1. Manila International Airport Authority vs CA GR No.

155650, July 20, 2006, 495 SCRA

591
Facts: Manila International Airport Authority (MIAA) is the operator of the Ninoy International
Airport located at Paranaque City. The Officers of Paranaque City sent notices to MIAA due to
real estate tax delinquency. MIAA then settled some of the amount. When MIAA failed to settle
the entire amount, the officers of Paranaque city threatened to levy and subject to auction the
land and buildings of MIAA, which they did. MIAA sought for a Temporary Restraining Order
from the CA but failed to do so within the 60 days reglementary period, so the petition was
dismissed. MIAA then sought for the TRO with the Supreme Court a day before the public
auction, MIAA was granted with the TRO but unfortunately the TRO was received by the
Paranaque City officers 3 hours after the public auction. MIAA claims that although the charter
provides that the title of the land and building are with MIAA still the ownership is with the
Republic of the Philippines. MIAA also contends that it is an instrumentality of the government
and as such exempted from real estate tax. That the land and buildings of MIAA are of public
dominion therefore cannot be subjected to levy and auction sale. On the other hand, the officers
of Paranaque City claim that MIAA is a government owned and controlled corporation therefore
not exempted to real estate tax.
Issues: Whether or not MIAA is an instrumentality of the government and not a government
owned and controlled corporation and as such exempted from tax.
Whether or not the land and buildings of MIAA are part of the public dominion and thus cannot
be the subject of levy and auction sale.
Ruling: Under the Local government code, government owned and controlled corporations are
not exempted from real estate tax. MIAA is not a government owned and controlled corporation,
for to become one MIAA should either be a stock or non stock corporation. MIAA is not a stock
corporation for its capital is not divided into shares. It is not a non stock corporation since it has
no members. MIAA is an instrumentality of the government vested with corporate powers and
government functions. Under the civil code, property may either be under public dominion or
private ownership. Those under public dominion are owned by the State and are utilized for
public use, public service and for the development of national wealth. The ports included in the
public dominion pertain either to seaports or airports. When properties under public dominion
cease to be for public use and service, they form part of the patrimonial property of the State.
The court held that the land and buildings of MIAA are part of the public dominion. Since the
airport is devoted for public use, for the domestic and international travel and transportation.
Even if MIAA charge fees, this is for support of its operation and for regulation and does not
change the character of the land and buildings of MIAA as part of the public dominion. As part of
the public dominion the land and buildings of MIAA are outside the commerce of man. To
subject them to levy and public auction is contrary to public policy. Unless the President issues
a proclamation withdrawing the airport land and buildings from public use, these properties
remain to be of public dominion and are inalienable. As long as the land and buildings are for
public use the ownership is with the Republic of the Philippines.
2. Magsaysay-Labrador, et. al. vs. Court of Appeals GR 58168, 19 December 1989

Facts: On 9 February 1979, Adelaida Rodriguez-Magsaysay, widow and special administratix of

