FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers Bank of the Philippines) and MERCURIO

RIVERA, petitioners, vs. COURT OF APPEALS, CARLOS EJERCITO, in substitution of DEMETRIO DEMETRIA, and JOSE
JANOLO, respondents.
In the absence of a formal deed of sale, may commitments given by bank officers in an exchange of letters and/or in a
meeting with the buyers constitute a perfected and enforceable contract of sale over 101 hectares of land in Sta. Rosa, Laguna?
Does the doctrine of apparent authority apply in this case? If so, may the Central Bank-appointed conservator of Producers Bank
(now First Philippine International Bank) repudiate such apparent authority after said contract has been deemed perfected? During
the pendency of a suit for specific performance, does the filing of a derivative suit by the majority shareholders and directors of the
distressed bank to prevent the enforcement or implementation of the sale violate the ban against forum-shopping?
Simply stated, these are the major questions brought before this Court in the instant Petition for review on certiorari under
Rule 45 of the Rules of Court, to set aside the Decision promulgated January 14, 1994 of the respondent Court of
Appeals[1] in CA-G.R. CV No. 35756 and the Resolution promulgated June 14, 1994 denying the motion for reconsideration. The
dispositive portion of the said Decision reads:

WHEREFORE, the decision of the lower court is MODIFIED by the elimination of the damages awarded under paragraphs 3, 4
and 6 of its dispositive portion and the reduction of the award in paragraph 5 thereof to P75,000.00, to be assessed against
defendant bank. In all other aspects, said decision is hereby AFFIRMED.

All references to the original plaintiffs in the decision and its dispositive portion are deemed, herein and hereafter, to legally refer
to the plaintiff-appellee Carlos C. Ejercito.

Costs against appellant bank.

The dispositive portion of the trial courts[2] decision dated July 10, 1991, on the other hand, is as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against the defendants as follows:

1. Declaring the existence of a perfected contract to buy and sell over the six (6) parcels of land situated at Don Jose, Sta. Rosa,
Laguna with an area of 101 hectares, more or less, covered by and embraced in Transfer Certificates of Title Nos. T-106932 to T-
106937, inclusive, of the Land Records of Laguna, between the plaintiffs as buyers and the defendant Producers Bank for an
agreed price of Five and One Half Million (P5,500,000.00) Pesos;

2. Ordering defendant Producers Bank of the Philippines, upon finality of this decision and receipt from the plaintiffs the amount of
P5.5 Million, to execute in favor of said plaintiffs a deed of absolute sale over the aforementioned six (6) parcels of land, and to
immediately deliver to the plaintiffs the owners copies of T.C.T. Nos. T-106932 to T-106937, inclusive, for purposes of registration
of the same deed and transfer of the six (6) titles in the names of the plaintiffs;

3. Ordering the defendants, jointly and severally, to pay plaintiffs Jose A. Janolo and Demetrio Demetria the sums of P 200,000.00
each in moral damages;

4. Ordering the defendants, jointly and severally, to pay plaintiffs the sum of P 100,000.00 as exemplary damages;

5. Ordering the defendants, jointly and severally, to pay the plaintiffs the amount of P400,000.00 for and by way of attorneys fees;

6. Ordering the defendants to pay the plaintiffs, jointly and severally, actual and moderate damages in the amount of P20,000.00;

With costs against the defendants.

After the parties filed their comment, reply, rejoinder, sur-rejoinder and reply to sur-rejoinder, the petition was given due
course in a Resolution dated January 18, 1995. Thence, the parties filed their respective memoranda and reply memoranda. The
First Division transferred this case to the Third Division per resolution dated October 23, 1995. After carefully deliberating on the
aforesaid submissions, the Court assigned the case to the undersigned ponente for the writing of this Decision.

The Parties

Petitioner First Philippine International Bank (formerly Producers Bank of the Philippines; petitioner Bank, for brevity) is a
banking institution organized and existing under the laws of the Republic of the Philippines. Petitioner Mercurio Rivera (petitioner
Rivera, for brevity) is of legal age and was, at all times material to this case, Head Manager of the Property Management
Department of the petitioner Bank.
Respondent Carlos Ejercito (respondent Ejercito, for brevity) is of legal age and is the assignee of original plaintiffs-appellees
Demetrio Demetria and Jose Janolo.
Respondent Court of Appeals is the court which issued the Decision and Resolution sought to be set aside through this
petition.
Facts: (1) defendant Producer Bank of the Philippines acquired six parcels of land with a total area of 101 hectares located at Don
Jose, Sta. Rosa, Laguna. The property used to be owned by BYME Investment and Development Corporation which had them
mortgaged with the bank as collateral for a loan. The original plaintiffs, Demetrio Demetria and Jose O. Janolo, wanted to
purchase the property and thus initiated negotiations for that purpose.

plaintiffs, upon the suggestion of BYME Investments legal counsel, Jose Fajardo, met with defendant Mercurio Rivera, Manager of
the Property Management Department of the defendant bank. The meeting was held pursuant to plaintiffs plan to buy the
property. After the meeting, plaintiff Janolo, following the advice of defendant Rivera, made a formal purchase offer to the bank.

