JURISDICTION Securities Regulation Code, Sec.

5
Section 5. Powers and Functions of the Commission. 5.1. The commission shall act with transparency and shall have the powers and functions provided by this code, Presidential Decree No. 902-A, the Corporation Code, the Investment Houses law, the Financing Company Act and other existing laws. Pursuant thereto the Commission shall have, among others, the following powers and functions:
(a) Have jurisdiction and supervision over all corporations, partnership or associations who are the grantees of primary franchises and/or a license or a permit issued by the Government; (b) Formulate policies and recommendations on issues concerning the securities market, advise Congress and other government agencies on all aspect of the securities market and propose legislation and amendments thereto; (c) Approve, reject, suspend, revoke or require amendments to registration statements, and registration and licensing applications; (d) Regulate, investigate or supervise the activities of persons to ensure compliance; (e) Supervise, monitor, suspend or take over the activities of exchanges, clearing agencies and other SROs; (f) Impose sanctions for the violation of laws and rules, regulations and orders, and issued pursuant thereto; (g) Prepare, approve, amend or repeal rules, regulations and orders, and issue opinions and provide guidance on and supervise compliance with such rules, regulation and orders; (h) Enlist the aid and support of and/or deputized any and all enforcement agencies of the Government, civil or military as well as any private institution, corporation, firm, association or person in the implementation of its powers and function under its Code; (i) Issue cease and desist orders to prevent fraud or injury to the investing public; (j) Punish for the contempt of the Commission, both direct and indirect, in accordance with the pertinent provisions of and penalties prescribed by the Rules of Court; (k) Compel the officers of any registered corporation or association to call meetings of stockholders or members thereof under its supervision; (l) Issue subpoena duces tecum and summon witnesses to appear in any proceedings of the Commission and in appropriate cases, order the examination, search and seizure of all documents, papers, files and records, tax returns and books of accounts of any entity or person under investigation as may be necessary for the proper disposition of the cases before it, subject to the provisions of existing laws; (m) Suspend, or revoke, after proper notice and hearing the franchise or certificate of registration of corporations, partnership or associations, upon any of the grounds provided by law; and (n) Exercise such other powers as may be provided by law as well as those which may be implied from, or which are necessary or incidental to the carrying out of, the express powers granted the Commission to achieve the objectives and purposes of these laws.

5.2. The Commissions jurisdiction over all cases enumerated under section 5 of Presidential Decree No. 902 A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over the cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this Code. The Commission shall retain jurisdiction over pending suspension of payment/rehabilitation cases filed as of 30 June 2000 until finally disposed.

1. Real v. Sangu Phils. (GR No. 168757 Jan. 19, 2011)

Two tests for determining if a dispute is one of labor or intra-corporate 1. Relationship Test a) b) c) d) between the corporation, partnership or association and the public; between the corporation, partnership or association and its stockholders, partners, members or officers; between the corporation, partnership or association and the State as far as its franchise, permit or license to operate is concerned; and among the stockholders, partners or associates themselves.

The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC (now the RTC), regardless of the subject matter of the dispute. This came to be known as the relationship test. Requires that the controversy must arise out of intra-corporate or partnership relations between any or all of the parties and the corporation, partnership, or association of which they are not stockholders, members or associates, between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership, or association and the State insofar as it concerns the individual franchises.

In this case, Real was never elected to the manager position thru a board resolution nor was he appointed tehre by the Board of Directors. Sangu has also said in its memo to the NLRC that it hired Real as manager pursuant to an arrangement with his former boss in Japan. Corporate officers in the context of Presidential Decree No. 902-A are those officers of the corporation who are given that character by the Corporation Code or by the corporations by-laws. There are three specific officers whom a corporation must have under Section 25 of the Corporation Code. These are the president, secretary and the treasurer. The number of officers is not limited to these three. A corporation may have such other officers as may be provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The number of corporate officers is thus limited by law and by the corporations by-laws. The controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation. If the relationship and its incidents are merely incidental to the controversy or if there will still be conflict even if the relationship does not exist, then no intra-corporate controversy exists. The dispute among the parties must be intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy. In this case, what we have is a termination of employment case which is a labor controversy and not intracorporate. With the two tests in mind, court finds that the complaint for illegal dismissal is not intra-corporate and is within the jurisdiction of the Labor Arbiter.

