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G.R. Nos.

116124-25 November 22, 2000 It was used for the purchase of a house and lot located at No. 12
BIBIANO O. REYNOSO, IV, petitioner, Macopa Street, Valle Verde I, Pasig City. The property was mortgaged
vs. to CCC, and was later foreclosed. Petitioner denied having unlawfully
HON. COURT OF APPEALS and GENERAL CREDIT used funds of CCC-QC and asserted that the sum of P1,300,593.11
CORPORATION, respondents. represented his money placements in CCC-QC, as shown by twenty-
three (23) checks which he issued to the said company.
the trial court rendered its decision wherein it finds the complaint
FACTS: The Commercial Credit Corporation (hereinafter, "CCC"), a
without merit. Accordingly, said complaint was dismissed. By reason
financing and investment firm, decided to organize franchise
of said complaint, defendant BibianoReynoso IV suffered degradation,
companies in different parts of the country, wherein it shall hold
humiliation and mental anguish.
thirty percent (30%) equity. Employees of the CCC were designated as
resident managers of the franchise companies. Petitioner Bibiano O. Both parties appealed to the then Intermediate Appellate Court. The
Reynoso, IV was designated as the resident manager of the franchise appeal of Commercial Credit Corporation of Quezon City was
company in Quezon City, known as the Commercial Credit dismissed for failure to pay docket fees. Petitioner, on the other hand,
Corporation of Quezon City (hereinafter, "CCC-QC"). withdrew his appeal.
CCC-QC entered into an exclusive management contract with CCC Meanwhile, in 1983, CCC became known as the General Credit
whereby the latter was granted the management and full control of Corporation.
the business activities of the former. Under the contract, CCC-QC Petitioner insisted that General Credit Corporation is just the new
shall sell, discount and/or assign its receivables to CCC. name of Commercial Credit Corporation; hence, General Credit
Subsequently, however, this discounting arrangement was Corporation and Commercial Credit Corporation should be treated as
discontinued pursuant to the so-called "DOSRI Rule", prohibiting the one and the same entity.Regional Trial Court of Quezon City denied
lending of funds by corporations to its directors, officers, the Omnibus Motion.
stockholders and other persons with related interests therein.CCC General Credit Corporation instituted a complaint before the Regional
decided to form CCC Equity Corporation, (hereinafter, "CCC-Equity"), Trial Court of Pasig against BibianoReynoso IV and Edgardo C.
a wholly-owned subsidiary, to which CCC transferred its thirty (30%) Tanangco, in his capacity as Deputy Sheriff of Quezon
percent equity in CCC-QC, together with two seats in the latter’s City,14 docketed as Civil Case No. 61777, praying that the levy on its
Board of Directors. parcel of land located in Pasig, Metro Manila and covered by Transfer
Several officials of Commercial Credit Corporation, including Certificate of Title No. 29940 be declared null and void, and that
petitioner Reynoso, became employees of CCC-Equity. While defendant sheriff be enjoined from consolidating ownership over the
petitioner continued to be the Resident Manager of CCC-QC, he drew land and from further levying on other properties of General Credit
his salaries and allowances from CCC-Equity. Furthermore, although Corporation to answer for any liability under the decision in Civil
an employee of CCC-Equity, petitioner, as well as all employees of Case No. Q-30583.
CCC-QC, became qualified members of the Commercial Credit ISSUE:whether or not the judgment in favor of petitioner may be
Corporation Employees Pension Plan. executed against respondent General Credit Corporation
Petitioner, in order to boost the business activities of CCC-QC, (EXTRA NOTES FOR RECIT IN CONNECTION WITH THE ISSUE: The
deposited his personal funds in the company. In return, CCC-QC latter contends that it is a corporation separate and distinct from
issued to him its interest-bearing promissory notes. CCC-QC and, therefore, its properties may not be levied upon to
A complaint for sum of money with preliminary attachmentwas satisfy the monetary judgment in favor of petitioner. In short,
instituted in the then Court of First Instance of Rizal by CCC-QC respondent raises corporate fiction as its defense. Hence, we are
against petitioner, who had in the meantime been dismissed from his necessarily called upon to apply the doctrine of piercing the veil of
employment by CCC-Equity. The complaint was subsequently corporate entity in order to determine if General Credit Corporation,
amended in order to include HidelitaNuval, petitioner’s wife, as a formerly CCC, may be held liable for the obligations of CCC-QC.)
party defendant.2 The complaint alleged that petitioner embezzled the
funds of CCC-QC HELD:The petition is impressed with merit.
