Union-CCLU v. NLRC.

Such ruling has been reversed by the Court in Alba v. Yupangco, where the
Court ruled:cralavvonlinelawlibrary
“By Order of September 5, 2007, the Labor Arbiter denied respondent’s motion
to quash the 3rd alias writ. Brushing aside respondent’s contention that his
liability is merely joint, the Labor Arbiter ruled:cralavvonlinelawlibrary
Such issue regarding the personal liability of the officers of a corporation for
the payment of wages and money claims to its employees, as in the instant
case, has long been resolved by the Supreme Court in a long list of cases [A.C.
Ransom Labor Union-CLU vs. NLRC (142 SCRA 269) and reiterated in the
cases of Chua vs. NLRC (182 SCRA 353), Gudez vs. NLRC (183 SCRA 644)]. In
the aforementioned cases, the Supreme Court has expressly held that the
irresponsible officer of the corporation (e.g., President) is liable for the
corporation’s obligations to its workers. Thus, respondent Yupangco, being the
president of the respondent YL Land and Ultra Motors Corp., is properly jointly
and severally liable with the defendant corporations for the labor claims of
Complainants Alba and De Guzman. x x x

xxxx
As reflected above, the Labor Arbiter held that respondent’s liability is solidary.

There is solidary liability when the obligation expressly so states, when the law
so provides, or when the nature of the obligation so requires. MAM Realty
Development Corporation v. NLRC, on solidary liability of corporate officers in
labor disputes, enlightens:cralavvonlinelawlibrary
x x x A corporation being a juridical entity, may act only through its directors,
officers and employees. Obligations incurred by them, acting as such corporate
agents are not theirs but the direct accountabilities of the corporation they
represent. True solidary liabilities may at times be incurred but only when
exceptional circumstances warrant such as, generally, in the following cases:

1. When directors and trustees or, in appropriate cases, the officers of a

corporation:

(a) vote for or assent to patently unlawful acts of the

corporation;chanroblesvirtualawlibrary

(b) act in bad faith or with gross negligence in directing the corporate
affairs;chanroblesvirtualawlibrary

xxxx
In labor cases, for instance, the Court has held corporate directors and officers
solidarily liable with the corporation for the termination of employment of
employees done with malice or in bad faith.”

To hold Ang personally liable at this stage is quite unfair. The judgment of the
LA, as affirmed by the NLRC and later by the SC had already long become final
and executory. It has been held that a final and executory judgment can no
longer be altered. The judgment may no longer be modified in any respect,
even if the modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law, and regardless of whether the modification
is attempted to be made by the court rendering it or by the highest Court of the
land.33 “Since the alias writ of execution did not conform, is different from
and thus went beyond or varied the tenor of the judgment which gave it life, it
is a nullity. To maintain otherwise would be to ignore the constitutional
provision against depriving a person of his property without due process of
law.”

