1) TAYAG v BENGUET CONSOLIDATED, INC.
G.R. No. L-23145November 29, 1968CASE DOCTRINE: A corporation as
known to Philippine jurisprudence is a creature without any
existence until it has received the imprimatur of the state
according to law. It is logically inconceivable that it will have
rights and privileges of a higher priority than that of its
creator. It cannot legitimately refuse to yield obedience to acts
of its state organs, certainly not excluding the judiciary,
whenever called upon to do so. It is not immune from judicial
control in those instances, where a duty under the law as
ascertained in an appropriate legal proceeding is cast upon it.
FACTS:
Idonah Slade Perkins died in New York leaving, among others, 2
stock certificates covering 33,002 shares of respondent, Benguet
Consolidated. The said certificates were in possession of County
Trust Company of New York being the domiciliary administrator of
the estate of the deceased. Ancillary administration proceedings
were instituted before the CFI of Manila wherein Tayag was
eventually appointed as ancillary administrator.
A dispute arose between the domiciary administrator in New York
and the ancillary administrator in the Philippines as to which of
them was entitled to the possession of the stock certificates in
question.
The CFI of Manila ordered the domiciliary administrator, County
Trust Company, to "produce and deposit" them with the ancillary
administrator or with the Clerk of Court. The domiciliary
administrator did not comply with the order. Hence, the ancillary
administrator petitioned the court to "issue an order declaring the
certificate or certificates of stocks covering the 33,002 shares
issued in the name of Idonah Slade Perkins by Benguet Consolidated,
be declared [or] considered as lost."Respondent argues that the
stock certificates cannot be declared or considered as lost since
there was a failure to observe certain requirements of its by-laws
before new stock certificates could be issued.
ISSUE: WHETHER OR NOT THE STOCK CERTIFICATES SHALL BE DECLARED
OR CONSIDERED AS LOST DESPITE FAILURE TO OBSERVE CERTAIN
REQUIREMENTS OF RESPONDENTS BY-LAWS BEFORE NEW STOCK CERTIFICATES
COULD BE ISSUED.
HELD: YES.
1. The ancillary administration is proper, whenever a person
dies, leaving in a country other than that of his last domicile,
property to be administered in the nature of assets of the deceased
liable for his individual debts or to be distributed among his
heirs.
2. Since there is a refusal, persistently adhered to by the
domiciliary administrator in New York, to deliver the shares of
stocks of Appellant Corporation owned by the decedent to the
ancillary administrator in the Philippines, there was nothing
unreasonable or arbitrary in considering them as lost and requiring
the appellant to issue new certificates in lieu thereof.3. It is
understandable that the Constitution overrides a statute, to which,
however, the judiciary must yield deference, when appropriately
invoked and deemed applicable. It would be most highly unorthodox,
however, if a corporate by-law would be accorded such a high estate
in the jural order that a court must not only take note of it but
yield to its alleged controlling force.4. "A corporation is not in
fact and in reality a person, but the law treats it as though it
were a person by process of fiction, or by regarding it as an
artificial person distinct and separate from its individual
stockholders.... It owes its existence to law. It is an artificial
person created by law for certain specific purposes, the extent of
whose existence, powers and liberties is fixed by its
charter."19Dean Pound's terse summary, a juristic person, resulting
from an association of human beings granted legal personality by
the state, puts the matter neatly.20There is thus a rejection of
Gierke'sgenossenchafttheory, the basic theme of which "is the
reality of the group as a social and legal entity, independent of
state recognition and concession."21
A corporation as known to Philippine jurisprudence is a creature
without any existence until it has received the imprimatur of the
state according to law. It is logically inconceivable that it will
have rights and privileges of a higher priority than that of its
creator. It cannot legitimately refuse to yield obedience to acts
of its state organs, certainly not excluding the judiciary,
whenever called upon to do so. It is not immune from judicial
control in those instances, where a duty under the law as
ascertained in an appropriate legal proceeding is cast upon it.
To assert that it can choose which court order to follow and
which to disregard is to confer upon it not autonomy which may be
conceded but license which cannot be tolerated. It is to argue that
it may, when so minded, overrule the state, the source of its very
existence; it is to contend that what any of its governmental
organs may lawfully require could be ignored at will. So
extravagant a claim cannot possibly merit approval.
2) Monfort Hermanos Agricultural Devt Corporation v. Monfort
III
434 SCRA 27 (2004)
Doctrine: The power of a corporation to sue and be sued in any
court is lodged with the board of directors that exercises its
corporate powers.In turn, physical acts of the corporation, like
the signing of documents, can be performed only by natural persons
duly authorized for the purpose by corporate by-laws or by a
specific act of the board of directors.
Facts:
Petitioner, a domestic private corporation, is the registered
owner of four Haciendas in Cadiz City.It also owns one unit of
motor vehicle and two units of tractors.
The group of Antonio Monfort III, through force and
intimidation, allegedly took possession of the said Haciendas, the
motor vehicle and tractors, as well as the fighting cocks bred and
maintained in one of the haciendas by petitioners Executive Vice
President, Ramon Monfort.
The Corporation, represented by its President, Ma. Antonia M.
Salvatierra, and Ramon H. Monfort, in his personal capacity, filed
a complaintfor delivery of motor vehicle, tractors and fighting
cocks, against the group of Monfort III.
The group of Monfort III filed a motion to dismiss contending
that Salvatierra has no capacity to sue on behalf of the
Corporation because theBoard Resolutionauthorizing Salvatierra
and/or Monfort to represent the Corporation is void as the
purported Members of the Board who passed the same were not validly
elected officers of the Corporation.
The signatories to the Board Resolution authorizing Salvatierra
and/or Monfort to represent the Corporation, were: Ma. Antonia M.
Salvatierra, President; Ramon H. Monfort, Executive Vice President;
Directors Paul M. Monfort, Yvete M. Benedicto and Jaqueline M.
Yusay; and EsterS. Monfort, Secretary.However, the names of the
last four (4) signatories to the said Board Resolution do not
appear in the 1996 General Information Sheet submitted by the
Corporation with the SEC.
Issue:
Whether or not Salvatierra has the legal capacity to sue on
behalf of the Corporation.
Held:
No. Corporations are required under Section 26 of the
Corporation Code to submit to the SEC within thirty (30) days after
the election the names, nationalities and residences of the elected
directors, trustees and officers of the Corporation.In order to
keep stockholders and the public transacting business with domestic
corporations properly informed of their organizational operational
status, the SEC issued rules requiring a General Information Sheet
be filed with the Commission which shall state, among others, the
names of the elected directors and officers, together with their
corresponding position title.
In the case at bar, the fact that four of the six Members of the
Board listed in the 1996 General Information Sheetare already
deadat the time the questioned Board Resolution was issued, does
not automatically make the four signatories (i.e., Paul M. Monfort,
Yvete M. Benedicto, Jaqueline M. Yusay and Ester S. Monfort)to the
said Board Resolution (whose name do not appear in the 1996 General
Information Sheet) as among the incumbent Members of the Board.This
is because it was not established that they were duly elected to
replace the said deceased Board Members.
Salvatierra failed to prove that four of those who authorized
her to represent the Corporation were the lawfully elected Members
of the Board of the Corporation.As such, they cannot confer valid
authority for her to sue on behalf of the corporation.
3) Phil. Exchange Stock vs CA
G.R. No. 125469.October 27, 1997
Torres, J;
Case Doctrine: A corporation is but an association of
individuals, allowed to transact under an assumed corporate name,
and with a distinct legal personality. In organizing itself as a
collective body, it waives no constitutional immunities and
perquisites appropriate to such bodyAs to its corporate and
management decisions, therefore, the state will generally not
interfere with the same. Questions of policy and of management are
left to the honest decision of the officers and directors of a
corporation, and the courts are without authority to substitute
their judgment for the judgment of the board of directors. The
board is the business manager of the corporation, and so long as it
acts in good faith, its orders are not reviewable by the
courts.
FACTS: The Puerto Azul Land, Inc. (PALI), a domestic real estate
corporation, had sought to offer its shares to the public in order
to raise funds allegedly to develop its properties and pay its
loans with several banking institutions. PALI was issued a Permit
to Sell its shares to the public by the SEC). To facilitate the
trading of its shares among investors, PALI sought to course the
trading of its shares through the Philippine Stock Exchange, Inc.
(PSE), for which purpose it filed with the said stock exchange an
application to list its shares, with supporting documents attached.
Listing Committee of the PSE, upon a perusal of PALIs application,
recommended to the PSEs Board of Governors the approval of PALIs
listing application. before it could act upon PALIs application,
the Board of Governors of PSE received a letter from the heirs of
Ferdinand E. Marcos, claiming that the late President Marcos was
the legal and beneficial owner of certain properties forming part
of the Puerto Azul Beach Hotel and Resort Complex which PALI claims
to be among its assets and that the Ternate Development
Corporation, which is among the stockholders of PALI, likewise
appears to have been held and continue to be held in trust by one
Rebecco Panlilio for then President Marcos and now, effectively for
his estate, and requested PALIs application to be deferred. . the
Board of Governors of the PSE reached its decision to reject PALIs
application, citing the existence of serious claims, issues and
circumstances surrounding PALIs ownership over its assets that
adversely affect the suitability of listing PALIs shares in the
stock exchange. PALI wrote a letter to the SEC bringing to the SECs
attention the action taken by the PSE in the application of PALI
for the listing of its shares with the PSE, and requesting that the
SEC, in the exercise of its supervisory and regulatory powers over
stock exchanges under Section 6(j) of P.D. No. 902-A, review the
PSEs action on PALIs listing application and institute such
measures as are just and proper and under the circumstances.
