CASE DIGEST : GUILLERMO VS USON

G.R. No. 198967, March 07, 2016

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

FACTS: On March 11, 1996, respondent Crisanto P. Uson (Uson) began his employment with Royal Class Venture Phils., Inc. (Royal Class Venture) as an accounting clerk. Eventually, he was promoted to the position of accounting supervisor, with a salary of Php13,000.00 a month, until he was allegedly dismissed from employment on December 20, 2000. On March 2, 2001, Uson filed with the Sub-Regional Arbitration. Royal Class Venture did not make an appearance in the case despite its receipt of summons. On October 22, 2001, Labor Arbiter Jose G. De Vera rendered a Decision in favor of the complainant Uson and ordering therein respondent Royal Class Venture to reinstate him to his former position and pay his backwages, 13th month pay as well as moral and exemplary damages and attorney's fees. Royal Class Venture, as the losing party, did not file an appeal of the decision. On May 17, 2002, an Alias Writ of Execution. But with the judgment still unsatisfied, a Second Alias Writ of Execution. Again, it was reported in the Sheriff's Return that the Second Alias Writ of Execution dated September 11, 2002 remained "unsatisfied." Thus, on November 14, 2002, Uson filed a Motion for Alias Writ of Execution and to Hold Directors and Officers of Respondent Liable for Satisfaction of the Decision. On December 26, 2002, Labor Arbiter Irenarco R. Rimando issued an Order. The order held that officers of a corporation are jointly and severally liable for the obligations of the corporation to the employees. 

Guillermo who appears to be the owner of the said corporation which was alleged to be resolved, filed, by way of special appearance, a Motion for Reconsideration/To Set Aside the Order of December 26, 2002. The same, however, was not granted as, this time. On January 5, 2004, Guillermo filed a Motion for Reconsideration of the above Order, but the same was promptly denied by the Labor Arbiter in an Order dated January 7, 2004. Guillermo elevated the matter to the NLRC by filing a Memorandum of Appeal with Prayer for a (Writ of) Preliminary Injunction dated June 10, 2004. the NLRC dismissed Guillermo's appeal and denied his prayers for injunction. On August 20, 2010, Guillermo filed a Petition for Certiorari. On June 8, 2011, the Court of Appeals rendered its assailed Decision which denied Guillermo's petition and upheld all the findings of the NLRC. Hence, the instant petition.

ISSUE : WON the piercing the veil of corporate fiction proper in the case

HELD: 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. 

A finding of personal and solidary liability against a corporate officer like Guillermo must be rooted on a satisfactory showing of fraud, bad faith or malice, or the presence of any of the justifications for disregarding the corporate fiction. 

It is our finding that such evidence exists in the record. In the case at bar involves an apparent family corporation. As in those two cases, the records of the present case bear allegations and evidence that Guillermo, the officer being held liable, is the person responsible in the actual running of the company and for the malicious and illegal dismissal of the complainant; he, likewise, was shown to have a role in dissolving the original obligor company in an obvious "scheme to avoid liability" which jurisprudence has always looked upon with a suspicious eye in order to protect the rights of labor. Then, it is also clearly reflected in the records that 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. Finally, the records likewise bear that Guillermo dissolved Royal Class Venture and helped incorporate a new firm, located in the same address as the former, wherein he is again a stockl1older. The foregoing clearly indicate a pattern or scheme to avoid the obligations to Uson and frustrate the execution of the judgment award, which this Court, in the interest of justice, will not countenance.

CASE DIGEST : PRINCE TRANSPORT INC VS GARCIA

G.R. No. 167291 January 12, 2011

PRINCE TRANSPORT, INC. and MR. RENATO CLAROS, Petitioners, vs

DIOSDADO GARCIA, LUISITO GARCIA, RODANTE ROMERO, REX BARTOLOME, FELICIANO GASCO, JR., DANILO ROJO, EDGAR SANFUEGO, AMADO GALANTO, EUTIQUIO LUGTU, JOEL GRAMATICA, MIEL CERVANTES, TERESITA CABANES, ROE DELA CRUZ, RICHELO BALIDOY, VILMA PORRAS, MIGUELITO SALCEDO, CRISTINA GARCIA, MARIO NAZARENO, DINDO TORRES, ESMAEL RAMBOYONG, ROBETO*MANO, ROGELIO BAGAWISAN, ARIEL SNACHEZ, ESTAQULO VILLAREAL, NELSON MONTERO, GLORIA ORANTE, HARRY TOCA, PABLITO MACASAET and RONALD GARCITA, Respondents.

