TAYKO VS CAPISTRANO FACTS: A criminal cases and election protests for violation of the election law was filed

in the CFI of Oriental Negros arising from the last election of June 05, 1928. That Honorable Sixto de la Costa was duly designated and acted as auxiliary judge of the Province of Oriental Negros; that between the auxiliary judge and the respondent judge herein there was an understanding, and the assignment of the said auxiliary judge was made with this understanding, that the said auxiliary judge so designated would hear and take cognizance of all election protests and criminal actions then pending or to filed arising from the said last general election, and that the respondent Honorable Nicolas Capistrano would try and hear the ordinary cases pending in the said court, but, notwithstanding this understanding or agreement, the respondent judge tried and is still trying to take cognizance of the election protests an criminal actions in said court; that the respondent judge declared in open court that he will try the criminal cases herein mentioned for the reason that the auxiliary judge refused to try the same on the ground that the preliminary investigations were held before him, when, in truth and in fact, the said auxiliary judge did not make the statement imputed to him and was and is still willing to try the election protests and criminal cases for violation of the election law pending in the court of the Province of Oriental Negros. Petitioners further allege that respondent judge already reached the age of 65 years and therefore under the provisions of section 28 of the Administrative Code as amended, is disqualified from acting as a judge of the CFI. ISSUE: Whether or not respondent judge who is already over 65 years of age is disqualified as judge of the CFI of Oriental Negros and that he is neither a judge de jure nor de facto? RULING: It is well settled that the title to the office of a judge, whether de jure or de facto, can only be determined in a proceeding in the nature of quo warranto and cannot be tested by prohibition. But counsel for the petitioners maintains that the respondent judge is neither a judge de jure nor de facto and that, therefore, prohibition will lie. In this, counsel is undoubtedly mistaken. Briefly defined, a de facto judge is one who exercises the duties of a judicial office under color of an appointment or election thereto (Brown vs. O'Connell, 36 Conn., 432). He differs, on the one hand, from a mere usurper who undertakes to act officially without any color of right, and on the other hand, from a judge de jure who is in all respects legally appointed and qualified and whose term of office has not expired (State vs. Carroll, 38 Conn., 449; Denny vs. Matton, 2 Allen [Mass.], 361; Van Slyke vs. Farmers' Mut. Fire Ins. Co., 39 Wis., 390). Apart from any constitutional or statutory regulation on the subject there seems to be a general rule of law that an incumbent of an office will hold over after the conclusion of his term until the elction and qualification of a successor (22 R. C. L., pp. 554-5). When a judge in good faith remains in office after his title has ended, he is a de facto officer (Sheehan's Case, 122 Mass., 445). Applying the principles stated to the facts set forth in the petition before us, we cannot escape the conclusion that, on the assumption that said facts are true, the respondent judge must be considered a judge de facto. His term of office may have expired, but his successor has not been appointed, and as good faith is presumed, he must be regarded as holding over in good faith. The contention of counsel for the petitioners that the auxiliary judge present in the district must be considered the regular judge seems obviously erroneous. The title of a de facto officer cannot be indirectly questioned in a proceeding to obtain a writ of prohibition to prevent him from doing an official act nor in a suit to enjoin the collection of a judgment rendered by him. Having at least colorable right to the office his title can be determined only in a quo warranto proceeding or information in the nature of a quo warranto at suit of the sovereign.