The SEC rendered its Order, reversing the PSEs decision. PSE
filed a motion for reconsideration wHich was denied. PSE then filed
a petition for review with The CA assailing the jurisdiction of SEC
to review the order of PSE. CA dismissed the petition stating that
SEC has a regulatory power over PSE and that the SEC had authority
to order the PSE to list the shares of PALI in the stock
exchange.
ISSUE: WON SEC has jurisdiction to review the order of PSE?
HELD: YES .Section 3 of Presidential Decree 902-A, standing
alone, is enough authority to uphold the SECs challenged control
authority over the petitioner PSE even as it provides that the
Commission shall have absolute jurisdiction, supervision, and
control over all corporations, partnerships or associations, who
are the grantees of primary franchises and/or a license or permit
issued by the government to operate in the Philippines The SECs
regulatory authority over private corporations encompasses a wide
margin of areas, touching nearly all of a corporations concerns.
This authority springs from the fact that a corporation owes its
existence to the concession of its corporate franchise from the
state.The SECs power to look into the subject ruling of the PSE,
therefore, may be implied from or be considered as necessary or
incidental to the carrying out of the SECs express power to insure
fair dealing in securities traded upon a stock exchange or to
ensure the fair administration of such exchange.
This is not to say, however, that the PSEs management
prerogatives are under the absolute control of the SEC. The PSE is,
after all, a corporation authorized by its corporate franchise to
engage in its proposed and duly approved business. One of the PSEs
main concerns, as such, is still the generation of profit for its
stockholders. Moreover, the PSE has all the rights pertaining to
corporations, including the right to sue and be sued, to hold
property in its own name, to enter (or not to enter) into contracts
with third persons, and to perform all other legal acts within its
allocated express or implied powers.
A corporation is but an association of individuals, allowed to
transact under an assumed corporate name, and with a distinct legal
personality. In organizing itself as a collective body, it waives
no constitutional immunities and perquisites appropriate to such
bodyAs to its corporate and management decisions, therefore, the
state will generally not interfere with the same. Questions of
policy and of management are left to the honest decision of the
officers and directors of a corporation, and the courts are without
authority to substitute their judgment for the judgment of the
board of directors. The board is the business manager of the
corporation, and so long as it acts in good faith, its orders are
not reviewable by the courts.
Thus, notwithstanding the regulatory power of the SEC over the
PSE, and the resultant authority to reverse the PSEs decision in
matters of application for listing in the market, the SEC may
exercise such power only if the PSEs judgment is attended by bad
faith. In reaching its decision to deny the application for listing
of PALI, the PSE considered important facts, which in the general
scheme, brings to serious question the qualification of PALI to
sell its shares to the public through the stock exchange. The
petitioner was in the right when it refused application of PALI,
for a contrary ruling was not to the best interest of the general
public.
In sum, the Court finds that the SEC had acted arbitrarily in
arrogating unto itself the discretion of approving the application
for listing in the PSE of the private respondent PALI, since this
is a matter addressed to the sound discretion of the PSE, a
corporate entity, whose business judgments are respected in the
absence of bad faith.
4) Land Bank of the Philippines vs CA
CASE DOCTIRNEA corporation, upon coming into existence, is
invested by law with a personality separate and distinct from those
persons composing it as well as from any other legal entity to
which it may be related. In order to disregard the separate
juridical personality of a corporation, the wrongdoing must be
clearly and convincingly established.
FACTSLand Bank of the Philippines (LBP) extended a series of
credit accommodations to ECO Managament Corporation, using the
trust funds of the Philippine Virginia Tobacco Administration
(PVTA) in the aggregate amount of P26,109,000.00. The proceeds of
the credit accommodations were received on behalf of ECO by
appellee Emmanuel Oate. On the respective maturity dates of the
loans, ECO failed to pay the same. Oral and written demands were
made, but ECO was unable to pay. ECO claims that the company was in
financial difficulty for it was unable to collect its investments
with companies which were affected by the financial crisis brought
about by the Dewey Dee scandal.
ECO proposed and submitted to LBP a Plan of Payment whereby the
former would set up a financing company which would absorb the loan
obligations. It was proposed that LBP would participate in the
scheme through the conversion of P9,000,000.00 which was part of
the total loan, into equity. LBP informed ECO of the action taken
by the formers Trust Committee concerning the Plan of Payment. The
Committee arrived at a decision that ECO may proceed with their
Plan of Payment provided Land Bank shall not participate in the
undertaking in any manner whatsoever.
ECO submitted to LBP a Revised Plan of Payment deleting the
latters participation in the proposed financing company. The Trust
Committee deliberated on the Revised Plan of Payment and resolved
to reject it. LBP then sent a letter to the PVTA for the latters
comments. The letter stated that if LBP did not hear from PVTA
within five (5) days from the latters receipt of the letter, such
silence would be construed to be an approval of LBPs intention to
file suit against ECO and its corporate officers. PVTA did not
respond to the letter. Thus, Landbank filed a complaint for
Collection of Sum of Money against ECO and Emmanuel C. Oate before
the Regional Trial Court of Manila.After trial on the merits, a
judgment was rendered in favor of LBP; however, appellee Oate was
absolved from personal liability for insufficiency of evidence.
Dissatisfied, both parties filed their respective Motions for
Reconsideration. Hence, the trial court rendered an Amended
Decision, ordering defendant Eco Management Corporation to pay
plaintiff Land Bank of the Philippines. The Court of Appeals
affirmed in toto the amended decision of the trial court. Hence,
this petition.
ISSUE/S(1) whether or not the corporate veil of ECO Management
Corporation should be pierced(2) whether or not Emmanuel C. Oate
should be held jointly and severally liable with ECO Management
Corporation for the loans incurred from Land Bank.
RULING(1) NO. A corporation, upon coming into existence, is
invested by law with a personality separate and distinct from those
persons composing it as well as from any other legal entity to
which it may be related. By this attribute, a stockholder may not,
generally, be made to answer for acts or liabilities of the said
corporation, and vice versa.This separate and distinct personality
is, however, merely a fiction created by law for convenience and to
promote the ends of justice. For this reason, it may not be used or
invoked for ends subversive to the policy and purpose behind its
creation or which could not have been intended by law to which it
owes its being. This is particularly true when the fiction is used
to defeat public convenience, justify wrong, protect fraud, defend
crime, confuse legitimate legal or judicial issues, perpetrate
deception or otherwise circumvent the law. This is likewise true
where the corporate entity is being used as an alter ego, adjunct,
or business conduit for the sole benefit of the stockholders or of
another corporate entity. In all these cases, the notion of
corporate entity will be pierced or disregarded with reference to
the particular transaction involved.
(2) NO. The burden is on petitioner to prove that the
corporation and its stockholders are, in fact, using the
personality of the corporation as a means to perpetrate fraud
and/or escape a liability and responsibility demanded by law. In
order to disregard the separate juridical personality of a
corporation, the wrongdoing must be clearly and convincingly
established. In the absence of any malice or bad faith, a
stockholder or an officer of a corporation cannot be made
personally liable for corporate liabilities.The mere fact that Oate
owned the majority of the shares of ECO is not a ground to conclude
that Oate and ECO is one and the same. Mere ownership by a single
stockholder of all or nearly all of the capital stock of a
corporation is not by itself sufficient reason for disregarding the
fiction of separate corporate personalities. Neither is the fact
that the name ECO represents the first three letters of Oates name
sufficient reason to pierce the veil. Even if it did, it does not
mean that the said corporation is merely a dummy of Oate. A
corporation may assume any name provided it is lawful. There is
nothing illegal in a corporation acquiring the name or as in this
case, the initials of one of its shareholders.
That respondent corporation in this case was being used as a
mere alter ego of Oate to obtain the loans had not been shown. Bad
faith or fraud on the part of ECO and Oate was not also shown. As
the Court of Appeals observed, if shareholders of ECO meant to
defraud petitioner, then they could have just easily absconded
instead of going out of their way to propose Plans of Payment.
Likewise, Oate volunteered to pay a portion of the corporations
debt. This offer demonstrated good faith on his part to ease the
debt of the corporation of which he was a part. It is
understandable that a shareholder would want to help his
corporation and in the process, assure that his stakes in the said
corporation are secured. In this case, it was established that the
P1 Million did not come solely from Oate. It was taken from a trust
account which was owned by Oate and other investors. It was
likewise proved that the P1 Million was a loan granted by Oate and
his co-depositors to alleviate the plight of ECO. This circumstance
should not be construed as an admission that he was really the
debtor and not ECO.5) GOOD EARTH EMPORIUM INC., and LIM KA PING vs.
