GOOD EARTH EMPORIUM v.

CA
Facts:
- Roces-Reyes Realty Inc (lessor), and Good Earth Emporium (lesssee) entered into a
lease contract, for a term of 3 years, at a monthly rental of P65,000
- When petitioners defaulted in the payment of rentals, private respondent Roces-Reyes
Realty filed an ejectment case against petitioners
- MTC: ordered the petitioners and all persons claiming title under him to vacate the
premises and to surrendered the same for the respondents
- Roces later filed a motion for execution which was opposed by petitioner, simultaneous
with its filing of a Notice of Appeal
- HOWEVER, petitioner’s counsel later filed a motion to withdraw said appeal citing as
reason that they were satisfied with the decision of the MTC

Issue:
WON the payment made by petitioner Good Earth Emporium to the Roces brothers constitutes
as payment to private respondent corporation, Roces-Reyes Realty

Held:
NO.
- In the present case, the payments were not made to Roces-Reyes Realty Inc. or to its
successors in interest nor was there evidence showing that payment was made to a
person authorized to receive it
- No such proof was submitted but merely inferred by the RTC from Marcos Roces
having signed the lease contract as President, whereby Jesus Marcos Roces
was a witness
- However, Roces was no longer President or even an officer of the
Roces-Reyes Realty Inc when he received the money and signed the sale
with pacto de retro
- In fact, he denied being in possession of authority to receive payment for the
respondent corporation and neither does the receipt show that he signed in the
same capacity as he did in the lease contract
- A corporation has a personality distinct and separate from its individual
stockholders/members
- Being an office/stockholder of a corporation DOES NOT make one’s
property also the of the soporation , and vice-versa because they are
separate entities
- Owners are in no legal sense the owners of corporate property which is owned
by the corporation as a distinct legal entity
- As a consequence of the separate juridical personality of a corporation, the
corporate debt/credit is not the debt/credit of the stockholder, nor is the
stockholder’s debt/credit that of the corporation
PETITION DENIED
Cruz v. Dalisay
Facts:
- 1984, the NLRC issued an order against Qualitrans Limo Service and ordered it to
reinstate the employees it terminated and to pay them their backwages
- In order to satisfy the backwages, respondent Dalisay, the Deputy Sheriff of the court,
garnished the bank account of Cruz, even though he was not the judgment debtor, but
rather it was Qualitrans Limo Service
- Respondent Dalisay argued that when he garnished Cruz’ bank account, he was merely
performing a ministerial duty and that the counsel for the plaintiff advised him to serve
notice of the garnishment on Cruz’ bank, since Cruz was the owner/president of the
corporation

Issue:
WON the personal property of Cruz, the president of the corporation, may be levied upon?

Held:
NO.
- The Court stated that respondent Dalisay chose to “pierce the veil of corporate entity”,
thereby usurping a power which belonged to the court and assumed that since Cruz is
the owner/president of the the corporation, they are one and the same
- It is a well settled doctrine that a corporation has a legal personality separate and distinct
from its individual stockholders or members
- The mere fact that a person is a president of a corporation does make his/her
own property, the property of the corporation, since the president and the
corporation are separate entities
- The court fined the deputy sheriff equivalent to 3 months salary and gave him a warning
Bank of America v. CA
Facts:
- Litonjuas filed a complaint before the RTC of Pasig against the petitioner banks (bank of
America NT&SA and Bank of America International).
- Litonjuas alleged that they were in the shipping business and that their revenues and
their corporation’s funds were deposited in the defendant banks. Since their business
was doing well, the petitioner banks induced them to increase the number of their ships
and offered them loans to acquire 4 more shops.
- Thereafter, the bank acquired the the 4 new vessels, with the operation and the
funds derived therefrom placed under the complete and exclusive control of the
petitioner banks
- Litonjuas claimed that the petitioner banks, as trustees, did not render an account of all
the income derived from the vessel operations as well as the proceeds of the
subsequent foreclosure sale and because of tis, the revenue derived from the operation
of the vessels rapidly decreased and the loans acquired for the purchase of the 4 new
vessels remained unpaid.
- Due to this, the petitioner banks foreclosed all of the Litonjuas vessels, including
the original 2 they had, to answer for the unpaid loans.
- The Litonjuas also lost a large portion of their own personal funds and were left
with an unpaid balance of their loans with the petitioner banks
- The petitioner banks filed a motion to dismiss on 2 grounds, one of which was lack of
cause of action and instead of filing an answer, they went to the CA to file a petition for
review on certiorari but the CA denied such petition and the MR they subsequently filed