Fernandez vs. P. Cuerva & Co. (NOTE: LABOR CASE ATA ITO WALA AKO MAKITA REGARDING CORPORATION LAW, BUT ETO PARIN YUNG CASE PAKI-ARAL NALANG PARA SURE) Facts: Federico Fernandez was employed as salesman by defendant P. Cuerva & Co. From 1949 to 1959. When he was severed from work, he filed an action against the defendant corporation to recover unpaid salaries and commission as well as separation pay on July 1960 in the regional Office No. 4 of the Department of Labor. During the pendency of the case, he filed the same action in the CFI of Manila on December 17, 1962. Defendant on the other hand contended that the action of the plaintiff in instituting the case in the CFI of Manila was already barred by the three year period to file monetary claim (he was severed from work on MARCH 1959). The CFI dismissed the claim of Fernandez on the ground that his action has already prescribed. On M.R. Fernandez contended that his filing in the Regional office No. 4 of the Department of Labor on July 1960 (barely 8 mos. After his separation from work) stops the running of the prescriptive period. Issue: whether or not the filing of Fernandez in the Regional Office No. 4 of the Department of Labor stops the prescriptive period to file monetary claim, and therefore the CFI of Manila has jurisdiction over his claim. Held: Since the Reorganization Plan No. 20-A (Giving jurisdiction to the Regional Office of the Department of Labor actions for monetary claims of laborers) was only declared unconstitutional on June 30, 1961 (almost 1 year after Fernandez instituted the action in the Regional office No. 4 of the Department of Labor his monetary claim against the defendant corporation), the filing of action of Fernandez on the Regional Office no. 4 of the Department of labor was not covered by the said declaration of unconstitutionality of said reorganization plan. Since the filing of Fernandez in the Department of Labor in 1960 almost 8 months after he was severed from work, his acts stops the running of the prescriptive period. Therefore it is only right that he file his action in the CFI of Manila after declaring that the Regional Office of the Department of Labor has no more jurisdiction over his actions. Therefore, the case is remanded to the CFI of Manila.

C. ARNOLD HALL and BRADLEY P. HALL vs. EDMUNDO S. PICCIO, Judge of the Court of First Instance of Leyte, FRED BROWN, EMMA BROWN, HIPOLITA CAPUCIONG, in his capacity as receiver of the Far Eastern Lumber and Commercial Co., Inc. FACTS: Petitioners signed and acknowledged in Leyte, the article of incorporation of the Far Eastern Lumber and Commercial Co., Inc. Attached to the article was an affidavit of the treasurer stating that 23,428 shares of stock had been subscribed and fully paid with certain properties transferred to the corporation described in a list appended thereto. Immediately after the execution of said articles of incorporation, the corporation proceeded to do business with the adoption of by-laws and the election of its officers. The articles of incorporation were filed (SEC) for the issuance of the corresponding certificate of incorporation. Pending action on the articles of incorporation, respondents filed before the CFI of Leyte a complaint, entitled "Fred Brown et al. vs. Arnold C. Hall et al.", alleging that the Far Eastern Lumber and Commercial Co. was an unregistered partnership; that they wished to have it dissolved because of bitter dissension among the members, mismanagement and fraud by the managers and heavy financial losses. Petitioners filed motion to dismiss, contesting the court's jurisdiction and the sufficiently of the cause of action. After hearing the parties, respondent judge (CFI) ordered the dissolution of the company. Petitioners offered to file a counter-bond for the discharge of the receiver, but the respondent judge refused to accept the offer and to discharge the receiver. Hence this petition. Petitioner contended, the court had no jurisdiction to decree the dissolution of the company, because it being a de facto corporation, dissolution thereof may only be ordered in a quo warranto proceeding instituted in accordance with section 19 of the Corporation Law. ISSUE: W/N Far Eastern Lumber and Commercial Co. (as alleged to being a de facto corporation), is covered by Sec. 19 of the Corporation Law. Section 19:. . . The due incorporation of any corporations claiming in good faith to be a corporation under this Act and its right to exercise corporate powers shall not be inquired into collaterally in any private suit to which the corporation may be a party, but such inquiry may be had at the suit of the Insular Government on information of the Attorney-General. HELD: This section does not apply on 2 reasons: (1) Not having obtained the certificate of incorporation, Far Eastern Lumber and Commercial Co. even its stockholders may not probably claim "in good faith" to be a corporation. Under our statue it is to be noted (Corporation Law, Sec. 11) that it is the issuance of a certificate of incorporation by the Director of the Bureau of Commerce and Industry which calls a corporation into being. The immunity if collateral attack is granted to corporations "claiming in good faith to be a corporation under this act." Such a claim is compatible with the existence of errors and irregularities; but not with a total or substantial disregard of the law. Unless there has been an evident attempt to comply with the law the claim to be a corporation "under this act" could not be made "in good faith." (2) This is not a suit in which the corporation is a party. This is a litigation between stockholders of the alleged corporation, for the purpose of obtaining its dissolution. Even the existence of a de jure corporation may be terminated in a private suit for its dissolution between stockholders, without the intervention of the state. There might be room for argument on the right of minority stockholders to sue for dissolution;1 but that question does not affect the court's jurisdiction, and is a matter for decision by the judge, subject to review on appeal. Whkch brings us to one principal reason why this petition may not prosper, namely: the petitioners have their remedy by appealing the order of dissolution at the proper time. Moreover, all the parties are informed that the Securities and Exchange Commission has not, so far, issued the corresponding certificate of incorporation. All of them know, or sought to know, that the personality of a corporation begins to exist only from the moment such certificate is issued not before (Sec. 11, Corporation Law). The complaining associates have not represented to the others that they were incorporated any more than the latter had made similar representations to them. And as nobody was led to believe anything to his prejudice and damage, the principle of estoppel does not apply. Obviously this is not an instance requiring the enforcement of contracts with the corporation through the rule of estoppel.

