PHILIPPINEJURISPRUDENCEFULLTEXT

TheLawphilProjectArellanoLawFoundation
G.R.No.100866July14,1992
REBECCABOYERROXAS,ETAL.vs.COURTOFAPPEALS,ETAL.

RepublicofthePhilippines
SUPREMECOURT
Manila
THIRDDIVISION

G.R.No.100866July14,1992

REBECCABOYERROXASandGUILLERMOROXAS,petitioners,
vs.
HON.COURTOFAPPEALSandHEIRSOFEUGENIAV.ROXAS,INC.,respondents.

GUTIERREZ,JR.,J.:

ThisisapetitiontoreviewthedecisionandresolutionoftheCourtofAppealsinCAG.R.No.14530affirmingtheearlierdecisionof
theRegionalTrialCourtofLaguna,Branch37,atCalamba,intheconsolidatedRTCCivilCaseNos.80284Cand80384Centitled
"HeirsofEugeniaV.Roxas,Inc.v.RebeccaBoyerRoxas"andHeirsofEugeniaV.Roxas,Inc.v.GuillermoRoxas,"thedispositive
portionofwhichreads:

INVIEWOFTHEFOREGOING,judgmentisherebyrenderedinfavoroftheplaintiffandagainstthedefendants,by
orderingasitisherebyorderedthat:

1)InRTCCivilCaseNo.80284C:RebeccaBoyerRoxasandallpersonsclaimingunderherto:

a) Immediately vacate the residential house near the Balugbugan pool located inside the premises of the Hidden
ValleySpringsResortatLimao,Calauan,Laguna

b)PaytheplaintifftheamountofP300.00permonthfromSeptember10,1983,forheroccupancyoftheresidential
houseuntilthesameisvacated

c) Remove the unfinished building erected on the land of the plaintiff within ninety (90) days from receipt of this
decision

d)PaytheplaintifftheamountofP100.00permonthfromSeptember10,1983,untilthesaidunfinishedbuildingis
removedfromthelandoftheplaintiffand

e)Paythecosts.

2)InRTCCivilCaseNo.80384C:GuillermoRoxasandallpersonsclaimingunderhimto:

a) Immediately vacate the residential house near the tennis court located within the premises of the Hidden Valley
SpringsResortatLimao,Calauan,Laguna

b)PaytheplaintifftheamountofP300.00permonthfromSeptember10,1983,forhisoccupancyofthesaidresidential
houseuntilthesameisvacatedand

c)Paythecosts.(Rollo,p.36)

Intwo(2)separatecomplaintsforrecoveryofpossessionfiledwiththeRegionalTrialCourtofLagunaagainstpetitionersRebecca
BoyerRoxasandGuillermoRoxasrespectively,respondentcorporation,HeirsofEugeniaV.Roxas,Inc.,prayedfortheejectmentof
thepetitionersfrombuildingsinsidetheHiddenValleySpringsResortlocatedatLimao,Calauan,Lagunaallegedlyownedbythe
respondentcorporation.

In the case of petitioner Rebecca BoyerRoxas (Civil Case No80284C), the respondent corporation alleged that Rebecca is in
possessionoftwo(2)houses,oneofwhichisstillunderconstruction,builtattheexpenseoftherespondentcorporationandthather
occupancyonthetwo(2)houseswasonlyuponthetoleranceoftherespondentcorporation.

InthecaseofpetitionerGuillermoRoxas(CivilCaseNo.80384C),therespondentcorporationallegedthatGuillermooccupiesa
housewhichwasbuiltattheexpenseoftheformerduringthetimewhenGuillermo'sfather,EribertoRoxas,wasstilllivingandwas
thegeneralmanageroftherespondentcorporationthatthehousewasoriginallyintendedasarecreationhallbutwasconvertedfor
the residential use of Guillermo and that Guillermo's possession over the house and lot was only upon the tolerance of the
respondentcorporation.

Inbothcases,therespondentcorporationallegedthatthepetitionersneverpaidrentalsfortheuseofthebuildingsandthelotsand
thattheyignoredthedemandlettersforthemtovacatethebuildings.

Intheirseparateanswers,thepetitionerstraversedtheallegationsinthecomplaintbystatingthattheyareheirsofEugeniaV.Roxas
andtherefore,coownersoftheHiddenValleySpringsResortandascoownersoftheproperty,theyhavetherighttostaywithinits
premises.

Thecaseswereconsolidatedandtriedjointly.