COURT OF APPEALS and ROCES-REYES REALTY INC. ; G.R. No. 82797 ,
February 27, 1991 ; PARAS,J.:DOCTRINE: A corporation has a
personality distinct and separate from its individual stockholders
or members. Being an officer or stockholder of a corporation does
not make ones property also of the corporation, and vice-versa, for
they are separate entities. Shareowners are in no legal sense the
owners of corporate property (or credits) which is owned by the
corporation as a distinct legal person.FACTS: A lease contract was
entered into between ROCES and Good Earth Emporioum (GEE). A
five-storey building was the subject of the said contract, which
upon failure of the latter to pay its rentals, ROCES filed an
ejectment case against the petitioner. The MTC of Manila rendered a
decision ordering GEE and all persons under him to vacate the
premises and surrender the same to ROCES and pay the plaintiffs the
rental.
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 P1 million 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. GEEs m/r was
denied, hence this petition.
ISSUE: Whether or not there was full satisfaction of the
judgment debt in favor of respondent corporation.
RULING: There is no indication in the receipt, that it was in
payment, full or partial, of the judgment obligation. Likewise,
there is no indication in thepacto de retrosale which was drawn in
favor of Jesus Marcos Roces and Marcos V. Roces and not the
respondent corporation, that the obligation embodied therein had
something to do with petitioners' judgment obligation with
respondent corporation.
Article 1240 of the Civil Code provides that: Payment shall be
made to the person in whose favor the obligation has been
constituted, or his successor in interest, or any person authorized
to receive it. In the case at bar, the supposed payments were not
made to Roces-Reyes Realty, Inc. or to its successor in interest
nor is there positive evidence that the payment was made to a
person authorized to receive it. No such proof was submitted but
merely inferred by the Regional Trial Court from Marcos Roces
having signed the Lease Contract as President which was witnessed
by Jesus Marcos Roces. On the other hand, Jesus Marcos Roces
testified that the amount of P1 million evidenced by the receipt is
the payment for a loan extended by him and Marcos Roces in favor of
Lim Ka Ping. The assertion is home by the receipt itself whereby
they acknowledged payment of the loan in their names and in no
other capacity. A corporation has a personality distinct and
separate from its individual stockholders or members. As a
consequence of the separate juridical personality of a corporation,
the corporate debt or credit is not the debt or credit of the
stockholder, nor is the stockholders debt or credit that of the
corporation.
The fact that at the time payment was made to the two Roces
brothers, GEE was also indebted to respondent corporation for a
larger amount, is not supportive of the Regional Trial Court's
conclusions that the payment was in favor of the latter, especially
in the case at bar where the amount was not receipted for by
respondent corporation and there is absolutely no indication in the
receipt from which it can be reasonably inferred, that said payment
was in satisfaction of the judgment debt. Likewise, no such
inference can be made from the execution of thepacto de retrosale
which was not made in favor of respondent corporation but in favor
of the two Roces brothers in their individual capacities without
any reference to the judgment obligation in favor of respondent
corporation.6) Case title: G.R. No. 86932. June 27, 1990.*
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION and DOROTHY S. ANCHETA, MA. MAGDALENA Y.
ARMARILLE, CONSTANTE A. ANCHETA, CONSTANTE B. BANAYOS, EVELYN
BARRIENTOS, JOSE BENAVIDEZ, LEO-NARDO BUENAAGUA, BENJAMIN BAROT,
ERNESTO S. CANTILLER, EDUARDO CANDA, ARMANDO CANDA, AIDA DE LUNA,
PACIFICO M. DE JESUS, ALFREDO ESTRERA, AURELIO A. FARIAS, FRANCISCO
GREGORIO, DOMELINA GONZALES, JUANA JALANDONI, MANUEL MALUBAY,
FELICIANO OCAMPO, MABEL PADO, GEMINIANO PLETA, ERNESTO S. SALAMAT,
JULIAN TRAQUENA, JUSFIEL SILVERIO, JAMES CRISTALES, FRANCISCO
BAMBIO, JOSE T. MARCELO, JR., SUSAN M. OLIVAR, ERNESTO JULIO,
CONSTANTE ANCHETA, JR., ENRIQUE NABUA and JAVIER P. MATARO,
respondents.
Case doctrine:
Ownership of majority of capital stock and fact that majority of
directors of a corporation are the directors of another corporation
creates no employer-employee relationship with latters
employees.
Facts:
Philippine Smelters Corporation (PSC), a corporation registered
under Philippine law, obtained a loan in 1983 from the Development
Bank of the Philippines, a government-owned financial institution,
to finance its iron smelting and steel manufacturing business. To
secure said loan, PSC mortgaged to DBP real properties with all the
buildings and improvements thereon and chattels, with its
President, Jose T. Marcelo, Jr., as co-obligor.
By virtue of the said loan agreement, DBP became the majority
stockholder of PSC, with stockholdings in the amount of
P31,000,000.00 of the total P60,226,000.00 subscribed and paid-up
capital stock. Subsequently, it took over the management of
PSC.
When PSC failed to pay its obligation with DBP, which amounted
to P75,752,445.83 as of March 31, 1986, DBP foreclosed and acquired
the mortgaged real estate and chattels of PSC in the auction sales
held on February 25, 1987 and March 4, 1987.
On February 10, 1987, forty (40) petitioners filed a Petition
for Involuntary Insolvency in the Regional Trial Court of Makati,2
against PSC and DBP, impleading as co-respondents therein Olecram
Mining Corporation, Jose Panganiban Ice Plant and Cold Storage,
Inc. and PISO Bank, with said petitioners representing themselves
as unpaid employees of said private respondents, except PISO
Bank.
They filed a complaint with the Department of Labor against PSC
for non-payment of salaries, 13th month pay, incentive leave pay
and separation pay. On February 20, 1987, the complaint was amended
to include DBP as party respondent. The case was thereafter
indorsed to the Arbitration Branch of the National Labor Relations
Commission (NLRC). DBP filed its position paper invoking the
absence of employer-employee relationship between private
respondents and DBP and submitting that when DBP foreclosed the
assets of PSC, it did so as a foreclosing creditor.
The labor arbiter rendered a decision, the dispositive portion
of which directed that DBP as foreclosing creditor is hereby
ordered to pay all the unpaid wages and benefits of the workers
which remain unpaid due to PSCs foreclosure.3
On appeal by DBP, the NLRC sustained the ruling of the labor
arbiter, holding DBP liable for unpaid wages of private respondents
not as a majority stockholder of respondent PSC, but as the
foreclosing creditor who possesses the assets of said PSC by virtue
of the auction sale it held in 1987.
Issue:
Whether or not DBP, as foreclosing creditor, could be held
liable for the unpaid wages, 13th month pay, incentive leave pay
and separation pay of the employees of PSC.
Ruling:
No. Ownership of majority of capital stock and fact that
majority of directors of a corporation are the directors of another
corporation creates no employer-employee relationship with latters
employees.
It is to be noted that in their comment, private respondents
tried to prove the existence of employer-employee relationship
based on the fact that DBP is the majority stockholder of PSC and
that the majority of the members of the board of directors of PSC
are from DBP. We do not believe that these circumstances are
sufficient indicia of the existence of an employer-employee
relationship as would confer jurisdiction over the case on the
labor arbiter, especially in the light of the express declaration
of said labor arbiter and the NLRC that DBP is being held liable as
a foreclosing creditor. At any rate, this jurisdictional defect was
cured when DBP appealed the labor arbiters decision to the NLRC and
thereby submitted to its jurisdiction.7) Traders Royal Bank vs
CA
DOCTRINE: It is elementary that a corporation has a personality
distinct and separate from its individual stockholders or members.
Being an officer or stockholder of a corporation does not make
one's property the property also of the corporation, for they are
separate entities.
FACTS:
On May 13, 1983, the petitioner bank filed Civil Case No. 1028-P
in the Regional Trial Court, Branch CXIII in Pasay City, against
PBM and Alfredo Ching, to collect P22,227,794.05 exclusive of
interests, penalties and other bank charges representing PBM's
outstanding obligation to the bank. Alfredo Ching, a stockholder of
PBM, was impleaded as co-defendant for having signed as a surety
for PBM's obligations to the extent of ten million pesos
(Pl0,000,000) under a Deed of Suretyship dated July 21, 1977.
On July 9, 1982, the SEC issued an Order placing PBM's business,
including its assets and liabilities, under rehabilitation
receivership, and ordered that "all actions for claims listed in
Schedule A of the petition pending before any court or tribunal are
hereby suspended in whatever stage the same may be, until further
orders from the Commission".
Ching and PBM filed jointly a motion to dismiss Civil Case No.
1028-P in the RTC, Pasay City, invoking the pendency in the SEC of
PBM's application for suspension of payments (which Ching
co-signed) and over which the SEC had already assumed jurisdiction.
Before the motion was resolved, PBM was dropped from the complaint
by the court. Chings motion was denied and the court argued that
under P ' D. 902-A, as amended, the SEC may not validly acquire
jurisdiction over an individual, like Ching.
CA: Ching filed a petition for certiorari and prohibition in the
Court of Appeals to annul the orders of respondent Judge and to
prohibit him from further proceeding in the civil case. CA ruled in
his favor and granted the writs prohibiting the judge from
proceeding with the case.
