LANUZA JR. VS BF CORPORATION (G.R. NO.

174938 OCTOBER 1, 2014) a contract just because a corporation executed a contract through that
stockholder, director or representative.
Facts: In 1993, BF Corporation filed a collection complaint with the Regional Trial
Court against Shangri-La and the members of its board of directors: Alfredo C. Hence, a corporation’s representatives are generally not bound by the terms of
Ramos, Rufo B.Colayco, Antonio O. Olbes, Gerardo Lanuza, Jr., Maximo G. the contract executed by the corporation. They are not personally liable for
Licauco III, and Benjamin C. Ramos. BF Corporation alleged in its complaint that obligations and liabilities incurred on or in behalf of the corporation.
on December 11, 1989 and May 30, 1991, it entered into agreements with
Shangri-La wherein it undertook to construct for Shangri-La a mall and a A submission to arbitration is a contract. As such, the Agreement, containing the
multilevel parking structure along EDSA.Shangri-La had been consistent in paying stipulation on arbitration, binds the parties thereto, as well as their assigns and
BF Corporation in accordance with its progress billing statements. However, by heirs.
October 1991, Shangri-La started defaulting in payment. BF Corporation alleged
that Shangri-La induced BF Corporation to continue with the construction of the When there are allegations of bad faith or malice against corporate directors or
buildings using its own funds and credit despite Shangri-La’s default. According to representatives, it becomes the duty of courts or tribunals to determine if these
BF Corporation, Shangri-La misrepresented that it had funds to pay for its persons and the corporation should be treated as one. Without a trial, courts and
obligations with BF Corporation, and the delay in payment was simply a matter of tribunals have no basis for determining whether the veil of corporate fiction
delayed processing of BF Corporation’s progress billing statements. BF should be pierced. Courts or tribunals do not have such prior knowledge. Thus,
Corporation eventually completed the construction of the buildings. Shangri-La the courts or tribunals must first determine whether circumstances exist
allegedly took possession of the buildings while still owing BF Corporation an towarrant the courts or tribunals to disregard the distinction between the
outstanding balance. BF Corporation alleged that despite repeated demands, corporation and the persons representing it. The determination of these
Shangri-La refused to pay the balance owed to it.It also alleged that the Shangri- circumstances must be made by one tribunal or court in a proceeding participated
La’s directors were in bad faith in directing Shangri-La’s affairs. Therefore, they in by all parties involved, including current representatives of the corporation,
should be held jointly and severally liable with Shangri-La for its obligations as and those persons whose personalities are impliedly the sameas the corporation.
well as for the damages that BF Corporation incurred as a result of Shangri-La’s This is because when the court or tribunal finds that circumstances exist
default. On August 3, 1993, Shangri-La, Alfredo C. Ramos, Rufo B. Colayco, warranting the piercing of the corporate veil, the corporate representatives are
Maximo G. Licauco III, and Benjamin C. Ramos filed a motion to suspend the treated as the corporation itself and should be held liable for corporate acts. The
proceedings in view of BF Corporation’s failure to submit its dispute to corporation’s distinct personality is disregarded, and the corporation is seen as a
arbitration, in accordance with the arbitration clause provided in its contract. mere aggregation of persons undertaking a business under the collective name of
Petitioners filed their comment on Shangri-La’s and BF Corporation’s motions, the corporation.
praying that they be excluded from the arbitration proceedings for being non-
parties to Shangri-La’s and BF Corporation’s agreement.