A corporation is an artificial being created by operation of law, having not served if further litigation is encouraged when the issue is
the right of succession and the powers, attributes, and properties determinable based on the records.
expressly authorized by law or incident to its existence. 17 It is an A court judgment becomes useless and ineffective if the employer, in
artificial being invested by law with a personality separate and this case CCC as a mother corporation, is placed beyond the legal
distinct from those of the persons composing it as well as from that of reach of the judgment creditor who, after protracted litigation, has
any other legal entity to which it may be related. 18 It was evolved to been found entitled to positive relief. Courts have been organized to
make possible the aggregation and assembling of huge amounts of put an end to controversy. This purpose should not be negated by an
capital upon which big business depends. It also has the advantage inapplicable and wrong use of the fiction of the corporate veil.
of non-dependence on the lives of those who compose it even as it
enjoys certain rights and conducts activities of natural persons.
Tayag vs. Benguet Consolidated, Inc.
Precisely because the corporation is such a prevalent and dominating
on 7:32 AM in Civil Law, Private International Law
factor in the business life of the country, the law has to look carefully
into the exercise of powers by these artificial persons it has created. 0
Any piercing of the corporate veil has to be done with caution. G.R. No. L-23145, Nov. 29, 1968
However, the Court will not hesitate to use its supervisory and
adjudicative powers where the corporate fiction is used as an unfair
device to achieve an inequitable result, defraud creditors, evade
contracts and obligations, or to shield it from the effects of a court o PRIVATE INTERNATIONAL LAW: Situs of Shares of Stock: domicile of
decision. The corporate fiction has to be disregarded when necessary the corporation
in the interest of justice. o SUCCESSION: Ancillary Administration: The ancillary administration
It is obvious that the use by CCC-QC of the same name of is proper, whenever a person dies, leaving in a country other than
Commercial Credit Corporation was intended to publicly identify it as that of his last domicile, property to be administered in the nature of
a component of the CCC group of companies engaged in one and the assets of the deceased liable for his individual debts or to be
same business, i.e., investment and financing. Aside from CCC- distributed among his heirs.
Quezon City, other franchise companies were organized such as CCC- o SUCCESSION: Probate: Probate court has authority to issue the
North Manila and CCC-Cagayan Valley. The organization of order enforcing the ancillary administrator’s right to the stock
subsidiary corporations as what was done here is usually resorted to certificates when the actual situs of the shares of stocks is in the
for the aggrupation of capital, the ability to cover more territory and Philippines.
population, the decentralization of activities best decentralized, and
the securing of other legitimate advantages. But when the mother
corporation and its subsidiary cease to act in good faith and honest FACTS:
business judgment, when the corporate device is used by the parent
to avoid its liability for legitimate obligations of the subsidiary, and Idonah Slade Perkins, an American citizen who died in New York
when the corporate fiction is used to perpetrate fraud or promote City, left among others, two stock certificates issued by Benguet
injustice, the law steps in to remedy the problem. When that Consolidated, a corporation domiciled in the Philippines. As ancillary
happens, the corporate character is not necessarily abrogated. It administrator of Perkins’ estate in the Philippines, Tayag now wants
continues for legitimate objectives. However, it is pierced in order to to take possession of these stock certificates but County Trust
remedy injustice, such as that inflicted in this case. Company of New York, the domiciliary administrator, refused to part
The ends of justice are not served if further litigation is encouraged with them. Thus, the probate court of the Philippines was forced to
when the issue is determinable based on the records.If the corporate issue an order declaring the stock certificates as lost and ordering
fiction is sustained, it becomes a handy deception to avoid a Benguet Consolidated to issue new stock certificates representing
judgment debt and work an injustice. The decision raised to us for Perkins’ shares. Benguet Consolidated appealed the order, arguing
review is an invitation to multiplicity of litigation. As we stated that the stock certificates are not lost as they are in existence and
in Islamic Directorate vs. Court of Appeals,30 the ends of justice are currently in the possession of County Trust Company of New York.
ISSUE: Whether or not the order of the lower court is proper appellant is insensible. It does not dispute it. Nor could it
successfully do so even if it were so minded.

NDC VS PHILIPPINE VETERANS BANK (192 SCRA 257)


HELD:
National Development Corporation vs Philippine Veterans Bank
192 SCRA 257 [GR No. 84132-33 December 10, 1990]
The appeal lacks merit.