27. United Philippine Lines vs Alkuino, GR 245960, July 14, 2021*

 On November 24, 2014, UPLI hired respondent as Assistant Stage

Manager for and on behalf of its foreign principal, Holland America Line
Westours, Inc. (Holland), under a four-month contract on board the
vessel "Westerdam."
 His task was to assist the Manager, supervise, and organize the stage
before, during, and after every show in the vessel.
 His employment was covered by a Collective Bargaining Agreement
(CBA)7 denominated as HAL AMOSUP CBA covering the period January
1, 2015 to December 31, 2017.
 Prior to his employment, respondent underwent a pre-employment
medical examination wherein he was declared fit for sea duties.
 While on board the vessel on March 20, 2015, respondent started to
feel back pains after he moved several boxes to be used for the
show.
 He ignored the pain and continued working. Later on, he began
experiencing lower back pains with right leg numbness, described as
sharp and severe when aggravated by movement.
 When he could hardly move his body, he reported his condition to his
superior. The ship doctor then gave him pain relievers. As the pain
persisted, the superior officer sent respondent to an orthopedic doctor at
Spine Solutions Clinic in Florida, U.S.A. where he was initially assessed
to have arthralgia of lumbar spine, lumbar disc disorder without
myelopathy.
 On April 13, 2015, respondent was repatriated for medical reasons.
 On April 16, 2015, respondent arrived in the Philippines. UPLI placed
respondent under the care of Shiphealth, Inc. and referred him to the
orthopedic spine surgery service. He underwent magnetic resonance
imaging (MRI) and was diagnosed with disc degeneration, L4-L5, for
which he was advised to undergo physical therapy (PT) sessions.
 After respondent completed his PT sessions, the company-designated
physician advised respondent to undergo surgical procedure,
transforaminal interlumbar fusion (TILF), L4-L5 on June 15, 2015.13
Skeptical of the procedure, respondent asked for more time to decide.
 As such, UPLI referred respondent to another orthopedic spine surgeon,
who also recommended surgery. However, respondent refused to undergo
the surgical procedure and chose to have treatment and PT sessions.
 On August 5, 2015, respondent completed his third PT session. The
company-designated physician issued a Final Medical Report declaring
respondent as "deemed maximally medically improved" because definitive
management was no longer possible on account of his refusal to undergo
surgery.
 The company-designated physician finally declared him partially and
permanently disabled with Grade 8 impediment-moderate rigidity or 2/3
loss of motion or lifting power of the trunk.
 Unsatisfied, respondent consulted his doctor of choice, Dr. Manuel Fidel
M. Magtira (Dr. Magtira), who advised him to undergo another MRI. On
August 21, 2015, Dr. Magtira found him suffering from upper and lower
back injuries and assessed him as permanently and totally disabled to
work at his previous occupation,
 Respondent] continues to experience back pain. His back is stiff, making
it difficult for him to bend and pick up objects from the floor. He could
not lift heavy objects. Sitting or standing for a long time, makes his
discomfort worse. He has difficulty running and climbing up or going
down the stairs. The demands of a Seaman's work are heavy.
[Respondent] has lost his pre injury capacity and is not capable of
working at his previous occupation. He is now permanent[ly]
disable[d].19chanRoblesvirtualLawlibrary
 On August 28, 2015, respondent informed UPLI of the findings of his
doctor of choice and requested that his case be referred to a third doctor.
UPLI ignored respondent's request. Thus, respondent filed a complaint
for payment of total and permanent disability benefits with the NCMB-
PVA.
 In its Position Paper,21 UPLI contended that only those with Grade
disability assessment are entitled to full disability compensation. It
invoked that because the company-designated physician declared
respondent as partially and permanently disabled with Grade 8
impediment, he was not entitled to permanent total disability benefits
under the Philippine Overseas Employment Administration (POEA)-
Standard Employment Contract (SEC).22
  Moreover, UPLI argued that the company-designated physician's medical
evaluation enjoys the presumption of validity and regularity absent any
showing that it was fraudulently given; that because respondent failed to
adduce evidence of bias, malice, or bad faith on the part of the company-
designated physician, the latter's medical assessment that respondent
was partially and permanently disabled should prevail
 Lastly, UPLI contended that respondent was not entitled to damages and
attorney's fees as it dealt with respondent in good faith; and that his
claims were without merit.24

Ruling of the NCMB-PVA

In the Decision dated August 8, 2016, the PVA found respondent entitled to
permanent total disability benefits under the HAL AMOSUP CBA. It held UPLI,
Holland, and JOSE GERONIMO CONSUNJI, jointly and severally liable.

Ruling of the CA

However, while the CA agreed with the PVA that respondent was entitled to
permanent total disability benefits, it held that there is no legal basis to hold
Consunji solidarity liable to respondent as it did not act in bad faith in denying
respondent's claim for total and permanent disability benefits.29

The parties filed their respective motions for reconsideration but were denied in
the Resolution30 dated March 7, 2019.

Hence, this petition.

Ruling:

Consunji, the owner and president of UPLI, is solidarily liable with UPLI in the
amount of US$20,154.00

Section 10 of Republic Act No. (RA) 8042, otherwise known as the "Migrant
Workers and Overseas Filipinos Act of 1995," as amended by Section 7 of RA
10022 reads:

SEC. 10. Money Claims. - Notwithstanding any provision of law to the contrary,
the Labor Arbiters of the National Labor Relations Commission (NLRC) shall
have the original and exclusive jurisdiction to hear and decide, within ninety
(90) calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damage. x x x
The liability of the principal/employer and the recruitment/placement agency
for any and all claims under this section shall be joint and several. This
provision shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond to [be]
filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the corporate
officers and directors and partners as the case may be shall themselves be
jointly and solidarily liable with the corporation or partnership for the aforesaid
claims and damages. (Italics supplied.)

