You are on page 1of 10

CORPORATION LAW CASES JDP

Yao Ka Sin Trading vs Court of Appeals


209 SCRA 763 – Business Organization – Corporation Law – Liability of
Officers – Apparent Authority

FACTS: In 1973, Constancio Maglana, president of Prime White Cement Corporation,


sent an offer letter to Yao Ka Sin Trading. The offer states that Prime White is willing
to sell 45,000 bags of cement at P24.30 per bag. The offer letter was received by Yao
Ka Sin’s manager, Henry Yao. Yao accepted the letter and pursuant to the letter, he
sent a check in the amount of P243,000.00 equivalent to the value of 10,000 bags of
cement. However, the Board of Directors of Prime White rejected the offer letter sent
by Maglana but it considered Yao’s acceptance letter as a new contract offer hence
the Board sent a letter to Yao telling him that Prime White is instead willing to sell
only 10,000 bags to Yao Ka Sin and that he has ten days to reply; that if no reply is
made by Yao then they will consider it as an acceptance and that thereafter Prime
White shall deposit the P243k check in its account and then deliver the cements to
Yao Ka Sin. Henry Yao never replied.

Later, Yao Ka Sin sued Prime White to compel the latter to comply with what Yao Ka
Sin considered as the true contract, i.e., 45,000 bags at P24.30 per bag. Prime White
in its defense averred that although Maglana is empowered to sign contracts in behalf
of Prime White, such contracts are still subject to approval by Prime White’s Board,
and then it still requires further approval by the National Investment and
Development Corporation (NIDC), a government owned and controlled corporation
because Prime White is a subsidiary of NIDC.

Henry Yao asserts that the letter from Maglana is a binding contract because it was
made under the apparent authority of Maglana. The trial court ruled in favor of Yao
Ka Sin. The Court of Appeals reversed the trial court.

ISSUE: Whether or not the president of a corporation is clothed with apparent


authority to enter into binding contracts with third persons without the authority of
the Board.

HELD: No. The Board may enter into contracts through the president. The president
may only enter into contracts upon authority of the Board. Hence, any agreement
signed by the president is subject to approval by the Board. Unlike a general manager
(like the case of Francisco vs GSIS), the president has no apparent authority to enter
into binding contracts with third persons. Further, if indeed the by-laws of Prime
White did provide Maglana with apparent authority, this was not proven by Yao Ka
Sin.

As a rule, apparent authority may result from (1) the general manner, by which the
corporation holds out an officer or agent as having power to act or, in other words,
the apparent authority with which it clothes him to act in general or (2) acquiescence
in his acts of a particular nature, with actual or constructive knowledge thereof,
whether within or without the scope of his ordinary powers. These are not present in
this case.
CORPORATION LAW CASES JDP

Also, the subsequent letter by Prime White to Yao Ka Sin is binding because Yao Ka
Sin’s failure to respond constitutes an acceptance, per stated in the letter itself –
which was not contested by Henry Yao during trial.

WOLFGANG AURBACH, ET AL. vs. SANITARY WARES


MANUFACTURING CORP, ET AL.
G.R. No. 75875 ; December 15, 1989

DOCTRINE: The legal concept of a Joint Venture is of common law origin, and has
no precise legal definition. Under Philippine law, a Joint Venture is a form of
partnership and should thus be governed by the Law on Partnerships, which would
then include the features of separate juridical personality, mutual agency among the
co-ventures , and unlimited liability.

