Good Earth Emporium Inc and Lim Ka Ping, petitionersv.CA and Roces-Reyes Realty Inc., respondentsThis is a petition for review on certiorari of the decision CA reversing the decision of respondent Judge RTC of Manila, whichreversed the resolution of the Metropolitan Trial Court Of Manila denying hereinGEE’smotion to quash the alias writ of execution issued against them.Facts:A lease contract was entered into between ROCES and GEE. A five-storey building was the subject of which, upon failure of the latter to pay its rentals, ROCES filed an ejectment case against the petitioner. The MTC of Mla rendered a decisionordering GEE and all persons under him to vacate the premises and surrender the same to ROCES and pay the plaintiffs therental.GEE filed a motion to quash the writ of execution but the same was denied by the MTC for lack of merit. In 1987 the RTC of Manila reversed the decision of the MTC finding that the amount of P1 million evidenced by Exhibit "I" and another P1million evidenced by the pacto de retro sale instrument were in full satisfaction of the judgment obligation.On further appeal, the CA reversed the decision of the RTC and reinstated the Resolution of the MTC of Manila. GEE’s m/rwas denied, hence this petition.Issue:Whether or not there was full satisfaction of the judgment debt in favor of respondent corporation which would justify thequashing of the Writ of ExecutionRuling:The fact that at the time payment was made to the two Roces brothers, GEE was also indebted to respondent corporationfor a larger amount, is not supportive of the Regional Trial Court's conclusions that the payment was in favor of the latter,especially where the amount was not receipted for by respondent corporation and there is absolutely no indication in thereceipt from which it can be reasonably inferred, that said payment was in satisfaction of the judgment debt. Likewise, nosuch inference

can be made from the execution of the pacto de retro sale which was not made in favor of respondentcorporation but in favor of the two Roces brothers in their individual capacities without any reference to the judgmentobligation in favor of respondent corporation.Respondent court was correct in stating that it "cannot go beyond what appears in the documents submitted by petitionersthemselves in the absence of clear and convincing evidence" that would support its claim that the judgment obligation hasindeed been fully satisfied which would warrant the quashal of the Alias Writ of Execution.It has been an established rule that when the existence of a debt is fully established by the evidence (which has been donein this case), the burden of proving that it has been extinguished by payment devolves upon the debtor who offers such adefense to the claim of the plaintiff creditor.

Santos vs. NLRC Case DigestSantos vs. National Labor Relations Commission[GR 101699, 13 March 1996] 

Facts: Melvin D. Millena, on 1 October 1985, was hired to be the project accountant for Mana Mining and Development Corporation's (MMDC) mining operations in Gatbo, Bacon, Sorsogon. On 12 August 1986, Millena sent to Mr. Gil Abaño, the MMDC corporate treasurer, a memorandum calling the latter's attention to the failure of the company to comply with the withholding tax requirements of, and to make the corresponding monthly remittances to, the Bureau of Internal Revenue (BIR) on account of delayed payments of accrued salaries to the company's laborers and employees. In a letter, dated 8 September 1986, Abaño advised Millena that it was the board's decision that it stop porduction (operation) in Sorsogon due to the upcoming rainy seasons and the deterioration of the peace and order in the said area; that the corporation will undertake only necessary maintenance and repair work and will keep overhead down to the minimum manageable level; and that the corporation will not need a project accountant until the corporaton resumes full-scale operations. Millena expressed "shock" over the termination of his employment. 

He complained that he would not have resigned from the Sycip, Gores & Velayo accounting firm, where he was already a senior staff auditor, had it not been for the assurance of a "continuous job" by MMDC's Eng.

Rodillano E. Velasquez. Millena requested that he be reimbursed the "advances" he had made for the company and be paid his "accrued salaries/claims." The claim was not heeded. On October 1986, Millena filed with the NLRC Regional Arbitration, Branch No. V, in Legazpi City, a complaint for illegal dismissal, unpaid salaries, 13th month pay, overtime pay, separation pay and incentive leave pay against MMDC and its two top officials, namely, Benjamin A Santos (the President) and Rodillano A. Velasquez (the executive vice-president). In his complaint-affidavit (position paper), submitted on 27 October 1986, Millena alleged, among other things, that his dismissal was merely an offshoot of his letter of 12 August 1986 to Abaño about the company's inability to pay its workers and to remit withholding taxes to the BIR. On 27 July 1988, Labor Arbiter Fructouso T. Aurellano, finding no valid cause for terminating complaint's employment, ruledthat a partial closure of an establishment due to losses was a retrenchment measure that rendered the employer liable for unpaid salaries and other monetary claims. 

The Labor Arbiter ordered Santos, et. al. to pay Millena the amount of P37,132.25 corresponding to the latter's unpaid salaries and advances: P5,400.00 for petitioner's 13th month pay; P3,340.95 as service incentive leave pay; and P5, 400.00 as separation pay. Santos, et. al. were further ordered to pay Millena 10% of the monetary awards as attorney's fees. Alleging abuse of discretion by the Labor Arbiter, the company and its co-respondents filed a "motion for reconsideration and /or appeal." 8 The motion/appeal was forthwith indorsed to the Executive Director of the NLRC in Manila. In a resolution, dated 04 September 1989, the NLRC affirmed the decision of the Labor Arbiter. A writ of execution correspondingly issued; however, it was returned unsatisfied for the failure of the sheriff to locate the offices of the corporation in the addressed indicated. Another writ of execution and an order of garnishment was thereupon served on Santos at his residence. Contending that he had been denied due process, Santos filed a motion for reconsideration of the NLRC's resolution along with a prayer for the quashal of the writ of execution and order of garnishment. He averred that he had never received any notice, summons or even a copy of the complaint; hence, he said, the Labor Arbiter at no time had acquired jurisdiction over him. On 16 August 1991, the NLRC dismissed the motion for reconsideration. Santos filed the petition for certiorari. 

Issue: Whether Santos should be made solidarily liable with MMDC. 

