Francisco Motors Corporation vs CA Case

DigestFrancisco Motors Corporation vs. Court of

Appeals[GR 100812, 25 June 1999]
Facts:
On 23 January 1985, Francisco Motors Corp. filed a
complaint against Spouses Gregorio and Librada
Manuel to recover P3,412.06, representing the
balance of the jeep body purchased by the Manuels
from Francisco Motors; an additional sum of
P20,454.80 representing the unpaid balance on the
cost of repair of the vehicle; and P6,000.00 for cost
of suit and attorney's fees.To the original balance on
the price of jeep body were added the costs of repair.
In their answer, the Manuel spouses interposed a
counterclaim for unpaid legal services by Gregorio
Manuel in the amount of P50,000 which was not paid
by the incorporators, directors and officers of
Francisco Motors. The trial court decided the case on
26 June 1985, in favor of Francisco Motors in regard
to its claim for money, but also allowed the counterclaim of the Manuel spouses. Both parties appealed.
On 15 April 1991, the Court of Appeals sustained the
trial court's decision. Hence, the present petition for
review on certiorari.
Issue:
Whether the Francisco Motors Corporation should be
liable for the legal services of Gregorio Manuel
rendered in the intestate proceedings over Benita
Trinidads estate (of the Francisco family).
Held
: Basic in corporation law is the principle that a
corporation has a separate personality distinct from
its stockholders and from other corporations to which
it may be connected. However, under the doctrine of
piercing the veil of corporate entity, the corporation's
separate juridical personality may be disregarded, for
example, when the corporate identity is used to defeat
public convenience, justify wrong, protect fraud, or
defend crime. Also, where the corporation is a mere
alter ego or business conduit of a person, or where
the corporation is so organized and controlled and its
affairs are so conducted as to make it merely an
instrumentality, agency, conduit or adjunct of another
corporation, then its distinct personality may be

ignored. In these circumstances, the courts will treat

the corporation as a mere aggregation of persons and
the liability will directly attach to them. The legal
fiction of a separate corporate personality in those
cited instances, for reasons of public policy and in the
interest of justice, will be justifiably set aside. Herein,
however, given the facts and circumstances of this
case, the doctrine of piercing the corporate veil has
no relevant application. The rationale behind piercing
a corporation's identity in a given case is to remove
the barrier between the corporation from the persons
comprising it to thwart the fraudulent and illegal
schemes of those who use the corporate personality
as a shield for undertaking certain proscribed
activities. In the present case, instead of holding
certain individuals or persons responsible for an
alleged corporate act, the situation has been reversed.
It is the Francisco Motors Corporation (FMC) as a
corporation which is being ordered to answer for the
personal liability of certain individual directors,
officers and incorporators concerned. Hence, the
doctrine has been turned upside down because of its
erroneous invocation. In fact, the services of
Gregorio Manuel were solicited as counsel for
members of the Francisco family to represent them in
the intestate proceedings over Benita Trinidad's
estate. These estate proceedings did not involve any
business of FMC. Manuel's move to recover unpaid
legal fees through a counterclaim against FMC, to
offset the unpaid balance of the purchase and repair
of a jeep body could only result from an obvious
misapprehension that FMC's corporate assets could
be used to answer for the liabilities of its individual
directors, officers, and incorporators. Such result if
permitted could easily prejudice the corporation, its
own creditors, and even other stockholders; hence,
clearly inequitous to FMC. Furthermore, considering
the nature of the legal services involved, whatever
obligation said incorporators, directors and officers of
the corporation had incurred, it was incurred in their
personal capacity. When directors and officers of a
corporation are unable to compensate a party for a
personal obligation, it is far-fetched to allege that the
corporation is perpetuating fraud or promoting
injustice, and be thereby held liable therefor by
piercing its corporate veil. While there are no hard
and fast rules on disregarding separate corporate
identity, we must always be mindful of its function
and purpose. A court should be careful in assessing

the milieu where the doctrine of piercing the

corporate veil may be applied. Otherwise an injustice,
although unintended, may result from its erroneous
application. The personality of the corporation and
those of its incorporators, directors and officers in
their personal capacities ought to be kept separate in
this case. The claim for legal fees against the
concerned individual incorporators, officers and
directors could not be properly directed against the
corporation without violating basic principles
governing corporations. Moreover, every action
including a counterclaim must be prosecuted or
defended in the name of the real party in interest. It is
plainly an error to lay the claim for legal fees of
private respondent Gregorio Manuel at the door of
FMC rather than individual members of the Francisco
family.
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.