Petitoner bank filed a petition for review assailing the
decision of the CA.
ISSUE:
whether the court a quo could acquire jurisdiction over Ching in
his personal and individual capacity as a surety of PBM in the
collection suit filed by the bank, despite the fact that PBM's
obligation to the bank had been placed under receivership by the
SEC.
HELD:YES
Case was ordered reinstated. Ching can be sued separately to
enforce his liability as surety for PBM, as expressly provided by
Article 1216 of the New Civil Code:
ART. 1216. The creditor may proceed against any of the solidary
debtors or all of them simultaneously. The demand made against one
of them shall not be an obstacle to those which may subsequently be
directed against the others, as long as the debt has not been fully
collected.
It is elementary that a corporation has a personality distinct
and separate from its individual stockholders or members. Being an
officer or stockholder of a corporation does not make one's
property the property also of the corporation, for they are
separate entities (Adelio Cruz vs. Quiterio Dalisay, 152 SCRA
482).
Ching's act of joining as a co-petitioner with PBM in SEC Case
No. 2250 did not vest in the SEC jurisdiction over his person or
property, for jurisdiction does not depend on the consent or acts
of the parties but upon express provision of law.8) G.R. No. 103372
June 22, 1992EPG CONSTRUCTION COMPANY, INC., and EMMANUEL P. DE
GUZMAN,petitioner,vs.HONARABLE COURT OF APPEALS (17th Division), (
Republic of the Philippines), UNIVERSITY OF THE
PHILIPPINES,respondents.
Doctrine:
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 entity to which it may be related. 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.
Facts:
EPG Construction Co., Inc. and the University of the
Philippines, private respondent, entered into a contract for the
construction of the UP Law Library Building for the stipulated
price of P7,545,000.00. The agreement included a provision wherein
EPG guarantees the completion of the work in accordance with the
specification of the architect and that EPG will be liable in case
the building collapses due to defects in construction.
Upon its completion, the building was formally turned over by
EPG to the private respondent. UP issued a certification of
acceptance dated January 13, 1983 stating that the General
Construction Work of the College of Law library was satisfactorily
completed and had no defects.
Sometime in July, 1983, UP complained to the petitioner that 6
air-conditioning units on the third floor of the building were not
cooling properly. After inspection of the equipment, EPG agreed to
shoulder the expenses for their repair, including labor and
materials, in the amount of P38.000.00.
The repair was never undertaken. UP repeated its complaints to
EPG. Finally, it made UP a written offer to repair the system for
P194,000.00.
UP insisted that EPG was obligated to repair the defects at its
own expense under the guarantee provision in their contract. EPG
demurred. UP then contracted with another company, which repaired
the defects for P190,000.00.
UP subsequently demanded from EPG reimbursement of the said
amount plus an equal sum as liquidated damages but was denied. UP
sued EPG and its president, Emmanuel P. de Guzman, in the Regional
Trial Court of Quezon City. De Guzman moved to dismiss the
complaint as to him for lack of a cause of action, but the motion
was denied.
RTC ruled against EPG and de Guzman requiring them jointly and
severally to pay the plaintiff P190,000.00 as actual damages,
P50,000.00 as liquidated damages, P10,000.00 as attorney's fees,
and costs. On appeal, CA affirmed the RTC.
Issue:
WON de Guzman, President of EPG, has a separate personality from
the latter, hence, not liable for damages.
Held:
YES. The trial court did not explain why Emmanuel de Guzman was
held solidarity liable with EPG Construction Co., Inc., and neither
did the CA when it affirmed the appealed decision.
Notably, when Emmanuel de Guzman moved to dismiss the complaint
as to him, UP said in its opposition to the motion that it was
suing him "in hisofficialcapacity and not in his personal
capacity." His inclusion as President of the company was therefore
superfluous, as De Guzman correctly contended, because his acts as
such were corporate acts imputable to EPG itself as his
principal.
It is settled that 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 entity to which it
may be related. 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 exception noted is where the official "had acted maliciously
or in bad faith," in which event he may be made personally liable
for his own act. That exception is not applicable in the case at
bar, because it has not been proved that De Guzman acted
maliciously or in bad faith when, as President of EPG, he sought to
protect its interests and resisted UP's claims. Whatever damage was
caused to UP as a result of his acts is the sole responsibility of
EPG even though De Guzman was its principal officer and controlling
stockholder.
The lower court did not err in holding EPG liable for the repair
of the air-conditioning system at its expense pursuant to the
guarantee provision in the construction contract with UP. However,
De Guzman is not solidarily liable with it, having acted on its
behalf within the scope of his authority and without any
demonstrated malice or bad faith.9) G.R. No. 171392 October 30,
2006RUPERTO SULDAO,petitioner,vs.CIMECH SYSTEM CONSTRUCTION, INC.
and ENGR. RODOLFO S. LABUCAY,respondents.
Doctrine: A corporation is invested by law with a personality
separate from that of its stockholders or members. It has a
personality separate and distinct from those of the persons
composing it as well as from that of any other entity to which it
may be related. A corporations authority to act and its liability
for its actions are separate and apart from the individuals who own
it.Facts:Respondent Cimech Systems Construction, Inc. employed the
services of petitioner Ruperto Suldao on August 31, 2001 as a
machinist on a contractual status for a period of five months.
After January 31, 2002, respondent continued to engage the services
of petitioner as a machinist until he became a permanent employee.
Petitioner alleged that owing to a dearth in projects being handled
by the respondent, he was ordered by Ms. Elsa Labocay to take a
leave of absence from November 1 to 6, 2002. He reported for work
on November 7, 2002 but was again ordered to take a leave of
absence from November 7 to 14, 2002. On November 15, 2002, he was
purportedly ordered to make a letter-request for field work
transfer which he complied. The following day, he failed to report
back for work because he was sick. On November 17, 2002, he
reported for work but was allegedly barred from entering by the
security guard on duty. On November 21, 2002, he was again barred
from entering the premises, hence he filed the instant
complaint4for constructive dismissal. Respondent opposed the
allegations and averred that because of the lack of work in the
machine shop, petitioner was transferred to its fabrication
department of which the latter refused and acted arrogantly and
unruly tantamount to insubordination. Thus he was suspended and
after his suspension he returned to work but again was absent the
following day, hence his dismissal. LA ruled in favor of the
petitioner and the NLRC concurred. CA reversed the decision and
dismissed the case.
Issue: WON the officers of the corporation should be held liable
for the constructive dismissal of the Suldao
Held: No. The veil of corporate fiction treats as separate and
distinct the affairs of a corporation and its officers and
stockholders. As a general rule, a corporation will be looked upon
as a legal entity, unless and until sufficient reason to the
contrary appears. When the notion of legal entity is used to defeat
public convenience, justify wrong, protect fraud, or defend crime,
the law will regard the corporation as an association of persons.
Also, the corporate entity may be disregarded in the interest of
justice in such cases as fraud that may work inequities among
members of the corporation internally, involving no rights of the
public or third persons. In both instances, there must have been
fraud and proof of it. For the separate juridical personality of a
corporation to be disregarded, the wrongdoing must be clearly and
convincingly established. It cannot be presumed.10) CONCEPT
BUILDERS, INC.,vs. THE NATIONAL LABOR RELATIONS COMMISSION, and
Norberto Marabe, et al
Doctrine: The corporate mask may be lifted and the corporate
veil may be pierced when a corporation is just but the alter ego of
a person or of another corporation. Where badges of fraud exist;
where public convenience is defeated; where a wrong is sought to be
justified thereby, the corporate fiction or the notion of legal
entity should come to naught.The law in these instances will regard
the corporation as a mere association of persons and, in case of
two corporations, merge them into one.
Facts: Petitioner Concept Builders, Inc., a domestic
corporation, with principal office at355Maysan Road, Valenzuela,
Metro Manila engaged in the construction business.Private
respondents were employed by said company as laborers, carpenters
and riggers.
Private respondent were illegally dismissed by petitioners. To
satisfy the judgment rendered by the LA in the amount of P199,800.
The LA issued a writ of execution wherein it was partially
satisfied through garnishment of petitioners debtor in the amount
of P81, 385.34
For the remaining balance of P 117,414.76 an Alias Writ of
execution was issued by the LA. However the sheriff reported that
the service of the order was refused on the ground that the
petitioner no longer occupied the premises. That it is now occupied
by Hydro Pipes Philippines Ince (HPPI)
the sheriff recommended that a break-open order be issued to
enable him to enter petitioners premises so that he could proceed
with the public auction sale of the aforesaid personal
properties.