Facts: The particular enactment in question is Presidential Decree
Tayag, as ancillary administrator, has the power to gain control and No. 1717, which ordered the rehabilitation of the Agrix Group of
possession of all assets of the decedent within the jurisdiction of the Companies to be administered mainly by the National Development
Philippines Company. The law outlined the procedure for filling claims against
the Agrix Companies and created a claims committee to process these
It is to be noted that the scope of the power of the ancillary claims. Especially relevant to this case, and noted at the outset, is
administrator was, in an earlier case, set forth by Justice Malcolm. section 4(1) thereof providing that “all mortgages and other liens
Thus: "It is often necessary to have more than one administration of presently attaching to any of the assets of the dissolved corporations
an estate. When a person dies intestate owning property in the are hereby extinguished.” Earlier, the Agrix Marketing Inc. had
country of his domicile as well as in a foreign country, administration executed in favor of private respondent Philippine Veterans Bank a
is had in both countries. That which is granted in the jurisdiction of real estate mortgage dated July 7, 1978 over three parcels of land
decedent's last domicile is termed the principal administration, while situated in Los Baños, Laguna. During the existence of the mortgage,
any other administration is termed the ancillary administration. The Agrix went bankrupt. It was the expressed purpose of salvaging this
reason for the latter is because a grant of administration does not ex and the other Agrix companies that the aforementioned decree was
proprio vigore have any effect beyond the limits of the country in issued by President Marcos. A claim for the payment of its loan credit
which it is granted. Hence, an administrator appointed in a foreign was filed by PNB against herein petitioner, however the latter alleged
state has no authority in the [Philippines]. The ancillary and invoked that the same was extinguished by PD 1717.
administration is proper, whenever a person dies, leaving in a Issue: Whether or not Philippine Veterans Bank as creditor of Agrix is
country other than that of his last domicile, property to be still entitled for payment without prejudice to PD 1717.
administered in the nature of assets of the deceased liable for his Held: Yes. A mortgage lien is a property right derived from contract
individual debts or to be distributed among his heirs." and so comes under the protection of Bill of rights so do interests on
loans, as well s penalties and charges, which are also vested rights
Probate court has authority to issue the order enforcing the ancillary once they accrue. Private property cannot simply be taken by law
administrator’s right to the stock certificates when the actual situs of from one person and given to another without just compensation and
the shares of stocks is in the Philippines. any known public purpose. This is plain arbitrariness and is not
permitted under the constitution.
It would follow then that the authority of the probate court to require The court also feels that the decree impairs the obligation of the
that ancillary administrator's right to "the stock certificates covering contract between Agrix and the private respondent without
the 33,002 shares ... standing in her name in the books of [appellant] justification. While it is true that the police power is superior to the
Benguet Consolidated, Inc...." be respected is equally beyond impairment clause, the principle will apply only where the contract is
question. For appellant is a Philippine corporation owing full so related to the public welfare that it will be considered congenitally
allegiance and subject to the unrestricted jurisdiction of local courts. susceptible to change by the legislature in the interest of greater
Its shares of stock cannot therefore be considered in any wise as number.
immune from lawful court orders. Our finding in sum, is that PD 1717 is an invalid exercise of the
police power, not being in conformity with the traditional
Our holding in Wells Fargo Bank and Union v. Collector of Internal requirements of a lawful subject and a lawful method. The extinction
Revenue finds application. "In the instant case, the actual situs of the of the mortgage and other liens and of the interest and other charges
shares of stock is in the Philippines, the corporation being domiciled pertaining to the legitimate creditors of Agrix constitutes taking
[here]." To the force of the above undeniable proposition, not even
without due process of law, and this is compounded by the reduction favor of Santos. It then ordered the petitioners to pay Santos his
of the secured creditors to the category of unsecured creditors in unpaid salaries and damages.
violation of the equal protection clause. Moreover, the new
corporation being neither owned nor controlled by the government, ISSUE: Whether or not NLRC was an inconvenient forum.
should have been created only by general and not special law. And in
so far as the decree also interferes with purely private agreements
without any demonstrated connection with the public interest, there RULING: YES. The NLRC was a seriously inconvenient forum.
is likewise an impairment of the obligation of the contract. The Palace Hotel and MHICL are foreign corporations. Santos was
hired by the Palace Hotel, Beijing without the intervention of the
POEA or any authorized recruitment agency of the government.
PRIVATE INTERNATIONAL LAW: Inconvenient Forumcribd
Under the rule of forum non conveniens, a Philippine court or
agency may assume jurisdiction over the case if it chooses to do
G.R. No. 120077 October 13, 2000 so provided: (1) that the Philippine court is one to which the
THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. parties may conveniently resort to; (2) that the Philippine court
LTD., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, is in a position to make an intelligent decision as to the law and
ARBITER CEFERINA J. DIOSANA AND MARCELO G. the facts; and (3) that the Philippine court has or is likely to
SANTOS, respondents. have power to enforce its decision. The conditions are unavailing
in the case at bar.