Held: A corporation is a judicial entity with legal personality separated and distinct from those acting for and in its behalf and, in general, from the people comprising it. The rule is that obligations incurred by the corporation, acting through its directors, officers and employees, are its sole liabilities. Nevertheless, being a mere fiction of law, peculiar situations or valid grounds can exist to warrant, albeit done sparingly, the disregard of its independent being and the lifting of the corporate veil. As a rule, this situation might arise a corporation is used to evade a just and due obligation or to justify a wrong, to shield or perpetrate fraud, to carry out similar other unjustifiable aims or intentions, or as a subterfuge to commit injustice and so circumvent the law. Without necessarily piercing the veil of corporate fiction, personal civil liability can also be said to lawfully attach to a corporate director, trustee or officer; to wit: When (1) He assents (a) to a patently unlawful act of the corporation, or (b) for bad faith or gross negligence in directing its affairs, or (b) for conflict of interest, resulting in damages to the corporation, its stockholders or other persons; (2) He consents to the issuance of watered stocks or who, having knowledge thereof, does not forthwith file with the corporate secretary his written objection thereto; (3) He agrees to hold himself personally and solidarily liable with the corporation; or (4) He is made, by a specific provision of law, to personally answer for his corporate action. The case of Santos is way of these exceptional instances. It is not even shown that Santos has had a direct hand in the dismissal of Millena enough to attribute to Santos a patently unlawful act while acting for the corporation. Neither can Article 289 of the Labor Code be applied since this specifically refers only to the imposition of penalties under the Code. It is undisputed that the termination of Millena's employment has, instead, been due, collectively, to the need for a further mitigation of losses, the onset of the rainy season, the insurgency problem, in Sorsogon and the lack of funds to further support the mining operation in Gatbo. It is basic that a corporation is invested by law with a personally 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. Mere ownership by a single stockholder or by another corporation of all nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personally. Similar to the case of Sunio vs. National Labor Relations Commission, Santos should not have been made personally answerable for the payment of Millena's back salaries. 

MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M GREENFIELD VS RAMOS326 SCRA428 [2000]FACTS:Petitioner Malayang Samahan ng mga Manggagawa sa M. Greenfield (MSMG) is a localunion. Private respondent M. Greenfield is the employer of petitioner's members. Membersof petitioner conducted a strike, which was marred by violence. Private respondentattempted to quell the same by hiring persons for that purpose. Thereafter, petitioners wereplaced under preventive suspension; only some of them were eventually allowed to return towork. Petitioners thus filed a verified complaint with the Arbitration Branch of the DOLE,charging private respondent of ULP, in the form of union-busting, illegal dismissal, illegalsuspension, interference in union activities, discrimination, threats, intimidation, coercion,violence, and oppression. Private respondent's defense was that the strike was illegal for itwas marred by violence. ISSUE:WON the strike should be declared illegal on account of violence committed during thestrike.HELD:No, where both parties are responsible for the violence committed during the strike, thestrike cannot be declared illegal since the strike cannot be attributed to the striking employeesonly. This is an exception to the general rule that the strike shall be declared illegal where it ismarred by violence on the part of the employees.In the case at bar, the allegation of violence committed in the course of the strike, it must beremembered that the Labor Arbiter and the Commission found that "the parties are agreedthat there were violent incidents . . . resulting to injuries to both sides, the union andmanagement.The evidence on record show that the violence cannot be attributed to thestriking employees alone for the company itself employed hired men to pacify the strikers.With violence committed on both sides, the management and

the employees, such violencecannot be a ground for declaring the strike as illegal. Powton Conglomerate Inc. and Philip C. Chien vs. Johnny AgcolicolGR 1509783 April 2003

Facts:Sometime in November 1990, Johnny Agcolicol, proprietor of JapersonEngineering, entered into an "Electrical Installation Contract" with PowtonConglomerate, Inc. (Powton), thru its President and Chairman of the Board, Philip C.Chien. For a contract price of P5,300,000.00, Agcolicol undertook to provide electricalworks as well as the necessary labor and materials for the installation of electricalfacilities at the Ciano Plaza Building owned by Powton, located along M. Reyes Street,corner G. Mascardo Street, Bangkal, Makati, Metro Manila. In August 1992, the CityEngineer's Office of Makati inspected the electrical installations at the Ciano PlazaBuilding and certified that the same were in good condition. Hence, it issued thecorresponding certificate of electrical inspection. On 16 December 1994, Agcolicol filedwith the Regional Trial Court of Pasay City, Branch 115, the complaint for sum of moneyagainst Powton and Chien. He alleged that despite the completion of the electricalworks at Ciano Plaza Building, the latter only paid the amount of P5,031,860.40, whichis equivalent to more than 95% of the total contract price, thereby leaving a balance ofP268,139.80. Agcolicol likewise claimed the amount of P722,730.38 as additionalelectrical works which were necessitated by the alleged revisions in the structuraldesign of the building. In their answer, petitioners contended that they cannot be obligedto pay the balance of the contract price because the electrical installations weredefective and were completed beyond the agreed period. During the trial, Chien testifiedthat they should not be held liable for the additional electrical works allegedly performedby Powton because they never authorized the same.Issue: Whether Chien, as president, can be made solidarily liable with Powton.Decision:The settled rule is that, a corporation is invested by law with a personalityseparate and distinct from those of the persons composing it, such that, save for certainexceptions, corporate officers who entered into contracts in behalf of the corporationcannot be held personally liable for the liabilities of the latter. Personal liability of acorporate director, trustee or officer along (although not necessarily) with thecorporation may so validly attach, as a rule, only when— (1) he assents to a patentlyunlawful act of the corporation, or when he is guilty of bad faith or gross negligence indirecting its affairs, or when there is a conflict of interest resulting in damages to thecorporation, its stockholders or other persons; (2) he

consents to the issuance ofwatered down stocks or who, having knowledge thereof, does not forthwith file with thecorporate secretary his written objection thereto; (3) he agrees to hold himselfpersonally and solidarily liable with the corporation; or (4) he is made by a specificprovision of law personally answerable for his corporate action. Considering that noneof the foregoing exceptions was established in the present case, Chien, who enteredinto a contract with Agcolicol in his capacity as President and Chairman of the Board ofPowton, cannot be held solidarily liable with the latter.

CASE DIGEST ON PADILLA V. CA [129 S 558 (1990)] - Where in the complaint for Grave Coercion against the mayor and policemen, they were acquitted on the ground that their guilt has not been proven beyond reasonable doubt, such acquittal will not bar a civil case for damages arising from the demolition of petition¬er's market stalls. The acquittal on the ground that their guilt has not been proven beyond reasona¬ble doubt refers to the element of Grave Coercion and not to the fact of that the stalls were not demolished. Under the Rules of Court, the extinction of penal action carries with it the extinction of civil only if there is a declaration that facts from which civil may arise did not exist. Also, Art. 29 of the Civil Code does not state that civil liability can be recovered only in a separate civil action. The civil liability can be recovered either in the same or a separate action. The purpose of recovering in the same action is to dispense with the filing of another civil action where the same evidence is to be presented, and the unsettling implications of permitting reinsti¬tuttion of a separate civil action. However, a separate civil action is warranted when (1) addition¬al facts are to be established; (2) there is more evidence to be adduced; (3) there is full termina¬tion of the criminal case and a separate complaint would be more efficacious than a remand. Hence, CA did not err in awarding damages despite the acquittal.MANILA GAS CORPORATION V CA(ONGSIP)MAKASIAR; October 30, 1980NATUREPetition for certiorari to review the decision of the CA(treated as a special civil action)FACTS- On May 20, 1964, respondent Ongsip applied for gass e r v i c e   c o n n e c t i o n   w i t h   p e t i t i o n e r   M a n i l a  G a s Corporation.- A burner gas was installed by petitioner's employeesin respondent's kitchen at his residence.-  On July  27,  1965,   respondent  Ongsip  requestedpetitioner to install additional appliances as well