Facts:
This consolidated petition assailed the decision of the CA directing a certain MANNER
OF ELECTION OFOFFICERS IN THE BOARD OF DIRECTORS. There are two groups in
this case, the Lagdameo group, composed of Filipino investors and the American
Standard, Inc. (ASI), composed of foreign investors. The ASI Group and petitioner
Salazar (G.R. Nos. 75975-76) contend that the actual intention of the parties should
be viewed strictly on the "Agreement" dated August 15,1962 wherein it is clearly
stated that the parties' intention was to form a corporation and not a joint venture.
Issue/s:
W/N the business established by the parties is a joint venture or a corporation.
W/N the ASI Group may vote their additional 10% equity during elections of
Saniwares' board of directors.
Held:
While certain provisions of the Agreement would make it appear that the parties
thereto disclaim being partners or joint venturers such disclaimer is directed at third
parties and is not inconsistent with, and does not preclude, the existence of two
distinct groups of stockholders in Saniwares one of which (the Philippine Investors)
shall constitute the majority, and the other ASI shall constitute the minority
stockholder. In any event, the evident intention of the Philippine Investors and ASI
in entering into the Agreement is to enter into a joint venture enterprise
An examination of the Agreement shows that certain provisions were included to
protect theinterests of ASI as the minority. For example, the vote of 7 out of 9
directors is required in certain enumerated corporate acts. ASI is contractually
entitled to designate a member of the Executive Committee and the vote of this
member is required for certain transactions.
The Agreement also requires a 75% super-majority vote for the amendment of the
articles and by-laws of Saniwares. ASI is also given the right to designate the
CORPORATION LAW CASES JDP

president and plant manager. The Agreement further provides that the sales policy
of Saniwares shall be that which is normally followed by ASI and that Saniwares
should not export "Standard" products otherwise than through ASI's Export
Marketing Services. Under the Agreement, ASI agreed to provide technology and
know-how to Saniwares and the latter paid royalties for the same.
The legal concept of a joint venture is of common law origin. It has no precise legal
definition but it has been generally understood to mean an organization formed for
some temporary purpose. It is in fact hardly distinguishable from the partnership,
since their elements are similar community of interest in the business, sharing of
profits and losses, and a mutual right of control.
The main distinction cited by most opinions in common law jurisdictions is that the
partnership contemplates a general business with some degree of continuity, while
the joint venture is formed for the execution of a single transaction, and is thus of a
temporary nature.

DR. JOEL C. MENDEZ vs. PEOPLE and COURT OF TAX APPEALS


G.R. No. 179962 June 11, 2014

FACTS: Dr. Joel Mendez was the sole proprietor of 6 different businesses.

1. Mendez Body and Face Salon and Spa Registered with RDO No. 39 – South Quezon City
2. Mendez Body and Face Salon and Spa Registered with RDO No. 39 – South Quezon City
3. Mendez Body and Face Salon and Spa Registered with RDO No. 40 – Cubao
4. Mendez Body and Face Skin Clinic Registered with RDO No. 47 – East Makati
5. Weigh Less Center Registered with RDO No. 21
6. Mendez Weigh Less Center Registered with RDO No. 4 – Calasiao Pangasinan

Petitioner failed to file an income tax return on those businesses during the taxable years
2001 to 2013. When a complaint was filed against him by the BIR for failure to file an income
tax return, petitioner admitted that he has been operating as a single proprietor under these
trade names in Quezon City, Makati, Dagupan and San Fernando. An information was
filed against him in the Court of Tax Appeals for violation of Art. 255 of the Tax Reform Act
of 1997, to which he plead not guilty. After his arraignment, the prosecution filed a motion
to amend the information:
i. change in the date in the commission of the crime from 2001 to 2002;
ii. the addition of the phrase “doing business in the name and style of”
iii. the addition of the phrase "for income earned."
iv. Business name was changed to “WEIGH LESS CENTER/MENDEZ MEDICAL GROUP”
v. DAGUPAN, SAN FERNANDO omitted, MANDALUYONG, MUNTINLUPA added

Petitioner failed to file a comment on the motion. The motion was granted.
Petitioner now assails the validity of the amended information. (PETITION FOR CERTIORARI
AND PROHIBITION).
He contends that the prosecution’s amendment is a substantial amendment
prohibited under Section 14, Rule 110 of the Revised Rules of Criminal Procedure.
a. It is substantial in nature because its additional allegations alter the prosecution’s
theory of the case so as to cause surprise to him and affect the form of his
defense.v
CORPORATION LAW CASES JDP

b. Thus, he was not properly informed of the nature and cause of the accusation
against him.

