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    1 HSBC-SRP V Spouses Galang

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    Jude Thaddeus Damian
    This case involves a housing loan obtained by Maria Theresa Ofelia G. Galang from the Hongkong and Shanghai Banking Corporation, Ltd. Staff Retirement Plan (HSBC-SRP) that she was unable to pay back after being dismissed from Hongkong and Shanghai Banking Corporation, Ltd. (HSBC). The spouses Galang argued that HSBC should be held liable for the foreclosure along with HSBC-SRP since their interests are intertwined. However, the court ruled that HSBC-SRP and HSBC are separate entities and there was no evidence presented that HSBC used HSBC-SRP to commit fraud or evade obligations. Additionally, inquiries into a corporation

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    1 HSBC-SRP V Spouses Galang

    Uploaded by

    Jude Thaddeus Damian
    646 views2 pages
    This case involves a housing loan obtained by Maria Theresa Ofelia G. Galang from the Hongkong and Shanghai Banking Corporation, Ltd. Staff Retirement Plan (HSBC-SRP) that she was unable to pay back after being dismissed from Hongkong and Shanghai Banking Corporation, Ltd. (HSBC). The spouses Galang argued that HSBC should be held liable for the foreclosure along with HSBC-SRP since their interests are intertwined. However, the court ruled that HSBC-SRP and HSBC are separate entities and there was no evidence presented that HSBC used HSBC-SRP to commit fraud or evade obligations. Additionally, inquiries into a corporation

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    1 HSBC-SRP v Spouses Galang

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    This case involves a housing loan obtained by Maria Theresa Ofelia G. Galang from the Hongkong and Shanghai Banking Corporation, Ltd. Staff Retirement Plan (HSBC-SRP) that she was unable to pay back after being dismissed from Hongkong and Shanghai Banking Corporation, Ltd. (HSBC). The spouses Galang argued that HSBC should be held liable for the foreclosure along with HSBC-SRP since their interests are intertwined. However, the court ruled that HSBC-SRP and HSBC are separate entities and there was no evidence presented that HSBC used HSBC-SRP to commit fraud or evade obligations. Additionally, inquiries into a corporation

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    646 views2 pages

    1 HSBC-SRP V Spouses Galang

    Uploaded by

    Jude Thaddeus Damian
    This case involves a housing loan obtained by Maria Theresa Ofelia G. Galang from the Hongkong and Shanghai Banking Corporation, Ltd. Staff Retirement Plan (HSBC-SRP) that she was unable to pay back after being dismissed from Hongkong and Shanghai Banking Corporation, Ltd. (HSBC). The spouses Galang argued that HSBC should be held liable for the foreclosure along with HSBC-SRP since their interests are intertwined. However, the court ruled that HSBC-SRP and HSBC are separate entities and there was no evidence presented that HSBC used HSBC-SRP to commit fraud or evade obligations. Additionally, inquiries into a corporation

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Mercantile Law: Doctrine of Piercing the Veil of Corporate Fiction

    HONGKONG AND SHANGHAI BANKING CORP. (HSBC), LTD. STAFF


    RETIREMENT PLAN (NOW INCORPORATED AS HSBC RETIREMENT TRUST
    FUND, INC.) AND MANUEL ESTACION v SPOUSES JUAN I. GALANG AND
    MA. THERESA OFELIA G. GALANG/HONG KONG AND SHANGHAI BANKING
    CORP. (HSBC), LTD. VS. SPOUSES JUAN I. GALANG MA. THERESA OFELIA
    G. GALANG
    G.R. No. 199565/G.R. No. 199635 June 30, 2021, SECOND DIVISION
    (Perlas-Bernabe, J.)

    FACTS:

    Maria Theresa Ofelia G. Galang was a regular employee of petitioner Hongkong


    and Shanghai Banking Corporation, Ltd. (HSBC), a foreign banking institution
    duly licensed to do business in the Philippines. HSBC offered benefit plans for
    its employees, including housing loans, administered and managed by
    Hongkong and Shanghai Banking Corporation, Ltd. Staff Retirement Plan
    (HSBC-SRP). Maria Theresa applied for a P400,000.00 housing loan with
    HSBC-SRP. After her dismissal from the corporation, she was not able to satisfy
    the monthly amortizations for the housing loans. Spouses Galang were then
    given demand letters and Installment Overdue Reminders. This resulted to the
    foreclosure of their mortgage by HSBC-SRP.

    During the court proceedings, Spouses Galang alleged that while the named
    mortgagee is HSBC-SRP, not HSBC, the latter cannot deny privity to the
    foreclosure of the mortgage because its interests are so closely intertwined with
    those of HSBC-SRP that they practically have the same interests in the loan
    collection and foreclosure. The Court of Appeals resolved 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 two corporations are distinct entities and treat
    them as identical or one and the same.

    ISSUE:

    Are HSBC-SRP and HSBC distinct from each other?

    RULING:

    Yes. HSBC-SRP and HSBC are separate entities. Though a subsidiary


    company's separate corporate personality may be disregarded when the
    evidence shows that such separate personality was being used by its
    parent or holding corporation to perpetrate a fraud or evade an existing
    obligation, none of these circumstances were alleged or proved by Spouses
    Galang. They simply claimed that HSBC-SRP and HSBC acted in bad faith
    when they foreclosed the mortgaged property though they (Spouses Galang)
    were up to date in their payments. More, the insistence of Spouses Galang that

    1
    HSBC was privy to the Mortgage Agreement for its interests are so intertwined
    with those of HSBC-SRP that they have become identical constitutes a collateral
    attack on the corporate personality of HSBC-SRP which is prohibited by the
    Corporation Code of the Philippines.

    Such an inquiry into the legal personality of a corporation may only be


    made by the Solicitor General in a Quo Warranto proceeding. At any rate,
    HSBC correctly argues that it had no participation in the foreclosure
    proceedings. The parties even stipulated during the pre-trial that HSBC was not
    a signatory to any contract between Spouses Galang and HSBC-SRP. Its role
    was limited to determining who among its employees were eligible to apply for
    housing loans, processing and approval of which were left to the discretion of
    HSBC-SRP. Considering, too, that spouses Galang are not entitled to damages,
    there is simply no reason to pierce the corporate veil as they would have
    nothing to collect or regain from HSBC. Otherwise stated, Spouses Galang do
    not have a cause of action against HSBC.

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