Issue:
WON the CA failed to consider the fact that the separate personalities of the private
respondents and the foreign corporations (the real borrowers), thus the private respondents
have no personality to sue

Held:
NO.
- The Court stated that the petitioners’ argument that private respondents, being mere
stockholders of the foreign corporations, have no personality to sue, is untenable
- Petitioners insist that they do not have any obligation to the private respondents as they
are mere stockholders and that corporate entities have juridical personalities
separate and distinct from those of the private respondents
- The Court agreed with the petitioner’s argument that since the corporations are wholly
owned by the, and prior to the incorporation of such entities, they were clients of the
petitioners which induced them to acquire loans in order to invest in new ships

PETITION DENIED FOR LACK OF MERIT

Avalon Dale Garments, Inc. v. CA
Facts:
- Private respondents were employees of petitioner Avon Dale Garments and its
predecessor-in-interest, Avon Dale Shirt Factory
- After a dispute about the rotation of workers, the petitioner and private respondents
entered into compromise agreement wherein the private respondents were terminated
from service and were to be given their corresponding separation pay
- However, petitioner refused to include in the computation of private respondents’
separation pay the period during which said respondents were employed by Avon Dale
Shirt Factory
- Thus, private respondents filed a complaint with the labor arbiter claiming a deficiency in
their separation pay
- LA: dismissed the complaint and held that Avon Dale Shirt Factory and Avon Dale
Garments are not the same entity as the former was dissolved when it filed its Articles of
Dissolution with the SEC
- Private respondents appealed to the NLRC
- NLRC: reversed the decision of the LA after finding that upon dissolution of the Avon
Dale Shirt Factory, there was no showing that its terminated employees were ever paid
and thus, Avon Dale Garments, as successor-in-interest, was liable for private
respondents’ unpaid claim

Issue:
WON Avon Dale Garments should be held liable for private respondents’ separation pay from
Avon Dale Shirt Factory

Held:
YES.
- Petitioner failed to show that Avon Dale Garments is a separate and distinct entity from
Avon Dale Shirt Factory, absent any showing that there indeed was an actual closure
and cessation of the operations of Avon Dale Shirt Factory
- The mere filing of the Articles of Dissolution with the SEC, without more, is
NOT ENOUGH to support the conclusion that actual dissolution of an entity
took place
- In the present case, petitioner is not distinct from its predecessor but in fact merely
continued operations under the same owners, same business venture, at the same
address and continued to hire the same employees
- THUS, the Court held that the 2 entities cannot be deemed as separate and distinct
where there is a showing that one is merely the continuation of the other
- Even a change in the corporate name does not make a new corporation, it has
no effect on the identity of the corporation or in its property or liabilities