Atthepretrial,thepartieslimitedtheissuesasfollows:

1)whetherplaintiffisentitledtorecoverthequestionedpremises

2)whetherplaintiffisentitledtoreasonablerentalforoccupancyofthepremisesinquestion

3) whether the defendant is legally authorized to pierce the veil of corporate fiction and interpose the same as a
defenseinanaccionpubliciana

4)whetherthedefendantsaretrulybuildersingoodfaith,entitledtooccupythequestionedpremises

5)whetherplaintiffisentitledtodamagesandreasonablecompensationfortheuseofthequestionedpremises

6) whether the defendants are entitled to their counterclaim to recover moral and exemplary damages as well as
attorney'sfeesinthetwocases

7) whether the presence and occupancy by the defendants on the premises in questioned (sic) hampers, deters or
impairsplaintiff'soperationofHiddenValleySpringsResortand

8) whether or not a unilateral and sudden withdrawal of plaintiffs tolerance allowing defendants' occupancy of the
premisesinquestioned(sic)isunjustenrichment.(OriginalRecords,486)

Uponmotionoftheplaintiffrespondentcorporation,PresidingJudgeFranciscoMa.GuerreroofBranch34issuedanOrderdated
April 25, 1986 inhibiting himself from further trying the case. The cases were reraffled to Branch 37 presided by Judge Odilon
Bautista.JudgeBautistacontinuedthehearingofthecases.

Forfailureofthepetitioners(defendantsbelow)andtheircounseltoattendtheOctober22,1986hearingdespitenotice,andupon
motionoftherespondentcorporation,thecourtissuedonthesameday,October22,1986,anOrderconsideringthecasessubmitted
fordecision.Atthisstageoftheproceedings,thepetitionershadnotyetpresentedtheirevidencewhiletherespondentcorporation
hadcompletedthepresentationofitsevidence.

Theevidenceoftherespondentcorporationuponwhichthelowercourtbaseditsdecisionisasfollows:

To support the complaints, the plaintiff offered the testimonies of Maria Milagros Roxas and that of Victoria Roxas
VillartaaswellasExhibits"A"to"M3".

Theevidenceoftheplaintiffestablishedthefollowing:thattheplaintiff,HeirsofEugeniaVRoxas,Incorporated,was
incorporated on December 4, 1962 (Exh. "C") with the primary purpose of engaging in agriculture to develop the
properties inherited from Eugenia V. Roxas and that of y Eufrocino Roxas that the Articles of Incorporation of the
plaintiff,in1971,wasamendedtoallowittoengageintheresortbusiness(Exh.
"C1")thattheincorporatorsasoriginalmembersoftheboardofdirectorsoftheplaintiffwereallmembersofthesame
family,withEufrocinoRoxashavingthebiggestsharethataccordingly,theplaintiffputuparesortknownasHidden
ValleySpringsResortonaportionofitslandlocatedatBo.Limao,Calauan,Laguna,andcoveredbyTCTNo.32639
(Exhs."A"and"Al")thatimprovementswereintroducedintheresortbytheplaintiffandamongthemwerecottages,
housesorbuildings,swimmingpools,tenniscourt,restaurantandopenpavilionsthatthehouseneartheBalugbugan
Pool (Exh. "Bl") being occupied by Rebecca B. Roxas was originally intended as staff house but later used as the
residence of Eriberto Roxas, deceased husband of the defendant Rebecca BoyerRoxas and father of Guillermo
Roxas that this house presently being occupied by Rebecca B. Roxas was built from corporate funds that the
constructionoftheunfinishedhouse(Exh."B2")wasstartedbythedefendantRebeccaBoyerRoxasandherhusband
Eriberto Roxas that the third building (Exh. "B3") presently being occupied by Guillermo Roxas was originally
intendedasarecreationhallbutlaterconvertedasaresidentialhousethatthishousewasbuiltalsofromcorporate
funds that the said house occupied by Guillermo Roxas when it was being built had nipa roofing but was later
changedtogalvanizedironsheetsthatatthebeginning,ithadnopartitiondownstairsandthesecondfloorwasan
open space that the conversion from a recreation hall to a residential house was with the knowledge of Eufrocino
Roxas and was not objected to by any of the Board of Directors of the plaintiff that most of the materials used in
convertingthebuildingintoaresidentialhousecamefromthematerialsleftbyCoppola,afilmproducer,whofilmed
the movie "Apocalypse Now" that Coppola left the materials as part of his payment for rents of the rooms that he
occupiedintheresortthatafterthesaidrecreationhallwasconvertedintoaresidentialhouse,defendantGuillermo
Roxas moved in and occupied the same together with his family sometime in 1977 or 1978 that during the time
 EufrocinoRoxaswasstillalive,EribertoRoxaswasthegeneralmanagerofthecorporationandtherewasseldomany
board meeting that Eufrocino Roxas together with Eriberto Roxas were (sic) the ones who were running the
corporationthatduringthistime,EribertoRoxaswastherestaurantandwineconcessionaireoftheresortthatafterthe
death of Eufrocino Roxas, Eriberto Roxas continued as the general manager until his death in 1980 that after the
deathofEribertoRoxasin1980,thedefendantsRebeccaB.RoxasandGuillermoRoxas,committedactsthatimpeded
the plaintiff's expansion and normal operation of the resort that the plaintiff could not even use its own pavilions,
kitchenandotherfacilitiesbecauseoftheactsofthedefendantswhichledtothefilingofcriminalcasesincourtthat
caseswereevenfiledbeforetheMinistryofTourism,BureauofDomesticTradeandtheOfficeofthePresidentbythe
partieshereinthatthedefendantsviolatedtheresolutionandordersoftheMinistryofTourismdatedJuly28,1983,
August3,1983andNovember26,1984(Exhs."G","H"and"Hl")whichorderedthemorthecorporationtheyrepresent
todesistfromandtoturnoverimmediatelytotheplaintiffthemanagementandoperationoftherestaurantandwine
outletsofthesaidresort(Exh."Gl")thatthedefendantsalsoviolatedthedecisionoftheBureauofDomesticTrade
dated October 23, 1983 (Exh. "C") that on August 27, 1983, because of the acts of the defendants, the Board of
Directors of the plaintiff adopted Resolution No. 8312 series of 1983 (Exh. "F") authorizing the ejectment of the
defendantsfromthepremisesoccupiedbythemthatonSeptember1,1983,demandlettersweresenttoRebecca
BoyerRoxas and Guillermo Roxas (Exhs. "D" and "D1") demanding that they vacate the respective premises they
occupyandthatthedisputebetweentheplaintiffandthedefendantswasbroughtbeforethebarangaylevelandthe
samewasnotsettled(Exhs."E"and"El").(OriginalRecords,pp.454456)