2. Strategic Alliance vs. Star Infrastructure (GR 187872, November 17, 2010)
An intra-corporate dispute is understood as a suit arising from intra-corporate relations or between or among stockholders or between any or all of them and the corporation. Applying what has come to be known as the relationship test, it has been held that the types of actions embraced by the foregoing definition include the following suits: (a) (b) (c) (d) between the corporation, partnership or association and the public; between the corporation, partnership or association and its stockholders, partners, members, or officers; between the corporation, partnership or association and the State insofar as its franchise, permit or license to operate is concerned; and, among the stockholders, partners or associates themselves.

As the definition is broad enough to cover all kinds of controversies between stockholders and corporations, the traditional interpretation was to the effect that the relationship test brooked no distinction, qualification or any exemption whatsoever. It was held that the better policy in determining which body has jurisdiction over a case would be to consider not only the status or relationship of the parties but also the nature of the question that is the subject of their controversy. Under the nature of the controversy test, the dispute must not only be rooted in the existence of an intra-corporate relationship, but must also refer to the enforcement of the parties' correlative rights and obligations under the Corporation Code as well as the internal and intra-corporate regulatory rules of the corporation. The combined application of the relationship test and the nature of the controversy test has, consequently, become the norm in determining whether a case is an intra-corporate controversy or is purely civil in character.

CLASSES OF CORPORATIONS UNDER CORPORATION CODE

Section 3. Classes of corporations. Corporations formed or organized under this Code may be stock or nonstock corporations. Corporations which have capital stock divided into shares and are authorized to distribute to the holders of such shares dividends or allotments of the surplus profits on the basis of the shares held are stock corporations. All other corporations are non-stock corporations. Section 87. Definition. For the purposes of this Code, a non-stock corporation is one where no part of its income is distributable as dividends to its members, trustees, or officers, subject to the provisions of this Code on dissolution: Provided, That any profit which a non-stock corporation may obtain as an incident to its operations shall, whenever necessary or proper, be used for the furtherance of the purpose or purposes for which the corporation was organized, subject to the provisions of this Title.

The provisions governing stock corporation, when pertinent, shall be applicable to non-stock corporations, except as may be covered by specific provisions of this Title. (n) Section 88. Purposes. Non-stock corporations may be formed or organized for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar purposes, like trade, industry, agricultural and like chambers, or any combination thereof, subject to the special provisions of this Title governing particular classes of non-stock corporations. (n) Section 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 the corporations 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 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 not be deemed a close corporation when at least two-thirds (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. Any corporation may be incorporated as a close corporation, except mining or oil companies, stock exchanges, banks, insurance companies, public utilities, educational institutions and corporations declared to be vested with public interest in accordance with the provisions of this Code. The provisions of this Title shall primarily govern close corporations: Provided, That the provisions of other Titles of this Code shall apply suppletorily except insofar as this Title otherwise provides. Section 123. Definition and rights of foreign corporations. For the purposes of this Code, a foreign corporation is one formed, organized or existing under any laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or state. It shall have the right to transact business in the Philippines after it shall have obtained a license to transact business in this country in accordance with this Code and a certificate of authority from the appropriate government agency.

3. Coll. Of Internal Revenue v. Club Filipino, 5 SCRA 321

Though the capital stock of the respondent Club is divided into shares, that fact does not detract from the finding of the trial court that it is not engaged in the business of operator of bar and restaurant. What is determinative of whether or not the Club is engaged in such business is its object or purpose, as stated in its articles and by-laws. The bar-restaurant operation is a necessary incident to the operation of the club and its golf course. Requisites for a stock corporation to exist (1) a capital stock divided into shares and (2) an authority to distribute to the holders of such shares, dividends or allotments of the surplus profits on the basis of the shares held (sec. 3, Act No. 1459).

