PNB vs Andrada Electric & Engineering Co.

381 SCRA 244

FACTS: PNB acquired the assets of Pampanga Sugar Mills that were earlier foreclosed by the DBP. It
was alleged that PNB organized National Sugar Development Corporation to take ownership and
possession of the assets and ultimately to nationalize and consolidate its interest in other PNB
controlled sugar mills. PASUMIL engaged the services of Andrada for electric rewinding and repair,
most of which were partially paid by PASUMIL, leaving several unpaid accounts with Andrada.
PASUMIL, PNB and NASUDECO refused to pay plaintiff. The President of NASUDECO is also the
VP of PNB and Andrada besought this official to pay the outstanding obligations of PASUMIL,
inasmuch as that PNB and NASUDECO now owned and possessed the assets of PASUMIL.
NASUDECO contends that it took over PASUMIL for the purpose of reconditioning the sugar
central pursuant to Martial Law and nothing commanded that they were to assume corporate
obligations of PASUMIL. The court ordered NASEDECO to pay Andrada.
ISSUE: Whether or not PNB should be held liable for PASUMILs debts
HELD: No, PNB should not be liable. Piercing the veil of corporate entity may only be allowed if
there is control in such a manner that the corporate entity had no separate mind, will, existence
on its own, that such control must have been used to commit fraud or a wrong and said control
and breach of duty must have proximately caused the injury or unjust loss complained of. In the
absence of the foregoing precludes the piercing of the corporate veil. First, other than the fact that
the petitioners acquired assets of PASUMIL, there is no showing that their control over it warrants the
disregard of corporate personalities. Second, there is no evidence that their juridical personality was
used to commit fraud or do a wrong or that the separate corporate entity was used as a mere alter ego,
business conduit or instrumentality of another entity or person. Third, respondent was not defrauded or
injured when petitioners acquired the assets of PASUMIL.