BENGUET CONSOLIDATED MINING CO. V. PINEDA FACTS: The Petitioner, the Benguet Consolidated Mining Co. (hereafter termed Benguet for short), was organized on June 24,1903, as a sociedad anonima regulated by Articles 151 et seq., of the Spanish Code of Commerce of 1886, then in force in the Philippines. The articles of association expressly provided that it was organized for a term of fifty (50) years. In 1906, the governing Philippine Commission enacted Act 1459, commonly known as the Corporation Law, establishing in the islands the American type of juridical entities known as corporation, to take effect on April 1, 1906. Prior to the expiration of its corporate term, petitioner filed with the SEC an alternative registration, extending its term of existence for another 50 years and reformation or reorganization of the corporation in accordance with the Corporation Code. Respondent herein, Securities and Exchange Commissioner denied the registration relying mainly upon the opinion of the Sec. of Justice on the ground that petitioner has no right to extend the original term of its corporate existence as stated in the Articles of Incorporation being a sociedad anonima. ISSUE: WON petitioner has the right to extend the term of its corporate existence in accordance with the Corporation Code. RULING: Petitioner Benguet (and here lies the second issue in this appeal) that the possibility to extend its corporate life under the Code of Commerce constituted a right already vested when Act No. 1459 was adopted. At that time, Benguets existence was well within the 50 years period set in its articles of association; and its members had not entered into any agreement that such period should be extended. It is safe to say that none of the members of Benguet anticipated in 1906 any need to reach an agreement to increase the term of its corporate life, barely three years after it had started. The prorogation was purely speculative; a mere possibility that could not be taken for granted. It was as yet conditional, depending upon the ultimate decision of the members and directors. They might agree to extend Benguets existence beyond the original 50 years; or again they might not. It must be remembered that in 1906, the success of Benguet in its mining ventures was by no means so certain as to warrant continuation of its operations beyond the 50 years set in its articles. The records of this Court show that Benguet ran into financial difficulties in the early part of its existence, to the extent that, as late as 1913, ten years after it was found, 301,100 shares of its capital stock (with a par value of $1 per share) were being offered for sale at 25 centavos per share in order to raise the sum of P75,000 that was needed to rehabilitate the company (Hanlon vs. Hausermann and Beam, 40 Phil., 796). Certainly the prolongation of the corporate existence of Benguet in 1906 was merely a possibility in futuro, a contingency that did not fulfill the requirements of a vested right entitled to constitutional protection. Since there was no agreement as yet to extend the period of Benguets corporate existence (beyond the original 50 years) when the Corporation Law was adopted in 1906, neither Benguet nor its members had any actual or vested right to such extension at that time. Therefore, when the Corporation Law, by section 18, forbade extensions of corporate life, neither Benguet nor its members were deprived of any actual or fixed right constitutionally protected. The election of Benguet to remain a sociedad anonima after the enactment of the Corporation Law is evidence, not only by its failure, from 1906 to 1953, to adopt the alternative to transfer its corporate interests to a new corporation, as required by section 75; chan roblesvirtualawlibraryit also appears from positive acts. Thus around 1933, Benguet claimed and defended in court its acquisition of shares of the capital stock of the Balatoc Mining Company, on the ground that as a sociedad anonima it (Benguet) was not a corporation within the purview of the laws prohibiting a mining corporation from becoming interested in another mining corporation (Harden vs. Benguet Mining Corp., 58 Phil., p. 149). Even in the present proceedings, Benguet has urged its right to amend its original articles of association as sociedad anonima and extend its life as such under the provisions of the Spanish Code of Commerce. Such appeals to privileges as sociedad anonima under the Code of 1886 necessarily imply that Benguet has rejected the alternative of reforming under the Corporation Law. The prohibition contained in section 18 of Act No. 1459, against extending the period of corporate existence by amendment of the original articles, was intended to apply, and does apply, to sociedades anonimas already formed, organized and existing at the time of the effectivity of the Corporation Law (Act No. 1459) in 1906. A sociedad anonima, existing before the Corporation Law, that continues to do business as such for a reasonable time after its enactments, is deemed to have made its election and may not subsequently claim to reform into a corporation under section 75 of Act No. 1459.