ISSUE: WON the prosecution’s amendments made after the petitioner’s arraignment are
substantial in nature and must perforce be denied?

HELD: NO SUBSTANTIAL AMENDMENT


1. The "change" in the date from 2001 to 2002 and the addition of the phrase
"for income earned"
a. petitioner still baselessly belabored the point in its present petition by citing the
erroneous content of the prosecution’s motion to amend instead of the original
information itself
b. That the actual date of the commission of the offense pertains to the year 2002 is
only consistent with the allegation in the information on the taxable year it covers,
i.e., for the taxable year 2001. Since the information alleges that petitioner failed to
file his income tax return for the taxable year 2001, then the offense could only
possibly be committed when petitioner failed to file his income tax return before the
due date of filing, which is on April of the succeeding year, 2002. Accordingly, the
addition of the phrase "for the income earned" before the phrase "for the taxable
year 2001" cannot but be a mere formal amendment since the added phrase
merely states with additional precision something that is already contained in the
original information, i.e., the income tax return is required to be filed precisely for
the income earned for the preceding taxable year.
2. The addition of the phrase "doing business under the name and style of
Mendez Medical Group and the change and/or addition of the branches of
petitioner’s operation
a. Under the National Internal Revenue Code, a person practicing his profession
must file an income tax return on his INCOME FROM ALL SOURCES
i. Since the petitioner operates as a sole proprietor from taxable years 2001
to 2003, the petitioner should have filed a consolidated return IN HIS
PRINCIPAL PLACE OF BUSINESS, regardless of the number and location
of his other branches.
1. Consequently, the change and/or addition of the branches of the
petitioner’s operation in the information does not constitute
substantial amendment because it does not change the prosecution’s
theory that the petitioner failed to file his income tax return.
2. PETITIONER’S FAILURE TO FILE HIS RETURN and consequently to pay
the correct amount of taxes. Accordingly, the petitioner could not have
been surprised at all. “doing business”
ii. Merely an added description of the business operations of the petitioner
a. Because his businesses are not separate juridical entities
i. A sole proprietorship is a form of business organization conducted for
profit by a single individual, and requires the proprietor or owner
thereof, like the petitioner-accused, to secure licenses and permits,
register the business name, and pay taxes to the national
government without acquiring juridical or legal personality of its
own

FELICIANO VS. COA (G.R. NO. 147402, JANUARY 14, 2004

FACTS: COA assessed Leyte Metropolitan Water District (LMWD) auditing fees. Petitioner Feliciano, as
General Manager of LMWD, contended that the water district could not pay the said fees on the basis of
CORPORATION LAW CASES JDP

Sections 6 and 20 of P.D. No. 198 as well as Section 18 of R.A. No. 6758. He primarily claimed that
LMWD is a private corporation not covered by COA's jurisdiction. Petitioner also asked for refund of all
auditing fees LMWD previously paid to COA.COA Chairman denied petitioner’s requests. Petitioner filed
a motion for reconsideration which COA denied. Hence, this petition.

ISSUE: Whether a Local Water District (“LWD”) created under PD 198, as amended, is a government-
owned or controlled corporation subject to the audit jurisdiction of COA or a private corporation which
is outside of COA’s audit jurisdiction.

HELD: Petition lacks merit. The Constitution under Sec. 2(1), Article IX-D and existing laws mandate
COA to audit all government agencies, including government-owned and controlled corporations with
original charters. An LWD is a GOCC with an original charter.

The Constitution recognizes two classes of corporations. The first refers to private corporations created
under a general law. The second refers to government-owned or controlled corporations created by
special charters. Under existing laws, that general law is the Corporation Code.

