Corpo Cases: 1. San Juan Structural v CA GR No. 129459, 9/29/1998 2. Subic Bay Metropolitan v Universal International GR No.

o. 131680; 9/14/2000 3. Yamamoto v Nishino; 551 SCRA 447 4. Kukan v Reyes; GR No. 182729; 9/20/2010 5. Francisco Motors v CA; GR No. 100812; 6/25/1999 6. Filipinas Broadcasting v Ago Medical; GR No. 141994; 1/17/2005 7. Crystal v BPI; GR No. 172428; 11/28/2008 8. DBP v Ong; 460 SCRA 170 9. Locsin v Nissan; GR No. 185567; Oct. 20, 2010 10. International Express Travel v CA; GR No. 119001; Oct. 19, 2000 11. Gala v Ellies; 418 SCRA 431 12. Industrial Refactories Corp of the PH v CA/SEC/Refractories Corp of the PH, 390 SCRA 252 13. Gokongwei JR v CA; 89 SCRA 336 14. Aurbach v Sanitary wares; 180 SCRA 130 15. Peoples Aircargo & Warehousing Co, Inc. v CA; 297 SCRA 170 16. Nakpil v IBC; GR No. 144767; ,March 31, 2002 17. Ong v CA; GR No. 119858; April 29, 2003 18. Matling v Koros; GR No. 157802; Oct. 13, 2010 19. Francisco v Mallen Jr., GR No. 173169; Sept. 23, 2010 20. Cebu Country Club v Elizagaque; 542 SCRA 65

San Juan Structural V. CA (1998) Lessons Applicable: Definition of a Close Corporation (Corporate Law)
FACTS:

February 14 1989: San Juan Structural and Steel Fabricators, Inc.'s (San Juan) entered into an agreement with Motorich Sales Corporation (Motorich) for the transfer to it of a parcel of land containing an area of 414 square meters

San Juan paid the down payment of P100,000, the balance to be paid on or before March 2, 1989 March 1, 1989: Mr. Andres T. Co, president of San Juan, wrote a letter course through Motorich's broker requesting for a computation of the balance to be paid

Linda Aduca, who wrote the computation of the balance March 2, 1989: San Juan was ready with the amount corresponding to the balance, covered by Metrobank Cashier's Check, payable to Motorich

they were supposed to meet in the office of San Juan but Motorich's treasurer, Nenita Lee Gruenberg, did not appear

Motorich refused to execute the Transfer of Rights/Deed of Assignment which is necessary to transfer the certificate of title

ACL Development Corp. (ACL) is impleaded as a necessary party since Transfer Certificate of Title No. (362909) 2876 is still in its name

JNM Realty & Development Corp. (JNM) is impleaded as a necessary party in view of the fact that it is the transferor of right in favor of Motorich

April 6, 1989: ACL and Motorich entered into a Deed of Absolute Sale the Registry of Deeds of Quezon City issued a new title in the name of Motorich Sales Corporation, represented by Nenita Lee Gruenberg and Reynaldo L. Gruenberg, under Transfer Certificate of Title No. 3571

as a result of Nenita Lee Gruenberg and Motorich's bad faith in refusing to execute a formal Transfer of Rights/Deed of Assignment, San Juan suffered moral and nominal damages of P500,000 and exemplary damages of P100,000.00 and P100,000 attorneys fees

San Juan lost the opportunity to construct a residential building in the sum of P100,000.00 Pesos CA affirmed RTC for dismissing San Juan argues that the veil of corporate fiction of Motorich should be pierced because it is a close corporation.