A corporation is an artificial entity created by fiction of law. This means that while
it is not a person, naturally, the law gives it a distinct personality and treats it as
Issue: Whether or not petitioners as directors of Shangri-La is personally liable such. A corporation, in the legal sense, is an individual with a personality that is
for the contractual obligations entered into by the corporation. distinct and separate from other persons including its stockholders, officers,
directors, representatives, and other juridical entities. The law vests in
Held: No. Because a corporation’s existence is only by fiction of law, it can only corporations rights,powers, and attributes as if they were natural persons with
exercise its rights and powers through its directors, officers, or agents, who are physical existence and capabilities to act on their own. For instance, they have
all natural persons. A corporation cannot sue or enter into contracts without the power to sue and enter into transactions or contracts. Section 36 of the
them. Corporation Code enumerates some of a corporation’s powers, thus:

A consequence of a corporation’s separate personality is that consent by a Section 36. Corporate powers and capacity.– Every corporation incorporated
corporation through its representatives is not consent of the representative, under this Code has the power and capacity: 1. To sue and be sued in its
personally. Its obligations, incurred through official acts of its representatives, corporate name; 2. Of succession by its corporate name for the period of time
are its own. A stockholder, director, or representative does not become a party to stated in the articles of incorporation and the certificate ofincorporation; 3. To
adopt and use a corporate seal; 4. To amend its articles of incorporation in return: a) that at RCVPI’s address (to which the writs are being served) there is a
accordance with the provisions of this Code; 5. To adopt by-laws, not contrary to new establishment named “ Joel and Sons Corporation” which was a family
law, morals, or public policy, and to amend or repeal the same in accordance corporation owned by the Guillermos, in which Jose Emmanuel Guillermo, the
with this Code; 6. In case of stock corporations, to issue or sell stocks to President and General Manager of RCVPI, is one of the stockholders; b) that Jose
subscribers and to sell treasury stocks in accordance with the provisions of this received the writ using the nickname “Joey” concealing his real identity and
Code; and to admit members to the corporation if it be a non-stock corporation; pretended to be the brother of Jose; c) that RCVPI has already been dissolved.
7. To purchase, receive, take or grant, hold, convey, sell, lease, pledge,
mortgage and otherwise deal with such real and personal property, including Labor Arbiter granted the motion filed by respondent and held herein petitioner
securities and bonds of other corporations, as the transaction of the lawful Jose Emmanuel Guillermo, in his personal capacity jointly and severally liable
business of the corporation may reasonably and necessarily require, subject to with the corporation stating that the officers of the corporation are jointly and
the limitations prescribed by law and the Constitution; 8. To enter into merger or severally liable for the obligations of the corporation (“piercing the veil of
consolidation with other corporations as provided in this Code; 9. To make corporate fiction”) to the employees even if the said officers were not parties to
reasonable donations, including those for the public welfare or for hospital, the case.
charitable, cultural, scientific, civic, or similar purposes: Provided, That no
corporation, domestic or foreign, shall give donations in aid of any political party Guillermo filed a Motion for Reconsideration/To Set Aside the Order of the labor
or candidate or for purposes of partisan political activity; 10. To establish arbiter. His contentions were a) officers cannot be included as judgement obligor
pension, retirement, and other plans for the benefit of its directors, trustees, in a labor case for the first time only after the decision of the Labor Arbiter had
officers and employees; and 11. To exercise such other powers as may be become final and executory b) in piercing the veil of RCVPI, he was allegedly
essential or necessary to carry out its purpose or purposes as stated in its articles discriminated against when he alone was belatedly impleaded despite the
of incorporation. 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.
JOSE EMMANUEL P. GUILLERMO, v. CRISANTO P. USON,
Issues:
G.R. No. 198967
1. Whether an officer of a corporation may be included as judgement obligor in a
March 07, 2016
labor case for the first time only after the decision of the Labor Arbiter had
PERALTA, J.:
become final and executory.
2. Whether the twin doctrines of “piercing the veil of corporate fiction” and
Facts:
personal liability of company officers in labor cases apply.
Respondent Uson was an accounting supervisor in Royal Class Venture Phils., Inc.
(RCVPI) until Dec. 20, 2000 when he was allegedly dismissed by petitioner
Ruling:
Guillermo, the company’s president/general manager, for having exposed the
The Petition is denied.
latter’s practice of dictating and undervaluing the shares of stocks of the
corporation. Thereafter he filed a complaint for illegal dismissal against the
In earlier labor cases, the Court held that persons who were not originally
corporation, RCVPI.
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-
The Labor Arbiter rendered a decision in favor of Uson, ordering respondent to
employees. Personal liability attaches only when, as enumerated by the said
reinstate him to his former position and pay his backwages, 13th month pay as
Section 31 of the Corporation Code, there is a wilfull and knowing assent to
well as moral damages, exemplary damages and attorney’s fees. RCVPI did not
patently unlawful acts of the corporation, there is gross negligence or bad faith in
file an appeal but repeated issuances of Writs of Execution against the same
directing the affairs of the corporation, or there is a conflict of interest resulting
remained unsatisfied.
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
Uson filed another Motion for Alias Writ of Execution and to Hold Directors and
doctrine of separate personality of a corporation.