CORPORATE ENTITY
THEORY OF CORPORATE ENTITY - That a corporation has a personality distinct from its stockholders, and is not affected by the personal rights, obligations and transactions of the latter. WHEN CAN THE VEIL OF CORPORATE ENTITY BE PIERCED? - The veil of corporate fiction may be pierced when it is used as a shield to further an end subversive of justice, or for purposes that could not have been intended by law that created it or to defeat public convenience, justify wrong, protect fraud or defend crime or to perpetuate fraud or confuse legitimate issues or to circumvent the law or perpetuate deception or as an alter ego, adjunct or business conduit for the sole benefit of the stockholders. EFFECTS OF DISREGARDING THE CORPORATE VEIL - Stockholders would be personally liable for the acts and contracts of the corporation whose existence at least for the purpose of the particular situation involved is ignored. - Court is not denying corporate existence for all purposes but merely refuses to allow the corporation to use the corporate privilege for the particular purpose involved.

4. Gallagher v. Germania Brewing Co. 54 N.W. 115 (1893)

To allow the set-off here, it is necessary to wholly ignore the legal doctrine, or fiction, whichever you may call it, that a corporation is an entity separate and distinct from the body of its stockholders, and to treat it as a mere association of individuals who are the real parties in interest. To allow the set-off in the case at bar, it will be tantamount to totally ignoring the legal doctrine, or fiction, that a corporation is an entity separate and distinct from the body of its stockholders. If the rights or liabilities of a corporation could be affected by the acts of the stockholders, except when acting in the corporate name, it can easily be seen into what confusion and chaos corporate affairs would inevitably fall.

5. Magsaysay-Labrador v. CA (1989) 180 SCRA 266

Shareholders are in no legal sense the owners of corporate property, which is owned by the corporation as a distinct legal person.

6. Caram v. CA (1987) 151 SCRA 373

The most that can be said is that they benefited from such services, but that is no justification to hold them personally liable therefor. Otherwise, all the other stockholders of the corporation, including those who came in later, and regardless of the amount of their share holdings, would be equally and personally liable also with the petitioners for the claims of the private respondent.

7. Palay, Inc. and Onsott v. Clave and Dumpit (1983) 124 SCRA 640
No sufficient proof exists on record that said petitioner used the corporation to defraud private respondent. He cannot therefore be made personally liable just because he appears to be the controlling stockholder. Mere ownership by a single stockholder or by another corporation is not itself sufficient ground for disregarding the separate corporate personality. Thus, Onstott cannot be made liable for the refund of respondent Dumpit.

8. San Juan Structural v. CA (1998) 296 SCRA 631

A corporation is a juridical person separate and distinct from its stockholders or members. Accordingly, the property of the corporation is not the property of its stockholders or members and may not be sold by the stockholders or members without express authorization from the corporation's board of directors. That Nenita Gruenberg is the treasurer of Motorich does not free petitioner from the responsibility of ascertaining the extent of her authority to represent the corporation. Petitioner cannot assume that she, by virtue of her position, was authorized to sell the property of the corporation. Selling is obviously foreign to a corporate treasurer's function, which generally has been described as "to receive and keep the funds of the corporation, and to disburse them in accordance with the authority given him by the board or the properly authorized officers."

9. Jacinto v. CA (1991) 198 SCRA 211

Roberto A. Jacinto was practically the corporation itself, Inland industries, Inc. He should be liable for the trust receipts he signed. He dealt entirely with Metrobank in those transactions. In the Trust Receipts that he signed supposedly in behalf of Inland Industries, Inc., it is not even mentioned that he did so in this official capacity.

10. JG Summit Holdings v. CA (2007) 450 SCRA 169

The agreement of co-shareholders to mutually grant this right to each other, by itself, does not constitute a violation of the provisions of the Constitution limiting land ownership to Filipinos and Filipino corporations. In fact, it can even be said that if the foreign shareholdings of a landholding corporation exceeds 40%, it is not the foreign stockholders ownership of the shares which is adversely affected but the capacity of the corporation to own land that is, the corporation becomes disqualified to own land. This finds support under the basic corporate law principle that the corporation and its stockholders are separate juridical entities. No law

disqualifies a person from purchasing shares in a landholding corporation even if the latter will exceed the allowed foreign equity, what the law disqualifies is the corporation from owning land.