The petitioners appealed the decision to the Court of Appeals. However, as stated earlier, the appellate court affirmed the lower
court'sdecision.ThePetitioners'motionforreconsiderationwaslikewisedenied.

Hence,thispetition.

InaresolutiondatedFebruary5,1992,wegaveduecoursetothepetition.

Thepetitionersnowcontend:

IRespondentCourterredwhenitrefusedtopiercetheveilofcorporatefictionoverprivaterespondentandmaintainthepetitionersin
theirpossessionand/oroccupancyofthesubjectpremisesconsideringthatpetitionersareownersofaliquotpartofthepropertiesof
privaterespondent.Besides,privaterespondentitselfdiscardedthemantleofcorporatefictionbyactsand/oromissionsofitsboardof
directorsand/orstockholders.

IITherespondentCourterredinnotholdingthatpetitionerswereinfactdenieddueprocessortheirdayincourtbroughtaboutbythe
grossnegligenceoftheirformercounsel.

IIITherespondentCourtmisappliedthelawwhenitorderedpetitionerRebeccaBoyerRoxastoremovetheunfinishedbuildingin
RTCCaseNo.80284C,whenthetrialcourtopinedthatshespentherownfundsfortheconstructionthereof.(CARollo,pp.1718)

Werethepetitionersdenieddueprocessoflawinthelowercourt?

AfterthecaseswerereraffledtothesalaofPresidingJudgeOdilonBautistaofBranch37thefollowingeventstranspired:

On July 3, 1986, the lower court issued an Order setting the hearing of the cases on July 21, 1986. Petitioner Rebecca V. Roxas
receivedacopyoftheOrderonJuly15,1986,whilepetitionerGuillermoRoxasreceivedhiscopyonJuly18,1986.Atty.Conrado
Manicad,thepetitioners'counselreceivedanothercopyoftheOrderonJuly11,1986.(OriginalRecords,p.260)

Onmotionoftherespondentcorporation'scounsel,thelowercourtissuedanOrderdatedJuly15,1986cancellingtheJuly21,1986
hearingandresettingthehearingtoAugust11,1986.(Originalrecords,262263)Threeseparatecopiesoftheorderweresentand
receivedbythepetitionersandtheircounsel.(OriginalRecords,pp.268,269,271)

A motion to cancel and reschedule the August 11, 1986 hearing filed by the respondent corporation's counsel was denied in an
OrderdatedAugust8,1986.AgainseparatecopiesoftheOrderweresentandreceivedbythepetitionersandtheircounsel.(Original
Records,pp.276279)

At the hearing held on August 11, 1986, only Atty. Benito P. Fabie, counsel for the respondent corporation appeared. Neither the
petitionersnortheircounselappeareddespitenoticeofhearing.ThelowercourtthenissuedanOrderonthesamedate,towit:

ORDER

Whenthesecaseswerecalledforcontinuationoftrial,Atty.BenitoP.FabieappearedbeforethisCourt,however,the
defendantsandtheirlawyerdespitereceiptoftheOrdersettingthecaseforhearingtodayfailedtoappear.OnMotion
ofAtty.Fabie,furthercrossexaminationofwitnessVictoriaVallartaisherebyconsideredashavingbeenwaived.

Theplaintiffisherebygiventwenty(20)daysfromtodaywithinwhichtosubmitformalofferofevidenceanddefendants
arealsogiventen(10)daysfromreceiptofsuchformalofferofevidencetofiletheirobjectionthereto.