Officers of Respondent Liable for the Decision and quoted from the sheriff’s
It also bears emphasis that in cases where personal liability attaches, not even all CASE DIGEST: Commissioner of Customs v. Navarro, G.R. No. L-33146
officers are made accountable. Rather, only the "responsible officer," i.e., the (77 SCRA 264)
person directly responsible for and who "acted in bad faith" in committing the Concept: Doctrine of Prior Resort
illegal dismissal or any act violative of the Labor Code, is held solidarily liable, in
cases wherein the corporate veil is pierced Facts:
· The Commissioner of Customs and the Collector of Customs in their exhaustive
The veil of corporate fiction can be pierced, and responsible corporate directors and scholarly petition for certiorari, filed on February 11, 1971, was on the
and officers or even a separate but related corporation, may be impleaded and jurisdictional issue. It sought to nullify and set aside order of respondent Judge
held answerable solidarily in a labor case, even after final judgment and on Pedro C. Navarro dated January 4, 1971, issuing a writ of preliminary injunction
execution, so long as it is established that such persons have deliberately used as prayed for by private respondents Juanito S. Flores and Asiatic Incorporated
the corporate vehicle to unjustly evade the judgment obligation, or have resorted the importers of 1,350 cartons of fresh fruits, restraining petitioners from
to fraud, bad faith or malice in doing so. proceeding with the auction sale of such perishable goods. Classified as non-
essential consumer commodities, they were banned by Central Bank Circulars
In the case at hand, respondent Uson’s sworn allegations stating that Guillermo Nos. 289, 294 and 295 as prohibited importation or importation contrary to law
was the responsible officer in charge of running the company as well as the one and thus made subject to forfeiture proceedings by petitioner Collector of
who maliciously and illegally dismissed Uson from employment was Customs pursuant to the relevant sections of the Tariff and Customs Code.
uncontroverted. Furthermore, it was Guillermo himself, as President and General · In a detailed and specific fashion, petitioners pointed out how violative was the
Manager of the company, who received the summons to the case, and who also assumption of jurisdiction by respondent Judge over an incident of a pending
subsequently and without justifiable cause refused to receive all notices and seizure and forfeiture proceeding which, as held in a number of decisions, was a
orders of the Labor Arbiter that followed. He, likewise, was shown to have a role matter falling within the exclusive competence of the customs authorities. The
in dissolving the original obligor company in an obvious "scheme to avoid persuasive character of the petition is thus evident, resulting in this Court issuing
liability". on February 15, 1971 a resolution requiring respondents to file an answer and at
the same time issuing a writ of preliminary injunction as prayed for by petitioners
Essentially, then, the facts form part of the records and stand as further proof of to prevent the challenged order of respondent Judge from being implemented.
Guillermo's bad faith and malicious intent to evade the judgment obligation. Instead of preparing an answer, they just submitted a manifestation stating that
"after an intensive and serious study of the merit of the case, the respondents
It is settled in jurisprudence that not all conflicts between a stockholder and the have decided to abandon its interest in the case.
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 Issue: W/ON Custom has Jurisdiction
director, or as an employee.
Held: Yes. Jurisdiction of the customs authorities is exclusive was made clear
In the case at bar, Uson's allegation was that he was maliciously and illegally in Pacis v. Averia, decided in 1966. This Court, speaking through Justice J. P.
dismissed as an Accounting Supervisor by Guillermo, the Company President and Bengzon, realistically observed: "This original jurisdiction of the Court of First
General Manager. It raised no intra-corporate relationship issues between him Instance, when exercised in an action for recovery of personal property which is a
and the corporation or Guillermo; neither did it raise any issue regarding the subject of a forfeiture proceeding in the Bureau of Customs, tends to encroach
regulation of the corporation. upon, and to render futile, the jurisdiction of the Collector of Customs in seizure
and forfeiture proceedings." The court "should yield to the jurisdiction of the
As correctly found by the appellate court, Uson's complaint and redress sought Collector of Customs."
were centered alone on his dismissal as an employee, and not upon any other The controlling principle was set forth anew in Ponce Enrile v. Vinuya, decided in
relationship he had with the company or with Guillermo. Thus, the matter is 1971. Thus: "The prevailing doctrine is that the exclusive jurisdiction in seizure
clearly a labor dispute cognizable by the labor tribunals. and forfeiture cases vested in the Collector of Customs precludes a court of first
instance from assuming cognizance over such a matter.