Obviously, LWD’s are not private corporations because they are not created under the Corporation
Code. LWD’s are not registered with the Securities and Exchange Commission. Section 14 of the
Corporation Code states that “all corporations organized under this code shall file with the SEC articles
of incorporation x x x.” LWDs have no articles of incorporation, no incorporators and no stockholders
or members. There are no stockholders or members to elect the board directors of LWDs as in the
case of all corporations registered with the SEC. The local mayor or the provincial governor appoints
the directors of LWDs for a fixed term of office. The board directors of LWDs are not co-owners of the
LWDs. The board directors and other personnel of LWDs are government employees subject to civil
service laws and anti-graft laws. Clearly, an LWD is a public and not a private entity, hence, subject to
COA’s audit jurisdiction.

FILIPINAS DE COMPANIA DE SEGUROS vs. CHRISTERN, HUENFELD & CO


July 2, 2014 G.R. No. L-2294 May 25, 1951, EN BANC (PARAS, C.J.)

FACTS: Christern, Huenefeld and Company, a German company, obtained a fire insurance
policy from Filipinas Compañia for the merchandise contained in a building located in Binondo,
Manila in the sum of P100,000. Filipinas Compañia is an American controlled company. The
building and the insured merchandise were burned during the Japanese occupation. Christern
filed its claim amounting to P92,650.00 but Filipinas Compañia refused to pay alleging that
Christern is a corporation whose majority stockholders are Germans and that during the
Japanese occupation, America declared war against Germany hence the insurance policy
ceased to be effective because the insured has become an enemy. Filipinas Compañia was
eventually ordered to pay Christern as ordered by the Japanese government.

ISSUE: Whether or not Christern, Huenefeld and Co is entitled to receive the proceeds from
the insurance claim.

HELD: NO. There is no question that majority of the stockholders of Christern were German
subjects. This being so, Christern became an enemy corporation upon the outbreak of the
war between the United States and Germany. The Philippine Insurance Law (Act No. 2427,
as amended,) in Section 8, provides that “anyone except a public enemy may be insured.”
It stands to reason that an insurance policy ceases to be allowable as soon as an insured
becomes a public enemy.

The respondent having become an enemy corporation on December 10, 1941, the insurance
policy issued in its favor on October 1, 1941, by the petitioner had ceased to be valid and
enforceable, and since the insured goods were burned after December 10, 1941, and during
CORPORATION LAW CASES JDP

the war, the respondent was not entitled to any indemnity under said policy from the
petitioner. However, elementary rules of justice (in the absence of specific provision in the
Insurance Law) require that the premium paid by the respondent for the period covered by
its policy from December 11, 1941, should be returned by the petitioner.

UNIVERSITY OF MINDANAO VS. BSP, 778 SCRA 458


GR No. 194964, January 11, 2016

Nature of Action: An action for the nullification and cancellation of mortgage on the ground
that the person who entered into contract has no authority to execute such contract.

