Facts:

The case involves Calvin S. Arcilla as the petitioner and Emilio Rodulfo as the private respondent. The events leading to the case began on June 4, 1985, when Rodulfo filed a complaint for a sum of money against Arcilla in the Regional Trial Court (RTC) of Catanduanes, which was assigned Civil Case No. 1292 to Branch 42. The complaint alleged that from late 1981 to early 1983, Arcilla, leveraging his friendship with Rodulfo, secured various items, cash, and checks on credit amounting to P93,358.51. Rodulfo claimed that Arcilla had made numerous demands for payment but had acted in bad faith by refusing to settle the debt. The complaint included thirty vales signed by Arcilla or authorized persons, which were attached as evidence.

In his answer, Arcilla admitted to having business transactions with Rodulfo but contended that the professional relationship began only in August 1982, asserting that the loan was in the name of his family corporation, CSAR Marine Resources, Inc. ...

Facts:

Procedural Background

• The case originates with a complaint filed on June 4, 1985 by Emilio Rodulfo (private respondent) before the Regional Trial Court (RTC) of Catanduanes, alleging that petitioner Calvin S. Arcilla obtained various items, cash, and checks on credit amounting to P93,358.51.
• The complaint, docketed as Civil Case No. 1292, detailed that petitioner’s transactions involved “vales” (promissory notes or vouchers) which were purportedly unredeemed or unpaid, evidenced by documents attached as Exhibits “A” to “DD”.
• Private respondent claimed that despite repeated demands for payment, petitioner acted in bad faith and failed to discharge his financial obligations.

Admissions and Claims of the Parties

• In his Answer, petitioner admitted to business dealings with the private respondent but asserted that the relationship began in August 1982 for the purpose of obtaining a pro-forma invoice to support a loan application with Kilusang Kabuhayan at Kaunlaran (KKK) under the Ministry of Human Settlement.
• Petitioner further clarified that his loan was in the name of his family corporation, CSAR Marine Resources, Inc., and that the “vales” were liquidated in bank loan releases.
• Despite this assertion, petitioner’s primary defense was his claim of payment, without advancing any other affirmative defenses in his pleadings.

Trial Court and Appellate Proceedings

• On August 1, 1986, the RTC found that although petitioner admitted to executing the instruments (Exhibits “A” to “DD”), his payment evidence (cash voucher and check dated September and December 1982, respectively) did not cover the overall issuance of the “vales”, except for two specific vouchers (Exhibits “K” and “Q”).
• The trial court held that the “vales,” being in the possession of the private respondent, were presumed unpaid. It ordered petitioner to pay:

- P92,358.43 for the value of the “vales” with interest at 12% per annum from June 4, 1985, - P9,000.00 for attorney’s fees, and - The costs of the suit.

Post-Judgment Motions and Newly Discovered Evidence

• On February 5, 1988, petitioner filed a motion to reconsider the decision, alleging:

- The evidence showing payment of the “vales” was uncontroverted, thus challenging the presumption of non-payment merely based on possession. - That he was denied the opportunity to conduct a sur-rebuttal and present additional evidence, including a newly discovered letter dated February 7, 1983 from Rafael Rodulfo, General Manager of the private respondent, which stated that the outstanding obligation was only P23,639.33. - That the transactions involved his family corporation, CSAR Marine Resources, Inc., and hence, corporate liability should not be conflated with his personal liability. - That there was no personal business transaction with the private respondent. - That the obligation in question belonged solely to his family corporation, which was not a party to the suit. - A request for clarification regarding his personal liability versus corporate liability, seeking dismissal of the complaint against him if he was not personally liable.

Alleged Errors and the Court’s Findings

• Petitioner contended that:

- The trial court erred in holding that the “vales” remained unpaid based solely on the creditor’s possession. - The entire transaction exceeded P200,000.00, yet his liability as declared was improper. - The appellate court wrongly confirmed the trial court’s findings without dismissing the case against him. - Petitioner’s failure to earlier raise the issue of the corporate entity’s separate personality amounted to a waiver of such defense. - Petitioner’s actions and subsequent admissions effectively blurred the distinction between his personal capacity and the corporation, warranting the application of the doctrine of piercing the corporate veil. - Accordingly, petitioner’s personal liability should be affirmed as his use of the corporation was merely a facade for his personal transactions.

Final Developments

• The Supreme Court, after reviewing the pleadings, motions, and evidentiary submissions, noted that petitioner—who is himself a lawyer—appears to have abandoned his corporate defense.
• The Court held that the petitioner’s reliance on the phrase “in his capacity as President” was an attempt to evade liability, despite his earlier admissions linking the transactions to his personal benefit.
• Based on the waiver of his affirmative defense and the clear demonstration that the corporate veil was used as a mere conduit for his own obligations, the petition was ultimately denied.

Issue:

Whether petitioner, Calvin S. Arcilla, can avoid personal liability by invoking the defense that the financial obligation arose as a corporate liability of CSAR Marine Resources, Inc.

• Did petitioner properly avail himself of the defense of separate corporate personality in his pleadings?
• Whether the possession of the “vales” by the private respondent is conclusive proof of non-payment, thereby justifying the presumption of an outstanding balance.

Whether the petitions and motions raised after the trial court’s decision, including the newly discovered evidence and the subsequent motion for clarificatory judgment, sufficiently raised errors warranting a reconsideration or a new trial.

• Does the new evidence of the letter dated February 7, 1983, reduce the outstanding balance to P23,639.33?
• Whether petitioner’s failure to timely assert the corporate defense constitutes a waiver of that defense.

The propriety of piercing the corporate veil in this case.

• Whether the court was justified in disregarding the separate juridical personality of CSAR Marine Resources, Inc. based on petitioner’s conduct and admissions.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)