asadditional gas service connections in his 46-door ReynoApartment: petitioner installed two 20-gallon capacitywater storage heaters and two heavy-duty gas burnersand replaced the original gas meter with a bigger 50-light capacity gas meter.- The installations and connections were all done solelyby petitioner's employees.- There was no significant change in the meter readingdespite additional installations, and on May and June1966, no gas consumption was registered in the meter,prompt ing  pet i t ioner   to   issue a  'meter  order '  wi th instructions to change the gas meter in respondent'sresidence.- On August 17, 1966, petitioner's employees went toOngsip's place.- Without notifying or informing respondent Ongsip,they changed the gas meter and installed new tubeconnections. Private respondent was then taking a nap,but he was informed afterwards of what had takenplace by his houseboy.-  On  that  same af ternoon,  pet i t ioner 's  employeesreturned with a photographer who took pictures of thepremises. Ongsip inquired from Coronel why they weretaking pictures but the latter simply gave him a callingcard with instructions to go to his office. There, he wasinformed about the existence of a by-pass valve or"jumper" in the gas connection and that unless he gaveP3,000.00, he would be deported.- Respondent Ongsip refused to give the money- By the end of August, a reading was made on the newmeter and expectedly, it registered a sudden increasein gas consumption.-Thereafter, in October, 1966, a complaint forqualified theft was filed by petitioner againstrespondent Ongsip- On February, 1967,pending investigation of thecriminal complaint, petitioner disconnectedrespondent's  gas service for alleged failureand/or refusal to pay his gas consumptions from July, 1965 to January, 1967.- Subsequently,the complaint was dismissed- On July 14, 1967,following the dismissal by theinvestigating fiscal of the complaint for qualifiedtheft and the disconnection by petitioner of hisgas service, respondent Ongsip filed a complaintfor  mora l  and  exemplary  damages  aga instpetitioner Manila Gas Corporation based on

twoc a u s e s   o f   a c t i o n ,   f i r s t l y :   t h e  m a l i c i o u s , oppressive and malevolent filing of the criminalcomplaint; and, secondly: the illegal closure of respondent Ongsip's gas service connectionwi thout   cour t  o rder  and  w i thout  noti ce  o f  warning.- Petitioner filed a motion to dismiss, but it was denied- On May 2, 1972, the trial court rendered its decisionordering defendant to pay plaintiff:(1) P50,000.00 asmoral damages in the FIRST CAUSE OF ACTION; (2)P10,000.00 as exemplary damages in the FIRST CAUSEOF ACTION; (3) P30,000.00 as moral damages in theS E C O N D   C A U S E   O F   A C T I O N ;   ( 4 )   P 5 , 0 0 0 . 0 0  a s exemplary damages in the SECOND CAUSE OF ACTION;(5) P10,000.00 as attorney's fees; and (6) the costs of the suit.- Petitioner appealed to the Court of Appeals- CA affirmed the lower court’s decision in toto, hence,this petitionISSUEWON the amount of moral and exemplary damagesawarded by the trial court and affirmed by the Court of appeals is excessiveHELD YES- Ar t ic le  2217 of   the Civ i l Code states  that   "moraldamages include physical suffering, mental anguish,f r ight ,  ser ious anxiety,  besmirched reputat ion,wounded feelings, moral shock, social humiliation, ands i m i l a r   i n j u r y .   T h o u g h   i n c a p a b l e   o f  p e c u n i a r y computation, moral damages may be recovered if theyare the proximate result of the defendant's wrongfulact or  omiss ion."  On  the other hand, Ar t ic le  2229provides that "exemplary or corrective damages areimposed, by way of example or correction for the publicgood,in addition, to the moral, temperate, liquidated or compensatory damages."- The first cause of action, for which respondent Ongsipwas awarded moral and exemplary damages in theamount of P50,000.00 and P10,000.00, respectively, ispredicated on Art ic le  2219 of   the Civ i l Code whichstates that "moral damages may be recovered in thefo l lowing and analogous cases:   . .   .   (8)  mal ic iousprosecution; .. .- To constitute malicious prosecution, there must beproof that the prosecution was prompted by a sinisterdesign to  vex and humi l ia te a  person that i t  wasinitiated

deliberately by the defendant knowing that hischarges were false and groundless.- Concededly, the mere act of submitting a case to theauthorities for prosecution does not make one liable formalicious prosecution.-   In   the instant case, however, there is   reason tobelieve that there was malicious intent in the filing of the complaint for qualified theft.- As correctly observed by the trial court in its decision—A significant fact brought about by the testimony of Coronel  h imsel f   is   the  tota l  absence of  immediateaccusation against Plaintiff right at the very momentwhen the by-pass valve was allegedly discovered. Rightthen and there Coronel should have told Plaintiff thathe was using a by-pass valve and in effect stealing gasfrom Defendant. The circumstance was familiar to thatof catching a thief inflagrante delicto. But the truth isthat  when Coronel  and h is  men entered Pla int i f f 'scompound and made changes therein, Plaintiff wassleeping. When Plaintiff woke up at four o'clock in theafternoon, Coronel and his men had already made thechanges and had already gone. They returned howeverat five o'clock, this time with a photographer. This wasthe time when Plaintiff met Coronel. Here was then theopportunity for Coronel to confront Plaintiff with theallegedly discovered 'by-pass valve' and bluntly, evenbrutally, tell him that there was thievery of gas. This,Coronel did not do. .. .. ."- It bears noting that when he was informed as to thee x i s t e n c e   o f   a   ' j u m p e r '   i n   h i s   g a s  c o n n e c t i o n , respondent Ongsip did not show any sign of fear orremorse and did not yield to the threatening demand of Coronel—this is the attitude of someone who knowshow to take a firm stand where his principles and rightsare concerned. To prove his innocence, he was evenwilling to have his place excavated but petitioner wouldnot  dare  take  the consequences.  Besides,  Del f inCustodio,  pet i t ioner 's  own mechanical  engineer, testified that the second gas meter was replaced as

