Alexis Justin B.

Perez

7. NISCE VS EQUITABLE PCI BANK INC.

FACT:
Spouses Ramon and Natividad Nisce contracted loans evidenced by
promissory notes with herein respondent Equitable PCI Bank Incorporated,
secured by a real mortgage on the formers parcel of land. Having defaulted,
respondent as creditor-mortgage filed a petition for extrajudicial foreclosure.
Petitioners alleged, among others that the bank should have compensated
their debt with their dollar account which they maintained with the PCI Capital
Asia Ltd. The bank for its part contends that although the spouses debt was
restructured, they nevertheless failed to pay. Moreover, it alleged that there
cannot be legal compensation because PCI had a separate and distinct
personality from the PCIB and a such claim from the former cannot be made
against the latter.

ISSUE:
Whether or not legal compensation may operate to extinguish the
petitioner’s obligation?

HELD:
Admittedly, PCI capital is a subsidiary of respondent bank. Even then, PCI
capital has an independent and separate judicial personality from that of the
respondent bank, its parent company, hence any claim against the parent
company and vice versa us not a claim against the subsidiary company.
Petitioners could have spared? Themselves the expenses of litigation had they
just withdrawn their deposit from the PCI capital and remitted the same to
respondent.

8.R&E TRANSPORT INC. VS LATAG

FACT:
The antecedents of the case are narrated by the CA as follows: νιr† υαl l αω 
Pedro Latag was a regular employee  of La Mallorca Taxi since March 1, 1961.
When La Mallorca ceased from business operations, Latag transferred to
[petitioner] R & E Transport, Inc.. He was receiving an average daily salary of
five hundred pesos (P500.00) as a taxi driver.
Latag got sick in January 1995 and was forced to apply for partial disability
with the SSS, which was granted. When he recovered, he reported for work in
September 1998 but was no longer allowed to continue working on account of
his old age.
Latag thus asked Felix Fabros, the administrative officer of [petitioners], for his
retirement pay pursuant to Republic Act 7641 but he was ignored. Thus, on
December 21, 1998, Latag filed a case for payment of his retirement pay
before the NLRC.
Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag,
substituted him. On January 10, 2000, the Labor Arbiter rendered a decision in
favor of Latag.

ISSUE:
Whether La Malorca and R & E taxi are the same entity?

HELD:
La Mallorca was a different entity, we are of the conclusion that Latag stint
with the Enriquez family dated back since February 1961 and thus, he should
be entitled to retirement benefits for 37 years, as of the date of the filing of
this case on December 12, 1998. Furthermore, basic is the rule that the
corporate veil may be pierced only if it becomes a shield for fraud, illegality or
inequity committed against a third person. We have thus cautioned against
the inordinate application of this doctrine. In Philippine National Bank v.
Andrada Electric & Engineering Company, we said:ς Any application of the
doctrine of piercing the corporate veil should be done with caution. A court
should be mindful of the milieu where it is to be applied. It must be certain
that the corporate fiction was misused to such an extent that injustice, fraud,
or crime was committed against another, in disregard of its rights. The
wrongdoing must be clearly and convincingly established; it cannot be
presumed. Otherwise, an injustice that was never unintended may result from
an erroneous application.
The question of whether a corporation is a mere alter ego is one of fact.
Piercing the veil of corporate fiction may be allowed only if the following
elements concur: (1) control -- not mere stock control, but complete
domination -- not only of finances, but of policy and business practice in
respect to the transaction attacked, must have been such 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
a fraud or a wrong to perpetuate the violation of a statutory or other positive
legal duty, or a dishonest and an unjust act in contravention of plaintiffs legal
right; and (3) the said control and breach of duty must have proximately
caused the injury or unjust loss complained of. 
Respondent has not shown by competent evidence that one taxi company had
stock control and complete domination over the other or vice versa. In fact, no
evidence was presented to show the alleged renaming of La Mallorca Taxi to R
& E Transport, Inc. The seven-year gap between the time the former closed
shop and the date when the latter came into being also casts doubt on any
alleged intention of petitioners to commit a wrong or to violate a statutory
duty. This lacuna in the evidence compels us to reverse the Decision of the CA
affirming the labor arbiters finding of fact that the basis for computing Pedros
retirement pay should be 37 years, instead of only 14 years.

[Link] VS OFFICE OF THE OMBUDSMAN

FACT:
The coconut industry investment fund (CIIF) companies failed to comply
with its contract agreement with the International Towage and Transport
Corporation (ITTC) for the transport of coconut oil in bulk. ITTC Executive Vice
President Manuel Layson Jr. filed a complaint with the office of the
ombudsman for breach of contract among others.
However the complaint was dismissed.

ISSUE:
Whether or not the office of the ombudsman has jurisdiction to further
act on the complaint?