The foregoing letter drew no response for more than four months, plaintiff, through counsel, made a final demand for compliance
by the bank with its obligations under the considered perfected contract of sale, the defendants through Acting Conservator
Encarnacion repudiated the authority of defendant Rivera and claimed that his dealings with the plaintiffs, particularly his counter-
offer of P5.5 Million are unauthorized or illegal. On that basis, the defendants justified the refusal of the tenders of payment and
the non-compliance with the obligations under what the plaintiffs considered to be a perfected contract of sale.

On May 16, 1988, plaintiffs filed a suit for specific performance with damages against the bank, its Manager Rivera and Acting
Conservator Encarnacion. The basis of the suit was that the transaction had with the bank resulted in a perfected contract of sale.
The defendants took the position that there was no such perfected sale because the defendant Rivera is not authorized to sell the
property, and that there was no meeting of the minds as to the price.

during the pendency of the proceedings in the Court of Appeals, Henry Co and several other stockholders of the Bank,
through counsel Angara Abello Concepcion Regala and Cruz, filed an action (hereafter, the Second Case) -purportedly a
derivative suit - with the Regional Trial Court of Makati, Branch 134, docketed as Civil Case No. 92-1606, against Encarnacion,
Demetria and Janolo to declare any perfected sale of the property as unenforceable and to stop Ejercito from enforcing or
implementing the sale.[4] In his answer, Janolo argued that the Second Case was barred by litis pendentia by virtue of the case
then pending in the Court of Appeals. During the pre-trial conference in the Second Case, plaintiffs filed a Motion for Leave of
Court to Dismiss the Case Without Prejudice. Private respondent opposed this motion on the ground, among others, that plaintiffs
act of forum shopping justifies the dismissal of both cases, with prejudice. [5] Private respondent, in his memorandum, averred that
this motion is still pending in the Makati RTC.

The Issues

From the foregoing positions of the parties, the issues in this case may be summed up as follows:
1) Was there forum-shopping on the part of petitioner Bank?
2) Was there a perfected contract of sale between the parties?
3) Assuming there was, was the said contract enforceable under the statute of frauds?
4) Did the bank conservator have the unilateral power to repudiate the authority of the bank officers and/or to revoke the said
contract?
5) Did the respondent Court commit any reversible error in its findings of facts?

The First Issue: Was There Forum-Shopping?

In the Philippines, forum-shopping has acquired a connotation encompassing not only a choice of venues, as it was originally
understood in conflicts of laws, but also to a choice of remedies.
In the instant case before us, there is also identity of parties, or at least, of interests represented. Although the plaintiffs in the
Second Case (Henry L. Co. et al.) are not name parties in the First Case, they represent the same interest and entity, namely,
petitioner Bank, because:

Firstly, they are not suing in their personal capacities, for they have no direct personal interest in the matter in controversy. They
are not principally or even subsidiarily liable; much less are they direct parties in the assailed contract of sale; and

Secondly, the allegations of the complaint in the Second Case show that the stockholders are bringing a derivative suit. In the
caption itself, petitioners claim to have brought suit for and in behalf of the Producers Bank of the Philippines.[24] Indeed, this is the
very essence of a derivative suit:

In the face of the damaging admissions taken from the complaint in the Second Case, petitioners, quite strangely, sought to
deny that the Second Case was a derivative suit, reasoning that it was brought, not by the minority shareholders, but by Henry Co
et al., who not only own, hold or control over 80% of the outstanding capital stock, but also constitute the majority in the Board of
Directors of petitioner Bank. That being so, then they really represent the Bank. So, whether they sued derivatively or directly,
there is undeniably an identity of interests/entity represented.
Petitioner also tried to seek refuge in the corporate fiction that the personality of the Bank is separate and distinct from its
shareholders. But the rulings of this Court are consistent: When the fiction is urged as a means of perpetrating a fraud or an illegal
 act or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, the achievement or perfection of a
monopoly or generally the perpetration of knavery or crime, the veil with which the law covers and isolates the corporation from
the members or stockholders who compose it will be lifted to allow for its consideration merely as an aggregation of individuals.[25]
In addition to the many cases[26] where the corporate fiction has been disregarded, we now add the instant case, and declare
herewith that the corporate veil cannot be used to shield an otherwise blatant violation of the prohibition against forum-shopping.
Shareholders, whether suing as the majority in direct actions or as the minority in a derivative suit, cannot be allowed to trifle with
court processes, particularly where, as in this case, the corporation itself has not been remiss in vigorously prosecuting or
defending corporate causes and in using and applying remedies available to it. To rule otherwise would be to encourage corporate
litigants to use their shareholders as fronts to circumvent the stringent rules against forum shopping.
Finally, petitioner Bank argued that there cannot be any forum shopping, even assuming arguendo that there is identity of
parties, causes of action and reliefs sought, because it (the Bank) was the defendant in the (first) case while it was the plaintiff in
the other (Second Case), citing as authority Victronics Computers, Inc. vs. Regional Trial Court, Branch 63, Makati, etc. et
al.,[27] where the Court held:

The rule has not been extended to a defendant who, for reasons known only to him, commences a new action against the plaintiff
- instead of filing a responsive pleading in the other case - setting forth therein, as causes of action, specific denials, special and
affirmative defenses or even counterclaims. Thus, Velhagens and Kings motion to dismiss Civil Case No. 91-2069 by no means
negates the charge of forum-shopping as such did not exist in the first place. (italics supplied)

In this case, this is exactly the problem: a decision recognizing the perfection and directing the enforcement of the contract of
sale will directly conflict with a possible decision in the Second Case barring the parties from enforcing or implementing the said
sale. Indeed, a final decision in one would constitute res judicata in the other.[28]
The foregoing conclusion finding the existence of forum-shopping notwithstanding, the only sanction possible now is the
dismissal of both cases with prejudice, as the other sanctions cannot be imposed because petitioners present counsel entered
their appearance only during the proceedings in this Court, and the Petitions VERIFICATION/CERTIFICATION contained
sufficient allegations as to the pendency of the Second Case to show good faith in observing Circular 28-91. The lawyers who filed
the Second Case are not before us; thus the rudiments of due process prevent us from motu propio imposing disciplinary
measures against them in this Decision. However, petitioners themselves (and particularly Henry Co, et al.) as litigants are
admonished to strictly follow the rules against forum-shopping and not to trifle with court proceedings and processes. They are
warned that a repetition of the same will be dealt with more severely.
WHEREFORE, finding no reversible error in the questioned Decision and Resolution, the Court hereby DENIES the petition.
The assailed Decision is AFFIRMED. Moreover, petitioner Bank is REPRIMANDED for engaging in forum-shopping and
WARNED that a repetition of the same or similar acts will be dealt with more severely. Costs against petitioners.
NCEPT BUILDERS, INC., petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION, (First Division); and Norberto
Marabe, Rodolfo Raquel, Cristobal Riego, Manuel Gillego, Palcronio Giducos, Pedro Aboigar, Norberto Comendador,
Rogello Salut, Emilio Garcia, Jr., Mariano Rio, Paulina Basea, Aifredo Albera, Paquito Salut, Domingo Guarino, Romeo
Galve, Dominador Sabina, Felipe Radiana, Gavino Sualibio, Moreno Escares, Ferdinand Torres, Felipe Basilan, and
Ruben Robalos, respondents.
The corporate mask may be lifted and the corporate veil may be pierced when a corporation is just but the alter ego of a
person or of another corporation. Where badges of fraud exist; where public convenience is defeated; where a wrong is sought to
be justified thereby, the corporate fiction or the notion of legal entity should come to naught. The law in these instances will regard
the corporation as a mere association of persons and, in case of two corporations, merge them into one.
Thus, where a sister corporation is used as a shield to evade a corporations subsidiary liability for damages, the corporation
may not be heard to say that it has a personality separate and distinct from the other corporation. The piercing of the corporate
veil comes into play.
This special civil action ostensibly raises the question of whether the National Labor Relations Commission committed grave
abuse of discretion when it issued a break-open order to the sheriff to be enforced against personal property found in the
premises of petitioners sister company.
FACTS: Petitioner Concept Builders, Inc., a domestic corporation, with principal office at 355 Maysan Road, Valenzuela,
Metro Manila, is engaged in the construction business. Private respondents were employed by said company as laborers,
carpenters and riggers.
Private respondents were served individual written notices of termination of employment by petitioner. It was stated in the
individual notices that their contracts of employment had expired and the project in which they were hired had been completed.
Public respondent found it to be, the fact, however, that at the time of the termination of private respondents employment, the
project in which they were hired had not yet been finished and completed. Petitioner had to engage the services of sub-
contractors whose workers performed the functions of private respondents.
Aggrieved, private respondents filed a complaint for illegal dismissal, unfair labor practice and non-payment of their legal
holiday pay, overtime pay and thirteenth-month pay against petitioner.
On December 19, 1984, the Labor Arbiter rendered judgment1 ordering petitioner to reinstate private respondents and to pay
them back wages equivalent to one year or three hundred working days.
On November 27, 1985, the National Labor Relations Commission (NLRC) dismissed the motion for reconsideration filed by
petitioner on the ground that the said decision had already become final and executory. 2
On October 16, 1986, the NLRC Research and Information Department made the finding that private respondents
backwages amounted to P199,800.00.3
 On October 29, 1986, the Labor Arbiter issued a writ of execution directing the sheriff to execute the Decision,
dated December 19, 1984. The writ was partially satisfied through garnishment of sums from petitioners debtor, the Metropolitan
Waterworks and Sewerage Authority, in the amount of P81,385.34. Said amount was turned over to the cashier of the NLRC.
On February 1, 1989, an Alias Writ of Execution was issued by the Labor Arbiter directing the sheriff to collect from herein
petitioner the sum of P117,414.76, representing the balance of the judgment award, and to reinstate private respondents to their
former positions.
On July 13, 1989, the sheriff issued a report stating that he tried to serve the alias writ of execution on petitioner through the
security guard on duty but the service was refused on the ground that petitioner no longer occupied the premises.
On September 26, 1986, upon motion of private respondents, the Labor Arbiter issued a second alias writ of execution.
The said writ had not been enforced by the special sheriff because, as stated in his progress report, dated November 2,
1989:

1. All the employees inside petitioners premises at 355 Maysan Road, Valenzuela, Metro Manila, claimed that they were
employees of Hydro Pipes Philippines, Inc. (HPPI) and not by respondent;

2. Levy was made upon personal properties he found in the premises;

3. Security guards with high-powered guns prevented him from removing the properties he had levied upon.4

The said special sheriff recommended that a break-open order be issued to enable him to enter petitioners premises so that
he could proceed with the public auction sale of the aforesaid personal properties on November 7, 1989.
On November 6, 1989, a certain Dennis Cuyegkeng filed a third-party claim with the Labor Arbiter alleging that the properties
sought to be levied upon by the sheriff were owned by Hydro (Phils.), Inc. (HPPI) of which he is the Vice-President.
On November 23, 1989, private respondents filed a Motion for Issuance of a Break-Open Order, alleging that HPPI and
petitioner corporation were owned by the same incorporator! stockholders. They also alleged that petitioner temporarily
suspended its business operations in order to evade its legal obligations to them and that private respondents were willing to post
an indemnity bond to answer for any damages which petitioner and HPPI may suffer because of the issuance of the break-open
order.
In support of their claim against HPPI, private respondents presented duly certified copies of the General Informations Sheet,
dated May 15, 1987, submitted by petitioner to the Securities and Exchange Commission (SEC) and the General Information
Sheet, dated May15, 1987, submitted by HPPI to the Securities and Exchange Commission.
On February 1, 1990, HPPI filed an Opposition to private respondents motion for issuance of a break-open order, contending
that HPPI is a corporation which is separate and distinct from petitioner. HPPI also alleged that the two corporations are engaged
in two different kinds of businesses, i.e., HPPI is a manufacturing firm while petitioner was then engaged in construction.
On March 2, 1990, the Labor Arbiter issued an Order which denied private respondents motion for break-open order.
Private respondents then appealed to the NLRC. On April 23, 1992, the NLRC set aside the order of the Labor Arbiter, issued
a break-open order and directed private respondents to file a bond. Thereafter, it directed the sheriff to proceed with the auction
sale of the properties already levied upon. It dismissed the third-party claim for lack of merit.
Petitioner moved for reconsideration but the motion was denied by the NLRC in a Resolution, dated December 3, 1992.
Hence, the resort to the present petition.
Petitioner alleges that the NLRC committed grave abuse of discretion when it ordered the execution of its decision despite a
third-party claim on the levied property. Petitioner further contends, that the doctrine of piercing the corporate veil should not have
been applied, in this case, in the absence of any showing that it created HPPI in order to evade its liability to private
respondents. It also contends that HPPI is engaged in the manufacture and sale of steel, concrete and iron pipes, a business
which is distinct and separate from petitioners construction business. Hence, it is of no consequence that petitioner and HPPI
shared the same premises, the same President and the same set of officers and subscribers. 7
We find petitioners contention to be unmeritorious.
It is a fundamental principle of corporation law that a corporation is an entity separate and distinct from its stockholders and
from other corporations to which it may be connected.8 But, this separate and distinct personality of a corporation is merely a
fiction created by law for convenience and to promote justice. 9 So, when the notion of separate juridical personality is used to
defeat public convenience, justify wrong, protect fraud or defend crime, or is used as a device to defeat the labor laws, 10 this
separate personality of the corporation may be disregarded or the veil of corporate fiction pierced. 11 This is true likewise when the
corporation is merely an adjunct, a business conduit or an alter ego of another corporation. 12
The conditions under which the juridical entity may be disregarded vary according to the peculiar facts and circumstances of
each case. No hard and fast rule can be accurately laid down, but certainly, there are some probative factors of identity that will
justify the application of the doctrine of piercing the corporate veil, to wit:

1. Stock ownership by one or common ownership of both corporations.

2. Identity of directors and officers.

3. The manner of keeping corporate books and records.

4. Methods of conducting the business.13

 The SEC en banc explained the instrumentality rule which the courts have applied in disregarding the separate juridical
personality of corporations as follows:

Where one corporation is so organized and controlled and its affairs are conducted so that it is, in fact, a mere instrumentality or
adjunct of the other, the fiction of the corporate entity of the instrumentality may be disregarded. The control necessary to invoke
the rule is not majority or even complete stock control but such domination of finances, policies and practices that the controlled
corporation has, so to speak, no separate mind, will or existence of its own, and is but a conduit for its principal. It must be kept in
mind that the control must be shown to have been exercised at the time the acts complained of took place. Moreover, the control
and breach of duty must proximately cause the injury or unjust loss for which the complaint is made.

The test in determining the applicability of the doctrine of piercing the veil of corporate fiction is as follows:

1. Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business
practice in respect to the transaction attacked so 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 fraud or wrong, to perpetuate the violation of a statutory or other
positive legal duty, or dishonest and unjust act in contravention of plaintiffs legal rights; and

3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.

The absence of any one of these elements prevents piercing the corporate veil. in applying the instrumentality or alter ego
doctrine, the courts are concerned with reality and not form, with how the corporation operated and the individual defendants
relationship to that operation. 14

Thus, the question of whether a corporation is a mere alter ego, a mere sheet or paper corporation, a sham or a subterfuge is
purely one of fact.15
In this case, the NLRC noted that, while petitioner claimed that it ceased its business operations on April 29, 1986, it filed an
Information Sheet with the Securities and Exchange Commission on May 15, 1987, stating that its office address is at 355 Maysan
Road, Valenzuela, Metro Manila. On the other hand, HPPI, the third-party claimant, submitted on the same day, a similar
information sheet stating that its office address is at 355 Maysan Road, Valenzuela, Metro Manila.
Furthermore, the NLRC stated that:

Both information sheets were filed by the same Virgilio O. Casino as the corporate secretary of both corporations. It would also not
be amiss to note that both corporations had the same president, the same board of directors, the same corporate officers, and
substantially the same subscribers.

From the foregoing, it appears that, among other things, the respondent (herein petitioner) and the third-party claimant shared the
same address and/or premises. Under this circumstances, (sic) it cannot be said that the property levied upon by the sheriff were
not of respondents.16

Clearly, petitioner ceased its business operations in order to evade the payment to private respondents of backwages and to
bar their reinstatement to their former positions. HPPI is obviously a business conduit of petitioner corporation and its emergence
was skillfully orchestrated to avoid the financial liability that already attached to petitioner corporation.
It is very obvious that the second corporation seeks the protective shield of a corporate fiction whose veil in the present case
could, and should, be pierced as it was deliberately and maliciously designed to evade its financial obligation to its employees.
In view of the failure of the sheriff, in the case at bar, to effect a levy upon the property subject of the execution, private
respondents had no other recourse but to apply for a break-open order after the third-party claim of HPPI was dismissed for lack
of merit by the NLRC. This is in consonance with Section 3, Rule VII of the NLRC Manual of Execution of Judgment which
provides that:

Should the losing party, his agent or representative, refuse or prohibit the Sheriff or his representative entry to the place where the
property subject of execution is located or kept, the judgment creditor may apply to the Commission or Labor Arbiter concerned for
a break-open order.

Furthermore, our perusal of the records shows that the twin requirements of due notice and hearing were complied with.
Petitioner and the third-party claimant were given the opportunity to submit evidence in support of their claim.
Hence, the NLRC did not commit any grave abuse of discretion when it affirmed the break-open order issued by the Labor
Arbiter.