GR No.

157549 May 30, 2011

DONNINA C. HALLEY, Petitioner vs.
PRINTWELL, INC., Respondent

FACTS:
BMPI (Business Media Philippines Inc.) is a corporation under the control of its stockholders,
including Donnina Halley. In the course of its business, BMPI commissioned Printwell to print
Philippines, Inc. (a magazine published and distributed by BMPI). Printwell extended 30-day credit
accommodation in favor of BMPI and in a period of 9 mos. BMPI placed several orders amounting
to 316,000.00

However, only 25,000 was paid hence a balance of 291,000. Printwell sued BMPI for collection of
the unpaid balance and later on impleaded BMPI’s original stockholders and incorporators to
recover on their unpaid subscriptions.

It appears that BMPI has an authorized capital stock of 3M divided into 300,000 shares with P10
par value. Only 75,000 shares worth P750,000 were originally subscribed of which P197,500 were
paid up capital. Halley subscribed to 35,000 shares worth P35,000 shares worth P350,000 but
only paid P87,500.

Halley contends that:

1. They all had already paid their subscriptions in full
2. BMPI had separate and distinct personality
3. BOD and SH had resolved to dissolved BMPI

RTC and CA:

Defendant merely used the corporate fiction as a cloak/cover to create an injustice (against
PRINTWELL). Rejected allegations of full payment in view of irregularity in the issuance of ORs
Payment made on a later date was covered by an OR with a lower serial number than payment
made on an earlier date).

-Doctrine of Limited Liability

ISSUE: Whether or not petitioner Donnina Halley is personally liable though she submits she had
no participation in the transaction between BMPI and Printwell and that BMPI acted on its own.

HELD: Yes. Such stockholder should be made liable up to the extent of her unpaid subscription.

Although a corporation has a personality separate and distinct from those of its stockholders,
directors, or officers, such separate and distinct personality is merely a fiction created by law for
the sake of convenience and to promote the ends of justice. The corporate personality may be
disregarded, and the individuals composing the corporation will be treated as individuals, if the
corporate entity is being used as a cloak or cover for fraud or illegality; as a justification for a
wrong; as an alter ego, an adjunct, or a business conduit for the sole benefit of the stockholders.
As a general rule, a corporation is looked upon as a legal entity, unless and until sufficient reason
to the contrary appears. Thus, the courts always presume good faith, and for that reason accord
prime importance to the separate personality of the corporation, disregarding the corporate
personality only after the wrongdoing is first clearly and convincingly.