In the meantime, hearing in these cases is set to September 29, 1986 at 10:00 o'clock in the morning. (Original
Records,p.286)

CopiesoftheOrderweresentandreceivedbythepetitionersandtheircounselonthefollowingdatesRebeccaBoyerRoxason
August20,1986,GuillermoRoxasonAugust26,1986,andAtty.ConradoManicadonSeptember19,1986.(OriginalRecords,pp.
288290)

OnSeptember1,1986,therespondentcorporationfiledits"FormalOfferofEvidence."InanOrderdatedSeptember29,1986,the
lowercourtissuedanOrderadmittingexhibits"A"to"M3"submittedbytherespondentcorporationinits"FormalOfferofEvidence...
there being no objection . . ." (Original Records, p. 418) Copies of this Order were sent and received by the petitioners and their
counselonthefollowingdates:RebeccaBoyerRoxasonOctober9,1986GuillermoRoxasonOctober9,1986andAtty.Conrado
ManicadonOctober4,1986(OriginalRecords,pp.420,421,428).

ThescheduledhearingonSeptember29,1986didnotpushthroughasthepetitionersandtheircounselwerenotpresentprompting
Atty.BenitoFabie,therespondentcorporation'scounseltomovethatthecasesbesubmittedfordecision.Thelowercourtdeniedthe
motionandsetthecasesforhearingonOctober22,1986.However,initsOrderdatedSeptember29,1986,thecourtwarnedthatin
the event the petitioners and their counsel failed to appear on the next scheduled hearing, the court shall consider the cases
submittedfordecisionbasedontheevidenceonrecord.(OriginalRecords,p.429,430and431)

SeparatecopiesofthisOrderweresentandreceivedbythepetitionersandtheircounselonthefollowingdates:RebeccaBoyer
RoxasonOctober9,1986,GuillermoRoxasonOctober9,1986andAtty.ConradoManicadonOctober1,1986.(OriginalRecords,
pp.429430)

Despite notice, the petitioners and their counsel again failed to attend the scheduled October 22, 1986 hearing. Atty. Fabie
representing the respondent corporation was present. Hence, in its Order dated October 22, 1986, on motion of Atty. Fabie and
pursuanttotheorderdatedSeptember29,1986,theCourtconsideredthecasessubmittedfordecision.(OriginalRecords,p.436)

OnNovember14,1986,therespondentcorporation,fileda"Manifestation",statingthat"...itissubmittingwithoutfurtherargumentits
"OppositiontotheMotionforReconsideration"fortheconsiderationoftheHonorableCourtinresolvingsubjectincident."(Original
Records,p.442)

OnDecember16,1986,thelowercourtissuedanOrder,towit:

ORDER

ConsideringthattheCourtuptothisdatehasnotreceivedanyMotionforReconsiderationfiledbythedefendantsin
theaboveentitledcases,theCourtcannotactontheOppositiontoMotionforReconsiderationfiledbytheplaintiffand
receivedbytheCourtonNovember14,1986.(OriginalRecords,p.446)

OnJanuary15,1987,thelowercourtrenderedthequestioneddecisioninthetwo(2)cases.(OriginalRecords,pp.453459)

OnJanuary20,1987,Atty.ConradoManicad,thepetitioners'counselfiledanExParteManifestationandattachedthereto,amotion
forreconsiderationoftheOctober22,1986Ordersubmittingthecasesfordecision.HeprayedthattheOrderbesetasideandthe
casesbereopenedforreceptionofevidenceforthepetitioners.Heaverredthat:1)withinthereglementaryperiodhepreparedthe
motionforreconsiderationandamongotherdocuments,thedraftwassenttohislawofficethruhismessengeraftersigningthefinal
copies,hecausedtheserviceofacopytotherespondentcorporation'scounselwiththeinstructionthatthecopyoftheCourtbefiled
however, there was a miscommunication between his secretary and messenger in that the secretary mailed the copy for the
respondentcorporation'scounselandplacedtherestinanenvelopeforthemessengertofilethesameincourtbutthemessenger
thoughtthatitwasthesecretarywhowouldfileititwasonlylateronwhenitwasdiscoveredthatthecopyfortheCourthasnotyet
beenfiledandthatsuchfailuretofilethemotionforreconsiderationwasduetoexcusableneglectand/oraccident.Themotionfor
reconsideration contained the following allegations: that on the date set for hearing (October 22, 1986), he was on his way to
Calambatoattendthehearingbuthiscarsufferedtransmissionbreakdownandthatdespiteeffortstorepairsaidtransmission,the
carremainedinoperativeresultinginhisabsenceatthesaidhearing.(OriginalRecords,pp.460469)

OnFebruary3,1987,Atty.ManicadfiledamotionforreconsiderationoftheJanuary15,1987decision.Heexplainedthathehadto
file the motion because the receiving clerk refused to admit the motion for reconsideration attached to the exparte manifestation
becausetherewasnoproofofservicetotheotherparty.Includedinthemotionforreconsiderationwasanoticeofhearingofthe
motiononFebruary3,1987.(OriginalRecords,p.476A)