Asia Banking Corporation (plaintiff) v. Standard Products Co. (defendant) Facts: Standard Products Co. paid partially and made a promissory note in favour of Asia Banking Corporation. It then thereafter filed a case to recover the payment it made to Asia Banking which the lower court denied. By using as a defense the failure of the plaintiff to prove the corporate existence of the parties and the argument that the court erred in finding that the parties were corporations with juridical personality. Issue: Whether or not the lower court erred in its findings that the parties were corporations with juridical personality? Held: The Appellate Court affirmed the decision of the lower court. The defendant having recognized the corporate existence of the plaintiff by making a promissory note in its favor and making partial payments on the same is therefore estopped to deny said plaintiff's corporate existence. It is, of course, also estopped from denying its own corporate existence. Under these circumstances it was unnecessary for the plaintiff to present other evidence of the corporate existence of either of the parties. There is no merit whatever in the appellant's contention. The general rule is that in the absence of fraud a person who has contracted or otherwise dealt with an association in such a way as to recognize and in effect admit its legal existence as a corporate body is thereby estopped to deny its corporate existence in any action leading out of or involving such contract or dealing, unless its existence is attacked for cause which have arisen since making the contract or other dealing relied on as an estoppel and this applies to foreign as well as to domestic corporations. MANUELA T. VDA. DE SALVATIERRA, petitioner, vs. HON. LORENZO C. GARLITOS, in his capacity as Judge of the Court of First Instance of Leyte, Branch II, and SEGUNDINO REFUERZO, respondents. FACTS: Manuela T. Vda. de Salvatierra appeared to be the owner of a parcel of land located at Maghobas, Poblacion, Burauen, Teyte. On March 7, 1954, said landholder entered into a contract of lease with the Philippine Fibers Producers Co., Inc., allegedly a corporation "duly organized and existing under the laws of the Philippines, domiciled at Burauen, Leyte, Philippines, and with business address therein, represented in this instance by Mr. Segundino Q. Refuerzo, the President". It was provided in said contract, among other things, that the lifetime of the lease would be for a period of 10 years; that the land would be planted to kenaf, ramie or other crops suitable to the soil; that the lessor would be entitled to 30 per cent of the net income accruing from the harvest of any, crop without being responsible for the cost of production thereof; and that after every harvest, the lessee was bound to declare at the earliest possible time the income derived therefrom and to deliver the corresponding share due the lessor. Apparently, the aforementioned obligations imposed on the alleged corporation were not complied with because on April 5, 1955, Alanuela T. Vda, de Salvatierra filed with the Court of First Instance of Leyte a complaint against the Philippine Fibers Producers Co., Inc., and Segundino Q. Refuerzo, for accounting, rescission and damages (Civil Case No. 1912). She averred that sometime in April, 1954, defendants planted kenaf on 3 hectares of the leased property which crop was, at the time of the commencement of the action, already harvested, processed and sold by defendants; that notwithstanding that fact, defendants refused to render an accounting of the income derived therefrom and to deliver the lessor's share; that the estimated gross income was P4,500, and the deductible expenses amounted to P1,000; that as defendants' refusal to undertake such task was in violation of the terms of the covenant entered into between the plaintiff and defendant corporation, a rescission was but proper. ISSUE: Whether or not an officer of the corporation can be made liable to the transaction entered into by an unorganized corporation purporting to be a valid one. RULINGS: While as a general rule a person who has contracted or dealt with an association in such a way as to recognize its existence as a corporate body is estopped from denying the same in an action arising out of such transaction or dealing, (Asia Banking Corporation vs. Standard Products Co., 46 Phil., 114; Compania Agricola de Ultramar vs. Reyes, 4 Phil., 1; Ohta Development Co.; vs. Steamship Pompey, 49 Phil., 117), yet this doctrine may not be held to be applicable where fraud takes a part in the said transaction. In the instant case, on plaintiff's charge that she was unaware of the fact that the Philippine Fibers Producers Co., Inc., had no juridical personality, defendant Refuerzo gave no confirmation or denial and the circumstances surrounding the execution of the contract lead to the inescapable conclusion that plaintiff Manuela T. Vda. de Salvatierra was really made to believe that such corporation was duly organized in accordance with law.