EXCEPTIONS
It is an elementary and fundamental principle of corporation law that a corporation is an entity separate and distinct from its stockholders and from other corporation petitions to which it may be connected. However, "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, or in the case of two corporations merge them into one. Another rule is that, when the corporation is the "mere alter ego or business conduit of a person, it may be disregarded." Under the doctrine of "piercing the veil of corporate fiction," the court looks at the corporation as a mere collection of individuals or an aggregation of persons undertaking business as a group, disregarding the separate juridical personality of the corporation unifying the group. Another formulation of this doctrine is that when two business enterprises are owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect the rights of third parties, disregard the legal fiction that two corporations are distinct entities and treat them as identical or as one and the same

11. Villa Rey Transit v. Ferrer (1968) 25 SCRA 845 The clear intention of the parties was to prevent the seller from conducting any competitive line for 10 years since he has bound himself not to apply for authorization to operate along such lines for the duration of such period. The preponderance of evidence have shown that the Villa Rey Transit, Inc. is an alter ego of Jose M. Villarama, and that the restrictive clause in the contract entered into by the latter and Pantranco is also enforceable and binding against the said Corporation. The Court found that the finances of Villa-Rey, Inc. were managed as if they were the private funds of Villarama and in such a way and extent that Villarama appeared to be the actual owner of the business without regard to the rights of the stockholders. Villarama even admitted that he mingled the corporate funds with his own money. These circumstances negate Villarama's claim that he was only a part-time General Manager, and show beyond doubt that the corporation is his alter ego. Thus, the restrictive clause with Pantranco applies. The interference of Villarama in the complex affairs of
the corporation, and particularly its finances, are much too inconsistent with the ends and purposes of the Corporation law, which, precisely, seeks to separate personal responsibilities from corporate undertakings.

12. Marvel Bldg. v. David (1954) 94 Phil 376

The existence of endorsed certificates, discovered by the internal revenue agents between 1948 and 1949 in the possession of the Secretary-Treasurer, the fact that twenty-five certificates were signed by the president of the corporation, for no justifiable reason, the fact that two sets of certificates were issued, the undisputed fact that Maria B. Castro had made enormous profits and, therefore, had a motive to hide them to evade the payment of taxes, the fact that the other subscribers had no incomes of sufficient magnitude to justify their big subscriptions, the fact that the subscriptions were not receipted for and deposited by the treasurer in the name of the corporation but were kept by Maria B. Castro herself, the fact that the stockholders or the directors never appeared to have ever met to discuss the business of the corporation, the fact that Maria B. Castro advanced big sums of money to the corporation without any previous arrangement or accounting, and the fact that the books of accounts were kept as if they belonged to Maria B. Castro alone these facts are of patent and potent significance.

Thus, Maria B. Castro is the corporation, and the other stockholders were dummies. 13. Concept Builders v. NLRC (1996) 257 SCRA 149

Some probative factors of identity that will justify the application of the doctrine of piercing the corporate veil: (1) (2) (3) (4) stock ownership by one or common ownership of both corporations; identity of directors and officers; the manner of keeping corporate books and records; and methods of conducting the business.

The test in determining the applicability of the doctrine of piercing the veil of corporate fiction 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 plaintiff's legal rights; and 3. 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 defendant's relationship to that operation. Concept Builders ceased its business operations in order to evade the payment to private respondents of back wages and to bar their reinstatement to their former positions. HPPI is obviously a business conduit of petitioner corporation and its emergence was skillfully orchestrated to avoid the financial liability that already attached to petitioner corporation.

14. Claparols v. CIR (1965) 65 SCRA 613

It is very clear that the latter corporation was a continuation and successor of the first entity, and its emergence was skillfully timed to avoid financial liability already attached to the predecessor, the Claparols Steel and Nail Plant. Both predecessors and successor were owned and controlled by the petitioner Eduardo Claparols and there was no break in the succession and continuity of the same business. This avoiding -the-liability scheme is very patent, considering that 90% of the subscribed shares of stocks of the Claparols Steel Corporation (the second corporation) was owned by the petitioner Claparols himself and all the assets of the dissolved Claparols Steel and Nail Plant were turned over to the emerging Claparols Steel Corporation. It is very obvious that the second corporation seeks the protective shield of a corporate fiction whose veil in the present case could and should be pierced as it was deliberately and maliciously designed to evade financial obligations to its employees.