FACTS: Respondents were hired either as drivers, conductors, mechanics or inspectors, except for respondent Diosdado Garcia (Garcia), who was assigned as Operations Manager. in addition to their regular monthly income, respondents also received commissions equivalent to 8 to 10% of their wages; sometime in October 1997, the said commissions were reduced to 7 to 9%; this led respondents and other employees of PTI to hold a series of meetings to discuss the protection of their interests as employees; these meetings led petitioner Renato Claros, who is the president of PTI, to suspect that respondents are about to form a union; in order to block the continued formation of the union, PTI caused the transfer of all union members and sympathizers to one of its sub-companies, Lubas Transport (Lubas)

Petitioners, on the other hand, denied the material allegations of the complaints contending that herein respondents were no longer their employees, since they all transferred to Lubas at their own request; petitioners have nothing to do with the management and operations of Lubas as well as the control and supervision of the latter's employees; Subsequently, the complaints filed by respondents were consolidated. On October 25, 2000, the Labor Arbiter rendered a Decision. The Labor Arbiter ruled that petitioners are not guilty of unfair labor practice. Respondents filed a Partial Appeal with the NLRC. NLRC modified the decision of the labor arbiter. Respondents filed a Motion for Reconsideration, but the NLRC denied it in its Resolution. Respondents then filed a special civil action for certiorari with the CA assailing the Decision and Resolution of the NLRC. On December 20, 2004, the CA rendered the herein assailed Decision which granted respondents' petition. The CA ruled that petitioners are guilty of unfair labor practice; that Lubas is a mere instrumentality, agent conduit or adjunct of PTI. Petitioners filed a Motion for Reconsideration, but the CA denied it via its Resolution. Hence, the instant petition for review on certiorari.

ISSUE : WON THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT PETITIONERS PRINCE TRANSPORT, INC. AND MR. RENATO CLAROS AND LUBAS TRANSPORT ARE ONE AND THE SAME CORPORATION AND THUS, LIABLE IN SOLIDUM TO RESPONDENTS

HELD: The Court agrees with the CA that Lubas is a mere agent, conduit or adjunct of PTI. A settled formulation of the doctrine of piercing the corporate veil is that when two business enterprises are owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect the rights of third parties, disregard the legal fiction that these two entities are distinct and treat them as identical or as one and the same. In the present case, it may be true that Lubas is a single proprietorship and not a corporation. However, petitioners attempt to isolate themselves from and hide behind the supposed separate and distinct personality of Lubas so as to evade their liabilities is precisely what the classical doctrine of piercing the veil of corporate entity seeks to prevent and remedy. What is telling is the fact that in a memorandum issued by PTI, dated January 22, 1998, petitioner company admitted that Lubas is one of its sub-companies. Moreover, petitioners failed to refute the contention of respondents that despite the latters transfer to Lubas of their daily time records, reports, daily income remittances of conductors, schedule of drivers and conductors were all made, performed, filed and kept at the office of PTI. In fact, respondents identification cards bear the name of PTI. It may not be amiss to point out at this juncture that in two separate illegal dismissal cases involving different groups of employees transferred by PTI to other companies, the Labor Arbiter handling the cases found that these companies and PTI are one and the same entity; thus, making them solidarily liable for the payment of backwages and other money claims awarded to the complainants therein.