Albert vs. University Publishing Co., Inc. Facts: Mariano Albert entered into a contract with University Publishing Co. Inc. for the exclusive right to publish his commentaries on the RPC and for his share in the sales of the said book. The publishing company failed to pay Albert and so the latter sued the company. The lower court ruled in favor of Albert. However, it was discovered that the publishing company was not registered with the SEC. Plaintiff Albert filed a petition for a writ of execution against Jose Aruego as the real party defendant. CA denied said petition. Albert filed an appeal. Issue: Whether or not Jose Aruego was the real party defendant in the said case and whether or not corporation by estoppel is applicable. Held: The SC held that Jose Aruego was the real party defendant as he possess the right to control the proceeding, to make defenses, adduce and cross examine witnesses. It was clear that he acted as a representative of a non-existent principal. He was the one who reaped the benefits resulting from the contract. Corporation by estoppel cannot be invoked by Aruego. The law provides that one who has induced another to act upon his willful misrepresentation that a corporation was duly organized and existing under the law cannot thereafter set up against his victim the said principle. Lim Tong Lim vs. Philippine Fishing Gear, inc. G.R. No. 1346448, November 3, 1999 Facts: On behalf of Ocean Quest Fishing Corp. Antonio Chua, Peter Yao entered into a Contract to purchase fishing nets from Philippine Fishing Gear Industries, Chua and Yao claimed that they engaged in the business venture with Lim Tong Lim. They failed to pay the fishing nets and the boats, the Philippine Fishing Gear, Inc. filed a collection suit against Chua, Yap and Lim as general partners of a nonexistent corporation Ocean Quest Fishing Corp. The Lower Court issued a writ of Preliminary Attachment for the fishing nets. Chua admitted his liability, Yao filed his answer but deemed waived his rights and Lim filed an answer for Counterclaim and Crossclaim and moved for the lifting of the writ of attachment. The writ was maintained by the Trial Court and ruled that a partnership among Lim, Yao and Chua existed. Lim appealed to the CA, but the latter affirmed the ruling of the trial court, hence, this petition. Issue: Whether or not Lim, Chua and Yao could be deemed to have entered into a partnership. Ruling: It is clear that Chua, Yao and Lim decided to engage in a fishing business, their Compromise Agreement revealed that their intention to pay the loan with the proceeds of the sale of the boats and to divide among themselves the excess or loss. The parties agreed that any loss or profit from the sale and operation would be divided equally among them which shows that they had intended to from a partnership. Sec. 21 provides that a Corporation by estoppel, all persons assume to act as a corporation knowing it to be without authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a result thereof. Provided, however, that when any such corporation is sued on any transaction entered by it as a corporation or on any tort committed by it as such, it shall not be allowed to use as a defense its lack of corporate personality. One who assumes an obligation to an ostensible corporation as such cannot resist performance thereof on the ground that there was in fact no corporation. Even if the ostensible corporation is proven to be legally nonexistent, a party may be estopped from denying its corporate existence. The SC affirmed the decision of the CA.