Since "Spouses Reynaldo L. Gruenberg and Nenita R. Gruenberg owned all or almost all or 99.866% to be accurate, of the subscribed capital stock" of Motorich, San Juan argues that Gruenberg needed no authorization from the board to enter into the subject contract.

being solely owned by the Spouses Gruenberg, the company can treated as a close corporation which can be bound by the acts of its principal stockholder who needs no specific authority

ISSUE: W/N Motorich is a close corp. which does not need to be bound by its principal SH

HELD: NO. petition is hereby DENIED

Gruenberg, treasurer of Motorich, and Andres Co signed the contract but that cannot bind Motorich, because it never authorized or ratified such sale or even the receipt of the earnest money

A corporation is a juridical person separate and distinct from its stockholders or members San Juan failed to prove otherwise The document is a hand-written one, not a corporate receipt, and it bears only Nenita Gruenberg's signature GR: acts of corporate officers within the scope of their authority are binding on the corporation. But when these officers exceed their authority, their actions "cannot bind the corporation, unless it has ratified such acts or is estopped from disclaiming them.

statutorily granted privilege of a corporate veil may be used only for legitimate purposes utilized as a shield to commit fraud, illegality or inequity; defeat public convenience; confuse legitimate issues; or serve as a mere alter ego or business conduit of a person or an instrumentality, agency or adjunct of another corporation - none here

Sec. 96. Definition and Applicability of Title. A close corporation, within the meaning of this Code, is one whose articles of incorporation provide that: (1) All of the corporation's issued stock of all classes, exclusive of treasury shares, shall be held of record by not more than a specified number of persons, not exceeding twenty (20); (2) All of the issued stock of all classes shall be subject to one or more specified restrictions on transfer permitted by this

Title; and (3) The corporation shall not list in any stock exchange or make any public offering of any of its stock of any class. Notwithstanding the foregoing, a corporation shall be deemed not a close corporation when at least twothirds (2/3) of its voting stock or voting rights is owned or controlled by another corporation which is not a close corporation within the meaning of this Code. . . . .

The articles of incorporation of Motorich Sales Corporation does not contain any provision stated in Sec. 96 mere ownership by a single stockholder or by another corporation of all or capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personalities

A narrow distribution of ownership does not, by itself, make a close corporation Even if veil is peice it will then be a sale of conjugal property which Nenita alone could not have effected Gruenberg did not represent herself as authorized by Respondent Motorich despite the receipt issued by the former specifically indicating that she was signing on behalf of Motorich

The amount paid as "earnest money" was not proven to have redounded to the benefit of Motorich it was deposited with the account of Aren Commercial c/o Motorich Andres Co being a President of San Juan for more than 10 years cannot feign ignorance of the scope of the authority of a corporate treasurer

However, Nenita Gruenberg should be ordered to return to petitioner the amount she received as earnest money, as "no one shall enrich himself at the expense of another.

SBMA v. Universal International Group of Taiwan September 14, 2000 Panganiban, J.

Facts UIG and SBMA entered into a Lease and Development Agreement (LDA) wherein SBMA leased to UIG the Binictan Golf Course and appurenant facilities thereto to be transforemed into a world-class 18-hole golf course/resort. The LDA contained pre-termination clauses which authorizes SBMA, after due notice to UIG, to terminate the lease and immediately take possession of the property if UIG commits a material breach of any of the contracts conditions. SBMA wrote UIG, calling its attention to its failure to deliver its various contactual obligations.

UIG imputed the delay to the default of its main contractor, FF Cruz, but committed itself to comply with its undertakibngs.

The following month, SBMA declared UIG in default.

Six months later, UIG still failed to satisfy its obligations so SBMA served a letter of pretermination to UIG. Shortly thereafter, the golf course was formally closed and SBMA took possession of the subject premises. UIG filed a complaint against SBMA for Injuction and Damages with prayer for TRO and preliminary injuction. TC granted UIGs prayer and ordered SBMA to restore possession of the golf course to UIG. In a subsequent order, TC denied SBMAs motion to dismiss. CA upheld UIGs capacity to sue, holding that SBMA is estopped from questioning its standing. It also held that UIGDC and SBGCCI were real parties in interest because they made substantial investments in the venture and had been in possession in property when SBMA took over.

Issues/Held 1. WON UIG has capacity to sue.

