Good Earth Emporium vs CA

G.R. No. 82797 February 27, 1991

PARAS, J.:

DOCTRINE:
A corporation has a personality distinct and separate from its individual stockholders or
members. As a consequence of the separate juridical personality of a corporation, the corporate
debt or credit is not the debt or credit of the stockholder, nor is the stockholder's debt or credit
that of the corporation

FACTS:
A contract of lease was entered into by Roces-Reyes Realty and Good Earth Emporium for a
five-storey building with a term of three years at a monthly rental of 65,000.

Good Earth Emporium had defaulted in the payment of its rentals, as a consequence Roces-Reyes
Realty filed an ejectment suit for unlawful detainer against the former and Lim Ka Ping. The MTC
rendered a decision in favor of Roces-Reyes Realty ordering defendants to vacate the premises
and pay their monthly rentals.

A motion for execution was filed by Roces while simultaneously, GEE filed a Notice of Appeal.
However, GEE filed motion to withdraw the appeal. Upon ex-parte motion by Roces, the trial
court issued an alias writ of execution. GEE then filed a motion to quash the writ and notice of
levy and a motion for the issuance of a restraining order. The lower court issued a restraining
order to the sheriff to hold the execution pending hearing in the motion to quash. While the
motion was pending, GEE filed a petition for relief from judgment before another court but was
dismissed. MTC denied the Motion to quash. CA denied appeal and remanded the case to the
RTC.

RTC found the amount of P1M evidenced by Exhibit "1" and another P1M evidenced by pacto
de retro sale instrument (Exhibit "2") were in full satisfaction of the judgment obligation. CA
reversed.

ISSUE:
Whether or not there was full satisfaction of the judgment debt in favor of respondent
corporation which would jusify the quashing of the writ of execution?

HELD:
The common exhibits (Exhibits 1/A and 2/B) shows that nowhere in any of said exhibits was there
any writing alluding to or referring to any settlement between the parties of petitioners'
judgment obligation

Moreover, there is no indication in the receipt, Exhibit "1", that it was in payment, full or partial,
of the judgment obligation. Likewise, there is no indication in the pacto de retro sale which was
drawn in favor of Jesus Marcos Roces and Marcos V. Roces and not the respondent corporation,
that the obligation embodied therein had something to do with petitioners' judgment obligation
with respondent corporation.

In the case at bar, the supposed payments were not made to Roces-Reyes Realty, Inc. or to its
successor in interest nor is there positive evidence that the payment was made to a person
authorized to receive it. No such proof was submitted but merely inferred by the RTC from
Marcos Roces having signed the Lease Contract as President which was witnessed by Jesus
Marcos Roces. The latter, however, was no longer President or even an officer of Roces-Reyes
Realty, Inc. at the time he received the money and signed the sale with pacto de retro. He, in
fact, denied being in possession of authority to receive payment for the respondent
corporation nor does the receipt show that he signed in the same capacity as he did in the
Lease Contract at a time when he was President for respondent corporation.
 Cruz vs. Dalisay
Adm. Matter No. R-181-P July 31, 1987
FERNAN, J

DOCTRINE: The mere fact that one is president of the corporation does not render the property
he owns or possesses the property of the corporation, since that president, as an individual,
and the corporation, are separate entities.

FACTS: Adelio C. Cruz charged Quiterio L. Dalisay, Senior Deputy Sheriff of Manila, with
"malfeasance in office, corrupt practices and serious irregularities. Respondent sheriff attached
the money belonging to complainant Cruz when he was not himself the judgment debtor in the
final judgment sought to be enforced but rather the company known as "Qualitrans Limousine
Service, Inc.

In his comments, respondent explained that when he garnished complainant's cash deposit, he
was merely performing a ministerial duty. Moreover, while it is true that said writ was addressed
to Qualitrans Limousine Service, Inc., but on the basis of an affidavit executed by respondent
before the Pasay City assistant fiscal he stated that he is the owner/president of said corporation,
as a consequence the notice was served to him.

ISSUE: W/N the action of Dalisay is correct?

HELD:
Considering the ministerial nature of his duty in enforcing writs of execution, what is incumbent
upon him is to ensure that only that portion of a decision ordained or decreed in the dispositive
part should be the subject of execution.