CASE DIGEST : VIOLAGO VS. BF FINANCE CORPORATION

G.R. No. 158262 July 21, 2008

SPS. PEDRO AND FLORENCIA VIOLAGO, Petitioners, vs BA FINANCE CORPORATION and AVELINO VIOLAGO, Respondents

FACTS: Sometime in 1983, Avelino Violago, President of Violago Motor Sales Corporation (VMSC), offered to sell a car to his cousin, Pedro F. Violago, and the latters wife, Florencia. Avelino explained that he needed to sell a vehicle to increase the sales quota of VMSC, and that the spouses would just have to pay a down payment of PhP 60,500 while the balance would be financed by respondent BA Finance. On August 4, 1983, the spouses and Avelino signed a promissory note under which they bound themselves to pay jointly and severally to the order of VMSC the amount of PhP 209,601 in 36 monthly installments of PhP 5,822.25 a month, the first installment to be due and payable on September 16, 1983. Avelino prepared a Disclosure Statement of Loan/Credit Transportation which showed the net purchase price of the vehicle, down payment, balance, and finance charges. The sales invoice was filed with the Land Transportation Office (LTO)-Baliwag Branch, which issued Certificate of Registration No. 0137032 in the name of Pedro on August 8, 1983. The spouses were unaware that the same car had already been sold in 1982 to Esmeraldo Violago, another cousin of Avelino, and registered in Esmeraldos name by the LTO-San Rafael Branch. Despite the spouses demand for the car and Avelinos repeated assurances, there was no delivery of the vehicle. Since VMSC failed to deliver the car, Pedro did not pay any monthly amortization to BA Finance. On March 1, 1984, BA Finance filed with the Regional Trial Court (RTC), Branch 116 in Pasay City a complaint for Replevin with Damages against the spouses.prayed for the delivery of the vehicle in favor of BA Finance or, if delivery cannot be effected, for the payment of PhP 199,049.41 plus penalty at the rate of 3% per month from February 15, 1984 until fully paid. 

On August 21, 1989, the spouses Violago filed a Motion for Reconsideration and Motion to Quash Writ of Execution on the basis of lack of a valid service of summons on them, among other reasons. The RTC denied the motions; hence, the spouses filed a petition for certiorari under Rule 65 before the CA, docketed as CA G.R. No. 2002-SP. On May 31, 1991, the CA nullified the RTCs order. This CA decision became final and executory. 

On January 28, 1992, the spouses filed their Answer before the RTC. The RTC rendered a Decision on March 5, 1994, finding for BA Finance but against the Violago spouses. The RTC, however, declared that they are entitled to be indemnified by Avelino. Petitioners-spouses and Avelino appealed to the CA. The appellate court ruled that the promissory note was a negotiable instrument and that BA Finance was a holder in due course, applying Secs. 8, 24, and 52 of the NIL. The spouses Violago sought but were denied reconsideration by the CA per its Resolution of May 15, 2003.

ISSUE : 1) WHETHER OR NOT THE HOLDER OF AN INVALID NEGOTIABLE PROMISSORY NOTE MAY BE CONSIDERED A HOLDER IN DUE COURSE

2) WHETHER OR NOT THE VEIL OF CORPORATE ENTITY MAY BE INVOKED AND SUSTAINED DESPITE THE FRAUD AND DECEPTION OF AVELINO

HELD : 1) In this case, the CA is correct in finding that BA Finance meets all the foregoing requisites:

In the present recourse, on its face, (a) the Promissory Note, Exhibit A, is complete and regular; (b) the Promissory Note was endorsed by the VMSC in favor of the Appellee; (c) the Appellee, when it accepted the Note, acted in good faith and for value; (d) the Appellee was never informed, before and at the time the Promissory Note was endorsed to the Appellee, that the vehicle sold to the Defendants-Appellants was not delivered to the latter and that VMSC had already previously sold the vehicle to Esmeraldo Violago. The indorsement by VMSC to BA Finance appears likewise to be valid and regular. In the hands of one other than a holder in due course, a negotiable instrument is subject to the same defenses as if it were non-negotiable.A holder in due course, however, holds the instrument free from any defect of title of prior parties and from defenses available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof. Since BA Finance is a holder in due course, petitioners cannot raise the defense of non-delivery of the object and nullity of the sale against the corporation. The NIL considers every negotiable instrument prima facie to have been issued for a valuable consideration. Thus, petitioners are liable to respondent corporation for the payment of the amount stated in the instrument.

