PCGG v.

Sandiganbayan
365 SCRA 538 (2001)
Facts:
PCGG directed Victor Africa who was the corporate secretary of Oceanic
Wireless Network, Inc. (OWNI) to send notices to its stockholders about a special
stockholders meeting. During the meeting, a new set of board of directors were
elected, however, none of the registered shareholders of Class A shares were
present in the meeting. Thereafter, PCGG sequestered the Class A shareholding in
OWNI covering the shares of Jose Africa, Benedicto, Andres Africa, Victor Africa, and
Manual Nieto (Africa group). Victor Africa questioned the election of the new board
of directors stating that they were not stockholders of OWNI, hence, they scheduled
another meeting wherein another election of board of directors was held and a new
set of officers were elected and the Africa group were the officers.
PCGG filed a complaint with the Sandiganbayan praying that the Africa group
be enjoined from interfering with its control of OWNI. The Africa group filed a
separate petition for certiorari and prohibition with TRO against PCGG. The
Sandiganbayan decided in favor of the Africa group.
PCGG argued that the Sandiganbayan should not have nullified the
sequestration order because there was no need to file separate actions against
OWNI, Polygon, Aerocom and Silangan because these were included in the list of illgotten wealth of Jose Africa.
Issue: Whether the writ of sequestration issued against Nieto and Africa as
shareholders is valid.
Held: No because the suit filed against Nieto and Africa as shareholders of OWNI is
not a suit against OWNI. This Court has held that "failure to implead these
corporations as defendants and merely annexing a list of such corporations to the
complaints is a violation of their right to due process for it would in effect be
disregarding their distinct and separate personality without a hearing.
A suit against individuals as shareholders in a corporation is not a suit against
the corporation. Failure to implead the corporations as defendants and merely
annexing a list of such corporations to the complaints is a violation of their right to
due process for it would in effect be disregarding their distinct and separate
personality without a hearing.
Sibagat Timber Corp. v. Garcia
216 SCRA 470 (1992)
Facts:
In the case entitled USIPHIL, INC. v. Del Rosario and Sons Logging
Enterprises, Inc.,", certain personal properties of Del Rosario and Sons Logging
Enterprises, Inc. were levied and the respondent Sheriff Garcia was entrusted its
implementation. On the day of the scheduled levy, Sibagat, represented by Mariano
Rana, filed a third-party complaint stating that it is the lawful owner of the

properties levied. Also, a temporary restraining order was obtained by Sibagat.

However, the public auction proceeded and USIPHIL, INC. acquired the certificate of
sale for the properties auctioned. USIPHIL, INC. filed a motion to dismiss against
Sibagats application for preliminary injunction and the same was granted. The
Court of Appeals likewise dismissed Sibagats appeal, hence, this petition for review.
Issue: Whether the Court of Appeals erred in piercing the veil of corporate fiction
and holding that Sibagat is one and the same as the judgment debtor.
Held: No because the circumstances in this case prove that Sibagat Timber Corp. is
a mere instrumentality, adjunct, or conduit of Del Rosario & Sons Logging
Enterprises, Inc.
As a rule, the veil of corporate fiction will be pierced when used as a shield to
perpetrate fraud and/or confuse legitimate issues. There would be basis for piercing
when the officers and directors of two (2) corporations are practically the same and
both corporations hold office in the same room.
In this case, the circumstances that: (1) petitioner and Del Rosario & Sons
Logging Enterprises, Inc. hold office in the same building; (2) the officers and
directors of both corporations are practically the same; and (3) the Del Rosarios
assumed management and control of Sibagat and have been acting for and
managing its business (p. 30, Rollo), bolster the conclusion that petitioner is an alter
ego of the Del Rosario & Sons Logging Enterprises, Inc.

Robledo v. NLRC
238 SCRA 52 (1994)
Facts:
Bacani Security and Protective Agency (BSPA) is a security company owned
by Felipe Bacani that employed the petitioners as security guards until BSPA ceased
to operate. A few months before Felipe Bacani retired the business name of BSPA,
Bacani Security and Allied Services Co., Inc. (BASEC) had been organized and
registered with the SEC. Felipes wife and daughter owned 25,250 shares each and
2 other incorporators had the same shareholdings. Meanwhile, Felipe owned 20,000
shares.
In December 1989, Felipe retired the business name and in 1990, Felipe died
intestate, hence, proceedings to settle the estate was instituted. The petitioners
filed their complaint for underpayment of wages and nonpayment of overtime pay,
holiday pay, and separation pay against BSPA and BASEC.
The Labor Arbiter ruled in favor of the petitioners, however, the NLRC
reversed the decision and suggested that the claims should be filed where the
intestate proceeding is held. The petitioners argued that BASEC and BSPA are one
and the same entity, hence, the corporate fiction should be pierced

Issue: Whether BASEC and BSPA can be held liable.