OnNovember 6, 1989, a certain Dennis Cuyegkeng filed a
third-party claim with the Labor Arbiter alleging that the
properties sought to be levied upon by the sheriff were owned by
Hydro (Phils.), Inc. (HPPI) of which he is the Vice-President.
private respondents filed a Motion for Issuance of a Break-Open
Order, alleging that HPPI and petitioner corporation were owned by
the same incorporator! stockholders.They also alleged that
petitioner temporarily suspended its business operations in order
to evade its legal obligations to them and that private respondents
were willing to post an indemnity bond to answer for any damages
which petitioner and HPPI may suffer because of the issuance of the
break-open order. To support their claims they presented General
Informations Sheet, datedMay 15, 1987, submitted by petitioner to
the Securities and Exchange Commission (SEC) and the General
Information Sheet, datedMay15,1987, submitted by HPPI to the
Securities and Exchange Commission. ( which shows that both
corporations have the same stockholders and officers)
HPPI argued that HPPI and petitioner is two separate and
distinct corporations and that both have different kind of
business, HPPI is a manufacturing firm while petitioner was then
engaged in construction. And that the doctrine of piercing the
corporate veil should not be applied in this case, in the absence
of any showing that it created HPPI in order to evade its liability
to private respondents
Issue: Whether or Not the doctrine of Piercing the veil should
be applied in this case
Held: Yes, It is a fundamental principle of corporation law that
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.So, when the notion of separate juridical
personality is used to defeat public convenience, justify wrong,
protect fraud or defend crime, or is used as a device to defeat the
labor laws,this separate personality of the corporation may be
disregarded or the veil of corporate fiction pierced.This is true
likewise when the corporation is merely an adjunct, a business
conduit or an alter ego of another corporation.
The conditions under which the juridical entity may be
disregarded vary according to the peculiar facts and circumstances
of each case.No hard and fast rule can be accurately laid down, but
certainly, there are some probative factors of identity that will
justify the application of the doctrine of piercing the corporate
veil, to wit:
1.Stock ownership by one or common ownership of both
corporations.
2.Identity of directors and officers.
3.The manner of keeping corporate books and records.
4.Methods of conducting the business.
The SEC en banc explained the instrumentality rule which the
courts have applied in disregarding the separate juridical
personality of corporations as follows:
Where one corporation is so organized and controlled and its
affairs are conducted so that it is, in fact, a mere
instrumentality or adjunct of the other, the fiction of the
corporate entity of the instrumentality may be disregarded.The
control necessary to invoke the 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. It must be kept in mind that 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 test in determining the applicability of the doctrine
of piercing the veil of corporate fiction is as follows:
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 plaintiffs
legal rights; and3. The aforesaid control and breach of duty must
proximately cause the injury or unjust loss complained of.The
absence of any one of these elements prevents piercing the
corporate veil. in applying the instrumentality or alter ego
doctrine, the courts are concerned with reality and not form, with
how the corporation operated and the individual defendants
relationship to that operation. In this case, the NLRC noted that,
while petitioner claimed that it ceased its business operations
onApril 29, 1986, it filed an Information Sheet with the Securities
and Exchange Commission onMay 15, 1987, stating that its office
address is at355Maysan Road, Valenzuela, Metro Manila. On the other
hand, HPPI, the third-party claimant, submitted on the same day, a
similar information sheet stating that its office address is
at355Maysan Road, Valenzuela, Metro Manila.
Furthermore, the NLRC stated that:
Both information sheets were filed by thesameVirgilio O. Casino
as the corporate secretary of both corporations. It would also not
be amiss to note that both corporations had thesamepresident, the
same board of directors, thesamecorporate officers, and
substantially thesamesubscribers.From the foregoing, it appears
that, among other things, the respondent (herein petitioner) and
the third-party claimant shared the same address and/or premises.
Under this circumstances, (sic) it cannot be said that the property
levied upon by the sheriff were not of respondents.
Clearly, petitioner ceased its business operations in order to
evade the payment to private respondents of backwages and to bar
their reinstatement to their former positions.
11) PHILIPPINE NATIONAL BANK & NATIONAL SUGAR DEVELOPMENT
CORPORATION vs. ANDRADA ELECTRIC & ENGINEERING COMPANY
April 17, 2002
CASE DOCTRINE: Basic is the rule that a corporation has a legal
personality distinct and separate 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 public
convenience, insulate bad faith or perpetuate injustice. Thus, the
mere fact that PNB acquired ownership or management of some assets
of PASUMIL will not make PNB liable for PASUMILs contractual
debts.
FACTS
Philippine National Bank PNB
National Sugar Development Corp NASUDECO
Pampanga Sugar Mills PASUMIL
Development Bank of the Philippines DBP
On 26 August 1975, PNB acquired the assets of PASUMIL that were
earlier foreclosed by DBP. In September 1975, PNB organized
NASUDECO to take possession of the assets and to nationalize and
consolidate its interest in other PNB controlled sugar mills.
Prior to 29 October 1971, PASUMIL engaged the services Andrada
Electric for electrical rewinding and repair. Most of the services
were partially paid by PASUMIL, leaving several unpaid accounts. On
29 October 1971, PASUMIL and Andrada Electric entered into another
contract to perform several services. The total obligation amounted
to P777,263.80. PASUMIL only paid P250,000. Out of the unpaid
balance, PASUMIL made partial payments amounting to P14,000.
PASUMIL, PNB, and NASUDECO failed and refused to pay Andrada
Electric the remaining balance. The President of NASUDECO is the
Vice President of PNB, and Andrada Electric besought this official
to pay the outstanding obligation of PASUMIL. Andrada Electric
contends that PNB and NASUDECO should pay since they now owned and
possessed the assets of PASUMIL, and that they also benefited from
the services rendered.
PNB and NASUDECO argue that there is lack or want of privity of
contract between them and Andrada Electric.
The trial court ruled in favor of Andrada Electric. The court
ordered PNB, NASUDECO and PASUMIL to pay. CA affirmed the
decision.
ISSUE: WHETHER PNB IS LIABLE FOR THE UNPAID DEBTS OF PASUMIL TO
RESPONDENT.
RULING: NO.
Liability for Corporate Debts
As a rule, a corporation that purchases the assets of another
will not be liable for the debts of the selling corporation,
provided the former acted in good faith and paid adequate
consideration for such assets, except when any of the ff.
circumstances is present: (1) where the purchaser expressly or
impliedly agreed to assume the debts; (2) where the transaction
amounts to a consolidation or merger of corporations; (3) where the
purchasing corporation is merely a continuation of the selling
corporation; and (4) where the transaction is fraudulently entered
into in order to escape liability for those debts.
Piercing the Corporate Veil Not Warranted
Equally well-settled is the principle that the corporate mask
may be removed or then corporate veil pierced when the corporation
is just an alter ego of a person or another corporation. For
reasons of public policy and in the interest of justice, the
corporate veil will justifiably be impaled only when it becomes a
shield for fraud, illegality or inequity committed against third
persons.
The question of whether a corporation is a mere alter ego is one
of fact. Piercing the veil of corporate fiction may be allowed only
if the ff. elements concur: (1) control not mere stock control, but
complete domination not only of finances, but of policy and
business practice in respect to the transaction attacked, must have
been such 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 a fraud or
wrong to perpetuate the violation of a statutory or other positive
legal duty, or a dishonest and an unjust act in contravention of
plaintiffs legal right; and (3) the said control and breach of duty
must have proximately caused the injury or unjust loss complained
of.
All of the elements are absent in the case at bar. First, other
than the fact that petitioners acquired the assets of PASUMIL,
there is no showing that their control over it warrants the
disregard of corporate personalities. Second, there is no evidence
that their juridical personality was used to commit a fraud or to
do a wrong; or that the separate corporate entity was farcically
used as a mere alter ego, business conduit or instrumentality of
another entity or person. Third, respondent was not defrauded or
injured when petitioners acquired the assets of PASUMIL.
12) First Philippine International Bank v. CA (Gr. No. 115849.
January 24, 1996)
Panganiban J,
Doctrine: The corporate veil cannot be used to shield an
otherwise blatant violation of the prohibition against forum
shopping, shareholders whether suing as the majority in direct
actions or as the minority in a derivative suit, cannot be allowed
to trifle with court processes. To rule otherwise would be to
encourage corporate litigants to use their shareholders as fronts
to circumvent the stringent rules against forum shopping.
Facts: In the course of its banking operations, the defendant
Producer Bank of the Philippines acquired six parcels of land with
a total area of 101 hectares located at Don Jose, Sta. Rosa,
Laguna. The property used to be owned by BYME Investment and
Development Corporation which had them mortgaged with the bank as
collateral for a loan. Demetrio Demetria and Jose O. Janolo, wanted
to purchase the property and thus initiated negotiations for that
purpose. Upon the suggestion of BYME Investments legal counsel,
Jose Fajardo, met with Mercurio Rivera, Manager of the Property
Management Department of the defendant bank. The meeting was held
pursuant to plaintiffs' plan to buy the property. After the
meeting, Janolo, following the advice of Rivera, made a formal
purchase offer to the bank through a letter dated August 30, 1987.
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 Banks 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. On May 16, 1988, plaintiffs filed a suit
for specific performance with damages against the bank, its Manager
Rivera and Acting Conservator Encarnacion. The basis of the suit
was that the transaction had with the bank resulted in a perfected
contract of sale, The defendants took the position that there was
no such perfected sale because the defendant Rivera is not
authorized to sell the property, and that there was no meeting of
the minds as to the price. The regional trial court ruled in favor
of Demetria et al. The Bank filed an appeal with theCourt of
Appeals. During the pendency of the proceedings in the Court of
Appeals, Henry Co and several other stockholders of the Bank
purportedly filed a derivative suit with the RTC against
Encarnacion, Demetria and Janolo "to declare any perfected sale of
the property as unenforceable and to stop Ejercito from enforcing
or implementing the sale. In his answer, Janolo argued that the
Second Case was barred bylitis pendentiaby virtue of the case then
pending in the Court of Appeals.