OnFebruary4,1987,therespondentcorporationthroughitscounselfiledaManifestationandMotionmanifestingthattheyreceived
thecopyofthemotionforreconsiderationonlytoday(February4,1987),hencetheyprayedforthepostponementofthehearing.
(OriginalRecords,pp.478479)

Onthesameday,February4,1987,thelowercourtissuedanOrdersettingthehearingonFebruary13,1987onthegroundthatit
received the motion for reconsideration late. Copies of this Order were sent separately to the petitioners and their counsel. The
recordsshowthatAtty.ManicadreceivedhiscopyonFebruary11,1987.Asregardsthepetitioners,therecordsrevealthatRebecca
BoyerRoxasdidnotreceivehercopywhileasregardsGuillermoRoxas,somebodysignedforhimbutdidnotindicatewhenthecopy
wasreceived.(OriginalRecords,pp.481483)

AtthescheduledFebruary13,1987hearing,thecounselsforthepartieswerepresent.However,thehearingwasresetforMarch6,
1987inordertoallowtherespondentcorporationtofileitsoppositiontothemotionforreconsideration.(OrderdatedFebruary13,
1987,OriginalRecords,p.486)CopiesoftheOrderweresentandreceivedbythepetitionersandtheircounselonthefollowing
dates:RebeccaBoyerRoxasonFebruary23,1987GuillermoRoxasonFebruary23,1987andAtty.ManicadonFebruary19,1987.
(OriginalRecords,pp.487,489490)
TherecordsarenotclearastowhetherornotthescheduledhearingonMarch6,1987washeld.Nevertheless,therecordsreveal
thatonMarch13,1987,thelowercourtissuedanOrderdenyingthemotionforreconsideration.

Thewellsettleddoctrineisthattheclientisboundbythemistakesofhislawyer.(Aguilav.CourtofFirstInstanceofBatangas,Branch
I,160SCRA352[1988]SeealsoViverov.Santos,etal.,98Phil.500[1956]Isaacv.Mendoza,89Phil.279[1951]Montesv.Court
of First Instance of Tayabas, 48 Phil. 640 [1926] People v. Manzanilla, 43 Phil. 167 [1922] United States v. Dungca, 27 Phil. 274
[1914]andUnitedStatesv.Umali,15Phil.33[1910])Thisrule,however,hasitsexceptions.Thus,inseveralcases,weruledthatthe
partyisnotboundbytheactionsofhiscounselincasethegrossnegligenceofthecounselresultedintheclient'sdeprivationofhis
propertywithoutdueprocessoflaw.InthecaseofLegardav.CourtofAppeals(195SCRA418[1991]),wesaid:

InPeople'sHomesite&HousingCorp.v.TiongcoandEscasa(12SCRA471[1964]),thisCourtruledasfollows:

Procedural technicality should not be made a bar to the vindication of a legitimate grievance. When
such technicality deserts from being an aid to Justice, the courts are justified in excepting from its
operationaparticularcase.Wheretherewassomethingfishyandsuspiciousabouttheactuationsofthe
former counsel of petitioners in the case at bar, in that he did not give any significance at all to the
processesofthecourt,whichhasprovenprejudicialtotherightsofsaidclients,underalameandflimsy
explanationthatthecourt'sprocessesjustescapedhisattention,itisheldthatsaidlawyerdeprivedhis
clientsoftheirdayincourt,thusentitlingsaidclientstopetitionforrelieffromjudgmentdespitethelapse
ofthereglementaryperiodforfilingsaidperiodforfilingsaidpetition.

InEscuderov.JudgeDulay(158SCRA69[1988]),thisCourt,inholdingthatthecounsel'sblunderinprocedureisan
exceptiontotherulethattheclientisboundbythemistakesofcounsel,madethefollowingdisquisition:

Petitioners contend, through their new counsel, that the judgment rendered against them by the
respondent court was null and void, because they were therein deprived of their day in court and
divested of their property without due process of law, through the gross ignorance, mistake and
negligenceoftheirpreviouscounsel.Theyacknowledgethat,whileasarule,clientsareboundbythe
mistakeoftheircounsel,theruleshouldnotbeappliedautomaticallytotheircase,astheirtrialcounsel's
blunderinprocedureandgrossignoranceofexistingjurisprudencechangedtheircauseofactionand
violatedtheirsubstantialrights.

Weareimpressedwithpetitioner'scontentions.

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While this Court is cognizant of the rule that, generally, a client will suffer consequences of the
negligence, mistake or lack of competence of his counsel, in the interest of Justice and equity,
exceptions may be made to such rule, in accordance with the facts and circumstances of each case.
Adherence to the general rule would, in the instant case, result in the outright deprivation of their
propertythroughatechnicality.