Held: No because BASEC is a separate entity from BSPA. BSPA is a single
proprietorship owned and operated by Felipe Bacani. Hence, its debts and
obligations were the personal obligations of its owner. Petitioners claim which are
based on these debts and personal obligations did not survive the death of Felipe
Bacani on January 15, 1990 and should have been filed instead in the intestate
proceedings involving his estate.
Piercing is not available when the personal obligations of an individual are
sought to be enforced against the corporation.
There are several other reasons why BASEC is not liable. First, it came into
existence before the retirement of BSPA, hence, it is not true that BASEC is a mere
continuity of BSPA. Second, while Felipe is an incorporator of BASEC, he owned the
least shares among them and the fact that his wife and daughter are incorporators
does not warrant the conclusion that the corporate veil should be pierced. Third,
there is no proof that the assets of BSPA were transferred to BASEC.
Hi-Cement Corp. v. Insular Bank of Asia and America
534 SCRA 169 (2007)
Facts:
This case is a result of the consolidation of the appeals made by Hi-Cement
and E.T. Henry & Co., Inc. against Insular Bank of Asia and America.
E.T. Henry is a company engaged in the processing and distribution of bunker
fuel and Spouses Tan were the controlling stockholders. Hi-Cement is one of their
clients. E.T. Henry had a rediscounting of checks arrangement with Insular Bank of
Asia and America and in the course of their business, 20 checks issued by HiCement for payment to E.T. Henry were dishonored. Hence, Insular Bank filed a
complaint for sum of money against Hi-Cement, E.T. Henry, and Spouses Tan. The
lower court ruled in favor of Insular Bank and held Spouses Tan to be joint and
solidarily liable to Insular Bank.
Spouses Tan argued that the lower court erred in applying the doctrine of
piercing of the veil of corporate fiction in this case.
Issue: Whether the application of piercing of the veil of corporate fiction was proper.
Held: No because after careful study of the records there was no sufficient ground/s
to warrant the application of the doctrine.
If any rule can be laid down, it is that the corporation will be looked upon as a
legal entity until sufficient reasons to the contrary appear. It is only when the fiction
or notion of legal entity is used to defeat public convenience, justify wrong,
perpetuate fraud or defend crime that the law will shred the corporate legal veil and
regard it as a mere association of persons. This is referred to as the doctrine of
piercing the veil of corporate entity.

In this case, the court failed to provide a clear ground as to why the doctrine
is applicable. Also, the mere ownership of the spouses of all or nearly all of the
capital stock is insufficient to warrant disregard of the separate corporate
personality of the company. Hence, the doctrine of piercing of the veil of corporate
entity was improper.
Arnold v. Willits & Patterson, Ltd.
44 Phil. 634 (1923)
Facts:
G.C. Arnold was an employee of Willits & Patterson a company owned by
the partners C.D. Willits and I.L. Patterson. It was doing business in California. They
employed Arnold under a contract designated as Exhibit A to work in Manila. When
Patterson retired, Willits became the sole owner of its assets. For convenience,
Willits organized Willits & Patterson, Ltd. in the Philippines and likewise, he is the
sole owner of its assets. During that time, another contract, designated as Exhibit B,
was entered into by Willits with Arnold which clarified the terms of his employment.
The company had financial troubles which led to the creation of a credit
committee managing the companys finances. The accountant of the company
found that it had unpaid wages for Arnold under Exhibit B, however, the credit
committee refused to recognize the validity of the contract stating that it was only
signed by Willits himself.
Issue: Whether Willits & Patterson, Ltd. should be held liable for the unpaid wages of
Arnold under Exhibit B.
Held: Yes because it is clear under the circumstances that when Exhibit B was
signed, it was for the mutual benefit of both parties. In fact, both corporations
recognized the services rendered by Arnold. Willits was the sole owner of all the
stock and as such, he is the force and dominant power that controlled them.
The corporation is emerging as an enterprise bounded by economics, rather
than as an artificial personality bounded by charter, minute books, and books of
accounts. The proposition that a corporation has an existence separate and distinct
from its membership has its limitations. It must be noted that this separate
existence is for particular purposes; there can be no corporate existence without
persons to compose it; and there can be no association without associates. A
contract entered into by its controlling stockholder-President in pursuit of corporate
affairs and without the requisite board approval may validly be enforced against the
corporation.
PNB v. Andrada Electric & Engineering Co.
381 SCRA 244 (2002)
Facts:
PASUMIL engaged the services of Andrada for electrical repair and rewinding
of several machineries. PASUMIL partially paid for the total amount, however, it
failed to pay the remaining balance. Andrada sought payment of the balance from
PNB, NASUDECO, and PASUMIL arguing that since PNB and NASUDECO are the

owners of the machineries repaired and they benefited from it, then, they should be
liable. Also, the President of NASUDECO is likewise the Vice-President of PNB, hence,
he should be liable. The lower court ruled in favor of Andrada and held PNB,
NASUDECO, and PASUMIL joint and solidarily liable.
Issue: Whether the veil of corporate fiction should be pierced.
Held: No because the elements of alter ego piercing are not present in this case.
First, petitioner only acquired the assets of PASUMIL but there is no showing that
complete control was present. Second, there was no proof that the juridical
personality was used to commit fraud. Third, Andrada was not injured or defrauded
when PASUMILs assets were acquired by petitioner.
Alter ego piercing is applicable only when the following elements are present:
(1) control not mere stock control, but complete domination not only of
finances, but of policy and business practice in respect to the transaction attacked,
must have been such that the corporate entity as to this transaction had at the time
no separate mind, will or existence of its own; (2) such control must have been used
by the defendant to commit a fraud or a wrong to perpetuate the violation of a
statutory or other positive legal duty, or a dishonest and an unjust act in
contravention of plaintiffs legal right; and (3) the said control and breach of duty
must have proximately caused the injury or unjust loss complained of.
Piercing can be applied only if it can be shown that the corporate fiction was
the very tool used to commit fraud or to do wrong, or the very means to avoid the
consequences of ones wrongdoing, or to evade ones liabilities.