FACTS: Guillermo B. Torres and Dolores P. Torres incorporated and operated two (2) thrift
banks: (1) First Iligan Savings & Loan Association, Inc. (FISLAI); and (2) Davao Savings and
Loan Association, Inc. (DSLAI). Guillermo B. Torres chaired both thrift banks. He acted as
FISLAI's President, while his wife, Dolores P. Torres, acted as DSLAI's President and FISLAI's
Treasurer. Upon Guillermo B. Torres' request, Bangko Sentral ng Pilipinas issued a P1.9 million
standby emergency credit to FISLAI. On May 25, 1982, University of Mindanao's Vice
President for Finance, Saturnino Petalcorin, executed a deed of real estate mortgage over
University of Mindanao's property in Cagayan de Oro City in favor of Bangko Sentral ng
Pilipinas. "The mortgage served as security for FISLAI's PI.9 Million loan" It was allegedly
executed on University of Mindanao's behalf. As proof of his authority to execute a real estate
mortgage for University of Mindanao, Saturnino Petalcorin showed a Secretary's Certificate
signed by University of Mindanao's Corporate Secretary, Aurora de Leon. The Secretary’s
certificate states among others the authorizing of the chairman to appoint Satunino Pactolerin
to represent the University of Mindanao to transact, transfer, convey, lease, mortgage, or
otherwise hypothecate the subject properties. Saturnino Petalcorin executed another deed of
real estate mortgage, allegedly on behalf of University of Mindanao, over its two properties
in Iligan City. This mortgage served as additional security for FISLAI's loans. FISLAI and
DSLAI eventually merged with DSLAI as the surviving corporation in an effort to rehabilitate
the thrift banks due to the heavy withdrawals of depositors. DSLAI later became known as
Mindanao Savings and Loan Association, Inc. (MSLAI). MSLAI failed to recover from its losses.
Bangko Sentral ng Pilipinas later on foreclosed the mortgaged properties. University of
Mindanao filed two Complaints for nullification and cancellation of mortgage. One Complaint
was filed before the Regional Trial Court of Cagayan de Oro City, and the other Complaint was
filed before the Regional Trial Court of Iligan City. University of Mindanao alleged that it did
not obtain any loan from Bangko Sentral ng Pilipinas and that Aurora De Leon’s certification
was anomalous. That it never authorized Saturnino Petalcorin to execute real estate mortgage
contracts involving its properties to secure FISLAI's debts and it never ratified the execution
of the mortgage contracts. The Regional Trial Courts ruled in favor of University of Mindanao.
The Court of Appeals however ruled that "although BSP failed to prove that the UM Board of
Trustees actually passed a Board Resolution authorizing Petalcorin to mortgage the subject
real properties, Aurora de Leon's Secretary's Certificate" clothed Petalcorin with apparent and
ostensible authority to execute the mortgage deed on its behalf. Bangko Sentral ng Pilipinas
merely relied in good faith on the Secretary's Certificate. University of Mindanao is estopped
from denying Saturnino Petalcorin's authority.

ISSUE: Whether petitioner University of Mindanao is bound by the real estate mortgage
contracts executed by Saturnino Petalcorin.
CORPORATION LAW CASES JDP

RULING: No. Acts of an officer that are not authorized by the board of
directors/trustees do not bind the corporation unless the corporation ratifies the
acts or holds the officer out as a person with authority to transact on its behalf.

Petitioner argues that it did not authorize Saturnino Petalcorin to mortgage its
properties on its behalf. There was no board resolution to that effect. Thus, the mortgages
executed by Saturnino Petalcorin were unenforceable. The mortgage contracts executed in
favor of respondent do not bind petitioner. They were executed without authority from
petitioner. Being a juridical person, petitioner cannot conduct its business, make decisions,
or act in any manner without action from its Board of Trustees. The Board of Trustees must
act as a body in order to exercise corporate powers. Individual trustees are not clothed with
corporate powers just by being a trustee. Hence, the individual trustee cannot bind the
corporation by himself or herself. The corporation may, however, delegate through a board
resolution its corporate powers or functions to a representative, subject to limitations under
the law and the corporation's articles of incorporation. The relationship between a corporation
and its representatives is governed by the general principles of agency. Article 1317 of the
Civil Code provides that there must be authority from the principal before anyone can act in
his or her name:
ART. 1317. No one may contract in the name of another without being authorized by
the latter, or unless he has by law a right to represent him.

Hence, without delegation by the board of directors or trustees, acts of a person -


including those of the corporation's directors, trustees, shareholders, or officers—executed on
behalf of the corporation are generally not binding on the corporation. The unenforceable
status of contracts entered into by an unauthorized person on behalf of another is based on
the basic principle that contracts must be consented to by both parties. There is no contract
without meeting of the minds as to the subject matter and cause of the obligations created
under the contract. Consent of a person cannot be presumed from representations of another,
especially if obligations will be incurred as a result. Thus, authority is required to make actions
made on his or her behalf binding on a person. Contracts entered into by persons without
authority from the corporation shall generally be considered ultra vires and
unenforceable against the corporation.

