San Juan vs.

CA

Facts: San Juan Structural and Steel Fabricators entered into an agreement with Motorich
Sales Corporation through Nenita Gruenberg, corporate treasurer of Motorich, for the
transfer to the former a parcel of land upon a P100,000earnest money, balance to be payable
within March 2, 1989.Upon payment of the earnest money, and on March 1, 1989,San Juan
allegedly asked to be submitted a computation of the balance due to Motorich. The latter,
despite repeated demands, refused to execute the Deed of Assignment of the land. San Juan
discovered that Motorich entered into a Deed of Absolute Sale of the land to ACL
Development Corporation. Hence, San Juan filed a complaint with the RTC. On the other
hand, Motorich contends that since Nenita Gruenberg was only the treasurer of said
corporation, and that its president, Reynaldo Gruenberg, did not sign the agreement entered
into by San Juan and Motorich, the treasurer’s signature was inadequate to bind Motorich to
the agreement. Furthermore, Nenita contended that since San Juan was not able to pay within
the stipulated period, no deed of assignment could be made. The deed was agreed to be
executed only after receipt of the cash payment, and since according to Nenita, no cash
payment was made on the due date, no deed could have been executed.RTC dismissed the
case holding that Nenita Gruenberg was not authorized by Motorich to enter into said
contract with San Juan, and that a majority vote of the BoD was necessary to sell assets of the
corporation in accordance with Sec. 40 of the Corporation Code. CA affirmed this decision.
Hence, this petition with SC

Issue: Whether or not the veil of corporate fiction could be pierced.

Held: No. San Juan argues that the veil of corporate fiction should be pierced because the
spouses Reynaldo and Nenita Gruenberg own 99.96% of the subscribed capital stock, they
needed no authorization from the BoD to enter into the said contract. The veil can only be
disregarded when it is utilized as a shield to commit fraud, illegality or inequity, defeat public
convenience, confuse legitimate issues, or serve as a mere alter ego or business conduit of a
person or an instrumentality, agency or adjunct of another corporation. Hence, the question of
piercing the veil becomes a matter of proof. In the case at bar, SC found no reason to pierce
the veil. San Juan failed to establish that said corporation was formed for the purpose of
shielding any fraudulent act of its officers and stockholders