InitsquestioneddecisiondatedNovember19,1989theCourtofAppealsfound,innouncertainterms,thenegligence
of the then counsel for petitioners when he failed to file the proper motion to dismiss or to draw a compromise
agreementifitwastruethattheyagreedonasettlementofthecaseorinsimplyfilingananswerandthatafterhaving
beenfurnishedacopyofthedecisionbythecourthefailedtoappealtherefromortofileapetitionforrelieffromthe
orderdeclaringpetitionersindefault.Inalltheseinstancestheappellatecourtfoundsaidcounselnegligentbuthis
actswereheldtobindhisclient,petitionersherein,nevertheless.

TheCourtdisagreesandfindsthatthenegligenceofcounselinthiscaseappearstobesogrossandinexcusable.This
wascompoundedbythefact,thatafterpetitionergavesaidcounselanotherchancetomakeupforhisomissionsby
askinghimtofileapetitionforannulmentofthejudgmentintheappellatecourt,againcounselabandonedthecaseof
petitionerinthatafterhereceivedacopyoftheadversejudgmentoftheappellatecourt,hedidnotdoanythingtosave
thesituationorinformhisclientofthejudgment.Heallowedthejudgmenttolapseandbecomefinal.Suchreckless
andgrossnegligenceshouldnotbeallowedtobindthepetitioner.Petitionerwastherebyeffectivelydeprivedofher
dayincourt.(atpp.426427)

Thehereinpetitioners,however,arenotsimilarlysituatedasthepartiesmentionedintheabovecitedcases.Wecannotrulethatthey,
too,werevictimsofthegrossnegligenceoftheircounsel.

ThepetitionersaretobeblamedfortheOctober22,1986orderissuedbythelowercourtsubmittingthecasesfordecision.They
receivednoticesofthescheduledhearingsandyettheydidnotdoanything.Morespecifically,thepartiesreceivednoticeoftheOrder
datedSeptember29,1986withthewarningthatiftheyfailtoattendtheOctober22,1986hearing,thecaseswouldbesubmittedfor
decisionbasedontheevidenceonrecord.Earlier,atthescheduledhearingonSeptember29,1986,thecounselfortherespondent
corporationmovedthatthecasesbesubmittedfordecisionforfailureofthepetitionersandtheircounseltoattenddespitenotice.The
lower court denied the motion and gave the petitioners and their counsel another chance by rescheduling the October 22, 1986
hearing.

Indeed,thepetitionersknewallalongthattheircounselwasnotattendingthescheduledhearings.Theydidnottakestepstochange
their counsel or make him attend to their cases until it was too late. On the contrary, they continued to retain the services of Atty.
Manicadknowingfullywellhislapsesvisavistheircases.They,therefore,cannotraisetheallegedgrossnegligenceoftheircounsel
resultingintheirdenialofdueprocesstowarrantthereversalofthelowercourt'sdecision.Inasimilarcase,Aguilav.CourtofFirst
InstanceofBatangas,Branch1(supra),weruled:

Intheinstantcase,thepetitionershouldhavenoticedthesuccessionoferrorscommittedbyhiscounselandtaken
appropriatestepsforhisreplacementbeforeitwasaltogethertoolate.Hedidnot.Onthecontrary,hecontinuedto
retainhiscounselthroughtheseriesofproceedingsthatallresultedintherejectionofhiscause,obviouslythrough
such counsel's "ineptitude" and, let it be added, the clients' forbearance. The petitioner's reverses should have
cautionedhimthathislawyerwasmishandlinghiscaseandmovedhimtoseekthehelpofothercounsel,whichhedid
intheendbutrathertardily.

Nowpetitionerwantsustonullifyalloftheantecedentproceedingsandrecognizehisearlierclaimstothedisputed
propertyonthejustificationthathiscounselwasgrosslyinept.Suchareasonishardlyplausibleasthepetitioner'snew
counselshouldknow.Otherwise,alladefeatedpartywouldhavetodotosalvagehiscaseisclaimneglectormistake
onthepartofhiscounselasagroundforreversingtheadversejudgment.Therewouldbenoendtolitigationifthese
wereallowedaseveryshortcomingofcounselcouldbethesubjectofchallengebyhisclientthroughanothercounsel
who,ifheisalsofoundwanting,wouldlikewisebedisownedbythesameclientthroughanothercounsel,andsoonad
infinitum.Thiswouldrendercourtproceedingsindefinite,tentativeandsubjecttoreopeningatanytimebythemere
subterfugeofreplacingcounsel.(atpp.357358)

Wenowdiscussthemeritsofthecases.

Inthefirstassignmentoferror,thepetitionersmaintainthattheirpossessionofthequestionedpropertiesmustberespectedinviewof
theirownershipofanaliquotportionofallthepropertiesoftherespondentcorporationbeingstockholdersthereof.Theyproposethat
theveilofcorporatefictionbepierced,consideringthecircumstancesunderwhichtherespondentcorporationwasformed.