Section 10 of RA 8042, as amended, expressly provides for joint and solidary

liability of corporate directors and officers with the recruitment/placement
agency for all money claims or damages that may be awarded to Overseas
Filipino Workers. While a corporate director, trustee, or officer who entered into
contracts in behalf of the corporation generally cannot be held personally liable
for the liabilities of the latter, in deference to the separate and distinct legal
personality of a corporation. their personal liability may validly attach when
they are specifically made by a particular provision of law, as in this case.
Thus, in the recent case of Sealanes Marine Services Inc., et al. v. Dela Torre,
the Court had sustained the joint and solidary liability of the manning, agency,
its foreign principal and the manning agency's President in accordance with
Section 10 of RA 8042, as amended.59 Indubitably, Consunji, as the owner
and President of UPLI, is solidarily liable with the latter in the amount of
US$20,154.00 representing respondent's partial and permanent disability
benefits.

28. Solidbank Corp. vs Mindanao Ferroalloy, GR 153535, July 28,

2005*

FACTS:

 Mindanao Ferroalloy corporation is the fruit of a joint venture

agreement between a Filipino corporation and Korean Corporation.
 In its operations, its liabilities ballooned over its assets that it had
to secure loans from petitioner Solidbank.
 The loans were later consolidated and restructured, evidenced by a
promissory note.
 The promissory note was signed by Cu and Hong, both officers of the
corporation.
 The corporation, through the same officers also executed a deed of
assignment.
  Thereafter, the corporation stopped its operations and the loan was
left unpaid.
 The bank was prompted to file a complaint against the corporation,
and with it, impleading the officers who signed the agreement and
promissory notes.
 The trial court held in favor of the bank but didn't adjudge liability of the
officers. Both the trial court and CA held that there was no solidary
liability on the part of the officers impleaded by the bank.

HELD:

Though Hong and Cu signed above the “maker/borrower” and the printed
name of the corporation, without the word “by” preceding their signatures, the
fact that they signed in their personal capacities is negated by the facts that
name and address of the corporation also appeared on the space
provided for in the “maker/borrower” and their signatures only appeared
once when it should be twice if indeed it was in their personal capacities.
Further, they didn't sign on the portion allocated for the co-maker, and
there was also indicia of it being signed as authorized representatives.

Corporation Law; Corporate officers cannot be held personally liable for the
consequences of their acts, for as long as these are for and on behalf of the
corporation, within the scope of their authority and in good faith.—Basic is the
principle that a corporation is vested by law with a personality separate and
distinct from that of each person composing or representing it. Equally
fundamental is the general rule that corporate officers cannot be held
personally liable for the consequences of their acts, for as long as these are for
and on behalf of the corporation, within the scope of their authority and in
good faith. The separate corporate personality is a shield against the personal
liability of corporate officers, whose acts are properly attributed to the
corporation.
Same; Piercing the Veil of Corporate Fiction; To disregard the separate juridical
personality of a corporation, the wrongdoing must be clearly and convincingly
established; it cannot be presumed.— Under certain circumstances, courts
may treat a corporation as a mere aggroupment of persons, to whom liability
will directly attach. The distinct and separate corporate personality may be
disregarded, inter alia, when the corporate identity is used to defeat public
convenience, justify a wrong, protect a fraud, or defend a crime. Likewise, the
corporate veil may be pierced when the corporation acts as a mere alter ego or
business conduit of a person, or when it is so organized and controlled and its
affairs so conducted as to make it merely an instrumentality, agency, conduit
or adjunct of another corporation. But to disregard the separate juridical
personality of a corporation, the wrongdoing must be clearly and convincingly
established; it cannot be presumed.
Civil Law; Obligations and Contracts; It is axiomatic that solidary liability
cannot be lightly inferred.—It is axiomatic that solidary liability cannot be
lightly inferred. Under Article 1207 of the Civil Code, “there is a solidary
liability only when the obligation expressly so states, or when the law or the
nature of the obligation requires solidarity.” Since solidary liability is not
clearly expressed in the Promissory Note and is not required by law or the
nature of the obligation in this case, no conclusion of solidary liability can be
made