G.R. No. 182398 - Hung vs. BPI Card Fice Corp.

Guess? Footwear and BPI Express Card Corporation entered into two merchant agreements dated 25 August 1994 and 16 November 1994.
In the first agreement, petitioner Benny Hung signed as owner and manager of Guess? Footwear; in the second, he signed as president of Guess? Footwear, which he also referred to as B & R Sportswear Enterprises.
The agreements involved the acceptance and honoring of BPI Express Credit Cards issued to cardholders for the purchase of goods and services.

From May 1997 to January 1999, respondent BPI mistakenly credited Guess? Footwear’s account with a total of P3,480,427.43 through 352 checks, reflecting overpayments.
Upon being informed of the overpayments, petitioner Benny Hung facilitated a transfer of P963,604.03 from his sole proprietorship’s bank account (B & R Sportswear Enterprises) to BPI’s account, indicating a partial settlement of the overpayments.

In a letter dated 27 September 1999, BPI demanded the balance payment of P2,516,826.68, arguing that only a partial settlement had been made.
BPI filed a collection suit before the RTC of Makati City against an erroneously designated defendant, B & R Sportswear Distributor, Inc., notwithstanding that the real contracting parties were Guess? Footwear and B & R Sportswear Enterprises.
On 24 June 2002, the RTC issued a decision ordering defendant B & R Sportswear Distributor, Inc. to pay the outstanding amount with interest at a rate of 6% per annum from 4 October 1999.

Discovery of the Non-existent Entity and Motion to Pierce the Corporate Veil

During the execution of the judgment, it was discovered that B & R Sportswear Distributor, Inc. did not exist as a corporate entity.
Owing to this defect, BPI subsequently moved to pierce the corporate veil to hold petitioner Benny Hung personally liable, arguing that he had signed the merchant agreements in his personal capacity.
The RTC, and later the Court of Appeals, validated this position by ordering that petitioner be held liable due to his direct involvement and representation.

Petitioner contended that he never represented a non-existent corporation nor did he intend to mislead; he maintained that his sole proprietorship, B & R Sportswear Enterprises, is distinct from the erroneously named B & R Sportswear Distributor, Inc.
He argued that the error in naming was a result of respondent’s own misdesignation and that the similarity in the business names should not be used to impute personal liability upon him.
Petitioner also claimed lack of proper service on his person and argued that, not being proper party to the suit, he should not be held liable for the RTC’s judgment.

Both parties acknowledged that a correction could be made under Sections 4 and 5, Rule 10 of the Rules of Court to change the name from B & R Sportswear Distributor, Inc. to B & R Footwear Distributors, Inc. and/or Benny Hung.
The real defendant, having answered the complaint and participated in the trial, confirmed the correction and thus undermined the petitioner’s due process argument related to service issues.

Whether petitioner Benny Hung can be held personally liable for the satisfaction of the judgment originally rendered against B & R Sportswear Distributor, Inc., a non-existent corporate entity.
Whether his actions and representations in the merchant agreements (including signing in his personal capacity and using ambiguous business names) justify the piercing of the corporate veil to impute personal liability.

Whether the misdesignation of the defendant’s name and the alleged lack of service (due to the erroneous name) should render the decisions of the lower courts null and void for lack of jurisdiction or due process.
Whether a correction of the formal defect pursuant to Section 4, Rule 10 of the Rules of Court is sufficient to validate the proceedings and execution of the judgment against petitioner.