Originally,thequestionedpropertiesbelongedtoEugeniaV.Roxas.Afterherdeath,theheirsofEugeniaV.Roxas,amongthemthe
petitioners herein, decided to form a corporation Heirs of Eugenia V. Roxas, Incorporated (private respondent herein) with the
inheritedpropertiesascapitalofthecorporation.ThecorporationwasincorporatedonDecember4,1962withtheprimarypurposeof
engaginginagriculturetodeveloptheinheritedproperties.TheArticlesofIncorporationoftherespondentcorporationwereamended
in1971toallowittoengageintheresortbusiness.Accordingly,thecorporationputuparesortknownasHiddenValleySprings
Resortwherethequestionedpropertiesarelocated.

Thesefacts,however,donotjustifythepositiontakenbythepetitioners.

Therespondentisabonafidecorporation.Assuch,ithasajuridicalpersonalityofitsownseparatefromthememberscomposingit.
(WesternAgroIndustrialCorporationv.CourtofAppeals,188SCRA709[1990]TanBoonBee&Co.,Inc.v.Jarencio,163SCRA205
[1988] Yutivo Sons Hardware Company v. Court of Tax Appeals, 1 SCRA 160 [1961] Emilio Cano Enterprises, Inc. v. Court of
IndustrialRelations,13SCRA290[1965])ThereisnodisputethattitleoverthequestionedlandwheretheHiddenValleySprings
Resortislocatedisregisteredinthenameofthecorporation.Therecordsalsoshowthatthestaffhousebeingoccupiedbypetitioner
RebeccaBoyerRoxasandtherecreationhallwhichwaslateronconvertedintoaresidentialhouseoccupiedbypetitionerGuillermo
Roxasareownedbytherespondentcorporation.Regardingpropertiesownedbyacorporation,westatedinthecaseofStockholders
ofF.GuanzonandSons,Inc.v.RegisterofDeedsofManila,(6SCRA373[1962]):

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. . . Properties registered in the name of the corporation are owned by it as an entity separate and distinct from its
members.Whilesharesofstockconstitutepersonalproperty,theydonotrepresentpropertyofthecorporation.The
corporation has property of its own which consists chiefly of real estate (Nelson v. Owen, 113 Ala., 372, 21 So. 75
Morrowv.Gould,145Iowa1,123N.W.743).Ashareofstockonlytypifiesanaliquotpartofthecorporation'sproperty,
ortherighttoshareinitsproceedstothatextentwhendistributedaccordingtolawandequity(Hall&Faleyv.Alabama
Terminal,173Ala.,398,56So.235),butitsholderisnottheownerofanypartofthecapitalofthecorporation(Bradley
v.Bauder,36OhioSt.,28).Norisheentitledtothepossessionofanydefiniteportionofitspropertyorassets(Gottfried
V.Miller,104U.S.,521Jonesv.Davis,35OhioSt.,474).Thestockholderisnotacoownerortenantincommonofthe
corporateproperty(Hartonv.Johnston,166Ala.,317,51So.992).(atpp.375376)

ThepetitionerspointoutthattheiroccupancyofthestaffhousewhichwaslaterusedastheresidenceofEribertoRoxas,husbandof
petitioner Rebecca BoyerRoxas and the recreation hall which was converted into a residential house were with the blessings of
EufrocinoRoxas,thedeceasedhusbandofEugeniaV.Roxas,whowasthemajorityandcontrollingstockholderofthecorporation.In
his lifetime, Eufrocino Roxas together with Eriberto Roxas, the husband of petitioner Rebecca BoyerRoxas, and the father of
petitionerGuillermoRoxasmanagedthecorporation.TheBoardofDirectorsdidnotobjecttosuchanarrangement.Thepetitioners
arguethat...theauthoritythusgivenbyEufrocinoRoxasfortheconversionoftherecreationhallintoaresidentialhousecanno
longerbequestionedbythestockholdersoftheprivaterespondentand/oritsboardofdirectorsfortheyimpliedlybutnoleasexplicitly
delegatedsuchauthoritytosaidEufrocinoRoxas.(Rollo,p.12)

Again, we must emphasize that the respondent corporation has a distinct personality separate from its members. The corporation
transactsitsbusinessonlythroughitsofficersoragents.(WesternAgroIndustrialCorporationv.CourtofAppeals,supra).Whatever
authoritytheseofficersoragentsmayhaveisderivedfromtheboardofdirectorsorothergoverningbodyunlessconferredbythe
charterofthecorporation.Anofficer'spowerasanagentofthecorporationmustbesoughtfromthestatute,charter,thebylawsorin
adelegationofauthoritytosuchofficer,fromtheactsoftheboardofdirectors,formallyexpressedorimpliedfromahabitorcustomof
doingbusiness.(Vicentev.Geraldez,52SCRA210[1973])
In the present case, the record shows that Eufrocino V. Roxas who then controlled the management of the corporation, being the
majority stockholder, consented to the petitioners' stay within the questioned properties. Specifically, Eufrocino Roxas gave his
consenttotheconversionoftherecreationhalltoaresidentialhouse,nowoccupiedbypetitionerGuillermoRoxas.TheBoardof
DirectorsdidnotobjecttotheactionsofEufrocinoRoxas.Thepetitionerswereallowedtostaywithinthequestionedpropertiesuntil
August27,1983,whentheBoardofDirectorsapprovedaResolutionejectingthepetitioners,towit:

RESOLUTIONNo.8312

RESOLVED,ThatRebeccaB.RoxasandGuillermoRoxas,andallpersonsclaimingunderthem,beejectedfromtheir
occupancyoftheHiddenValleySpringscompoundonwhichtheirhouseshavebeenconstructedand/orarebeing
constructed only on tolerance of the Corporation and without any contract therefor, in order to give way to the
Corporation's expansion and improvement program and obviate prejudice to the operation of the Hidden Valley
SpringsResortbytheircontinuedinterference.