the estate of the late Senator Genaro Magsaysay, brought before the then Court of First
Instance of Olongapo an action against Artemio Panganiban, Subic Land Corporation (SUBIC),
Filipinas Manufacturer's Bank (FILMANBANK) and the Register of Deeds of Zambales, for the
annulment of the Deed of Assignment executed by the late Senator in favor of SUBIC (as a
result of which TCT 3258 was cancelled and TCT 22431 issued in the name of SUBIC), for the
annulment of the Deed of Mortgage executed by SUBIC in favor of FILMANBANK (dated 28
April 1977 in the amount of P 2,700,000.00), and cancellation of TCT 22431 by the Register of
Deeds, and for the latter to issue a new title in her favor. On 7 March 1979, Concepcion
Magsaysay-Labrador, Soledad Magsaysay-Cabrera, Luisa Magsaysay-Corpuz, Felicidad
Magsaysay, and Mercedes Magsaysay-Diaz, sisters of the late senator, filed a motion for
intervention on the ground that on 20 June 1978, their brother conveyed to them 1/2 of his
shareholdings in SUBIC or a total of 416,566.6 shares and as assignees of around 41 % of the
total outstanding shares of such stocks of SUBIC, they have a substantial and legal interest in
the subject matter of litigation and that they have a legal interest in the success of the suit with
respect to SUBIC. On 26 July 1979, the trial court denied the motion for intervention, and ruled
that petitioners have no legal interest whatsoever in the matter in litigation and their being
alleged assignees or transferees of certain shares in SUBIC cannot legally entitle them to
intervene because SUBIC has a personality separate and distinct from its stockholders.
On appeal, the Court of Appeals found no factual or legal justification to disturb the findings of
the lower court. The appellate court further stated that whatever claims the Magsaysay sisters
have against the late Senator or against SUBIC for that matter can be ventilated in a separate
proceeding. The motion for reconsideration of the Magsaysay sisters was denied. Hence, the
petition for review on certiorari.
Issue: Whether the Magsaysay sister, allegedly stockholders of SUBIC, are interested parties in
a case where corporate properties are in dispute.
Held: Viewed in the light of Section 2, Rule 12 of the Revised Rules of Court, the Magsaysay
sisters have no legal interest in the subject matter in litigation so as to entitle them to intervene
in the proceedings. To be permitted to intervene in a pending action, the party must have a legal
interest in the matter in litigation, or in the success of either of the parties or an interest against
both, or he must be so situated as to be adversely affected by a distribution or other disposition
of the property in the custody of the court or an officer thereof . Here, the interest, if it exists at
all, of the Magsaysay sisters is indirect, contingent, remote, conjectural, consequential and
collateral. At the very least, their interest is purely inchoate, or in sheer expectancy of a right in
the management of the corporation and to share in the profits thereof and in the properties and
assets thereof on dissolution, after payment of the corporate debts and obligations. While a
share of stock represents a proportionate or aliquot interest in the property of the corporation, it
does not vest the owner thereof with any legal right or title to any of the property, his interest in
the corporate property being equitable or beneficial in nature. Shareholders are in no legal
sense the owners of corporate property, which is owned by the corporation as a distinct legal
person.

3. Sulo ng Bayan vs. Araneta GR L-31061, 17 August 1976

Facts: On 26 April 1966, Sulo ng Bayan, Inc. filed an accion de revindicacion with the Court of
First Instance of Bulacan, Fifth Judicial District, Valenzuela, Bulacan, against Gregorio Araneta
Inc. (GAI), Paradise Farms Inc., National Waterworks & Sewerage Authority (NAWASA),
Hacienda Caretas Inc., and the Register of Deeds of Bulacan to recover the ownership and
possession of a large tract of land in San Jose del Monte, Bulacan, containing an area of
27,982,250 sq. ms., more or less, registered under the Torrens System in the name of GAI, et.
al.'s predecessors-in-interest (who are members of the corporation). On 2 September 1966, GAI
filed a motion to dismiss the amended complaint on the grounds that (1) the complaint states no
cause of action; and (2) the cause of action, if any, is barred by prescription and laches.
Paradise Farms, Inc. and Hacienda Caretas, Inc. filed motions to dismiss based on the same
grounds. NAWASA did not file any motion to dismiss. However, it pleaded in its answer as
special and affirmative defenses lack of cause of action by Sulo ng Bayan Inc. and the barring
of such action by prescription and laches. On 24 January 1967, the trial court issued an Order
dismissing the (amended) complaint. On 14 February 1967, Sulo ng Bayan filed a motion to
reconsider the Order of dismissal, arguing among others that the complaint states a sufficient
cause of action because the subject matter of the controversy in one of common interest to the
members of the corporation who are so numerous that the present complaint should be treated
as a class suit. The motion was denied by the trial court in its Order dated 22 February 1967.
Sulo ng Bayan appealed to the Court of Appeals. On 3 September 1969, the Court of Appeals,
upon finding that no question of fact was involved in the appeal but only questions of law and
jurisdiction, certified the case to the Supreme Court for resolution of the legal issues involved in
the controversy.
Issue:
Whether the corporation (non-stock) may institute an action in behalf of its individual members
for the recovery of certain parcels of land allegedly owned by said members, among others.
Whether the complaint filed by the corporation in behalf of its members may be treated as a
class suit
Held:
1. It is a doctrine well-established and obtains both at law and in equity that a corporation is a
distinct legal entity to be considered as separate and apart from the individual stockholders or
members who compose it, and is not affected by the personal rights, obligations and
transactions of its stockholders or members. The property of the corporation is its property and
not that of the stockholders, as owners, although they have equities in it. Properties registered
in the name of the corporation are owned by it as an entity separate and distinct from its
members. Conversely, a corporation ordinarily has no interest in the individual property of its
stockholders unless transferred to the corporation, "even in the case of a one-man corporation."
The mere fact that one is president of a corporation does not render the property which he owns
or possesses the property of the corporation, since the president, as individual, and the