BUENAFLOR C. UMALI, MAURICIA M. VDA. DE CASTILLO, VICTORIA M. CASTILLO, BERTILLA C. RADA, MARIETTA C. ABAEZ, LEOVINA C. JALBUENA and SANTIAGO M. RIVERA vs. COURT OF APPEALS, BORMAHECO, INC. and PHILIPPINE MACHINERY PARTS MANUFACTURING CO., INC. FACTS: Petitioner Santiago Rivera is the nephew of petitioner Mauricia Meer Vda. de Castillo. The Castillo family are the owners of a parcel of land located in Lucena City which was given as security for a loan from the Development Bank of the Philippines. For their failure to pay the amortization, foreclosure of the said property was about to be initiated. This problem was made known to Santiago Rivera, who proposed to them the conversion into subdivision of the four (4) parcels of land adjacent to the mortgaged property to raise the necessary fund. The Idea was accepted by the Castillo family and to carry out the project, a Memorandum of Agreement was executed by and between Slobec Realty and Development, Inc., represented by its President Santiago Rivera and the Castillo family. In this agreement, Santiago Rivera obliged himself to pay the Castillo family the sum of P70K immediately after the execution of the agreement and to pay the additional amount of P400T after the property has been converted into a subdivision. Rivera, armed with the agreement, approached Mr. Modesto Cervantes, president of defendant Bormaheco, and proposed to purchase from Bormaheco two (2) tractors, Sales Agreement was executed on Dec. 28, 1970. Bormaheco, Inc. and Slobec Realty and Development, Inc. executed a Sales Agreement over one unit of Caterpillar Tractor D-7. In the contract, the price was P230,000.00 of which P50,000.00 was to constitute a down payment, and the balance of P180,000.00 payable in eighteen monthly installments. On the same date, Slobec, through Rivera, executed in favor of Bormaheco a Chattel Mortgage over the said equipment as security for the payment of the aforesaid balance of P180,000.00. As further security of the aforementioned unpaid balance, Slobec obtained from Insurance Corporation of the Phil. a Surety Bond, with ICP as surety and Slobec as principal, in favor of Bormaheco. The surety bond was in turn secured by an Agreement of Counter-Guaranty with Real Estate Mortgage executed by Rivera as president of Slobec and Castillo family, as mortgagors and ICP as mortgagee. In this agreement, ICP guaranteed the obligation of Slobec with Bormaheco in the amount of P180,000.00. In giving the bond, ICP required that the Castillos mortgage to them the properties in question, namely, four parcels of land in the name of the aforementioned mortgagors. Meanwhile, for violation of the terms and conditions of the Counter-Guaranty Agreement, the properties of the Castillos were foreclosed by ICP as the highest bidder, a Certificate of Sale was issued by the Provincial Sheriff of Lucena City and Transfer Certificates of Title over the subject parcels of land were issued by the Register of Deeds of Lucena City in favor of ICP. The mortgagors had one (1) year from the date of the registration of the certificate of sale, to redeem the property, but they failed to do so. Consequently, ICP consolidated its ownership over the subject parcels of land through the requisite affidavit of consolidation of ownership. Pursuant thereto, a Deed of Sale of Real Estate covering the subject properties was issued in favor of ICP. Subsequently, ICP sold to Phil. Machinery Parts Manufacturing Co. (PM Parts) the four (4) parcels of land and by virtue of said conveyance, PM Parts transferred unto itself the titles over the lots in dispute. Thereafter, PM Parts, through its President, Mr. Modesto Cervantes, sent a letter addressed to petitioner Mrs. Mauricia Meer Castillo requesting her and her children to vacate the subject property, who (Mrs. Castillo) in turn sent her reply expressing her refusal to comply with his demands. The heirs of the late Felipe Castillo, petitioner Buenaflor M. Castillo Umali as the appointed administratrix of the properties filed an action for annulment of title before the then CFI of Quezon. Thereafter, they filed an Amended Complaint. Then petitioners filed their Second Amended Complaint, impleading Santiago M. Rivera as a party plaintiff. They contended that all the aforementioned transactions starting with the Agreement of Counter-Guaranty with Real Estate Mortgage, Certificate of Sale and the Deeds of Authority to Sell, Sale and the Affidavit of Consolidation of Ownership and the Deed of Sale are void for being entered into in fraud and without the consent and approval of the CFI of Quezon, before whom the administration proceedings has been pending. Petitioners pray that the 4 parcels of land be declared as owned by the estate of the late Felipe Castillo and that all Transfer Certificates of Title, as well as those appearing as encumbrances at the back of the certificates of title mentioned be declared as a nullity. In their amended answer, the defendants (r espondents herein) controverted the complaint and alleged, that the complaint did not state facts sufficient to state a cause of action against defendants; that petitioners are not entitled to the reliefs demanded; that they are estopped or precluded from asserting the matters set forth in the Complaint; that they are guilty of laches in not asserting their alleged right in due time; that respondent PM Parts is an innocent purchaser for value and relied on the face of the title before it bought the subject property. The trial court rendered judgment in favor of petitioners and declared all said transactions as null and void for being fictitious, spurious and without consideration. The CA reversed said decision, hence this petition. ISSUE: W/N the doctrine of piercing the veil of corporate fiction is not applicable in this case. HELD: No. Under the doctrine of piercing the veil of corporate entity, when valid grounds therefore exist, the legal fiction that a corporation is an entity with a juridical personality separate and distinct from its members or stockholders may be disregarded. In such cases, the corporation will be considered as a mere association of persons. The members or