2) VMSC is a family-owned corporation of which Avelino was president. Avelino committed fraud in selling the vehicle to petitioners, a vehicle that was previously sold to Avelinos other cousin, Esmeraldo. Nowhere in the pleadings did Avelino refute the fact that the vehicle in this case was already previously sold to Esmeraldo; he merely insisted that he cannot be held liable because he was not a party to the transaction. The fact that Avelino and Pedro are cousins, and that Avelino claimed to have a need to increase the sales quota, was likely among the factors which motivated the spouses to buy the car. Avelino, knowing fully well that the vehicle was already sold, and with abuse of his relationship with the spouses, still proceeded with the sale and collected the down payment from petitioners. The trial court found that the vehicle was not delivered to the spouses. Avelino clearly defrauded petitioners. His actions were the proximate cause of petitioners loss. He cannot now hide behind the separate corporate personality of VMSC to escape from liability for the amount adjudged by the trial court in favor of petitioners.

CASE DIGEST : VICMAR DEV. CORP VS ELACOSA

G.R. No. 202215, December 09, 2015

VICMAR DEVELOPMENT CORPORATION AND/OR ROBERT KUA, OWNER, AND ENGR. JUANITO C. PAGCALIWAGAN,¹ MANAGER, Petitioners, v. CAMILO ELARCOSA, MARLON BANDA, DANTE L. BALAMAD, RODRIGO COLANSE,² CHIQUITO PACALDO, ROBINSON PANAGA, JUNIE ABUGHO, SBLVERIO NARISMA, ARMANDO GONZALES, TEOFILO ELBINA, FRANCISCO BAGUIO, GELVEN RHYAN RAMOS, JULITO SIMAN, RECARIDO⁴ PANES, JESUS TINSAY, AGAPITO CANAS, JR., OLIVER LOBAYNON, SIMEON BAGUIO, JOSEPH SALCEDO, DONIL INDINO, WILFREDO GULBEN, JESRILE⁵ TANIO, RENANTE PAMON, RICHIE⁶ GULBEN, DANIEL ELLO, REXY DOFELIZ, RONALD NOVAL, NORBERTO BELARGA, ALLAN BAGUIO, ROBERTO PAGUICAN, ROMEO⁷ PATOY, ROLANDO TACBOBO, WILFREDO LADRA, RUBEN PANES, RUEL CABANDAY, AND JUNARD⁸ABUGHO, Respondent.

FACTS : Respondents alleged that Vicmar, a domestic corporation engaged in manufacturing of plywood for export and for local sale. They averred that Vicmar has two branches, Top Forest Developers, Incorporated (TFDI) and Greenwood International Industries, Incorporated (GUI) located in the same compound where Vicmar operated. According to respondents, Vicmar employed some of them as early as 1990 and since their engagement they had been performing the heaviest and dirtiest tasks in the plant operations. Respondents declared that Vicmar paid them minimum wage and a small amount for overtime but it did not give them benefits as required by law, such as Philhealth, Social Security System, 13th month pay, holiday pay, rest day and night shift differential. They added that Vicmar employed more than 200 regular employees and more than 400 "extra" workers. Respondents claimed that they were illegally dismissed after "vicmar learned that they instituted the subject Complaint through the simple expedience of not being scheduled for work. Even those persons associated with them were dismissed. They also asserted that Vicmar did not comply with the twin notice requirement in dismissing employees

Respondents contended that while Vicmar, TFDI and Gin were separately registered with the SEC. they were involved in the same business, located in the same compound, owned by one person, had one resident manager, and one and the same administrative department, personnel and finance sections. They claimed that the employees of these companies were identified as employees of Vicmar even if they were assigned in TFDI or GIII

ISSUE: WON Vicmar TFDI and Gin can be consdiered as one entity

HELD: The Court also gives merit to the finding of the CA that Vicmar is the employer of respondents despite the allegations that a number of them were assigned to the branches of Vicmar. Petitioners failed to refute the contention that Vicmar and its branches have the same owner and management - which included one resident manager, one administrative department, one and the same personnel and finance sections. Notably, all respondents were employed by the same plant manager, who signed their identification cards some of whom were under Vicmar, and the others under TFDI.

Where it appears that business enterprises are owned, conducted and controlled by the same parties, law and equity will disregard the legal fiction that these corporations are distinct entities and shall treat them as one. This is in order to protect the rights of third persons, as in this case, to safeguard the rights of respondents