G.R. No. 131116 - People vs. Sanchez

Petitioner General Credit Corporation (GCC), now Penta Capital Finance Corporation, originally incorporated in 1957 as Commercial Credit Corporation (CCC), engaged in finance and investment, and later quasi-banking activities after securing licenses from the Central Bank (CB) and Securities and Exchange Commission (SEC).
Respondent CCC Equity Corporation (EQUITY) was organized in November 1994 by GCC to take over operations and management of various GCC franchise companies.
Respondent Alsons Development and Investment Corporation (ALSONS) and the Alcantara family each owned shares in the GCC franchise companies.

In December 1980, ALSONS and the Alcantara family sold their combined 101,953 shares in the GCC franchise companies to EQUITY for P2,000,000.00.
On January 2, 1981, EQUITY issued a bearer promissory note to ALSONS et al. for the amount of P2,000,000.00, payable within one year, with 18% interest per annum and provisions for damages and litigation costs in case of default.
Subsequently, the Alcantara family assigned their interest in the promissory note to ALSONS, which became the note holder.

EQUITY failed to pay interest due to lack of assets and financial support from GCC.
On January 14, 1986, ALSONS filed a complaint for sum of money against EQUITY and GCC before the RTC of Makati, alleging GCC as a responsible party under the doctrine of piercing the veil of corporate fiction, claiming EQUITY was merely an instrumentality of GCC.
EQUITY in its cross-claim accused GCC of organizing it to circumvent CB DOSRI limitations and relied on GCC for funding, arguing GCC’s liability in the obligations to ALSONS.
GCC denied the claims, asserting its separate corporate personality and autonomy from EQUITY, and filed its own counterclaim for exemplary damages and attorney’s fees against ALSONS.

ALSONS presented testimony and documentary evidence, including over 60 exhibits and the bearer promissory note, proving the relationship and factual circumstances showing EQUITY as adjunct of GCC.
Documented evidence showed common ownership, management control, financing arrangements, and shared offices between GCC and EQUITY.
A letter from GCC President discouraged the payout requested by ALSONS but authorized payment of interest from EQUITY’s operations instead.
EQUITY adopted the testimonies of ALSONS’ witnesses and documentary evidence. GCC relied mainly on testimony of its president and presented CB and SEC licenses to confirm legality of its operations.

The RTC issued its decision on November 8, 1990, ruling that EQUITY was an instrumentality of GCC and ordering them jointly and severally to pay ALSONS:

Principal sum of P2,000,000.00 with 18% interest per annum from January 2, 1981 until full payment.
Liquidated damages at 3% monthly from January 2, 1982 until full payment.
Attorney’s fees equivalent to 24% of the total obligation.
Costs of suit.

GCC appealed to the Court of Appeals (CA) arguing lack of parent-subsidiary relationship, separate corporate entities doctrine, and improper piercing of the corporate veil.
On April 11, 2002, the CA affirmed the RTC decision, rejecting GCC’s claims.
GCC’s motion for reconsideration and for oral argument were denied by the CA on August 20, 2002.
GCC filed the present petition for review on certiorari before the Supreme Court under Rule 45, challenging the CA rulings and asserting several arguments including illegitimacy of the promissory note and the denial of its motions.

Whether the Court of Appeals erred in affirming the RTC’s decision that EQUITY is an instrumentality or adjunct of GCC, justifying the piercing of GCC’s corporate veil and holding GCC liable for EQUITY’s obligations to ALSONS.
Whether the bearer promissory note issued by EQUITY to ALSONS is a genuine and enforceable instrument.
Whether the denial of petitioner GCC’s motions for reconsideration and oral argument by the CA violated its right to due process.
Whether new arguments and issues raised on appeal by GCC, such as the alleged simulation, alteration of the promissory note, and estoppel of ALSONS, are valid and can be entertained by the Supreme Court.