ANG MGA KAANIB SA IGLESIA NG DIOS

KAY KRISTO HESUS, H.S.K. SA BANSANG
PILIPINAS, INC
vs.
IGLESIA NG DIOS KAY CRISTO JESUS,
HALIGI AT SUHAY NG KATOTOHANAN
G.R. No. 137592

December 12, 2001

FACTS: Respondent Iglesia ng Dios Kay Cristo

Jesus, Haligi at Suhay ng Katotohanan, is a nonstock religious society or corporation registered in
1936. Sometime in 1976, one Eliseo Soriano and
several other members of Respondent Corporation
disassociated themselves from the latter and
succeeded in registering on March 30, 1977 a new
non-stock religious society or corporation, named
Iglesia ng Dios Kay Kristo Hesus, Haligi at Saligan
ng Katotohanan. On July 16, 1979, Respondent
Corporation filed with the SEC a petition to compel
the petitioner to change its corporate name. On May
4, 1988, the SEC rendered judgment in favor of
respondent, ordering the petitioner to change its
corporate name to another name that is not similar or
identical to any name already used by a corporation,
partnership or association registered with the
Commission. No appeal was taken from said
decision. It appears that during the pendency of SEC
Case, Soriano, et al., caused the registration on April
25, 1980 of Petitioner Corporation, Ang Mga Kaanib
sa Iglesia ng Dios Kay Kristo Hesus, H.S.K, sa
Bansang Pilipinas. The acronym "H.S.K." stands
for Haligi at Saligan ng Katotohanan. On March 2,
1994, respondent corporation filed before the SEC a
petition, docketed as SEC Case No. 03-94-4704,
praying that petitioner be compelled to change its
corporate name and be barred from using the same or
similar name on the ground that the same causes
confusion among their members as well as the public.
The SEC rendered a decision ordering petitioner to
change its corporate name. On appeal to the SEC En
Banc, it affirmed the above decision. Petitioner then
filed a petition for review with the CA. On October 7,
1997, the CA rendered the assailed decision affirming
the decision of the SEC En Banc. Petitioner's motion
for reconsideration was denied by the CA. Hence,
this petition for review.

RULING: Petitioner claims that it complied with the

aforecited SEC guideline by adding not only two but
eight words to their registered name, to wit: "Ang
Mga Kaanib" and "Sa Bansang Pilipinas,
Inc.," which,
petitioner
argues,
effectively
distinguished it from respondent corporation.
The additional words "Ang Mga Kaanib" and "Sa
Bansang Pilipinas, Inc." in petitioner's name are, as
correctly observed by the SEC, merely descriptive of
and also referring to the members, or kaanib, of
respondent who are likewise residing in the
Philippines. These words can hardly serve as an
effective differentiating medium necessary to avoid
confusion or difficulty in distinguishing petitioner
from respondent. This is especially so, since both
petitioner and respondent corporations are using the
same acronym H.S.K.; not to mention the fact that
both are espousing religious beliefs and operating in
the same place. Parenthetically, it is well to mention
that the acronym H.S.K. used by petitioner stands for
"Haligi at Saligan ng Katotohanan."
Then, too, the records reveal that in holding out their
corporate name to the public, petitioner highlights the
dominant words "IGLESIA NG DIOS KAY KRISTO
HESUS,
HALIGI
AT
SALIGAN
NG
KATOTOHANAN," which is strikingly similar to
respondent's corporate name, thus making it even
more evident that the additional words "Ang Mga
Kaanib" and "Sa Bansang Pilipinas, Inc.", are merely
descriptive of and pertaining to the members of
respondent corporation.
Significantly, the only difference between the
corporate names of petitioner and respondent are the
words SALIGAN and SUHAY. These words are
synonymous both mean ground, foundation or
support. Hence, this case is on all fours
with Universal Mills Corporation v. Universal Textile
Mills, Inc., where the Court ruled that the corporate
names Universal Mills Corporation and Universal
Textile Mills, Inc., are undisputably so similar that
even under the test of "reasonable care and
observation" confusion may arise.

ISSUE: Whether or not petitioners corporate name

is deceptively or confusingly similar to that of
petitioner.