PETITION DISMISSED
Concept Builder, Inc. v. NLRC
Facts:
- Petitioner Concept Builders is a domestic corporation engaged in the construction
business. Private respondents were employed by said company as laborers, carpenters
and riggers
- Private respondents were each served notices of termination and it was stated in their
notices that their contracts of employment had expired and that the project in which they
were hired for had been completed
- Private respondents filed a complaint for illegal dismissal, unfair labor practice and
non-payment of their holidays pay, overtime pay and 13th month pay against petitioner
- LA: ordered the petitioner to reinstate the respondents and to pay them back wages
equivalent to 1 year
- NLRC: dismissed the MR and found that respondents’ back wages amounted to
P199,800
- The LA issued a writ of execution directing the sheriff to execute the decision and the
writ was partially satisfied through the garnishment of sums from petitioner’s debtor
(Metropolitan Waterworks, P81,385) and the amount was turned over to the cashier of
the NLRC
- Later, an ALIAS WRIT OF EXECUTION was issued by the LA directing the sheriff to
collect the balance of the judgment award (P117,000) and to reinstate the private
respondents to their former positions
- The sheriff later issued a report stating that he tried to serve the writ of execution on
petitioner through the security guard on duty but the service was refused on the ground
that petitioner no longer occupied the premises
- THUS, the sheriff recommended a “break-open order” to enable him to enter
the petitioner’s premises so that he could proceed with the public auction sale
- Later a certain Dennis filed a 3rd party claim with the LA alleging that the
properties sought to be levied upon were owned by HPPI, the company of which
he was the VP
- The private respondents filed a motion for issuance of a break open order, alleging that
HPPI and the petitioner corporation were owned by the same incorporator/stockholders
- In support if this, private respondents presented duly certified copies of the
General Information Sheet submitted by the petitioner to the SEC and the
General Information Sheer submitted by HPPI to the SEC
- HPPI filed an opposition, contending that HPPI is a corporation separate and distinct
from petitioner and that it and the petitioner company engaged in 2 different types of
businesses
- LA: denied private respondents’ motion for break open order
- Private respondents then appealed to the NLRC
- NLRC: set aside the order of the LA and issued a break-open order
- Petitioner filed an MR but such was denied by the NLRC
Issue:
WON the doctrine of piercing the corporate veil is inapplicable, in the absence of any showing
that petitioner created HPPI to evade its liability to private respondents

Held:
NO.
- The fundamental principle of corporation law is that a corporation is an entity separate
and distinct from its stockholders and from other corporation 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
- When the notion of separate juridical personality is used to defeat public convenience,
justify wrong, protect fraud or defend a crime, this separate personality may be
disregarded or the veil of corporate fiction pierced
- In the present case, it was noted that, while petitioner claimed that it ceased business
operations, it filed an Information sheet with the SEC stating its office address. On the
other hand, HPPI, the 3rd party claimant, submitted a similar Information sheet stating
that its office address is at the same address as the petitioner’s
- THUS, it is clear that petitioner ceased its business operations in order to evade
the payment to private respondents of backwages and to batrtheir reinstatement
- HPPI is obviously a business conduit of petitioner corporation and its emergence
was orchestrated to avoid the financial liability that already attached to the
petitioner corporation
- HENCE, the Court stated that the NLRC did not commit grave abuse of discretion when
it affirmed the break-open order issued by the LA

PETITION DISMISSED
Francisco Motors Corp v. CA
Facts:
- Petitioner filed a complaint against private respondents to recover P3412, which was the
balance of the jeep body bought by the Manuels from petitioner.
- An additional sum of P20,454, which was the unpaid balance of the cost of repair
of the vehicle and P6,000 for the cost of suit and attorney’s fees
- Private respondents filed a counterclaim for unpaid legal services by Gregorio Manuel in
the amount of P50k, which was not paid by the incorporators, directors and officers of
the petitioner
- RTC: decided in favor of the petitioner in relation to the claim for money but also allowed
the counterclaim of private respondents
- CA: upon appeal, the CA sustained the RTC’s decision
- Private respondent Gregorio Manuel claimed that he was the petitioner's assistant legal
officer and that he ha represented members of the Francisco family in the intestate
proceedings of their late mother
- HOWEVER, after the termination of the proceedings, his services were not paid.
- He said that the family members were also incorporators, directors and officers of
the petitioner, thus, he filed a permissive counterclaim for the unpaid attorney’s
fees
- RTC: ruled in favor of private respondents and found that Gregorio Manuel had rendered
legal services to the Francisco family and orders the petitioner to pay him P50,000
- Petitioner thus elevated the matter to the CA, contending that the it should not be made
a party to the counterclaim filed by Gregorio Manuel as it was not the real party in
interest but the individual members of the Francisco family concerned with the intestate
case
- CA: applied the doctrine of piercing the veil of corporate entity. Since the petitioner
corporation is composed of the Francisco family members, as directors and
incorporators for whom Gregorio Manuel rendered legal services in the intestate estate
case of their deceased mother and considering the principles and circumstances
established in the case, equity and justice demands the veil of corporate identity be
pierced and Gregorio Manuel to be compensated for legal services rendered to the heirs,
who are directors of the petitioner corporation