Issue: Whether or not there is forum shopping and Whether or not
the Doctrine of Piercing the Veil of the Corporate Entity applies
in this case.
Held: (1) Yes (2) No. (1) Where a litigant (or one representing
the same interest or person) sues the same party against whom
another action or actions for the alleged violation of the same
right and the enforcement of the same relief is/are still pending,
the defense oflitis pendenciain one case is bar to the others; and,
a final judgment in one would constituteres judicataand thus would
cause the dismissal of the rest. In either case, forum shopping
could be cited by the other party as a ground to ask for summary
dismissal of the two (or more) complaints or petitions, and for
imposition of the other sanctions, which are direct contempt of
court, criminal prosecution, and disciplinary action against the
erring lawyer. Applying the foregoing principles in the case before
us, it is obvious that there exist identity of parties or interests
represented identity of rights or causes and identity of reliefs
sought.
In the instant case before us, there is also identity of
parties, or at least, of interests represented. Although the
plaintiffs in the Second Case (Henry L. Co. et al.) are not name
parties in the First Case, they represent the same interest and
entity, namely, petitioner Bank, because:
Firstly, they are not suing in their personal capacities, for
they have no direct personal interest in the matter in controversy.
They are not principally or even subsidiarily liable; much less are
they direct parties in the assailed contract of sale; and
Secondly, the allegations of the complaint in the Second Case
show that the stockholders are bringing a "derivative suit". In the
caption itself, petitioners claim to have brought suit "for and in
behalf of the Producers Bank of the Philippines"
In the face of the damaging admissions taken from the complaint
in the Second Case, petitioners, quite strangely, sought to deny
that the Second Case was a derivative suit, reasoning that it was
brought,not by the minority shareholders, but by Henry Co et al.,
who not only own, hold or control over 80% of the outstanding
capital stock, but also constitute the majority in the Board of
Directors of petitioner Bank. That being so, then they really
represent the Bank. So, whether they sued "derivatively" or
directly, there is undeniably an identity of interests/entity
represented.
(2) Petitioner also tried to seek refuge in the corporate
fiction that the personality Of the Bank is separate and distinct
from its shareholders. But the rulings of this Court are
consistent: "When the fiction is urged as a means of perpetrating a
fraud or an illegal act or as a vehicle for the evasion of an
existing obligation, the circumvention of statutes, the achievement
or perfection of a monopoly or generally the perpetration of
knavery or crime, the veil with which the law covers and isolates
the corporation from the members or stockholders who compose it
will be lifted to allow for its consideration merely as an
aggregation of individuals."In addition to the many cases where the
corporate fiction has been disregarded, we now add the instant
case, and declare herewith that the corporate veil cannot be used
to shield an otherwise blatant violation of the prohibition against
forum-shopping. Shareholders, whether suing as the majority in
direct actions or as the minority in a derivative suit, cannot be
allowed to trifle with court processes, particularly where, as in
this case, the corporation itself has not been remiss in vigorously
prosecuting or defending corporate causes and in using and applying
remedies available to it. To rule otherwise would be to encourage
corporate litigants to use their shareholders as fronts to
circumvent the stringent rules against forum shopping.
13) SHOEMART, INC.,vs NLRC
DOCTRINE: The corporate veil may be lifted 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 a mere
instrumentality, agency, conduit, or adjunct of another
corporation.
FACTS:One of the corporations involved is Moris Industries, Inc.
a private corporation engaged in the manufacture of leather
products, It had in its employ seventy-three (73) workers,
fifty-six (56) of whom are members of a labor organization known as
Moris Industries Workers Union (UNION, for short).
On June 7, 1985 the UNION affiliated itself with the (PAFLU). On
June 15, 1985, the UNION, through PAFLU, sent a letter to MORIS
informing it of the UNION's existence, and inviting the latter to
enter into negotiations for a (CBA). MORIS's reaction was as swift
as it was unexpected. Within two days, it suddenly closed shop and
ceased operations, claiming that such a closure had become
inevitable because of business reverses.
On June 20, 1985, the UNION (PAFLU) filed a complaint for unfair
labor practice against MORIS. A week later, it commenced another
case against MORIS, this time for recovery of wage differentials
and other monetary benefits.
Shoemart, Inc., the other corporation involved in these cases,
was impleaded by the UNION in both cases, together with the
former's president, Mr. Henry Sy, on the stated theory that
Shoemart, Inc. (hereafter, simply SHOEMART) and MORIS were one and
the same juridical entity.
SHOEMART's position paper set up the claim inter alia that its
corporate personality was separate and distinct from that of MORIS,
and there was no employer-employee relationship between it and the
UNION's members.
Arbiter Linsangan rendered a decision in favor of the UNION,
holding both MORIS and SHOEMART "equally liable" to the complaining
UNION
The Linsangan decision declared "that indeed Moris Industries
was but a conduit of SM Shoe Mart, Inc.," it appearing that the
"payrolls used by the former bear the letterhead of the latter,"
and that "Moris Industries is a family corporation of the Sy's, . .
. the same family that owns and controls SM Shoe Mart, Incorporated
. . . ." 5
ISSUE: whether a corporation may be held liable for acts of
unfair labor practice and illegal dismissal of employees of a
"sister corporation," engaged in a different line of business, on
the theory that the latter is the former's alter ego or business
conduit.
RULING: Yes. The corporate veil may be lifted 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 a mere instrumentality, agency, conduit, or adjunct of
another corporation.
1. In his affidavit, Mr. (Cresencio) Edic testified that he was
first employed as sample maker, by the people who owned SM. His job
was to make samples to be displayed on the window and only those
which appealed to the customers were mass produced. When he was
promoted to over-all supervisor, the factory was transferred to its
present location and from then on, this production division was
incorporated separately and has undergone many changes in name, yet
all throughout, the known owners of the factory remain the
same;
2. An examination of the Incorporation papers of SM Shoe Mart
and Moris Manufacturing show (sic) that except for Elizabeth Sy all
other five (5) incorporators and directors of Morris Industries are
major stockholders of SM Shoe Mart as of July 20, 1985;
3. The SM Shoe Mart is the exclusive buyer of all of Moris'
products;
4. Both are housed in one building and Moris for many years has
been using the payrolls of SM Shoe Mart. SM glibly excuses this
fact by alleging that this was done without its knowledge. We,
however, considering the close relationship of parties, find this
incredible.((**FACTORS to be considered that will justify the
application of the treatment of the doctrine of piercing the veil
or corp fiction))14) G.R. No. L-5081, February 24, 1954MARVEL
BUILDING CORPORATION, ET AL. vs. SATURNINO DAVID
Case Doctrine: The fact that 1) certificates in possession of
Castro were endorsed in blank; 2) Castro had enormous profits and
had motive to hide them; 3) other subscribers had no incomes of
sufficient magnitude; and 4) directors never met all show that
other shareholders may be considered dummies of Castro. Hence,
corporate veil may be pierced.
Facts:
The Secretary of Finance, upon consideration of the report of a
special committee assigned to study the war profits tax case of
Mrs. Maria B. Castro, recommended the collection of war profits
taxes for the latter, so the President instructed the Collector
that steps be taken to collect the same. Pursuant thereto various
properties, including the Aguinaldo Building, the Wise Building,
and the Dewey Boulevard-Padre Faura Mansion, all registered in the
name of petitioner corporation, were seized by the Collector of
Internal Revenue. The trial court rendered judgment ordering the
release of the properties mentioned, and enjoined the Collector of
Internal Revenue from selling the same.
Petitioners allege that the said three properties (lands and
buildings) belong to Marvel Building Corporation and not to Maria
B. Castro, while the defendant claims that Maria B. Castro is the
true and sole owner of all the subscribed stock of the Marvel
Building Corporation, including those appearing to have been
subscribed and paid for by the other members, and consequently said
Maria B. Castro is also the true and exclusive owner of the
properties seized.
It does not appear that the stockholders or the board of
directors of the Marvel Building Corporation have ever held a
business meeting, for no books thereof or minutes meeting were ever
mentioned by the officers thereof or presented by them at the
trial. The by-laws of the corporation, if any had ever been
approved, has not been presented. Neither does it appear that any
report of the affairs of the corporation has been made, either of
its transactions or accounts.
Issue: Is Maria B. Castro the owner of all the shares of stocks
of Marvel Building Corporation and the other stockholders mere
dummies of hers?
Ruling:
YES. The CIR presented evidence to prove his claim that Maria B.
Castro the sole and true owner of theshare of stockMarvel Building
Corp., this was the supposedendorsementin blank of the shares of
stock in the name of other incorporators. This evidence was
testified by Aquino,Internal Revenueexaminer, Mariano, examiner and
Crispin Llamado, undersecretary of Finance. Julio Llamado who was
at that time thebookkeeperof Marvel Building Corp also testified
that he was the one who had prepared the original certificates
which was given by Mariafor comparison with the Articles of
Incorporation and that he also prepared stock certificates which
was copied in the Photostat presented in evidence.