YES. As a general rule, unlicensed foreign non-resident corporations cannot file suits in the Philippines. A corporation has legal status only within the state or territory in which it was organized. For this reason, a corporation organized in another country has no personality to file suits in the Philippines. In order to subject a foreign corporation doing business in the country to the jurisdiction of our courts, it must acquire a license from the SEC and appoint an agent for service of process. Without such license, it cannot institute a suit in the Philippines. However, after contracting with a foreign corporation, a domestic firm is estopped from denying the formers capacity to sue.

2.

WON UIGDC and SBGCCI are real parties in interest.

YES. According to Sec. 2, Rule 3 of the Rules of Court defines a real party in interest as the party who stands to be benefited or injured by the judgment of the suit, or the party entitled to the avails of the suit. In this case, the CA made a factual finding that UIGDC and SBGCCI were in possession of the property when SBMA took over. Moreover, it also found that they had already made substantial investments in the project. The CA is correct in holding that UIGDC and SBGCCI stand to be benefitted or injured by the present suit and should be deemed real parties in interest.

3.

WON RTC has jurisdiction over the suit.

YES. According to petitioners, the RTC has no jurisdiction over the case because ejectment suits are cognizable by municipal courts. However, the complaint reveals that it sought to enjoin petitioners from

rescinding the contract and taking over the property. While possession was a necessary consequence of the suit, it was merely incidental. The main issue is not ejectment, but whether SBMA could rescind the LDA. Because it was a dispute that was incapable of pecuniary estimation, it was within the jurisdiction of the RTC.

RYUICHI YAMAMOTO v. NISHINO LEATHER INDUSTRIES, INC. and IKUO NISHINO 551 SCRA 447 (2008) To disregard the separate juridical personality of a corporation, the wrongdoing or unjust act in contravention of a plaintiffs legal rights must be clearly and convincingly established. Also, without acceptance, a mere offer produces no obligation. Ryuichi Yamamoto and Ikuo Nishino agreed to enter into a joint venture wherein Nishino would acquire such number of shares of stock equivalent to 70% of the authorized capital stock of the corporation. However, Nishino and his brother Yoshinobu Nishino acquired more than 70% of the authorized capital stock. Negotiations subsequently ensued in light of a planned takeover by Nishino who would buy-out the shares of stock of Yamamoto who was advised through a letter that he may take all the equipment/ machinery he had contributed to the company (for his own use and sale) provided that the value of such machines is deducted from the capital contributions which will be paid to him. However, the letter requested that he give his comments on all the above, soonest. On the basis of the said letter, Yamamoto attempted to recover the machineries but Nishino hindered him to do so, drawing him to file a Writ of Replevin. The Trial Court issued the writ. However, on appeal, Nishino claimed that the properties being recovered were owned by the corporation and the above-said letter was a mere proposal which was not yet authorized by the Board of Directors. Thus, the Court of Appeals reversed the trial courts decision despite Yamamotos contention that the company is merely an instrumentality of the Nishinos. ISSUE: Whether or not Yamamoto can recover the properties he contributed to the company in view of the Doctrine of Piercing the Veil of Corporate Fiction and Doctrine of Promissory Estoppel. HELD: One of the elements determinative of the applicability of the doctrine of piercing the veil of corporate fiction is that 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 the plaintiffs legal rights. To disregard the separate juridical personality of a corporation, the wrongdoing or unjust act in contravention of a plaintiffs legal rights must be clearly and convincingly established; it cannot be presumed. Without a demonstration that any of the evils sought to be prevented by the doctrine is present, it does not apply. Estoppel may arise from the making of a promise. However, it bears noting that the letter was followed by a request for Yamamoto to give his comments on all the above, soonest. What was thus proffered to Yamamoto was not a promise, but a mere offer, subject to his acceptance. Without acceptance, a mere offer produces no obligation. Thus, the machineries and equipment, which comprised Yamamotos investment, remained part of the capital property of the corporation.