15. Pamplona Plantation v. Tinghil (2005) 450 SCRA 421

To protect the rights of labor, two corporations with identical directors, management, office and payroll should be treated as one entity only. A suit by the employees against one corporation should be deemed as a suit against the other. Also, the rights and claims of workers should not be prejudiced by the acts of the employer that tend to confuse them about its corporate identity. The corporate fiction must yield to truth and justice. The attempt to make the two corporations appear as two separate entities, insofar as the workers are concerned, should be viewed as a devious but obvious means to defeat the ends of the law. Such a ploy should not be permitted to cloud the truth and perpetrate an injustice. Both the leisure corporation and petitioner-company were identified or described as entities engaged in the development and operation of sugar and coconut plantations, as well as recreational facilities such as a golf course. These allegations reveal that petitioner successfully confused the workers as to who their true and real employer was.

16. Yu v. NLRC (1995) 245 SCRA 134 The fiction of separate and distinct corporate entities cannot, in the instant case, be disregarded and brushed aside, there being not the least indication that the second corporation is a dummy or serves as a client of the first corporate entity.

17. Indo-Phil Textile Mill Workers Union v. Calica (1992) 205 SCRA 698 The workers contend that Indo-Phil Acrylic should be included in the CBA with Indo-Phil Textile Mill. Court says no, The fact that the businesses of private respondent and Acrylic are related, that some of the employees of the private respondent are the same persons manning and providing for auxiliary services to the units of Acrylic, and that the physical plants, offices and facilities are situated in the same compound, it is our considered opinion that these facts are not sufficient to justify the piercing of the corporate veil of Acrylic. the legal corporate entity is disregarded only if it is sought to hold the officers and stockholders directly liable for a corporate debt or obligation. In the instant case, petitioner does not seek to impose a claim against the members of the Acrylic. 18. Umali v. CA (1990) 189 SCRA 529
There is no clear showing of fraud in this case. The mere fact that Bormaheco paid said premium payments to ICP does not constitute fraud per se. As it turned out, Bormaheco is an agent of ICP. SRC, through Rivera, agreed that part of the payment of the mortgage shall be paid for the insurance. Naturally, when Rivera was paying some portions of the mortgage to Bormaheco, Bormaheco is applying some parts thereof for the payment of the premium and this was agreed upon beforehand. The veil of corporate fiction cant be pierced also by the simple reason that the businesses of two or more corporations are interrelated, absent sufficient showing that the corporate entity was purposely used as a shield to defraud creditors and third persons of their rights. In this case, there is no justification for disregarding their separate personalities.

19. Yutivo v. CTA (1961) 1 SCRA 160

Consideration of various circumstances indicate that Yutivo treated SM merely as its department or adjunct: (1) The founders of the corporation are closely related to each other by blood and affinity. (2) The object and purpose of the business is the same; both are engaged in sale of vehicles, spare parts, hardware supplies and equipment. (3) The accounting system maintained by Yutivo shows that it maintained high degree of control over SM accounts. (4) Several correspondences have reference to Yutivo as the head office of SM. SM may even freely use forms or stationery of Yutivo. (5) All cash collections of SMs branches are remitted directly to Yutivo. (6) The controlling majority of the Board of Directors of Yutivo is also the controlling majority of SM. (7) The principal officers of both corporations are identical. Both corporations have a common comptroller in the person of Simeon Sy, who is a brother-in-law of Yutivos president, Yu Khe Thai. (8) Yutivo, financed principally the business of SM and actually extended all the credit to the latter not only in the form of starting capital but also in the form of credits extended for the cars and vehicles allegedly sold by Yutivo to SM. Southern Motors being but a mere instrumentality, or adjunct of Yutivo, the Court of Tax Appeals correctly disregarded the technical defense of separate corporate entity in order to arrive at the true tax liability of Yutivo.