corporation are separate similarities. Similarly, stockholders in a corporation engaged in buying

and dealing in real estate whose certificates of stock entitled the holder thereof to an allotment
in the distribution of the land of the corporation upon surrender of their stock certificates were
considered not to have such legal or equitable title or interest in the land, as would support a
suit for title, especially against parties other than the corporation. It must be noted, however, that
the juridical personality of the corporation, as separate and distinct from the persons composing
it, is but a legal fiction introduced for the purpose of convenience and to subserve the ends of
justice. This separate personality of the corporation may be disregarded, or the veil of corporate
fiction pierced, in cases where it is used as a cloak or cover for fraud or illegality, or to work -an
injustice, or where necessary to achieve equity. It has not been claimed that the members have
assigned or transferred whatever rights they may have on the land in question to the
corporation. Absent any showing of interest, therefore, a corporation, has no personality to bring
an action for and in behalf of its stockholders or members for the purpose of recovering property
which belongs to said stockholders or members in their personal capacities.
2. In order that a class suit may prosper, the following requisites must be present: (1) that the
subject matter of the controversy is one of common or general interest to many persons; and (2)
that the parties are so numerous that it is impracticable to bring them all before the court. Here,
there is only one party plaintiff, and the corporation does not even have an interest in the
subject matter of the controversy, and cannot, therefore, represent its members or stockholders
who claim to own in their individual capacities ownership of the said property. Moreover, a class
suit does not lie in actions for the recovery of property where several persons claim partnership
of their respective portions of the property, as each one could alleged and prove his respective
right in a different way for each portion of the land, so that they cannot all be held to have
identical title through acquisition/prescription.
4. Bataan Shipyard & Engineering Co., Inc. vs Presidential Commission on Good
Government November 19, 2012 150 SCRA 181 A Corporation Cannot Invoke the Right
Against Self-Incrimination
Facts: When President Corazon Aquino took power, the Presidential Commission on Good
Government (PCGG) was formed in order to recover ill gotten wealth allegedly acquired by
former President Marcos and his cronies. Aquino then issued two executive orders in 1986 and
pursuant thereto, a sequestration and a takeover order were issued against Bataan Shipyard &
engineering Co., Inc. (BASECO). BASECO was alleged to be in actuality owned and controlled
by the Marcoses through the Romualdez family, and in turn, through dummy stockholders.
The sequestration order issued in 1986 required, among others, that BASECO produce
corporate records from 1973 to 1986 under pain of contempt of the PCGG if it fails to do so.
BASECO assails this order as it avers, among others, that it is against BASECOs right against
self incrimination and unreasonable searches and seizures.
ISSUE: Whether or not BASECO is correct.
HELD: No. First of all, PCGG has the right to require the production of such documents
pursuant to the power granted to it. Second, and more importantly, right against self-