Nissan
Malixi
Ferro

CONSTANTE AMOR DE CASTRO and CORAZON AMOR DE


CASTRO, petitioners, vs. COURT OF APPEALS and FRANCISCO
ARTIGO, respondents.
[G.R. No. 115838. July 18, 2002]

Facts: De castro were co-owners of four (4) lots. In a letter, Artigo was authorized by
appellants to act as real estate broker in the sale of these properties and five percent (5%)
of which will be given to the agent as commission. It was appellee who first found Times
Transit Corporation, who bought 2 lots. Artigo felt short of his commission. Hence, he sued
below to collect the balance. De Castro’s then moved for the dismissal for failure to implead
other co-owners as indispensable parties. The De Castros claim that Artigo always knew that
the two lots were co-owned with their other siblings and failure to implead such indispensable
CORPORATION LAW CASES JDP

parties is fatal to the complaint since Artigo, as agent of all the four co-owners, would be paid
with funds co-owned by the four co-owners.

Issue: WON the complaint merits dismissal for failure to implead other co-owners as
indispensable parties

Ruling: Devoid of merit.

Art. 1915. If two or more persons have appointed an agent for a common transaction or
undertaking, they shall be solidarily liable to the agent for all the consequences of the agency.

The rule in this article applies even when the appointments were made by the principals in
separate acts, provided that they are for the same transaction. The solidarity arises from the
common interest of the principals, and not from the act of constituting the agency. By virtue
of this solidarity, the agent can recover from any principal the whole compensation and
indemnity owing to him by the others. The parties, however, may, by express agreement,
negate this solidary responsibility. The solidarity does not disappear by the mere partition
effected by the principals after the accomplishment of the agency.

When the law expressly provides for solidarity of the obligation, as in the liability of co-
principals in a contract of agency, each obligor may be compelled to pay the entire obligation.
The agent may recover the whole compensation from any one of the co-principals, as in this
case.

JOSE EMMANUEL P. GUILLERMO, Petitioner, v. CRISANTO P. USON, Respondent.


November 3, 2017 G.R. No. 198967. March 07, 2016.

Facts: Respondent Uson was an accounting supervisor in Royal Class Venture Phils., Inc.
(RCVPI) until Dec. 20, 2000 when he was allegedly dismissed by petitioner Guillermo, the
company’s president/general manager, for having exposed the latter’s practice of dictating
and undervaluing the shares of stocks of the corporation. Thereafter he filed a complaint for
illegal dismissal against the corporation, RCVPI.

The Labor Arbiter rendered a decision in favor of Uson, ordering respondent to reinstate him
to his former position and pay his backwages, 13th month pay as well as moral damages,
exemplary damages and attorney’s fees. RCVPI did not file an appeal but repeated issuances
of Writs of Execution against the same remained unsatisfied.

Uson filed another Motion for Alias Writ of Execution and to Hold Directors and Officers of
Respondent Liable for the Decision and quoted from the sheriff’s return: a) that at RCVPI’s
address (to which the writs are being served) there is a new establishment named “ Joel and
Sons Corporation” which was a family corporation owned by the Guillermos, in which Jose
Emmanuel Guillermo, the President and General Manager of RCVPI, is one of the stockholders;
b) that Jose received the writ using the nickname “Joey” concealing his real identity and
pretended to be the brother of Jose; c) that RCVPI has already been dissolved.

Labor Arbiter granted the motion filed by respondent and held herein petitioner Jose
Emmanuel Guillermo, in his personal capacity jointly and severally liable with the corporation
stating that the officers of the corporation are jointly and severally liable for the obligations
CORPORATION LAW CASES JDP

of the corporation (“piercing the veil of corporate fiction”) to the employees even if the said
officers were not parties to the case.