stockholders of the corporation will be considered as the corporation, that is, liability will attach directly to the officers and stockholders. The doctrine applies: (1)when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime; (2) when it is made as a shield to confuse the legitimate issues; (3)where a corporation is the mere alter ego or business conduit of a person; (4)where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation. In the case at bar, petitioners seek to pierce the V621 Of corporate entity of Bormaheco, ICP and PM Parts, alleging that these corporations employed fraud in causing the foreclosure and subsequent sale of the real properties belonging to petitioners. While we do not discount the possibility of the existence of fraud in the foreclosure proceeding, neither are we inclined to apply the doctrine invoked by petitioners in granting the relief sought. It is our considered opinion that piercing the veil of corporate entity is not the proper remedy in order that the foreclosure proceeding may be declared a nullity. In the first place, 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, petitioners do not seek to impose a claim against the individual members of the three corporations involved; on the contrary, it is these corporations which desire to enforce an alleged right against petitioners. Assuming that petitioners were indeed defrauded by private respondents in the foreclosure of the mortgaged properties, this fact alone is not, under the circumstances, sufficient to justify the piercing of the corporate fiction, since petitioners do not intend to hold the officers and/or members of respondent corporations personally liable therefor. Petitioners are merely seeking the declaration of the nullity of the foreclosure sale, which relief may be obtained without having to disregard the aforesaid corporate fiction attaching to respondent corporations. Secondly, petitioners failed to establish by clear and convincing evidence that private respondents were purposely formed and operated, and thereafter transacted with petitioners, with the sole intention of defrauding the latter. The mere fact, therefore, that the businesses of two or more corporations are interrelated is not a justification for disregarding their separate personalities, absent sufficient showing that the corporate entity was purposely used as a shield to defraud creditors and third persons of their rights. ----KOPPEL---

RICARDO TANTONGCO, petitioner, -versusKAISAHAN NG MGA MANGGAGAWA SA LA CAMPAN (KKM) AND THE HONORABLE COURT OF INDUSTRIAL RELATIONS, respondents FACTS: Tantongco was cited in contempt in relation to the orders issued by the CIR- the La Campana Starch and Coffee Factory or its manager or the person who has charge of the management, and the administrator of the Estate of Ramon Tantongco are hereby ordered to comply with said order, within five days from receipt hereof, particularly the following, to: (a) To reinstate the persons named in the said Order of February 18, 1957; (b) To deposit the amount of P65,534.01 with this Court. With respect to possible back wages from August 28, 1957 as mentioned in the petition for contempt of August 30, 1957, the same shall first be determined. The facts in this case may be briefly narrated thus: Sometime in June, 1951, members of the Kaisahan ng mga Manggagawa sa La Campana, a labor union to which were affiliated workers in the La Campana Starch Factory and La Campana Coffee Factory, two separate entities but under the one management, presented demands for higher wages, and more privileges and benefits in connection with their work. When the management failed and refused to grant the demands, the Department of Labor intervened; but failing to settle the controversy, it certified the dispute to the Court of Industrial Relations on July 17, 1951, where it was docketed as Case No. 584V. On the theory that the laborers presenting the demands were only the ones working in the coffee factory, said company filed through the management a motion to dismiss claiming that inasmuch as there were only 14 of them in said factory, the Court of Industrial Relations had no jurisdiction to entertain and decide the case. The motion was denied by the Court of Industrial Relations, which said: There was only management for the business of gawgaw and coffee with whom the laborers are dealing regarding their work. Hence, the filing of action against the La Campana Starch and Coffee Factory is proper and justified. Petitioner contends on the other hand-obviously do not question the fact that the