G.R. No. 174938 - Lanuza, Jr. vs. BF Corp.

In December 1989 and May 1991, BF Corporation (BF Corp) and Shangri-La Properties, Inc. (Shangri-La) executed contracts for the construction of a mall and a multilevel parking structure along EDSA.
Shangri-La initially paid BF Corp in accordance with progress billings but defaulted by October 1991, allegedly misrepresenting its financial capacity and inducing BF Corp to continue construction.
BF Corp completed the works, demanded payment of the outstanding balance, and sued Shangri-La and its directors—Alfredo C. Ramos, Rufo B. Colayco, Antonio O. Olbes, Gerardo Lanuza Jr., Maximo G. Licauco III, and Benjamin C. Ramos—alleging bad faith, fraud, and solidarity liability under Section 31 of the Corporation Code.

August 1993: Shangri-La and its directors moved to suspend the trial court proceedings in favor of arbitration per the contract’s arbitration clause. The trial court denied the motion; on certiorari, the Court of Appeals (CA) ordered arbitration, and on March 27, 1998, the Supreme Court (SC) affirmed that order.
Post-arbitration initiation, parties disputed the governing law (Republic Act No. 876) and whether Shangri-La’s directors must be served separate demands for arbitration. On July 28, 2003, the trial court directed service on all defendants, including the directors; its denial of the directors’ motion for reconsideration (January 19, 2005) was upheld by the CA (May 11, 2006 decision; October 5, 2006 resolution).
Petitioners filed a petition for review with the SC. Meanwhile, the Arbitral Tribunal issued its award (July 31, 2007), absolving petitioners. The SC found the petition moot yet proceeded to resolve the underlying legal issues.

Whether corporate directors, as non-signatories to the arbitration agreement, can be compelled to arbitrate under the contract binding only BF Corp and Shangri-La.
Whether allegations of bad faith or malice in directing corporate affairs justify piercing the corporate veil to include directors in arbitration proceedings.