 torts & damagesA2010 - 135 -  prof. casisbeing defective because "some of its parts were wornout and that it was not properly registering."- Evidently, petitioner Manila Gas Corporation, in failingto recover its lost revenue caused by the gas meter'sincorrect recording, sought to vindicate its financial lossby  f i l ing   the complaint   for  qual i f ied   thef t  against respondent  Ongsip knowing   i t   to be  fa lse. I t  wasa c t u a l l y   i n t e n d e d   t o   v e x   a n d   h u m i l i a t e  p r i v a t e respondent and to blacken his reputation not only as abusinessman but also as a person. Qualified theft is aser ious of fense  indicat ing  moral  depravi ty   in  anindividual. To be accused of such crime without basis isshocking and libelous. It stigmatized private respondentc a u s i n g   h i m   e m o t i o n a l   d e p r e s s i o n   a n d  s o c i a l degradation. The fact that the complaint for qualifiedthef t was d ismissed by the Pasay Ci ty   f iscal is  noconsolation. The damage had been done. Necessarily,indemnification had to be made.-  The Court  g ives due considerat ion   to  respondentOngsip's social and financial status as a businessmanand the mental anguish he suffered as a result of thefa lse  imputat ion.  However,  pet i t ioner 's   f inancia lcapabi l i ty  must  a lso be considered.  Pet i t ioner   is  apublic utility corporation whose primary concern isservice to the people, the profit motive being merelysecondary. Under the circumstances, the award of moral and exemplary damages should be reduced toP25,000.00 and P5,000.00, respectively.- Petitioner's act in disconnecting respondent Ongsip'sgas service without prior notice constitutes breach of contract  amount ing  to  an  independent   tor t .  Theprematurity of the action is indicative of an intent tocause additional mental and moral suffering to privaterespondent. This is a clear violation of Article 21 of theCivil Code.- The award of moral damages is sanctioned by Article2220 which provides that "willful injury to property maybe a legal ground for awarding moral damages if thecourt should find that, under the circumstances, suchdamages are justly due.

The same rule applies tobreaches of contract where the defendant actedfraudulently or in bad faith"- Respondent Ongsip's default in payment cannot beutilized by petitioner to defeat or nullify the claim fordamages. At most, this circumstance can be consideredas a mitigating factor in ascertaining the amount of damages to which respondent Ongsip is entitled. Inconsequence thereof, We reduce the amount of moraldamages to P15,000.00 The award of P5,000.00 asexemplary damages, on the other hand, is sustained,being similarly warranted by Article 2234 of the CivilCode as complemented by Article 2220.DispositionDecision of CA modified as regards theamount of damages

Traders Royal bank vs. CaFilriters Guaranty Assurance Corporation (FGAC) is the owner of several Central Bank Certificates of Indebtedness (CBCI). These certificates are actually proof that FGAC has the required reserve investment with the Central Bank to operate as an insurer and to protect third persons from whatever liabilities FGAC may incur. In 1979, FGAC agreed to assign said CBCI to Philippine Underwriters Finance Corporation (PUFC). Later, PUFC sold said CBCI to Traders Royal Bank (TRB). Said sale with TRB comes with a right to repurchase on a date certain. However, when the day to repurchase arrived, PUFC failed to repurchase said CBCI hence TRB requested the Central Bank to have said CBCI be registered in TRB’s name. Central Bank refused as it alleged that the CBCI are not negotiable; that as such, the transfer from FGAC to PUFC is not valid; that since it was invalid, PUFC acquired no valid title over the CBCI; that the subsequent transfer from PUFC to TRB is likewise invalid.TRB then filed a petition for mandamus to compel the Central Bank to register said CBCI in TRB’s name. TRB averred that PUFC is the alter ego of FGAC; that PUFC owns 90% of FGAC; that the two corporations have identical sets of directors; that payment of said CBCI to PUFC is like a payment to FGAC hence the sale between PUFC and TRB is valid. In short, TRB avers that that the veil of corporate fiction, between PUFC and FGAC, should be pierced because the two corporations allegedly used their separate identity to defraud TRD into buying said CBCI.ISSUE: Whether or not Traders Royal Bank is correct.HELD: No. Traders Royal Bank failed to show that the corporate fiction is used by the two corporations to defeat public convenience, justify wrong,

protect fraud or defend crime or where a corporation is a mere alter ego or business conduit of a person. TRB merely showed that PUFC owns 90% of FGAC and that their directors are the same. The identity of PUFC can’t be maintained as that of FGAC because of this mere fact; there is nothing else which could lead the court under the circumstance to disregard their corporate personalities. Further, TRB can’t argue that it was defrauded into buying those certificates. In the first place, TRB as a banking institution is not ignorant about these types of transactions. It should know for a fact that a certificate of indebtedness is not negotiable because the payee therein is inscribed specifically and that the Central Bank is obliged to pay the named payee only and no one else.

Umali vs. CaMauricia Castillo was the administratrix in charge over a parcel of land left be Felipe Castillo. Said land was mortgaged to the Development Bank of the Philippines and was about to be foreclosed but then Mauricia’s nephew, Santiago Rivera, proposed that they convert the land into 4 subdivisions so that they can raise the necessary money to avoid foreclosure. Mauricia agreed. Rivera sought to develop said land through his company, Slobec Realty Corporation (SRC), of which he was also the president. SRC then contracted with Bormaheco, Inc. for the purchase of one tractor. Bormaheco agreed to sell the tractor on an installment basis. At the same time, SRC mortgaged said tractor to Bormaheco as security just in case SRC will default. As additional security, Mauricia and other family members executed a surety agreement whereby in case of default in paying said tractor, the Insurance Corporation of the Philippines (ICP) shall pay the balance. The surety bond agreement between Mauricia and ICP was secured by Mauricia’s parcel of land (same land to be developed).SRC defaulted in paying said tractor. Bormaheco foreclosed the tractor but it wasn’t enough hence ICP paid the deficiency. ICP then foreclosed the property of Mauricia. ICP later sold said property to Philippine Machinery Parts Manufacturing Corporation (PMPMC). PMPMC then demanded Mauricia et al to vacate the premises of said property.While all this was going on, Mauricia died. Her successor-administratrix, Buenaflor Umali, questioned the foreclosure made by ICP. Umali alleged that all the transactions are void and simulated hence they were defrauded; that through Bormaheco’s machinations, Mauricia was fooled into entering into a surety agreement with ICP; that Bormaheco even made the premium payments to ICP for said surety bond; that the president of Bormaheco is a

director of PMPMC; that the counsel who assisted in all the transactions, Atty. Martin De Guzman, was the legal counsel of ICP, Bormaheco, and PMPMC.ISSUE: Whether or not the veil of corporate fiction should be pierced.HELD: No. There is no clear showing of fraud in this case. The mere fact that Bormaheco paid said premium payments to ICP does not constitute fraud per se. As it turned out, Bormaheco is an agent of ICP. SRC, through Rivera, agreed that part of the payment of the mortgage shall be paid for the insurance. Naturally, when Rivera was paying some portions of the mortgage to Bormaheco, Bormaheco is applying some parts thereof for the payment of the premium – and this was agreed upon beforehand.Further, piercing the veil of corporate fiction is not the proper remedy in order that the foreclosure conducted by ICP be declared a nullity. The nullity may be attacked directly without disregarding the separate identity of the corporations involved. Further still, Umali et al are not enforcing a claim against the individual members of the corporations. They are not claiming said members to be liable. Umali et al are merely questioning the validity of the foreclosure.The veil of corporate fiction can’t be pierced also by the simple reason that the businesses of two or more corporations are interrelated, absent sufficient showing that the corporate entity was purposely used as a shield to defraud creditors and third persons of their rights. In this case, there is no justification for disregarding their separate personalities.