incrimination has no application to juridical persons. There is a reserve right in the legislature to
investigate the contracts of a corporation and find out whether it has exceeded its powers. It
would be a strange anomaly to hold that a state, having chartered a corporation like BASECO to
make use of certain franchises, could not, in the exercise of sovereignty, inquire how these
franchises had been employed, and whether they had been abused, and demand the
production of the corporate books and papers for that purpose.
Neither is the right against unreasonable searches and seizures applicable here. There were no
searches made and no seizure pursuant to any search was ever made. BASECO was merely
ordered to produce the corporate records.
5. Luxuria Homes, Inc. vs Court of Appeals 302 SCRA 315 Piercing the Veil of Corporate
Fiction
Facts: Aida Posadas was the owner of a 1.6 hectare land in Sucat, Muntinlupa. In 1989, she
entered into an agreement with Jaime Bravo for the latter to draft a development and
architectural design for the said property. The contract price was P450,000.00. Posadas gave a
down payment of P25,000.00. Later, Posadas assigned her property to Luxuria Homes, Inc.
One of the witnesses to the deed of assignment and articles of incorporation was Jaime Bravo.
In 1992, Bravo finished the architectural design so he proposed that he and his company
manage the development of the property. But Posadas turned down the proposal and thereafter
the business relationship between the two went sour. Bravo then demanded Posadas to pay
them the balance of their agreement as regards the architectural design (P425k). Bravo also
demanded payment for some other expenses and fees he incurred i.e., negotiating and
relocating the informal settlers then occupying the land of Posadas. Posadas refused to make
payment. Bravo then filed a complaint for specific performance against Posadas but he included
Luxuria Homes as a co-defendant as he alleged that Luxuria Homes was a mere conduit of
Posadas; that the said corporation was created in order to defraud Bravo and avoid the
payment of debt.
ISSUE: Whether or not Luxuria Homes should be impleaded.
HELD: No. It was Posadas who entered into a contract with Bravo in her personal capacity.
Bravo was not able to prove that Luxuria Homes was a mere conduit of Posadas. Posadas
owns just 33% of Luxuria Homes. Further, when Luxuria Homes was created, Bravo was there
as a witness. So how can he claim that the creation of said corporation was to defraud him. The
eventual transfer of Posadas property to Luxuria was with the full knowledge of Bravo. The
agreement between Posadas and Bravo was entered into even before Luxuria existed hence
Luxuria was never a party thereto. Whatever liability Posadas incurred arising from said
agreement must be borne by her solely and not in solidum with Luxuria. To disregard the
separate juridical personality of a corporation, the wrongdoing must be clearly and convincingly
established. It cannot be presumed.
6. Concept Builders Inc. vs. National Labor Relations Commission GR 108734, 29 May
1996

Facts: Concept Builders, Inc., (CBI) a domestic corporation, with principal office at 355 Maysan
Road, Valenzuela, Metro Manila, is engaged in the construction business while Norberto
Marabe; Rodolfo Raquel, Cristobal Riego, Manuel Gillego, Palcronio Giducos, Pedro Aboigar,
Norberto Comendador, Rogelio Salut, Emilio Garcia, Jr., Mariano Rio, Paulina Basea, Alfredo
Albera, Paquito Salut, Domingo Guarino, Romeo Galve, Dominador Sabina, Felipe Radiana,
Gavino Sualibio, Moreno Escares, Ferdinand Torres, Felipe Basilan, and Ruben Robalos were
employed by said company as laborers, carpenters and riggers. On November 1981, Marabe,
et. al. were served individual written notices of termination of employment by CBI, effective on
30 November 1981. 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. The National Labor
Relations Commission (NLRC) found it to be, the fact, however, that at the time of the
termination of Marabe, et.al.'s employment, the project in which they were hired had not yet
been finished and completed. CBI had to engage the services of sub-contractors whose workers
performed the functions of Marabe, et. al. Aggrieved, Marabe, et. al. filed a complaint for illegal
dismissal, unfair labor practice and non-payment of their legal holiday pay, overtime pay and
thirteenth-month pay against CBI. On 19 December 1984, the Labor Arbiter rendered judgment
ordering CBI to reinstate Marabe et. al. and to pay them back wages equivalent to 1 year or 300
working days. On 27 November 1985, the NLRC dismissed the motion for reconsideration filed
by CBI on the ground that the said decision had already become final and executory.
On 16 October 1986, the NLRC Research and Information Department made the finding that
Marabe, et. al.'s back wages amounted to P199,800.00. On 29 October 1986, the Labor Arbiter
issued a writ of execution directing the sheriff to execute the Decision, dated 19 December
1984. The writ was partially satisfied through garnishment of sums from CBI's 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 1 February 1989, an Alias Writ of Execution
was issued by the Labor Arbiter directing the sheriff to collect from CBI the sum of P117,414.76,
representing the balance of the judgment award, and to reinstate Marabe, et. al. to their former
positions. On 13 July 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 CBI no longer occupied the premises. On 26 September 1986, upon motion of
Marabe, et. al., 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 2
November 1989, that all the employees inside CBI's premises claimed that they were
employees of Hydro Pipes Philippines, Inc. (HPPI) and not by CBI; that levy was made upon
personal properties he found in the premises; and that security guards with high-powered guns
prevented him from removing the properties he had levied upon. The said special sheriff
recommended that a "break-open order" be issued to enable him to enter CBI's premises so
that he could proceed with the public auction sale of the aforesaid personal properties on 7
November 1989. On 6 November 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 HPPI, of which he is the Vice-President. On 23 November 1989, Marabe, et. al. filed a
"Motion for Issuance of a Break-Open Order," alleging that HPPI and CBI 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 Marabe, et. al. were