CIR was also able to submit evidence which proves the fact that
the other stockholder did not have incomes in such amounts during
the time of the organization of the corporation in 1947 or
immediately thereto, as to enable them to pay full for their
supposed subscription and that this supposed subscribers fail to
cometo courtto assert that they actually paid for their
subscription and are not mere dummies.
15) Estelita Lipat and Alfredo Lipat vs. Pacific Banking
Corporation
Doctrine: When the corporation is the mere alter ego or business
conduit of a person, the separate personality of the corporation
may be disregarded. This is commonly referred to as the
Instrumentality Rule or the Alter Ego Doctrine which the courts
have applied in disregarding the separate juridical personality of
corporations. When a corporation is so organized and controlled and
its affairs are conducted so that it is in fact a mere
instrumentality or adjunct of the other, the fiction of the
corporate entity of the instrumentality may be disregarded.
FACTS:
Petitioner spouses owned Belas Export Trading (BET), a single
proprietorship engaged in manufacturing garments for domestic and
foreign consumption. They likewise owned the Mystical Fashions in
the United States selling goods imported from the Philippines
through BET. Teresita, daughter of the spouses, were designated to
manage BET while her mom manages Mystical Fashions. A special power
of attorney was executed to appoint Teresita as her attorney in
fact for convenient operation in obtaining loans, and other credit
transactions from respondent Bank. Teresita was also authorized to
execute mortgage contracts on properties owned or co owned by her
as security for the obligations to be extended by the bank.
A loan was secured in April 1979 by Teresita to buy fabrics to
be manufactured by BET and to be exported to Mystical Fashions in
the US. As security, the Spouses, as represented by Teresita,
executed a real estate mortgage over their property located in
Cubao, QC. In September 1979, BET was incorporated into a family
corporation named Belas Export Corporation (BEC) in order to
facilitate management of the business. Its incorporators include
the petitioner spouses owning a combined 300 shares out of 420
shares subscribed; Teresita (20 shares) and other close relatives
and friends of the Lipats.
Estelita Lipat was named as the President while her daughter
Teresita was the vice president and general manager. Consequently,
the loan was restructured in the name of BEC. Upon the request of
BEC, a letter of credit was opened in favor of A.O Knitting
Manufacturing by the bank after BEC executed the corresponding
trust receipt. The bank also facilitated an export bill. These
transactions were all secured by the real estate mortgage
previously executed by the spouses. When all their obligations
became due and demandable, they requested the bank to extend time
for payment which was granted, but still the petitioner failed to
fulfill their promise.
The Real Estate Mortgage was foreclosed then sold for public
auction where a certificate of sale was issued to Eugenio Trinidad
as the highest bidder. The spouses filed for the annulment of the
real estate mortgage, extrajudicial foreclosure and the certificate
of sale issued alleging that the promissory notes, trust receipts
and export bills were all ultra vires acts of Teresita as they were
executed without the requisite board resolution of the Board of
Directors of BEC. They also assailed that assuming the acts were
valid and binding on BEC, the same were corporations sole
obligation, it having a personality distinct and separate from
petitioner spouses. In response to the claim of the spouses, the
bank and Trinidad assailed that Lipat and the BEC are one and the
same, the latter being a family corporation.
ISSUE: Whether or not the Doctrine of piercing the veil of
corporation fiction is applicable in this case
RULING:
YES. The spouses attempted to isolate themselves from and hide
behind the corporate personality of BEC so as to evade the
liabilities to the bank. This is what the classical doctrine of
piercing the veil of corporate entity seeks to prevent and
remedy.
When the corporation is the mere alter ego or business conduit
of a person, the separate personality of the corporation may be
disregarded. This is commonly referred to as the Instrumentality
Rule or the Alter Ego Doctrine which the courts have applied in
disregarding the separate juridical personality of corporations.
When a corporation is so organized and controlled and its affairs
are conducted so that it is in fact a mere instrumentality or
adjunct of the other, the fiction of the corporate entity of the
instrumentality may be disregarded.16) La Compana Coffee Factory
Inc. vs. Kaisahan ng mga manggagawa sa La Campana Case
Doctrine: Disregarding Corporate Entity. The doctrine that a
corporation is a legal entity existing separate and apart from the
person composing it is a legal theory introduced for purposes of
convenience and to subserve the ends of justice. The concept
cannot, therefore, be extended to a point beyond its reason and
policy, and when invoked in support of an end subversive of this
policy, will be disregarded by the courts. Thus, in an appropriate
case and in furtherance of the ends of justice, a corporation and
the individual or individuals owning all its stocks and assets will
be treated as identical, the corporate entity being disregarded
where used as a cloak or cover for fraud or illegality. (13 Am.
Jur., 160-161.)
Facts: Tan Tong has been engaged in the business of buying and
selling guagua under the trade name La Campana Guagua Packing.
Later, Tan Tong and his family organized a family corporation known
as La Campana Coffee Factory Co. Inc, with its principal office
located in the same place as that of La Campana Guagua Packing. A
year before the formation of the corporation, Tan Tong had entered
into a CBA with the Phil. Legion of Organized Workers (PLOW) to
which the union of Tan Tongs employees was affiliated. Said
employees later formed their organization known as Kaisahan Ng Mga
Manggagawa sa La Campana and applied for registration in the Dept.
of Labor as an independent entity. The Kaisahan Ng Mga Manggagawa
Sa La Campana, composed of 66 members consisting of both members of
LCGP and LCCF, presented a demand for higher wages and more
privileges addressed to La Campana Starch and Coffee Factory, by
which name they sought to designate the LCGP and the LCCF. However,
the demand was not granted and the attempt to settle the matter
through mediation had given no result. So the Dept. of Labor
certified the dispute to the Court of Industrial Relations. The 2
corpos as combined and the PLOW moved for the dismissal of the case
which includes the ground, among others, that the action is
directed against 2 different entities with distinct personalities
the La Campana Starch Factory and the La Campana Coffee Factory
Inc. CIR denied. MR was filed on the grounds that CIR had no
jurisdiction to take cognizance of the case for the reason, among
others, that the petitioner La Campana Coffee Factory, has only 14
employees, only 5 of whom are members of the respondent union and
therefore the absence of the jurisdictional number of 30.
ISSUE WON THE CIR HAS JURISDICTION
HELD YES. CIR HAS JURISDICTION bec the number of employees of
the La Campana Gaugau Packing involved in the case is more than the
jurisdictional number (31) required by law. La Campana Gaugau
Packing and La Campana Coffee Factory are operating under one
single mgt, that is, as one business though with 2 trade names. It
is true that the coffee factory is a corpo and, by legal fiction,
an entity existing separate and apart from the persons composing
it, that is, Tan Tong and his family. But it is settled that this
fiction of law, which has been introduced as a matter of
convenience and to subserve the ends of justice cannot be invoked
to further an end subversive of that purpose. In the present case,
Tan Tong appears to be the owner of the gaugau factory. And the
coffee factory, though an incorporated business, is in reality
owned exclusively by Tan Tong and his family. As found by the
CIR:The 2 factories have only 1 office, 1 mgt and 1 payroll. The
laborers of the gaugau factory and the coffee factory were
interchangeable laborers from the gaugau factory were sometimes
transferred to the coffee factory and vice-versa. Thus, the attempt
to make the 2 factories appear as 2 separate businesses, when in
reality they are but one, is but a device to defeat the ends of the
law (the Act governing capital and labor relations) and shld not be
permitted to prevail.
17) NAFLU vs OPLE143 SCRA 125 (1986)
Doctrine: The veil of corporate fiction may be pierced to
safeguard the right to self-organization and certain vested rights,
which had accrued in favor of the union. A corporation cannot use
the corporate fiction to achieve an illegal purpose.
Facts:In 1982, NAFLU (the union) filed a request for
conciliation before the Bureau of Labor Relations requesting for
the intervention in its dispute with management (private respondent
Lawman Industrial involving certain money claims, refusal to
conclude a collective agreement after such has been negotiated and
run-away shop undertaken by management in order to bust the union.
In the course of proceedings, management unilaterally declared a
temporary shutdown on Sept. 1982. The management of Lawman promised
the union that it would start the normalization of operation
effective Jan. 1983. But on Oct. 1982 NAFLU filed a notice of
strike. A month after the notice, Lawman offered 200K settlement of
claims inclusive of separation pay but NAFLU rejected it hence the
latter filed a case for ULP. Came Jan. 1983 but Lawman was still
not in operation alleging poor business condition. Lawman
Industrial was able to extend their shutdown after the period
expired without the Bureau claiming they had no more properties
claiming that another company repossessed it (Pioneer Corp.).On the
part of NAFLU, they alleged that due to Lawmans failure to grant
the unions economic demands they were forced to declare a strike
but subsequently entered into a settlement with respondent Lawman
(essentially wage increase and other benefits embodied in the CBA
they entered to take effect in Sept 1982). However, the company
already started the partial shutdown a month prior to the
affectivity of the CBA and allegedly committed run-away shop
because the machines were removed in the premises of the employer
and the name of Lawman was changed to Libra Garments. The Union
members discovered this and yet again, the respondent, thinking
they would get away with it the second time, changed it again to
Dolphin Garments.On March 1983, the Minister of Labor ordered
Lawman to stop the transfer of any of its existing assets to third
parties (other company Pioneer) to the prejudice of its employees
and the union and ordered reinstatement of the union members.