INDOPHIL TEXTILE MILL WORKERS UNION-PTGWO, petitioner, vs.VOLUNTARY ARBITRATOR TEODORICO P. CALICA and INDOPHIL TEXTILE MILLS, INC., respondents.Romeo C. Lagman for petitioner.Borreta, Gutierrez & Leogardo for respondent Indophil Textile Mills, Inc. MEDIALDEA, J.:This is a petition for certiorari seeking the nullification of the award issued by the respondent Voluntary Arbitrator Teodorico P. Calica dated December 8, 1990 finding that Section 1 (c), Article I of the Collective Bargaining Agreement between Indophil Textile Mills, Inc. and Indophil Textile Mill Workers

Union-PTGWO does not extend to the employees of Indophil Acrylic Manufacturing Corporation as an extension or expansion of Indophil Textile Mills, Incorporated.The antecedent facts are as follows:Petitioner Indophil Textile Mill Workers Union-PTGWO is a legitimate labor organization duly registered with the Department of Labor and Employment and the exclusive bargaining agent of all the rank-and-file employees of Indophil Textile Mills, Incorporated. Respondent Teodorico P. Calica is impleaded in his official capacity as the Voluntary Arbitrator of the National Conciliation and Mediation Board of the Department of Labor and Employment, while private respondent Indophil Textile Mills, Inc. is a corporation engaged in the manufacture, sale and export of yarns of various counts and kinds and of materials of kindred character and has its plants at Barrio Lambakin. Marilao, Bulacan.In April, 1987, petitioner Indophil Textile Mill Workers Union-PTGWO and private respondent Indophil Textile Mills, Inc. executed a collective bargaining agreement effective from April 1, 1987 to March 31, 1990.On November 3, 1967 Indophil Acrylic Manufacturing Corporation was formed and registered with the Securities and Exchange Commission. Subsequently, Acrylic applied for registration with the Board of Investments for incentives under the 1987 Omnibus Investments Code. The application was approved on a preferred non-pioneer status.In 1988, Acrylic became operational and hired workers according to its own criteria and standards. Sometime in July, 1989, the workers of Acrylic unionized and a duly certified collective bargaining agreement was executed.In 1990 or a year after the workers of Acrylic have been unionized and a CBA executed, the petitioner union claimed that the plant facilities built and set up by Acrylic should be considered as an extension or expansion of the facilities of private respondent Company pursuant to Section 1(c), Article I of the CBA, to wit,.c) This Agreement shall apply to the Company's plant facilities and installations and to any extension and expansion thereat. (Rollo, p.4)

In other words, it is the petitioner's contention that Acrylic is part of the Indophil bargaining unit.The petitioner's contention was opposed by private respondent which submits that it is a juridical entity separate and distinct from Acrylic.The existing impasse led the petitioner and private respondent to enter into a submission agreement on September 6, 1990. The parties jointly requested the public respondent to act as voluntary arbitrator in the resolution of the pending labor dispute pertaining to the proper interpretation of the CBA provision.After the parties submitted their respective position papers and replies, the public respondent Voluntary Arbitrator rendered its award on December 8, 1990, the dispositive portion of which provides as follows:PREMISES CONSIDERED, it would be a strained interpretation and application of the questioned CBA provision if we would extend to the employees of Acrylic the coverage clause of Indophil Textile Mills CBA. Wherefore, an award is made to the effect that the proper interpretation and application of Sec. l, (c), Art. I, of the 1987 CBA do (sic) not extend to the employees of Acrylic as an extension or expansion of Indophil Textile Mills, Inc. (Rollo, p.21)Hence, this petition raising four (4) issues, to wit:1. WHETHER OR NOT THE RESPONDENT ARBITRATOR ERRED IN INTERPRETING SECTION 1(c), ART I OF THE CBA BETWEEN PETITIONER UNION AND RESPONDENT COMPANY.2. WHETHER OR NOT INDOPHIL ACRYLIC IS A SEPARATE AND DISTINCT ENTITY FROM RESPONDENT COMPANY FOR PURPOSES OF UNION REPRESENTATION.3. WHETHER OR NOT THE RESPONDENT ARBITRATOR GRAVELY ABUSED HIS DISCRETION AMOUNTING TO LACK OR IN EXCESS OF HIS JURISDICTION.4. WHETHER OR NOT THE RESPONDENT ARBITRATOR VIOLATED PETITIONER UNION'S CARDINAL PRIMARY RIGHT TO DUE PROCESS. (Rollo, pp. 6-7)The central issue submitted for arbitration is whether or not the operations in Indophil Acrylic Corporation are an extension or

expansion of private respondent Company. Corollary to the aforementioned issue is the question of whether or not the rank-and-file employees working at Indophil Acrylic should be recognized as part of, and/or within the scope of the bargaining unit.Petitioner maintains that public respondent Arbitrator gravely erred in interpreting Section l(c), Article I of the CBA in its literal meaning without taking cognizance of the facts adduced that the creation of the aforesaid Indophil Acrylic is but a devise of respondent Company to evade the application of the CBA between petitioner Union and respondent Company.Petitioner stresses that the articles of incorporation of the two corporations establish that the two entities are engaged in the same kind of business, which is the manufacture and sale of yarns of various counts and kinds and of other materials of kindred character or nature.Contrary to petitioner's assertion, the public respondent through the Solicitor General argues that the Indophil Acrylic Manufacturing Corporation is not an alter ego or an adjunct or business conduit of private respondent because it has a separate legitimate business purpose. In addition, the Solicitor General alleges that the primary purpose of private respondent is to engage in the business of manufacturing yarns of various counts and kinds and textiles. On the other hand, the primary purpose of Indophil Acrylic is to manufacture, buy, sell at wholesale basis, barter, import, export and otherwise deal in yarns of various counts and kinds. Hence, unlike private respondent, Indophil Acrylic cannot manufacture textiles while private respondent cannot buy or import yarns.Furthermore, petitioner emphasizes that the two corporations have practically the same incorporators, directors and officers. In fact, of the total stock subscription of Indophil Acrylic, P1,749,970.00 which represents seventy percent (70%) of the total subscription of P2,500,000.00 was subscribed to by respondent Company.On this point, private respondent cited the case of Diatagon Labor Federation v. Ople, G.R. No. L-44493-94, December 3, 1980, 10l SCRA 534, which ruled that two corporations cannot be treated as a single bargaining unit even if their businesses are