KUKAN INTERNATIONAL CORPORATION vs. REYES G.R. No. 182729 September 29, 2010

FACTS: Sometime in March 1998, Kukan, Inc. conducted bidding for the supply and installation of signages in a building being constructed in Makati City. Romeo Morales tendered the winning bid and was awarded the PhP 5 million contract. Short changed, Morales filed a Complaint with the RTC against Kukan, Inc. for a sum of money. The RTC rendered a Decision in favor of Morales and against Kukan, Inc. After the decision became final and executory, Morales moved for and secured a writ of execution against Kukan, Inc. The sheriff then levied upon various personal properties of Kukan International Corporation (KIC). KIC then filed an Affidavit of Third-Party Claim. Notably, KIC was incorporated in August 2000, or shortly after Kukan, Inc. had stopped participating in Civil Case. In reaction to the third party claim, Morales interposed an Omnibus Motion dated April 30, 2003. In it, Morales prayed, applying the principle of piercing the veil of corporate fiction, that an order be issued for the satisfaction of the judgment debt of Kukan, Inc. with the properties under the name or in the possession of KIC, it being alleged that both corporations are but one and the same entity. By Order of May 29, 2003 as reiterated in a subsequent order, the court denied the omnibus motion. In a bid to establish the link between KIC and Kukan, Inc., and thus determine the true relationship between the two, Morales filed a Motion for Examination of Judgment Debtors dated May 4, 2005. In this motion Morales sought that subpoena be issued against the primary stockholders of Kukan, Inc., among them Michael Chan, a.k.a. Chan Kai Kit. This too was denied by the trial court in an Order dated May 24, 2005. Morales then sought the inhibition of the presiding judge, Eduardo B. Peralta, Jr., who eventually granted the motion. The case was re-raffled to Branch 21, presided by public respondent Judge Amor Reyes. Before the Manila RTC, Branch 21, Morales filed a Motion to Pierce the Veil of Corporate Fiction to declare KIC as having no existence separate from Kukan, Inc. This time around, the RTC, by Order dated March 12, 2007, granted the motion. KIC moved but was denied reconsideration in another Order dated June 7, 2007. On petition for certiorari before CA, the same was denied. The CA later denied KICs motion for reconsideration in the assailed resolution. Hence, the instant petition for review. ISSUE: Whether the trial and appellate courts correctly applied, under the premises, the principle of piercing the veil of corporate fiction. RULING: Piercing the veil of corporate entity apllies only: (1) the court must first acquire jurisdiction over the corporation or corporations involved before its or their separate personalities are disregarded; and (2) the doctrine of piercing the veil of corporate entity can only be raised during a full-blown trial over a cause of action duly commenced involving parties duly brought under the authority of the court by way of service of summons or what passes as such service. Mere ownership by a single stockholder or by another corporation of a substantial block of shares of a corporation does not, standing alone, provide sufficient justification for disregarding the separate corporate personality. For this ground to hold sway in this case, there must be proof that Chan had control or complete dominion of Kukan and KICs finances, policies, and business practices; he used such control to commit fraud; and the control was the proximate cause of the financial loss complained of by

Morales. The absence of any of the elements prevents the piercing of the corporate veil. And indeed, the records do not show the presence of these elements. In fine, there is no showing that the incorporation, and the separate and distinct personality, of KIC was used to defeat Morales right to recover from Kukan, Inc. Judging from the records, no serious attempt was made to levy on the properties of Kukan, Inc. Morales could not, thus, validly argue that Kukan, Inc. tried to avoid liability or had no property against which to proceed. The suggestion that KIC is but a continuation and successor of Kukan, Inc., owned and controlled as they are by the same stockholders, stands without factual basis. It is true that Michael Chan, a.k.a. Chan Kai Kit, owns 40% of the outstanding capital stock of both corporations. But such circumstance, standing alone, is insufficient to establish identity. There must be at least a substantial identity of stockholders for both corporations in order to consider this factor to be constitutive of corporate identity. Evidently, the aforementioned case relied upon by Morales cannot justify the application of the principle of piercing the veil of corporate fiction to the instant case. As shown by the records, the name Michael Chan, the similarity of business activities engaged in, and incidentally the word "Kukan" appearing in the corporate names provide the nexus between Kukan, Inc. and KIC. As illustrated, these circumstances are insufficient to establish the identity of KIC as the alter ego or successor of Kukan, Inc.