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SIAIN ENTERPRISES, INC. vs. CUPERTINO REALTY CORP.

G.R. 170782
June 22, 2009
FACTS:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing
the decision of the CA affirming the decision of the RTC.
On April 10, 1995, petitioner Siain obtained a loan of P37,000,000 from respondent
Cupertino covered by a promissory note signed by both petitioners and respondents respective
presidents, Cua Le Leng and Wilfredo Lua. The promissory note authorizes Cupertino, as the
creditor, to place in escrow the loan proceeds of P37M with Metrobank to pay off petitioners
loan obligation with Development Bank of the Philippines. To secure the loan, petitioner, on the
same date, executed a real estate mortgage over two parcels of land and other immovables, such
as equipment and machineries. Two days later, the promissory note was amended to include a
17% interest per annum on the note. This was again signed by each of the presidents of the
parties.
On August 16, 1995, Cua Le Leng, signed a second promissory note as maker, on
behalf of petitioner, and as co-maker, in her personal capacity in favor of Cupertino for
P160,000,000. On the same date, the parties executed an amendment on the real estate mortgage.
It now indicated that the total loan to be secured by the mortgage is P197,000,000.
Curiously, on March 11, 1996, petitioner, through counsel, sent a letter to respondent
demanding the release of the P160,000,000 loan. Petitioner alleges that respondent had yet to
release the proceeds of the loan.
Cupertino refuted the accusations and maintained that Siain had long obtained the
proceeds. Cupertino declared petitioners demand as made to "abscond from a just and valid
obligation," a mere afterthought, following Cupertinos letter demanding payment of the
P37,000,000 loan covered by the first promissory note which became overdue on March 5, 1996.
Not surprisingly, Cupertino instituted extrajudicial foreclosure proceedings over the
properties subject of the amended real estate mortgage. The auction sale was scheduled on
October 11, 1996 with respondent Notary Public Edwin R. Catacutan commissioned to conduct
the same. This prompted petitioner to file a complaint with a prayer for a restraining order to
enjoin Notary Public Catacutan from proceeding with the public auction on the grounds that the
real estate mortgage was void for lack of consideration.
During the pre-trial conference, the parties failed to arrive at an amicable settlement.
Hence, trial on the merits ensued. RTC upheld the validity of the real estate mortgage. CA
affirmed.
ISSUE: Whether the CA erred in affirming the RTCs decision.
HELD:
NO. The RTC arrived at its decision by applying the doctrine of piercing the veil of
corporate fiction. The Court ruled that the trial court correctly did so. Siain merely denied
receiving payment while Cupertino presented overwhelming evidence of the payments it made
by providing proof of the same.
The fact that the checks, debit memos and the pledges of the jewelries, condominium
units and trucks were constituted not exclusively in the name of Siain Enterprises, Inc. but also

either in the name of Yuyek Manufacturing Corporation, Siain Transport, Inc., Cua Le Leng and
Alberto Lim is of no moment. Heres why:
1. Siain and Yuyek have a common set of incorporators, stockholders and board of
directors;
2. they have the same internal bookkeeper and accountant in the person of
Rosemarie Ragodon;
3. they have the same office address at 306 Jose Rizal St., Mandaluyong City;
4. they have the same majority stockholder and president in the person of Cua Le
Leng; and
5. in relation to Siain Transport, Cua Le Leng had the unlimited authority by and on
herself, without authority from the Board of Directors, to use the funds of Siain
Trucking to pay the obligation incurred by the petitioner corporation.
Consequently, these corporations are proven to be the mere alter-ego of their president
Cua Le Leng, and considering that Cua Le Leng and Alberto Lim have been living together as
common law spouses with three children, the Court believes that while Alberto Lim does not
appear to be an officer of Siain and Yuyek, nonetheless, his receipt of certain checks and debit
memos from Willie Lua and Victoria Lua was actually for the account of his common-law wife,
Cua Le Leng and her alter ego corporations.