related. It submits that the fact that there are as many bargaining units as there are companies in a conglomeration of companies is a positive proof that a corporation is endowed with a legal personality distinctly its own, independent and separate from other corporations (see Rollo, pp. 160-161).Petitioner notes that the foregoing evidence sufficiently establish that Acrylic is but an extension or expansion of private respondent, to wit:(a) the two corporations have their physical plants, offices and facilities situated in the same compound, at Barrio Lambakin, Marilao, Bulacan;(b) many of private respondent's own machineries, such as dyeing machines, reeling, boiler, Kamitsus among others, were transferred to and are now installed and being used in the Acrylic plant;(c) the services of a number of units, departments or sections of private respondent are provided to Acrylic; and(d) the employees of private respondent are the same persons manning and servicing the units of Acrylic. (see Rollo, pp. 12-13)Private respondent insists that the existence of a bonafide business relationship between Acrylic and private respondent is not a proof of being a single corporate entity because the services which are supposedly provided by it to Acrylic are auxiliary services or activities which are not really essential in the actual production of Acrylic. It also pointed out that the essential services are discharged exclusively by Acrylic personnel under the control and supervision of Acrylic managers and supervisors.In sum, petitioner insists that the public respondent committed grave abuse of discretion amounting to lack or in excess of jurisdiction in erroneously interpreting the CBA provision and in failing to disregard the corporate entity of Acrylic.We find the petition devoid of merit.Time and again, We stress that the decisions of voluntary arbitrators are to be given the highest respect and a certain measure of finality, but this is not a hard and fast rule, it does not preclude judicial review thereof where want of jurisdiction, grave abuse of discretion, violation of due process, denial of substantial justice, or erroneous interpretation of the law were

brought to our attention. (see Ocampo, et al. v. National Labor Relations Commission, G.R. No. 81677, 25 July 1990, First Division Minute Resolution citing Oceanic Bic Division (FFW) v. Romero, G.R. No. L-43890, July 16, 1984, 130 SCRA 392)It should be emphasized that in rendering the subject arbitral award, the voluntary arbitrator Teodorico Calica, a professor of the U.P. Asian Labor Education Center, now the Institute for Industrial Relations, found that the existing law and jurisprudence on the matter, supported the private respondent's contentions. Contrary to petitioner's assertion, public respondent cited facts and the law upon which he based the award. Hence, public respondent did not abuse his discretion.Under the doctrine of piercing the veil of corporate entity, when valid grounds therefore exist, the legal fiction that a corporation is an entity with a juridical personality separate and distinct from its members or stockholders may be disregarded. In such cases, the corporation will be considered as a mere association of persons. The members or stockholders of the corporation will be considered as the corporation, that is liability will attach directly to the officers and stockholders. The doctrine applies when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime, or when it is made as a shield to confuse the legitimate issues, or where a corporation is the 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. (Umali et al. v. Court of Appeals, G.R. No. 89561, September 13, 1990, 189 SCRA 529, 542)In the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that the creation of the corporation is a devise to evade the application of the CBA between petitioner Union and private respondent Company. While we do not discount the possibility of the similarities of the businesses of private respondent and Acrylic, neither are we inclined to apply the doctrine invoked by petitioner in granting the relief sought. The fact that the businesses of private respondent and Acrylic are related, that some of the employees of the private respondent are the same persons manning and providing for auxilliary

services to the units of Acrylic, and that the physical plants, offices and facilities are situated in the same compound, it is our considered opinion that these facts are not sufficient to justify the piercing of the corporate veil of Acrylic.In the same case of Umali, et al. v. Court of Appeals (supra), We already emphasized that "the legal corporate entity is disregarded only if it is sought to hold the officers and stockholders directly liable for a corporate debt or obligation." In the instant case, petitioner does not seek to impose a claim against the members of the Acrylic.Furthermore, We already ruled in the case of Diatagon Labor Federation Local 110 of the ULGWP v. Ople (supra) that it is grave abuse of discretion to treat two companies as a single bargaining unit when these companies are indubitably distinct entities with separate juridical personalities.Hence, the Acrylic not being an extension or expansion of private respondent, the rank-and-file employees working at Acrylic should not be recognized as part of, and/or within the scope of the petitioner, as the bargaining representative of private respondent.All premises considered, the Court is convinced that the public respondent Voluntary Arbitrator did not commit grave abuse of discretion in its interpretation of Section l(c), Article I of the CBA that the Acrylic is not an extension or expansion of private respondent.ACCORDINGLY, the petition is DENIED and the award of the respondent Voluntary Arbitrator are hereby AFFIRMED.SO ORDERED.

Luxuria Homes vs. CAAida Posadas was the owner of a 1.6 hectare land in Sucat, Muntinlupa. In 1989, she entered into an agreement with Jaime Bravo for the latter to draft a development and architectural design for the said property. The contract price was P450,000.00. Posadas gave a down payment of P25,000.00. Later, Posadas assigned her property to Luxuria Homes, Inc. One of the witnesses to the deed of assignment and articles of incorporation was Jaime Bravo.In 1992, Bravo finished the architectural design so he proposed that he and his company manage the development of the property. But Posadas turned

down the proposal and thereafter the business relationship between the two went sour. Bravo then demanded Posadas to pay them the balance of their agreement as regards the architectural design (P425k). Bravo also demanded payment for some other expenses and fees he incurred i.e., negotiating and relocating the informal settlers then occupying the land of Posadas. Posadas refused to make payment. Bravo then filed a complaint for specific performance against Posadas but he included Luxuria Homes as a co-defendant as he alleged that Luxuria Homes was a mere conduit of Posadas; that the said corporation was created in order to defraud Bravo and avoid the payment of debt.ISSUE: Whether or not  Luxuria Homes should be impleaded.HELD: No. It was Posadas who entered into a contract with Bravo in her personal capacity. Bravo was not able to prove that Luxuria Homes was a mere conduit of Posadas. Posadas owns just 33% of Luxuria Homes. Further, when Luxuria Homes was created, Bravo was there as a witness. So how can he claim that the creation of said corporation was to defraud him. The eventual transfer of Posadas’ property to Luxuria was with the full knowledge of Bravo. The agreement between Posadas and Bravo was entered into even before Luxuria existed hence Luxuria was never a party thereto. Whatever liability Posadas incurred arising from said agreement must be borne by her solely and not in solidum with Luxuria. To disregard the separate juridical personality of a corporation, the wrongdoing must be clearly and convincingly established. It cannot be presumed.