willing to post an indemnity bond to answer for any damages which CBI and HPPI may suffer
because of the issuance of the break-open order. On 2 March 1990, the Labor Arbiter issued an
Order which denied Marabe, et. al.'s motion for break-open order.
Marabe, et. al. then appealed to the NLRC. On 23 April 1992, the NLRC set aside the order of
the Labor Arbiter, issued a break-open order and directed Marabe, et. al. 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. CBI moved for reconsideration but the
motion was denied by the NLRC in a Resolution, dated 3 December 1992. Hence, the petition.
Issue: Whether the NLRC was correct in issuing the break-open order to levy the HPPI
properties located at CBI amd/or HPPIs premises at 355 Maysan Road, Valenzuela, Metro
Manila.
Held: 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. But, this
separate and distinct personality of a corporation is merely a fiction created by law for
convenience and to promote justice. 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, this separate personality of the corporation may be disregarded
or the veil of corporate fiction pierced. This is true likewise when the corporation is merely an
adjunct, a business conduit or an alter ego of another corporation. 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;
and (4) Methods of conducting the business. The SEC en banc explained the "instrumentality
rule" which the courts have applied in disregarding the separate juridical personality of
corporations as "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 instances, 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 (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 plaintiff's 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 defendant's relationship to that operation. 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. Here, while CBI claimed that it ceased its business operations
on 29 April 1986, it filed an Information Sheet with the Securities and Exchange Commission on
15 May 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. Further, both information sheets were filed by the same Virgilio O. Casio as the
corporate secretary of both corporations. 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 CBI and the HPPI shared the same
address and/or premises. Under these circumstances, it cannot be said that the property levied
upon by the sheriff were not of CBI's. Clearly, CBI ceased its business operations in order to
evade the payment to Marabe, et. al. of back wages and to bar their reinstatement to their
former positions. HPPI is obviously a business conduit of CBI and its emergence was skillfully
orchestrated to avoid the financial liability that already attached to CBI.
7. Francisco Motors Corporation vs Court of Appeals 309 SCRA 72 Piercing the Veil of
Corporate Fiction (Upside Down)
Facts: In 1985, Francisco Motors Corporation (FMC) sued Atty. Gregorio Manuel to recover from
a him a sum of money in the amount of P23,000.00+. Said amount was allegedly owed to them
by Manuel for the purchase of a jeep body plus repairs thereto. Manuel filed a counterclaim in
the amount of P50,000.00. In his counterclaim, Manuel alleged that he was the Assistant Legal
Officer for FMC; that the Francisco Family, owners of FMC, engaged his services for the
intestate estate proceedings of one Benita Trinidad; that he was not paid for his legal services;
that he is filing the counterclaim against FMC because said corporation was merely a conduit of
the Francisco Family. The trial court as well as the Court of Appeals granted Manuels
counterclaim on the ground that the legal fees were owed by the incorporators of FMC (an
application of the doctrine of piercing the veil of corporation fiction in a reversed manner).
ISSUE: Whether or not the doctrine of piercing the veil of corporate fiction was properly used by
the Court of Appeals.
HELD: No. In the first place, the doctrine is to be used in disregarding corporate fiction and
making the incorporators liable in appropriate circumstances. In the case at bar, the doctrine is
applied upside down where the corporation is held liable for the personal obligations of the
incorporators such was uncalled for and erroneous. It must be noted that that Atty. Manuels
legal services were secured by the Francisco Family to represent them in the intestate
proceedings over Benita Trinidads estate. The indebtedness was incurred by the Francisco
Family in their separate and personal capacity. These estate proceedings did not involve any
business of FMC. The proper remedy is for Manuel to sue the concerned members of the
Francisco Family in their individual capacity.