Issue:
WON the CA wrongly applied the doctrine of piercing the corporate veil because the transaction
only concerned Gregorio Manuel and the heirs

Held:
YES.
- Given the facts and circumstances of the case, the Court stated that the doctrine of
piercing the corporate veil has no relevant application
 - The rationale behind piercing a corporation’s identity in a given case is to remove
the barrier between the corporation from the persons comprising it to thwart the
fraudulent and illegal schemes of those who use corporate personality as a shield for
undertaking proscribed activities
- BUT in the present case, instead of holding certain individuals responsible for an
alleged corporate act, the situation has been reversed
- It is the petitioner as a corporation which is being ordered to answer for the
personal liability of certain individual directors, officer and incorporators
- The estate proceedings where Gregoria Manuel rendered his legal services
did NOT involve any business of the petition
- He sought to collect legal fees not just from certain Francisco family members but
also from the corporation on the claims that its management had requested his
services and he acceded thereto as an employee of the petitioner
- Considering the nature of the legal services involved, whatever obligation said
incorporators, directors and officers of the corporation had incurred, it was
incurred in their personal capacity
- The personality of the corporation and those of its incorporators,
directors and officers in their personal capacities ought to be kept
separate in this case.
- The claim for legal fees against the concerned individual
incorporators, officers and directors could not be properly directed
against the corporation without violating basic principles governing
corporations.

PETITION GRANTED, assailed decision is hereby REVERSED insofar only as it

held Francisco Motors Corporation liable for the legal obligation owing to
private respondent Gregorio Manuel;
First Phil. International Bank v. CA (???)
Facts:
- In the course of its banking operations, petitioner First Phil International Bank (formerly
Producers Bank of the Philippines), acquired 6 parcels of land, covered by a TCT
- BYME Investment and Development Corp, which used to be the owner of the properties,
mortgaged them with the bank as collateral for a loan
- The original plaintiffs, Demetria and Janolo wanted to buy the property and thus initiated
negotiations for that purpose
- Later, upon the suggestion og BYME’s legal counsel, Fajardo met with defendant Rivera,
the manager of the property management dept. Of the bank
- After the meeting, Janolo, made a formal purchase offer to the bank
- After exchanging a series of letters
- Later, Henry Co filed a motion to intervene

Issue:

Held:
Bibiano Reynoso v. CA
Facts:
- CCC (commercial credit corporation) is a financing and investment firm. It decided to
organize franchise companies in different parts of the country and employees of CCC
were designated as resident managers of the franchise companies.
- Petitioner Reynoso was designated as the resident manager of the franchise company in
QC (CCC-QC)
- CCC-QC later entered into an exclusive management contract with CCC where CCC
was granted the management and full control of the business activities of CCC-QC
- Under the contract, CCC-QC also made a discounting agreement with CCC but
such agreement was later discontinued due to the so called DOSRI Rule,
prohibiting the lending of funds by corporations to its directors, officers,
stockholders and other persons with related interest
- Due to the new set-up, several CCC officials, including petitioner Reynoso, became
employees of CCC-Equity.
- As resident manager, petitioner oversaw the operations of CCC-QC and
supervised its employees
- In order to boots the business activities of CCC-QC, petitioner deposited his
personal funds in the company and in return, CCC-QC issued him
interest-bearing PNs
- Later, a complaint for sum of money with preliminary attachment was instituted in the CFI
by CCC-QC against petitioner, who has been dismissed from CCC-Equity
- The complaint alleged that petitioner embex=zzled funds from CCC-QC and use
part of the embezzled funds to buy a house and lot
- The property was mortgaged to CCC and was later foreclosed
- Petitioner denied having embezzled funds from CCC-QC and asserted that the
sum (P1.3 million) represented his money placements in CCC-QC as evidenced
by 23 checks issued by him to the said company
- RTC: dismissed the complaint and found petitioner’s counterclaim to be meritorious,
ordering CCC-QC to pay P185,000 and damages
- Both parties appealed to the IAC
- IAC: dismissed CCC-QC’s appeal for failure to pay docket fees and petitioner withdrew
his appeal
- After the decision became final, a writ of execution was issued but the judgment
remained unsatisfied. This prompted the petitioner to file a motion for writ of execution
- Meanwhile, CCC became known as General Credit Corporation (GCC)
- GCC filed a special appearance and opposition alleging that it was not a party to the
case and thus, petitioner should direct his claim against CCC-QC, when the RTC
directed it to file its comment
- Petitioner argued that CCC-QC is a conduit and agency of CCC and invoked the SEC
decision where it was declared that GCC, CC-Equity and other franchised companies
including CCC-QC were declared as 1 corporation
 - GCC instituted a complaint before the RTC of Pasig against petitioner Reynoso and the
deputy sheriff, praying that the levy on its land be declared null and void, and that the
sheriff be enjoined from consolidating ownership over the land and from further levying
on other properties of GCC
- The RTC did not issue a TRO, thus, GCC instituted 2 petitions for certiorari with the CA
(the cases were consolidated)
- CA: enjoined the auction sale of petitioner’s properties as well as initiating similar acts of
levying and selling on execution other properties of said petitioner
- The injunction was granted

Issue:
WON the judgment in favor of petitioner may be executed against respondent GCC

Held:
YES.
- The Court stated that the use by CCC-QC of the same name of CCC was intended to
publicly identify it as a component of the CCC group of companies engaged in 1 and the
same business (i.e. investment and financing)
- Aside from CCC-QC, other franchise companies were organized such as
CCC-North Manila and CC-Cagayan Valley
- When the mother corporation and its subsidiary cease to act in good faith and honest
business judgment, when the corporate device is used by the parent to avoid its liability
for legitimate obligations of the subsidiary, and when the corporate fiction used to
perpetrate fraud or promote injustice, the law steps in to remedy the problem
- Factually and legally, CCC had dominant control of the business operations of CCC-QC.
- The EXCLUSIVE management contract insured that CCC-QC would be
managed and controlled by CCC and would not deviate from the commands of
the mother corporation
- Petitioner’s designation as resident manager implies that he was placed in CCC-QC by a
superior authority
- Petitioner and other permanent employees of CCC-QC were qualified members
and participants of the Employees Pension Plan of CCC
- Both CCC and CCC-QC were engaged in the same principal line of business
involving a single transaction process and the 2 corporations also shared the
same office space. CCC-QC had no office of its own
- To circumvent the Central Bank’s disapproval of CCC-QC’s mode of reducing its
DORI lender accounts, and its directive to follow Central Bank’s requirements,
resident manager, including the petitioner were told to observe a pseudo
compliance with the phasing out orders. BUT due to his unwillingness to conform
to these directives and his reluctance to resort to illegal practices, petitioner was
terminated and criminal as well as civil cases were filed against him
- Faced with the financial obligations which CCC-QC had to satisfy, the
mother firm closed CCC-QC, in obvious fraud of its creditors
 - The contention of respondent GCC, that the corporate fiction should
be appreciated in its favor is without merit.