PNB, NASUDECO vs. Andrada Electric and Engineering Company (2002)Doctrine:Basic is the rule that a corporation has a legal personality distinct andseparate from the persons and entities owning it. The corporate veil may be lifted only if it has been used to shield fraud, defend crime, justify a wrong, defeat publicconvenience, insulate bad faith or perpetuate injustice. Thus, the mere fact that thePhilippine National Bank (PNB) acquired ownership or management of some assets of the Pampanga Sugar Mill (PASUMIL), which had earlier been foreclosed and purchasedat the resulting public auction by the Development Bank of the Philippines (DBP), willnot make PNB liable for the PASUMIL’s contractual debts to respondent.Facts:1.PASUMIL (Pampanga Sugar Mills) engaged the services of Andrada Electric for electrical rewinding, repair, the construction of a power house building,installation of turbines, transformers, among others. Most of the services werepartially paid by PASUMIL, leaving several unpaid accounts.2.

On August 1975, PNB, a semi-government corporation, acquired the assets of PASUMIL—assets that were earlier foreclosed by the DBP.3.On September 1975, PNB organized NASUDECO (National Sugar DevelopmentCorporation), under LOI No. 311 to take ownership and possession of the assetsand ultimately, to nationalize and consolidate its interest in other PNB controlledsugar mills. NASUDECO is a semi-government corporation and the sugar arm of the PNB.4.Andrada Electric alleges that PNB and NASUDECO should be liable for PASUMIL’s unpaid obligation amounting to 500K php, damages, and attorney’sfees, having owned and possessed the assets of PASUMIL.Issue:Whether PNB and NASUDECO may be held liable for PASUMIL’s liability to AndradaElectric and Engineering Company.Held: NO.Basic is the rule that a corporation has a legal personality distinct and separate from thepersons and entities owning it. The corporate veil may be lifted only if it has been usedto shield fraud, defend crime, justify a wrong, defeat public convenience, insulate badfaith or perpetuate injustice.Thus, the mere fact that the Philippine National Bank (PNB) acquired ownership or management of some assets of the Pampanga Sugar Mill (PASUMIL), which had earlier been foreclosed and purchased at the resulting public auction by the Development Bankof the Philippines (DBP),will not make PNB liable for the PASUMIL's contractualdebtsto Andrada Electric & Engineering Company (AEEC).

Heirs of Ramon Durano, Sr. v. Uy [344 SCRA 238  (Oct.24, 2000)]Separate Juridical PersonalityAlter Ego:  Piercing the Veil of Corporate FictionFacts:  Ramon Durano III & wife instituted an action for damages against Uy, etc. accusing them of officiating a hate campaign against them by lodging complaints in the police for ‘invasion of property’; sending complaints to the Office of the President depicting them as oppressors, landgrabbers & usurpers; spreading false rumors & damaging tales w/c put them into public contempt & ridicule.In their answer, Uy, etc. lodged affirmative defenses, demanded the return of their property & made counterclaims for actual, moral & exemplary damages.  They claim that in the first week of August 1970, they received mimeographed notices signed by Durano, Sr. informing them that the land they were tilling, formerly owned by Cepco was purchased by Durano & Co, directing them to immediately turn over the property.  Even before they could vacate, Durano & Co. proceeded to bulldoze & destroy their property

& fire at air even.  September 15, 1970 Durano & Co. sold the property to Durano III who proceeded to register the lands in his name.  They claim that they were deprived of their independent source of income, were made victims of serious violence & demanded damages for cost of improvements on the land that were destroyed.The Duranos moved for the dismissal of their complaint w/c the trial court granted w/o prejudice to the right of Uy, etc. to maintain their counterclaim.  The counterclaim was later upheld.  This decision was affirmed by the CA.  Hence this petition.Issue:  WON Durano can invoke the doctrine of separate corporate personality to evade liability for damagesHeld:  Denied & CA decision modified. The Duranos hinge their claim on the TCTs issued in the name of Durano III.  Their validity was put into serious doubt by the ff: a) the certificates reveal the lack of registered title of Cepoc to the Properties; b) alleged reconstituted titles of Cepoc were not produced in evidence; c) deed of sale between Cepoc & Durano & Co. was unnotarized & thus unregisterableFraud in the issuance of a certificate of title may be raised only in an action expressly instituted for that purpose; and not collaterally as in an action for reconveyance & damages.  The rule on indefeasibility of title – Torrens titles can only be attacked for fraud w/in 1 year from the date of issuance of the decree of registration; an action for reconveyance may prosper if a property wrongfully registered has not passed to an innocent purchaser for value.  The purchase of Durano & Co. could not be said to have been in good faith since it is not disputed that Durano III acquired the property w/ full knowledge of Uy’s occupancy thereon.  Uy’s action for reconveyance will prosper, it being clear that the property, wrongfully registered in the name of Durano III, has not passed to an innocent purchaser for value.Notarization of the deed of sale is essential to its registrability, & the action of the RD in allowing the registration of the unacknowledged deed of sale was unauthorized & did not render validity to the registration of the document.A buyer who could not have failed to know or discover that the land sold to him was in the adverse possession of another is a buyer in bad faith.  A purchaser cannot just close his eyes to facts w/c should put a reasonable man upon his guard, such as when the subject of the sale is in the possession of persons other than the seller.  Uy & company were in open possession & occupancy of the properties when Durano & Co. supposedly purchased the same from Cepoc.In applying the instrumentality or alter ego doctrine, the courts are

concerned w/ reality & not form, w/ how the corp operated & the individual defendant’s relationship to that operation.Whether a corporation is a mere alter ego is purely one of fact.  Shortly after the sale by Cepco to Durano & Co., the latter sold the property to Durano III, who immediately procured the registration of the property in his name.  Obviously, Durano & Co.  was used by Durano III,etc. as an instrumentality to appropriate the disputed property for themselves.Test to enable piercing of the veil, except in express agency, estoppel or direct tort: a)Control, not mere majority or complete domination; b)Such control must have e=been used by the defendant to commit fraud or wrong, etc.; c)The aforesaid control & breach of duty must approximately cause the injury or unjust loss complained of.•    Sec.8 Rule 51 indicates that the CA is not limited to reviewing only those errors assigned by appellant but also those closely related to or dependent on an assigned error.  CA is imbued w/ sufficient discretion to review matters.•    Ordinary acquisitive prescription, in the case of immovable property, requires possession of the thing in good faith & w/ just title for a period of 10 years.•    Remedies of an owner on whose land somebody has built in bad faith: a) appropriate what has been built w/o any obligation to pay indemnity; b) demand that the builder remove what he had built; c) compel the builder to pay the value of the land.  In any case, landowner is entitled to damages (Art.451)