Guillermo filed a Motion for Reconsideration/To Set Aside the Order of the labor arbiter. His
contentions were a) officers cannot be included as judgement obligor in a labor case for the
first time only after the decision of the Labor Arbiter had become final and executory b) in
piercing the veil of RCVPI, he was allegedly discriminated against when he alone was belatedly
impleaded despite the existence of other officers of RCVPI; c)that the labor arbiter has no
jurisdiction because the case is one of an intra-corporate controversy, with the complainant
Uson also claiming to be a stockholder and director of the corporation.

Issues:
1. Whether an officer of a corporation may be included as judgement obligor in a labor case for
the first time only after the decision of the Labor Arbiter had become final and executory.
2. Whether the twin doctrines of “piercing the veil of corporate fiction” and personal liability of
company officers in labor cases apply.

Ruling:
The Petition is denied.

In earlier labor cases, the Court held that persons who were not originally impleaded in the
case were, even during execution, held to be solidarity liable with the employer corporation
for the latter's unpaid obligations to complainant-employees. Personal liability attaches only
when, as enumerated by the said Section 31 of the Corporation Code, there is a willful and
knowing assent to patently unlawful acts of the corporation, there is gross negligence or bad
faith in directing the affairs of the corporation, or there is a conflict of interest resulting in
damages to the corporation. The conferment of liability on officers for a corporation's
obligations to labor is held to be an exception to the general doctrine of separate personality
of a corporation.

It also bears emphasis that in cases where personal liability attaches, not even all officers are
made accountable. Rather, only the "responsible officer," i.e., the person directly responsible
for and who "acted in bad faith" in committing the illegal dismissal or any act violative of the
Labor Code, is held solidarily liable, in cases wherein the corporate veil is pierced

The veil of corporate fiction can be pierced, and responsible corporate directors and officers
or even a separate but related corporation, may be impleaded and held answerable solidarily
in a labor case, even after final judgment and on execution, so long as it is established that
such persons have deliberately used the corporate vehicle to unjustly evade the judgment
obligation, or have resorted to fraud, bad faith or malice in doing so.

In the case at hand, respondent Uson’s sworn allegations stating that Guillermo was the
responsible officer in charge of running the company as well as the one who maliciously and
illegally dismissed Uson from employment was uncontroverted. Furthermore, it was Guillermo
himself, as President and General Manager of the company, who received the summons to
the case, and who also subsequently and without justifiable cause refused to receive all
notices and orders of the Labor Arbiter that followed. He, likewise, was shown to have a role
in dissolving the original obligor company in an obvious "scheme to avoid liability".

Essentially, then, the facts form part of the records and stand as further proof of Guillermo's
bad faith and malicious intent to evade the judgment obligation.
CORPORATION LAW CASES JDP

It is settled in jurisprudence that not all conflicts between a stockholder and the
corporation are intra-corporate; an examination of the complaint must be made on
whether the complainant is involved in his capacity as a stockholder or director, or
as an employee.

In the case at bar, Uson's allegation was that he was maliciously and illegally dismissed as an
Accounting Supervisor by Guillermo, the Company President and General Manager. It raised
no intra-corporate relationship issues between him and the corporation or Guillermo; neither
did it raise any issue regarding the regulation of the corporation.

As correctly found by the appellate court, Uson's complaint and redress sought were centered
alone on his dismissal as an employee, and not upon any other relationship he had with the
company or with Guillermo. Thus, the matter is clearly a labor dispute cognizable by the labor
tribunals.

Veil-piercing in fraud cases requires that the legal fiction of separate juridical personality is
used for fraudulent or wrongful ends. For reasons discussed below, We see red flags of
fraudulent schemes in public procurement, all of which were established in the 2004 Decision,
the totality of which strongly indicate that MPEI was a sham corporation formed merely for
the purpose of perpetrating a fraudulent scheme. Republic v. Mega Pacific eSolutions,
Inc., 794 SCRA 414 (2016)