HELD:
No, all three corporations comprising the CIIF companies were organized
as stock corporations. The UCPB-CIIP owns 44.10% of the shares of legaspi oil.
91.24% of the shares of Gran Export and 92.85% of the shares of United
Coconut. The below 51% shares of stock in legaspi oil removes it from the
definition of a government owned or controlled corporation. There is no
showing that Grand Export and United Coconut was vested with functions
relating to public needs whether governmental or propriety in nature. Thus the
CIIF are private corporations not within the scope of ombudsman jurisdiction.

11. GALA VS. ELLICE AGRO-INDUSTRIAL CORP. (418 SCRA 431[2003])

FACT:
On March 28, 1979, the spouses Manuel and Alicia Gala, their children
Guia Domingo, Ofelia Gala, Raul Gala, and Rita Benson, and their encargados
Virgilio Galeon and Julian Jader formed and organized the Ellice Agro-
Industrial Corporation.
As payment for their subscriptions, the Gala spouses transferred several
parcels of land located in the provinces of Quezon and Laguna to Ellice.

ISSUE:
Petitioners want this Court to disregard the separate juridical
personalities of Ellice and Margo for the purpose of treating all property
purportedly owned by said corporations as property solely owned by the Gala
spouses.

HELD:
The Court holds that petitioners’ contentions impugning the legality of
the purposes for which Ellice and Margo were organized, amount to collateral
attacks which are prohibited in this jurisdiction.

The best proof of the purpose of a corporation is its articles of

incorporation and by-laws. The articles of incorporation must state the primary
and secondary purposes of the corporation, while the by-laws outline the
administrative organization of the corporation, which, in turn, is supposed to
insure or facilitate the accomplishment of said purpose.

In the case at bar, a perusal of the Articles of Incorporation of Ellice and

Margo shows no sign of the allegedly illegal purposes that petitioners are
complaining of.

If a corporation’s purpose, as stated in the Articles of Incorporation, is

lawful, then the SEC has no authority to inquire whether the corporation has
purposes other than those stated, and mandamus will lie to compel it to issue
the certificate of incorporation.

Assuming there was even a grain of truth to the petitioners’ claims

regarding the legality of what are alleged to be the corporations’ true
purposes, we are still precluded from granting them relief. We cannot address
here their concerns regarding circumvention of land reform laws, for the
doctrine of primary jurisdiction precludes a court from arrogating unto itself
the authority to resolve a controversy the jurisdiction over which is initially
lodged with an administrative body of special competence.

With regard to their claim that Ellice and Margo were meant to be used as
mere tools for the avoidance of estate taxes, suffice it say that the legal right
of a taxpayer to reduce the amount of what otherwise could be his taxes or
altogether avoid them, by means which the law permits, cannot be doubted.

Thus, even if Ellice and Margo were organized for the purpose of
exempting the properties of the Gala spouses from the coverage of land
reform legislation and avoiding estate taxes, we cannot disregard their
separate juridical personality.

12. UCCP vs. Bradford UCCI

FACTS:
United Church of Christ in the Philippines, Inc. (UCCP) is a religious
corporation duly organized and existing under the laws of the Philippines. It is
a national confederation of incorporated and unincorporated self-governing
Evangelical churches of different denominations, devised for fellowship,
mutual counsel and cooperation. Bradford United Church of Christ, Inc.
(BUCCI), is likewise a religious corporation with a personality separate and
distinct from UCCP. 

UCCP has 3 governing bodies: the General Assembly, the Conference and the
Local Churches. BUCCI belonged to the Cebu Conference Inc. and enjoyed a
peaceful co-existence until late 1989 when the BUCCI constructed a fence that
encroached upon the right of way allocated by the UCCP for CCI. 

The General Assembly attempted to settle the dispute and rendered a decision
in favor of CCI. This triggered a series of events, which further increased
enmity and led to the formal break-up of BUCCI from UCCP. Consequently,
BUCCI filed its amended Articles of Incorporation and By-Laws, which provided
for and affected its disaffiliation from UCCP. SEC approved the same. UCCP
filed a complaint before SEC to reject the same but SEC dismissed UCCP's
petition. 

ISSUE:
Whether or not, SEC has the jurisdiction over matters involving UCCP and
BUCCI.

HELD:
YES. Being corporate entities and grantees of primary franchises, are subject to
the jurisdiction of the SEC. Section 3 of Presidential Decree No. 902-A provides
that SEC shall have absolute jurisdiction, supervision and control over all
corporations. Even with their religious nature, SEC may exercise jurisdiction
over them in matters that are legal and corporate. Well-settled is the judicial
dictum that factual findings of quasi-judicial agencies, such as SEC, which have
acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only respect but even finality. They are binding upon
this Court which is not a trier of facts. Only upon clear showing of grave abuse
of discretion, or that such factual findings were arrived at arbitrarily or in
disregard of the evidence on record will this Court step in and proceed to
make its own independent evaluation of the facts. No cogent reason exists in
the instant cases to deviate from this settled rule.