8. WILLIAM C. YAO, SR vs People G.R. No. 168306

DOCTRINE: corporation is an entity separate and distinct from its stockholders, directors or
officers. However, when the notion of legal entity is used to defeat public convenience, justify
wrong, protect fraud, or defend crime, the law will regard the corporation as an association of
persons, or in the case of two corporations merge them into one. Where the separate corporate
entity is disregarded, the corporation will be treated merely as an association of persons and the
stockholders or members will be considered as the corporation, that is, liability will attach
personally or directly to the officers and stockholders.
FACTS: Petitioners are incorporators and officers of MASAGANA GAS CORPORATION
(MASAGANA), an entity engaged in the refilling, sale and distribution of LPG products. Private
respondents Petron Corporation (Petron) and Pilipinas Shell Petroleum Corporation (Pilipinas
Shell) are two of the largest bulk suppliers and producers of LPG in the Philippines. Petron is
the registered owner in the Philippines of the trademarks GASUL and GASUL cylinders used for
its LPG products. It is the sole entity in the Philippines authorized to allow refillers and
distributors to refill, use, sell, and distribute GASUL LPG containers, products and its
trademarks. Pilipinas Shell, on the other hand, is the authorized user in the Philippines of the
tradename, trademarks, symbols, or designs of its principal, Shell International Petroleum
Company Limited (Shell International), including the marks SHELLANE and SHELL device in
connection with the production, sale and distribution of SHELLANE LPGs. It is the only
corporation in the Philippinesauthorized to allow refillers and distributors to refill, use, sell and
distribute SHELLANE LPG containers and products. On 3 April 2003, (NBI) agent Ritche N.
Oblanca (Oblanca) filed two applications for search warrant with the RTC, Cavite City, against
petitioners and other occupants of the MASAGANA compound for alleged violation of Section
155, in relation to Section 170 of The Intellectual Property Code of the Philippines. The two
applications for search warrant uniformly alleged that per information, belief, and personal
verification of Oblanca, the petitioners are actually producing, selling, offering for sale and/or
distributing LPG products using steel cylinders owned by, and bearing the tradenames,
trademarks, and devices of Petron and Pilipinas Shell, without authority and in violation of the
rights of the said entities. MASAGANA, as third party claimant, filed with the RTC a Motion for
the Return of Motor Compressor and LPG Refilling Machine.[15] It claimed that it is the owner of
the said motor compressor and LPG refilling machine; that these items were used in the
operation of its legitimate business; and that their seizure will jeopardize its business interests.
RTC resolved that MASAGANA cannot be considered a third party claimant whose rights were
violated as a result of the seizure since the evidence disclosed that petitioners are stockholders
of MASAGANA and that they conduct their business through the same juridical entity. CA
affirmed RTCs decision
Issue: Whether or not CA ERRED IN RULING THAT THE COMPLAINT IS DIRECTED
AGAINST MASAGANA GAS CORPORATION, ACTING THROUGH ITS OFFICERS AND
DIRECTORS, HENCE MASAGANA GAS CORPORATION MAY NOT BE CONSIDERED AS
THIRD PARTY CLAIMANT WHOSE RIGHTS WERE VIOLATED AS A RESULT OF THE
SEIZURE