The tenor of the NLRC judgment and the implementing writ is clear enough. It directed
Qualitrans Limousine Service, Inc. to reinstate the discharged employees and pay them full
backwages. Respondent, however, chose to "pierce the veil of corporate entity" usurping a
power belonging to the court and assumed improvidently that since the complainant is the
owner/president of Qualitrans Limousine Service, Inc., they are one and the same. It is a well-
settled doctrine both in law and in equity that as a legal entity, a corporation has a personality
distinct and separate from its individual stockholders or members. The mere fact that one is
president of a corporation does not render the property he owns or possesses the property of
the corporation, since the president, as individual, and the corporation are separate entities.
 Bank of America v. CA
G.R. No. 120135 March 31, 2003
AUSTRIA-MARTINEZ, J.:

DOCTRINE:

FACTS:
Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua filed a Complaint against the Bank of America
NT&SA and Bank of America International, Ltd.

The Lintojuas were engaged in the shipping business and owned two vessels, through their
wholly-owned corporations; they deposited their revenues from said business together with
other funds with the branches of said banks; with their business doing well, the defendant banks
induced them to increase the number of their ships in operation, offering them easy loans to
acquire four other vessels; the vessels were registered in the names of their corporations.

The Litonjuas claimed that defendant banks as trustees did not fully render an account of all the
income derived from the operation of the vessels as well as of the proceeds of the subsequent
foreclosure sale; because of the breach of their fiduciary duties, the revenues derived declined
drastically; the loans acquired for the purchase of the four additional vessels then matured and
remained unpaid, prompting defendant banks to have all the six vessels, including the two
vessels foreclosed and sold at public auction to answer for the obligations incurred.

Petitioners filed a motion to dismiss on grounds of forum non conveniens and lack of cause of
action against. The RTC dismissed the said petition, an appeal was filed but the decision RTC
was affirmed by the CA.

Petitioners argue that the borrowers and the registered owners of the vessels are the foreign
corporations and not private respondents Litonjuas who are mere stockholders; and that the
revenues derived from the operations of all the vessels are deposited in the accounts of the
corporations. Hence, petitioners maintain that these foreign corporations are the legal entities
that have the personalities to sue and not herein private respondents; that private respondents,
being mere shareholders, have no claim on the vessels as owners since they merely have an
inchoate right to whatever may remain upon the dissolution of the said foreign corporations
and after all creditors have been fully paid and satisfied;19 and that while private respondents
may have allegedly spent amounts equal to 10% of the acquisition costs of the vessels in
question, their 10% however represents their investments as stockholders in the foreign
corporations.

ISSUE:
WON plaintiffs have no cause of action against defendants since plaintiffs are merely
stockholders of the corporations which are the registered owners of the vessels and the
borrowers of petitioners?
HELD:
A case is dismissible for lack of personality to sue upon proof that the plaintiff is not the real
party-in-interest. Lack of personality to sue can be used as a ground for a Motion to Dismiss
based on the fact that the complaint, on the face thereof, evidently states no cause of action.
 Avon Dale Garments vs. NLRC

G.R. No. 117932 July 20, 1995

FRANCISCO, J.:

DOCTRINE: The two entities cannot be deemed as separate and distinct where there is a showing
that one is merely the continuation of the other. In fact, even a change in the corporate name
does not make a new corporation, whether effected by a special act or under a general law, it
has no effect on the identity of the corporation, or on its property, rights, or liabilities

FACTS: Private respondents were employees of petitioner Avon Dale Garments, Inc. and its
predecessor-in-interest, Avon Dale Shirt Factory. Following a dispute brought about by the
rotation of workers, a compromise agreement was entered into between petitioner and private
respondents wherein the latter were terminated from service and given their corresponding
separation pay.

However, upon refusal of the petitioner to include in the computation of private respondents'
separation pay the period during which the latter were employed by Avon Dale Shirt Factory,
private respondents filed a complaint with the labor arbiter.

According to private respondents, their previous employment with petitioner's predecessor-in-

interest, Avon Dale Shirt Factory, should be credited in computing their separation pay
considering that Avon Dale Shirt factory was not dissolved and they were not in turn hired as new
employees by Avon Dale Garments, Inc.

In its decision, the labor arbiter dismissed private respondents' complaint and held that Avon
Dale Shirt Factory and Avon Dale Garments, Inc. are not one and the same entity. Private
respondents appealed to the NLRC and the latter reversed the decision of the labor arbiter after
finding that upon dissolution of Avon Dale Shirt Factory, Inc., there was no showing that its
terminated employees, as creditors insofar as their separation pay were concerned.

ISSUE:

WON petitioner is a separate and distinct entity from Avon Dale Shirt.

HELD: Petitioner failed to establish that Avon Dale Garments, Inc., is a separate and distinct entity
from Avon Dale Shirt Factory, absent any showing that there was indeed an actual closure and
cessation of the operations of the latter. The mere filing of the Articles of Dissolution with the
Securities and Exchange Commission, without more, is not enough to support the conclusion that
actual dissolution of an entity in fact took place.