RESOLVED,FurtherthattheservicesofAtty.BenitoP.Fabiebeengagedandthathebeauthorizedasheishereby
authorized to effect the ejectment, including the filing of the corresponding suits, if necessary to do so. (Original
Records,p.327)

We find nothing irregular in the adoption of the Resolution by the Board of Directors. The petitioners' stay within the questioned
properties was merely by tolerance of the respondent corporation in deference to the wishes of Eufrocino Roxas, who during his
lifetime, controlled and managed the corporation. Eufrocino Roxas' actions could not have bound the corporation forever. The
petitionershavenotcitedanyprovisionofthecorporationbylawsoranyresolutionoractoftheBoardofDirectorswhichauthorized
Eufrocino Roxas to allow them to stay within the company premises forever. We rule that in the absence of any existing contract
betweenthepetitionersandtherespondentcorporation,thecorporationmayelecttoejectthepetitionersatanytimeitwishesforthe
benefitandinterestoftherespondentcorporation.

The petitioners' suggestion that the veil of the corporate fiction should be pierced is untenable. The separate personality of the
corporationmaybedisregardedonlywhenthecorporationisused"asacloakorcoverforfraudorillegality,ortoworkinjustice,or
where necessary to achieve equity or when necessary for the protection of the creditors." (Sulong Bayan, Inc. v. Araneta, Inc., 72
SCRA347[1976]citedinTanBoonBee&Co.,Inc.,v.Jarencio,supraandWesternAgroIndustrialCorporationv.CourtofAppeals,
supra)Thecircumstancesinthepresentcasesdonotfallunderanyoftheenumeratedcategories.

Inthethirdassignmentoferror,thepetitionersinsistthatasregardstheunfinishedbuilding,RebeccaBoyerRoxasisabuilderin
goodfaith.

TheconstructionoftheunfinishedbuildingstartedwhenEribertoRoxas,husbandofRebeccaBoyerRoxas,wasstillaliveandwas
thegeneralmanageroftherespondentcorporation.Thecoupleusedtheirownfundstofinancetheconstructionofthebuilding.The
BoardofDirectorsofthecorporation,however,didnotobjecttotheconstruction.Theyallowedtheconstructiontocontinuedespite
thefactthatitwaswithinthepropertyofthecorporation.Underthesecircumstances,weagreewiththepetitionersthattheprovisionof
Article453oftheCivilCodeshouldhavebeenappliedbythelowercourts.

Article453oftheCivilCodeprovides:

Iftherewasbadfaith,notonlyonthepartofthepersonwhobuilt,plantedorsownonthelandofanotherbutalsoon
thepartoftheownerofsuchland,therightsofoneandtheothershallbethesameasthoughbothhadactedingood
faith.

Insuchacase,theprovisionsofArticle448oftheCivilCodegoverntherelationshipbetweenpetitionerRebeccaBoyerRoxasand
therespondentcorporation,towit:

Art.448Theownerofthelandonwhichanythinghasbeenbuilt,sownorplantedingoodfaith,shallhavetheright
toappropriateashisowntheworks,sowingorplantingafterpaymentoftheindemnityprovidedforinarticles546and
548,ortoobligetheonewhobuiltorplantedtopaythepriceoftheland,andtheonewhosowed,theproperrent.
However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the
buildingortrees.Insuchcase,heshallpayreasonablerent,iftheownerofthelanddoesnotchoosetoappropriate
the buildings or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of
disagreement,thecourtshallfixthetermsthereof.

WHEREFORE,thepresentpetitionispartlyGRANTED.ThequestioneddecisionoftheCourtofAppealsaffirmingthedecisionofthe
Regional Trial Court of Laguna, Branch 37, in RTC Civil Case No. 80284C is MODIFIED in that subparagraphs (c) and (d) of
Paragraph 1 of the dispositive portion of the decision are deleted. In their stead, the petitioner Rebecca BoyerRoxas and the
respondent corporation are ordered to follow the provisions of Article 448 of the Civil Code as regards the questioned unfinished
buildinginRTCCivilCaseNo.80284C.Thequestioneddecisionisaffirmedinallotherrespects.

SOORDERED.

Feliciano,Bidin,Davide,Jr.andRomero,JJ.,concur.

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