number of employees of the La Campana Gaugau Packing involved in the case is more than the jurisdictional number (31) required by law, contend that the industrial court has no jurisdiction to try case against La Campana Coffee Factory Co. Inc. because the latter has allegedly only 14 laborers and only five of these are members of respondent Kaisahan. This contention loses force when it is noted that, as found by the industrial court and this finding is conclusive upon us La Campana Gaugau Packing and La Campana Coffee Factory Co. Inc., are operating under one single management, that is, one business though with two trade names. True, the coffee factory is a corporation , and, by legal fiction, an entity existing separate and part from the persons composing it, that is, Tan Tong and his family. But is settled this fiction of law, which has been introduced as a matter of convenience and to subserve the ends of justice cannot be invoke to further an end subversive of that purpose. ISSUE: Whether or not the court is correct in piercing the veil of corporate fiction of La Campana Co despite the death of Tantongco. RULING: YES- we "pierced the veil of corporate existence", and held that the La Campana Starch and Coffee Factory and its owner, Ramon Tantongco, were one; so that with the death of Ramon, the La Campana entities ceased to exist, resulting in the loss of jurisdiction of the CIR to enforce its order against said entities. The reason we applied the so-called "piercing the veil of corporate existence" in G.R. No. L-5677 was to avoid the technicality therein advanced in order to defeat the jurisdiction of the CIR. We there found that although there were ostensibly two separate companies or entities, they were managed by the same person or persons and the workers in both were used interchangeably so that in order to determine whether or not the CIR had jurisdiction, the number of workers in both entitles, not in only one, was to be considered. However, we still believe that although the family of Ramon Tantongco was practically the owner of both the coffee factory and the starch factory, nevertheless these entities are separate from the personality of Ramon. The coffee factory is a stock corporation and the shares are owned not only by Ramon but also by others, such as petitioner Ricardo who not only is a stockholder and director and treasurer but also the management of the same Furthermore, petitioner is now estopped from claiming that the two entities in question and Ramon are one. Thus in Annex 3-CIR (par. 1 thereof) which is a complaint for injunction filed by La Campana Food Products, et al and La Campana Starch Packing against the consolidated Labor Organization of the Philippines, in civil Case No. P-25482 in the Court of First Instance of Rizal, petitioner admitted the existence and operation of said entities; in Annex 4CIR where petitioner appeared as General Manager representing the two entities in its agreement with the La Campana Workers Union to resolve the dispute between the two entities and the laborers in case Nos. 1072-V and 1371-ULP, the existence of the two entities appears to have been admitted; and in Annex 5-A-CIR, an answer to the complaint of La Campana Workers Union in case No. 1471-ULP (Annex 5CIR), petitioner admitted the allegation that said two factories were in existence and doing business with petitioner as manager of the same.

ROBLEDO vs. NLRC (Recognition and disregard of corporateness: Piercing the veil of corporate fiction) 238 SCRA 52( 1994) FACTS: The BASEC corporation was organized to be engaged in operating security agency, having as one of its incorporators, Bacani, who also had at that time a security agency operated as a single proprietorship. Later, Bacani closed down his operations and terminated his employees. His terminated employees sought to hold that BASEC corporation liable for unpaid overtime and legal holiday pays, contending that Bacani intentionally closed his operations to allow expansion of the business through BASEC. They contended that the Bacani family merely continued the operation of the business by creating BASEC in order to avoid the obligations of the former, contending that Bacani became an incorporator of BASEC together with his wife and daughter. ISSUE: Whether or not Bacani intentionally closed his operation to allow expansion of the business by creating BASEC and to avoid obligations of his former company. HELD: It would make the successor enterprise liable for debts of the previous enterprise on the basis of piercing doctrine scenario. The doctrine of piercing the veil of corporate entity is used whenever a court finds that the corporate fiction is being used to defeat public convenience, justify wrong, protect fraud, or defend crime, or to confuse legitimate issues, or that a corporation is a mere alter ego or business conduit of a person or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely as an instrumentality, agency, conduit or adjunct of another corporation. The Court refused to make BASEC liable for the claims of the terminated employees since the facts showed that BASEC already existed prior to closure of Bacani of his operations; that Bacani was merely one of fie incorporators with the lease number of shares in BASEC; and there was no showing that the assets of the single proprietorship were even transferred to BASEC.