20. Koppel v. Yatco (1946) 77 Phil 496

(The subsidiary was so controlled by the parent that its separate identity was hardly discernible, and became a mere alter ego of the parent and was used to evade taxes). The application of the piercing doctrine is not a contravention of the principle that the corporate personality of a corporation cannot be collaterally attacked. Koppel (Phil.), Inc. v. Yatco held that when the piercing doctrine is applied against a corporation in a particular case, the court does "not deny legal personality x x x for any and all purposes." The application of the piercing doctrine is therefore within the ambit of the principle of res adjudicata that binds only the parties to the case only to the matters actually resolved therein. share in the profits of Koppel Phils was left to the sole, unbridled control of Koppel Industrial shares of stock of Koppel Phils are all owned by Koppel Industrial (overwhelming majority) Koppel Phils acted as agent and representative of Koppel Industrial

 Koppel Phils alone bore the incidental expenses for transactions, such as cable expenses Koppel Phils was fully empowered to instruct banks it deals with, if purchasers were not able to pay the bank drafts to the bank as payment for the purchases Koppel Phils makes good any deficiencies by deliveries from its own stock

21. Liddell & Co. v. CIR (1961) 2 SCRA 632

Lidell Motors, Inc. is an alter ego of Lidell & Co. hence making it liable for tax deficiency based on the principle that to allow a taxpayer to deny tax liability on the ground that the sales were made through another and distinct corporation when it is proved that the latter is virtually owned by the former or that they are practically one and the same is to sanction a circumvention of our tax laws. The bulk of the business of Liddell & Co. was channelled through Liddell Motors, Inc. On the other hand, Liddell Motors, Inc. pursued no activities except to secure cars, trucks, and spare parts from Liddell & Co. Inc. and then sell them to the general public. These sales of vehicles by Liddell & Co. to Liddell Motors, Inc. for the most part were shown to have taken place on the same day that Liddell Motors, Inc. sold such vehicles to the public. We may even say that the cars and trucks merely touched the hands of Liddell Motors, Inc. as a matter of formality.

22. Jardine Davis Inc. v. JRB Realty (2005) 463 SCRA 555
While it is true that Aircon is a subsidiary of the petitioner, it does not necessarily follow that Aircon's corporate legal existence can just be disregarded. In applying the doctrine, the following requisites must be established: (1) control, not merely majority or complete stock control; (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 acts in contravention of plaintiff's legal rights;and (3) the aforesaid control and breach of duty must proximately cause the injury orunjust loss complained of. The records bear out that Aircon is a subsidiary of the petitioner only because the latter acquired Aircon's majority of capital stock. It, however, does not exercise complete control over Aircon; nowhere can it be gathered that the petitioner manages the business affairs of Aircon. Indeed, no management agreement exists between the petitioner and Aircon, and the latter is an entirely different entity from the petitioner. In the instant case, there is no evidence that Aircon was formed or utilized with the intention of defrauding its creditors or evading its contracts and obligations. There was nothing fraudulent in the acts of Aircon in this case. Aircon, as a manufacturing firm of air conditioners, complied with its obligation of providing two air conditioning units for the second floor of the Blanco Center in good faith, pursuant to its contract with the respondent. Unfortunately, the performance of the air conditioning units did not satisfy the respondent despite several adjustments and corrective measures.

23. PNB v. Ritratto Group (2001) 362 SCRA 216

The doctrine of piercing the corporate veil based on the alter ego or instrumentality doctrine finds no application in the case at bar. In any case, the parent-subsidiary relationship between PNB and PNB-IFL is not the significant legal relationship involved in this case since the petitioner was not sued because it is the parent company of PNB-IFL. Rather, the petitioner was sued because it acted as an attorney-in-fact of PNB-IFL in initiating the foreclosure proceedings. A suit against an agent cannot without compelling reasons be considered a suit against the principal.

24. Pantranco v. NLRC (GR No. 170689) March 17, 2009

Neither the personality of PNEI with PNB can be merged simply because the latter acquired the former. Settled is the rule that where one corporation sells or otherwise transfers all its assets to another corporation for value, the latter is not, by that fact alone, liable for the debts and liabilities of the transferor. Lastly, while it is recognize that there are peculiar circumstances or valid grounds that may exist to warrant the piercing of the corporate veil, none applies in the present case whether between PNB and PNEI; or PNB and PNB-Madecor.