Gala vs Ellice Agro Industrial Corp.Doctrine: The legal right of a taxpayer to reduce the amount of what otherwise, could be his taxes or altogether to avoid them, by meanswhich the law permits, could be doubtedFacts: The spouses Manuel and Alicia Gala and their children Guia Domingo, Ofelia Gala, Raul Gala and Rita Benson, and their encargados(rough translation; representatives) VirgilioGaleon and Julian Jader, formed and organized Ellice Agro Industrial Corporation (Ellice). Aspayment for their subscriptions the Spouses Gala transferred several parcles of land to Ellice. Subsequently, the children and theencargados formed and organized another corporation, Margo Management and Development

Corporation (Margo). The father, ManuelGala, sold his shares in Ellice to Margo. Subsequently, Alicia transferred her shares to Margo.In 1990, a special stockholder’s meeting of Margo was held where a new board of directors was elected. Raul Gala was electedaschairman, president, and general manager. During the meeting, the board approved the commencement of proceeding to annul thedispositions of Margos’s property made by Alicia Gala. Similarity, a special stockholder’s meeting was held in Ellice. A newboard waselected and Raul Gala also became chairman, president and GM of Ellice, Raul Gala along with the respondents filed a case against thepetitiones in the SEC for accounting and restitution for alleged mismanagement of funds of Ellice.In turn the petitioners filed in the SEC a petition for the nullification of the election of directors of officers of both Margo and Ellice. Essentially,petitioners sought to disregard the separate juridical personalities of two corporations, namely, Ellice Agro-Industrial Corporation and MargoManagement and Development Corporation, for the purpose of treating all property purportedly owned by said corporations as properlysolely owned by the Gala Spouses. Among their arguments were: (1) said corporations were organized for purpose of exempting theproperty the property of the Gala Spouses from the coverage of land reform laws, and (2) the two corporations were meant to be used asmere tools for the avoidance of estate taxes.Issue: Whether the separate juridical personalities of Ellice and Margo could be disregard on the grounds that they were meant to be tools toavoid land reform laws and estate taxes.Held: NO, a perusal of the Articles of Incorporation of Ellice and Margo shows no sign of the allegedly illegal purposes that petitioners arecomplaining of. And even assuming that the petitioner’s allegations were true, the legality of the purposes for which the two corporationswere formed should be first threshed out in an administrative case before the Securities and Exchange Commission. (Doctrine of PrimaryJurisdiction).Moreover, on the contention that Ellice and Margo were meant to be tools for the avoidance of estate taxes, the court said that “…the legalright of a taxpayer to reduce the amount of what otherwise could be his taxes or altogether avoid them, by means which the law permits,cannot be doubted. (citing: Liddel& Co., Inc c. CIR)”

 Note: Simplified, this case is about a feud between family members who organized two corporation. Petitioners are Alicia Gala (mother),Guia Domingo (sister), and Rita Benson (Sister), Respondents are Raul Gala (brother), Ellice Inc., and Margo Inc. (the family corporations).

First Philippine International Bank vs. CAProducers Bank (now called First Philippine International Bank), which has been under conservatorship since 1984, is the owner of 6 parcels of land. The Bank had an agreement with Demetrio Demetria and Jose Janolo for the two to purchase the parcels of land for a purchase price of P5.5 million pesos. The said agreement was made by Demetria and Janolo with the Bank’s manager, Mercurio Rivera. Later however, the Bank, through its conservator, Leonida Encarnacion, sought the repudiation of the agreement as it alleged that Rivera was not authorized to enter into such an agreement, hence there was no valid contract of sale. Subsequently, Demetria and Janolo sued Producers Bank. The regional trial court ruled in favor of Demetria et al. The Bank filed an appeal with the Court of Appeals.Meanwhile, Henry Co, who holds 80% shares of stocks with the said Bank, filed a motion for intervention with the trial court. The trial court denied the motion since the trial has been concluded already and the case is now pending appeal. Subsequently, Co, assisted by ACCRA law office, filed a separate civil case against Demetria and Janolo seeking to have the purported contract of sale be declared unenforceable against the Bank. Demetria et al argued that the second case constitutes forum shopping.ISSUES:1. Whether or not there is forum shopping.2. Whether or not there is a perfected contract of sale.HELD:

1. Yes. There is forum shopping because there is identity of interest and parties between the first case and

the second case. There is identity of interest because both cases sought to have the agreement, which

involves the same property, be declared unenforceable as against the Bank. There is identity of parties

even though the first case is in the name of the bank as defendant, and the second case is in the name of

Henry Co as plaintiff. There is still forum shopping here because Henry Co essentially represents the

bank. Both cases aim to have the bank escape liability from the agreement it entered into with Demetria

et al. The Supreme Court did not lay down any disciplinary action against the ACCRA lawyers but they

were warned that a repetition will be dealt with more severely.

2. Yes. There is a perfected contract of sale because the bank manager, Rivera, entered into the agreement

with apparent authority. This apparent authority has been duly proved by the evidence presented which

showed that in all the dealings and transactions, Rivera participated actively without the opposition of the

conservator. In fact, in the advertisements and announcements of the bank, Rivera was designated as

the go-to guy in relation to the disposition of the Bank’s assets.

Tan Boon Bee vs. JarencioIn 1972, Anchor Supply Co. (ASC), through Tan Boon Bee, entered into a contract of sale with Graphic Publishing Inc. (GPI) whereby ASC shall deliver paper products to GPI. GPI paid a down payment but defaulted in paying the rest despite demand from ASC. ASC sued GPI and ASC won. To satisfy the indebtedness, the trial court, presided by Judge Hilarion Jarencio, ordered that one of the printing machines of GPI be auctioned. But before the auction can be had, Philippine American Drug Company

(PADCO) notified the sheriff that PADCO is the actual owner of said printing machine. Notwithstanding, the sheriff still went on with the auction sale where Tan Boon Bee was the highest bidder.Later, PADCO filed with the same court  a motion to nullify the sale on execution. The trial court ruled in favor of PADCO and it nullified said auction sale. Tan Boon Bee assailed the order of the trial court. Tan Boon Bee averred that PADCO holds 50% of GPI; that the board of directors of PADCO and GPI is the same; that the veil of corporate fiction should be pierced based on the premises. PADCO on the other hand asserts ownership over the said printing machine; that it is merely leasing it to GPI.ISSUE: Whether or not the veil of corporate fiction should be pierced.HELD: Yes. PADCO, as its name suggests, is a drug company not engaged in the printing business. So it is dubious that it really owns the said printing machine regardless of PADCO’s title over it. Further, the printing machine, as shown by evidence, has been in GPI’s premises even before the date when PADCO alleged that it acquired ownership thereof. Premises considered, the veil of corporate fiction should be pierced; PADCO and GPI should be considered as one. When a corporation is merely an adjunct, business conduit or alter ego of another corporation the fiction of separate and distinct corporation entities should be disregarded.