FACTS:
The SC states that NLRC is not a convenient forum given that all
Marcelo G. Santos was employed as a printer by the Palace Hotel, the incidents of the case — from the time of recruitment, to
Beijing, China whose personnel were trained by the MHCL. MHC is employment to dismissal occurred outside the Philippines. The
the “incorporator” of MHCL, owning 50% of its capital stock. MHC inconvenience is compounded by the fact that the proper
was organized under the laws of the Philippines. On the other hand, defendants, the Palace Hotel and MHICL are not nationals of the
MHICL was created under the laws of Hong Kong. Philippines. Neither are they “doing business in the Philippines.”
Likewise, the main witnesses, Mr. Shmidt and Mr. Henk, the
Hotel manager, are non-residents of the Philippines.
Due to a retrenchment and “after the unfortunate happenings in
China” (the Tiannamen Square incidents) that has affected the
company business, the printshop of the hotel where Santos is QUERIES:
assigned was closed. For this, Santos was released from employment. 1. Will Philippine Laws apply in this case?
He was paid all benefits due to him and he was repatriated to the
Philippines. NO. The law governing the employment contract as such was
perfected in foreign soil. This calls to for the application of the
Santos filed a complaint for illegal dismissal with the Arbitration principle of lex loci contractus (the law of the place where the
Branch, NCR, NLRC, praying for damages. The complaint named contract was made). The employment contract was not
MHC, MHICL, the Palace Hotel and Mr. Shmidt, the General Manager perfected in the Philippines. Santos signified his acceptance
of the Palace Hotel, as respondents. The Palace Hotel and Mr. by writing a letter while he was still in the Republic of Oman.
Gerhard Shmidt were not served with summons and neither The letter was sent to the Palace Hotel in the China.
participated in the proceedings before the Labor Arbiter. NLRC ruled
in favor of Santos. MHC and MHCL appealed to the NLRC arguing 2. Does NLRC have the power to determine the facts of the case?
that the POEA, not the NLRC had jurisdiction over the case. NLRC
dismissed the case and referred the case to the POEA. Santos filed a
motion to reconsider, stating that he is not an “overseas worker”, NO. All the acts complained of took place in Beijing. The NLRC
thus POEA does not have jurisdiction. NLRC reversed itself, ruling in was not in a position to determine whether the Tiannamen
Square incident truly adversely affected operations of the Issue:
Palace Hotel as to justify respondent Santos’ retrenchment. Whether or not petitioner corporation, who has already ceased
its operation, may claim for moral damages.
3. Does the Principle of effectiveness apply? Can the case be Ruling: NO.
decided in the Philippines through the NLRC? Herein appellant’s claim for moral damages, however, seems
to have no legal or factual basis. Obviously, an artificial
NO. Even assuming that a proper decision could be reached person like herein appellant corporation cannot experience
by the NLRC, such would not have any binding effect against physical sufferings, mental anguish, fright, serious anxiety,
the employer, the Palace Hotel. The Palace Hotel is a wounded feelings, moral shock or social humiliation which are
corporation incorporated under the laws of China and was not basis of moral damages. A corporation may have a good
even served with summons. Jurisdiction over its person was reputation which, if besmirched, may also be a ground for the
not acquired. award of moral damages. The same cannot be considered
under the facts of this case, however, not only because it is
admitted that herein appellant had already ceased in its
This is not to say that Philippine courts and agencies have no
business operation at the time of the foreclosure sale of the
power to solve controversies involving foreign employers.
chattels, but also for the reason that whatever adverse effects
Neither are we saying that we do not have power over an
of the foreclosure sale of the chattels could have upon its
employment contract executed in a foreign country. If Santos
reputation or business standing would undoubtedly be the
were an “overseas contract worker”, a Philippine forum,
same whether the sale was conducted at Jose Panganiban,
specifically the POEA, not the NLRC, would protect him. He is
Camarines Norte, or in Manila which is the place agreed upon
not an “overseas contract worker” a fact which he admits with
by the parties in the mortgage contract.
conviction.

Even assuming that the NLRC was the proper forum, even on
the merits, the NLRC’s decision cannot be sustained.

Mambulao Lumber Company v. PNB (G.R. No. L-22973)


Date: June 6, 2016
Facts:
Petitioner Mambulao Lumber applied for an industrial loan
with herein respondent PNB and was approved with its real
estate, machinery and equipments as collateral. PNB released
the approved loan but petitioner failed to pay and was later
discovered to have already stopped in its operation. PNB then
moved for the foreclosure and sale of the mortgaged
properties. The properties were sold and petitioner sent a
bank draft to PNB to settle the balance of the obligation. PNB
however alleges that a remaining balance stands and a
foreclosure sale would still be held unless petitioner remits
said amount. The foreclosure sale proceeded and petitioner’s
properties were taken out of its compound. Petitioner filed
actions before the court and claims among others, moral
damages.