Issue: WOR Lawman and Libre/Dolphin are the same
Ruling:Yes. The 2nd Corporation seeks the protective shield of a
corporate fiction to achieve an illegal purpose. As Libra/Dolphin
is but an alter-ego of the old employer Lawman, the former must
bear the consequences of the latters unfair acts by reinstating the
petitioners to their former positions without loss of seniority
rights.
20) Francisco Motors Corporation vs Court of Appeals309 SCRA
72Piercing the Veil of Corporate Fiction
DOCTRINE: 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.
FACTS: In 1985, Francisco Motors Corporation (FMC) sued Atty.
Gregorio Manuel to recover from a him a sum of money in the amount
of P23,000.00+. Said amount was allegedly owed to them by Manuel
for the purchase of a jeep body plus repairs thereto. Manuel filed
a counterclaim in the amount of P50,000.00. In his counterclaim,
Manuel alleged that he was the Assistant Legal Officer for FMC;
that the Francisco Family, owners of FMC, engaged his services for
the intestate estate proceedings of one Benita Trinidad; that he
was not paid for his legal services; that he is filing the
counterclaim against FMC because said corporation was merely a
conduit of the Francisco Family. The trial court as well as the
Court of Appeals granted Manuels counterclaim on the ground that
the legal fees were owed by the incorporators of FMC (an
application of the doctrine of piercing the veil of corporation
fiction in a reversed manner).
ISSUE: Whether or not the doctrine of piercing the veil of
corporate fiction was properly used by the Court of Appeals.
HELD: No. In the first place, the doctrine is to be used in
disregarding corporate fiction and making the incorporators liable
in appropriate circumstances. In the case at bar, the doctrine is
applied upside down where the corporation is held liable for the
personal obligations of the incorporators such was uncalled for and
erroneous. It must be noted that that Atty. Manuels legal services
were secured by the Francisco Family to represent them in the
intestate proceedings over Benita Trinidads estate. The
indebtedness was incurred by the Francisco Family in their separate
and personal capacity. These estate proceedings did not involve any
business of FMC. The proper remedy is for Manuel to sue the
concerned members of the Francisco Family in their individual
capacity.
21) TRADERS ROYAL BANK VS. COURT OF APPEALS, FILRITERS GUARANTY
ASSURANCE CORPORATION and CENTRAL BANK of the PHILIPPINES
(G.R. No. 93397 March 3, 1997)
CASE DOCTRINE: A reading of the subject CBCI indicates that the
same is payable to FILRITERS GUARANTY ASSURANCE CORPORATION, and to
no one else, thus, discounting the petitioner's submission that the
same is a negotiable instrument, and that it is a holder in due
course of the certificate. Petitioner cannot put up the excuse of
piercing the veil of corporate entity, as this merely an equitable
remedy, and may be awarded only in cases when the corporate fiction
is used 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. In the case at bar, there is
sufficient showing that the petitioner was not defrauded at all
when it acquired the subject certificate of indebtedness from
Philfinance. Petitioner, being a commercial bank, cannot feign
ignorance of Central Bank Circular 769, and its requirements. An
entity which deals with corporate agents within circumstances
showing that the agents are acting in excess of corporate
authority, may not hold the corporation liable.
FACTS:
On November 27, 1979, Filriters Guaranty Assurance Corporation
(Filriters) executed a "Detached Assignment", whereby Filriters, as
registered owner, sold, transferred, assigned and delivered unto
Philippine Underwriters Finance Corporation (Philfinance) all its
rights and title to Central Bank Certificates of Indebtedness
(CBCI) No. D891 with a face value of P500,000.00. It was only
through one of its officers by which the CBCI was conveyed without
authorization from the company. Petitioner and Philfinance later
entered into a Repurchase agreement, on which petitioner bought the
CBCI from Philfinance. The latter agreed to repurchase the CBCI but
failed to do so. When the petitioner tried to have it registered in
its name in the Central Bank, the latter didn't want to recognize
the transfer.
On December 4, 1984, the Regional Trial Court the case took
cognizance of the defendant Central Bank of the Philippines' Motion
for Admission of Amended Answer with Counter Claim for Interpleader
6 thereby calling to fore the respondent Filriters Guaranty
Assurance Corporation (Filriters), the registered owner of the
subject CBCI as respondent. In its Decision dated April 29, 1988,
the Regional Trial Court of Manila, Branch XXXIII found the
assignment of CBCI No. D891 in favor of Philfinance, and the
subsequent assignment of the same CBCI by Philfinance in favor of
Traders Royal Bank null and void and of no force and effect. The
petitioner assailed the decision of the trial court in the Court of
Appeals, but their appeals likewise failed.
ISSUE/S:
1. Whether or not the CBCI is a negotiable instrument?
2. Whether or not the transfer of the CBCI from Filriters to
Philfinance and subsequently from Philfinance to TRB, in accord
with existing law, so as to entitle TRB to have the CBCI registered
in its name with the Central Bank?
HELD:
1. The CBCI is not a negotiable instrument. The instrument
provides for a promise to pay the registered owner Filriters. Very
clearly, the instrument was only payable to Filriters. It lacked
the words of negotiability which should have served as an
expression of the consent that the instrument may be transferred by
negotiation. 2. No, the officer who signed the deed of assignment
purportedly for and on behalf of Filriters, did not have the
necessary written authorization from the Board of Directors of
Filriters to act for the latter. For lack of such authority, the
assignment did not therefore bind Filriters and violated at the
same time Central Bank Circular No. 769 which has the force and
effect of a law, resulting in the nullity of the transfer.
Clearly shown in the record is the fact that Philfinance's title
over CBCI No. D891 is defective since it acquired the instrument
from Filriters fictitiously. What happened was Philfinance merely
borrowed CBCI No. D891 from Filriters, a sister corporation. Thus,
for lack of any consideration, the assignment made is a complete
nullity.
We find that the transfer made by Filriters to Philfinance did
not conform to Central Bank Circular No. 769, series of 1980,
otherwise known as the "Rules and Regulations Governing Central
Bank Certificates of Indebtedness", under which the note was
issued. Published in the Official Gazette on November 19, 1980,
Section 3 thereof provides that any assignment of registered
certificates shall not be valid unless made . . . by the registered
owner thereof in person or by his representative duly authorized in
writing.
In sum, Philfinance acquired no title or rights under CBCI No.
D891 which it could assign or transfer to Traders Royal Bank and
which the latter can register with the Central Bank. Thus, the
anauthorized use or distribution of the same by a corporate officer
of Filriters cannot bind the said corporation, not without the
approval of its Board of Directors, and the maintenance of the
required reserve fund. Consequently, the title of Filriters over
the subject certificate of indebtedness must be upheld over the
claimed interest of Traders Royal Bank.
22) INDOPHIL TEXTILE MILL WORKERS UNION-PTGWO vs CALICA &
INDOPHIL TEXTILE MILLS, INC.G.R. No. 96490 February 3, 1992
MEDIALDEA,J.: p
Doctrine: The fact that the businesses of Indophil and Acrylic
are related, that some of the employees of Indophil 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, these facts are not sufficient
to justify the piercing of the corporate veil of Acrylic.
Facts: Indophil Textile Mills, Inc. (Indophil) and Indophil
Acrylic Manufacturing Corp. (Acrylic) are engaged in the same
business of manufacturing, sale & export of yarns of various
counts and kinds of textiles, share the same physical plants,
offices & facilities, has practically the same incorporators,
directors and officers, and employ employees of Indophil to man the
units of Acrylic. However, these two companies are registered
separately in the Securities and Exchange Commission, and have
separate business purposes i.e. Acrylic cannot manufacture textiles
while Indophil cannot buy or import yarns. Petitioner is a
legitimate labor organization and the exclusive bargaining agent of
Indophils rank-and-file employees. When the Acrylic workers were
unionized and a CBA executed, petitioner claimed that Acrylic
should be considered as an extension or expansion of Indophil and
that Acrylic should be part of Indophils bargaining unit. Indophil
opposed holding that it is a juridical entity separate and distinct
from Acrylic. The impasse led petitioner and Indophil to enter into
a submission agreement and jointly requested respondent Calica to
act as voluntary arbitrator to resolve the labor dispute.
Arbitrator Calica rendered his award that the coverage clause of
Indophils CBA do not extend to the employees of Acrylic as an
extension or expansion of Indophil. Issue: Whether or not Indophil
Acrylic Manufacturing Corp. is an extension or expansion of
Indophil Textile Mills, Inc. and thus the workers of Indophil
Acrylic should be recognized as part of, and/or within the scope of
the bargaining unit of Indophil Textile Mills, Inc.?
Ruling: NO. While the businesses of Indophil and Acrylic are
related, some employees of Indophil are the same persons manning
and providing services to the units of Acrylic and the physical
plants, offices and facilities are situated in the same compound do
not sufficiently justify the doctrine of piercing the corporate
veil of