Held: No. It is an elementary and fundamental principle of corporation law that a corporation is
an entity separate and distinct from its stockholders, directors or officers. However, when the
notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend
crime, the law will regard the corporation as an association of persons, or in the case of two
corporations merge them into one.[46] In other words, the law will not recognize the separate
corporate existence if the corporation is being used pursuant to the foregoing unlawful
objectives. This non-recognition is sometimes referred to as the doctrine of piercing the veil of
corporate entity or disregarding the fiction of corporate entity. Where the separate corporate
entity is disregarded, the corporation will be treated merely as an association of persons and the
stockholders or members will be considered as the corporation, that is, liability will attach
personally or directly to the officers and stockholders. As we now find, the petitioners, as
directors/officers of MASAGANA, are utilizing the latter in violating the intellectual property rights
ofPetron and Pilipinas Shell. Thus, petitioners collectively and MASAGANA should be
considered as one and the same person for liability purposes. Consequently, MASAGANAs
third party claim serves no refuge for petitioners. The law does not require that the property to
be seized should be owned by the person against whom the search warrants is directed.
Ownership, therefore, is of no consequence, and it is sufficient that the person against whom
the warrant is directed has control or possession of the property sought to be seized. Hence,
even if, as petitioners claimed, the properties seized belong to MASAGANA as a separate entity,
their seizure pursuant to the search warrants is still valid.
Further, it is apparent that the motor compressor, LPG refilling machine and the GASUL and
SHELL LPG cylinders seized were the corpusdelicti, the body or substance of the crime, or the
evidence of the commission of trademark infringement. These were the very instruments used
or intended to be used by the petitioners in trademark infringement. It is possible that, if returned
to MASAGANA, these items will be used again in violating the intellectual property rights of
Petron and Pilipinas Shell
9. International Express Travel & Tour Services, Inc. vs Court of Appeals 43 SCRA 674
Corporation by Estoppel When Applied
Facts: In 1989, International Express Travel & Tour Services, Inc. (IETTI), offered to the
Philippine Football Federation (PFF) its travel services for the South East Asian Games. PFF,
through Henri Kahn, its president, agreed. IETTI then delivered the plane tickets to PFF, PFF in
turn made a down payment. However, PFF was not able to complete the full payment in
subsequent installments despite repeated demands from IETTI. IETTI then sued PFF and Kahn
was impleaded as a co-defendant.
Kahn averred that he should not be impleaded because he merely acted as an agent of PFF
which he averred is a corporation with separate and distinct personality from him. The trial court
ruled against Kahn and held him personally liable for the said obligation (PFF was declared in
default for failing to file an answer). The trial court ruled that Kahn failed to prove that PFF is a
corporation. The Court of Appeals however reversed the decision of the trial court. The Court of
Appeals took judicial notice of the existence of PFF as a national sports association; that as
such, PFF is empowered to enter into contracts through its agents; that PFF is therefore liable
for the contract entered into by its agent Kahn. The CA further ruled that IETTI is in estoppel;

that it cannot now deny the corporate existence of PFF because it had contracted and dealt with
PFF in such a manner as to recognize and in effect admit its existence.
ISSUE: Whether or not the Court of Appeals is correct.
HELD: No. PFF, upon its creation, is not automatically considered a national sports association.
It must first be recognized and accredited by the Philippine Amateur Athletic Federation and the
Department of Youth and Sports Development. This fact was never substantiated by Kahn. As
such, PFF is considered as an unincorporated sports association. And under the law, any
person acting or purporting to act on behalf of a corporation which has no valid existence
assumes such privileges and becomes personally liable for contract entered into or for other
acts performed as such agent. Kahn is therefore personally liable for the contract entered into
by PFF with IETTI.
There is also no merit on the finding of the CA that IETTI is in estoppel. The application of the
doctrine of corporation by estoppel applies to a third party only when he tries to escape liability
on a contract from which he has benefited on the irrelevant ground of defective incorporation. In
the case at bar, IETTI is not trying to escape liability from the contract but rather is the one
claiming from the contract.