DECISION OF THE CA REVERSED AND SET ASIDE, INJUNCTION AGAINST THE

HOLDING OF AN AUCTION SALE FOR THE PROPERTIES OF GCC, LIFTED
Simeon De Leon v. NLRC
Facts:
- FTC and FISI entered into a contract for security services, of which FISI was to provide
- Petitioners were among those engaged as security guards pursuant to the contract
- The incorporators and the stockholders of FISI later sold their shares of to a group of
new stockholders and the FISI’s Articles of Incorporation were amended, changing its
corporate name to MISI, with new by-laws adopted and approved by the SEC
- FTC terminated the contract for security services which resulted in the displacement of
500 plus security guards assigned by FISI/MISI to FTC.
- FTC engaged the services of 2 other security agencies, whose security guards
were to replace FISI’s security guards
- The Fortun Tobacco Labor Union (FTC Labor Union), claiming to be the bargaining
agent of the security guards, sent a Notice of Strike to FISI/MISI. However, the RTC of
Pasig issued a writ of injunction to enjoin the picket strike
- Petitioner de Leon and 16 other complainants thus filed a case before the NLRC,
alleging that they as regular employees of FTC, were dismissed without valid cause and
without due process.
- They also claimed that the dismissal was part of FTC’s plan to bust their
newly-organized union
- FTC argued that there was no employer-employee relationship between FTC
and the petitioners and that at the time of their dismissal, petitioners were
employees of MISI, which was a separate and distinct corporation from FTC.
THUS, petitioners had no cause of action against FTC
- On the other hand, FISI denied the charge of illegal dismissal and unfair
labor practice, arguing that petitioners were not dismissed but were merely
placed on floating status pending reassignment to other posts
- It further alleged that the temporary displacement of petitioners was not
due to its fault but was the result of the pre termination by FTC of the
security services contract
- LA: found respondents liable for the charges
- NLRC: reversed and set aside the decision of the LA and held that the LA erred in
applying the “single employer” principle and concluding that there was an
employer-employee relationship between FTC and FISI on the one hand and the
petitioners on the other
- Also found that at the time of the termination of the contract, FISI had been
renamed and had different stockholders and officers from that of FTC and they
had separate offices
- Held that the principle of “single employer” and the doctrine of piercing the
corporate veil could not apply
- Further ruled that the proximate cause for the displacement of petitioners was the
termination of the contract for by FTC, thus FISI should not be faulted for the
charge of illegal dismissal
 - The petitioners filed a MR but the same was denied

Issue:
WON the doctrine of piercing the corporate veil applies to the present case

Held:
YES.
- After examination of the facts of the case, the Court found that there was sufficient
ground to conclude that respondents were guilty of interfering with the right of petitioners
to self-organization
- The Court found that the LA correctly applied the doctrine of piercing the corporate veil
to hold the respondents liable for unfair labor practice and illegal termination
- Though a corporation is an entity separate and distinct from its stockholders and
from other corporations connected to it, the law will regard the corporation as an
association of persons or merge 2 corporations into one when the concept of
separate entity is used to defeat public convenience, justify wrong, protect fraud
or defend a crime
- The separate juridical personality of a corporation may also be disregarded when such
corporation is a mere alter ego or business conduit of another person.
- In the present case, it was shown that FISI was a mere adjunct of FTC
- FISI by virtue of a contract for security services, provided FTC with security
guards BUT records show that FISI and FTC have the same owners and
business address and FISI only provided security services to FTC and
other companies belonging to the Lucio Tan group of companies
- The sale of the shares of the former stockholders to a new group of
stockholders, who changed the name of the corporation, appears to be part of
a scheme to terminate the services of FISI’s security guards and bust their
newly-organized union
- THUS, the Court stated that it cannot allow FTC to use its separate corporate
personality to shield itself from liability for illegal acts committed against its
employees

PETITION GRANTED, RESOLUTIONS OF THE NLRC SET ASIDE