G.R. No. 182770 - WPM International Trading, Inc. vs. Labayen

Fe Corazon Labayen (respondent) owned H.B.O. Systems Consultants, a management and consultancy firm.
WPM International Trading, Inc. (petitioner) was a domestic corporation engaged in the restaurant business; Warlito P. Manlapaz (petitioner) was its president.
Around 1990, WPM entered into a management agreement with Labayen, allowing her to operate, manage, and rehabilitate "Quickbite," a restaurant owned by WPM.

Respondent Labayen engaged CLN Engineering Services (CLN) to renovate two Quickbite outlets, with the Divisoria branch renovation costing ₱432,876.02.
The renovation was completed on June 13, 1990, and possession was delivered to Labayen.
Out of the renovation cost, only ₱320,000 was paid to CLN, leaving a balance of ₱112,876.02 unpaid.

CLN sued respondent and Manlapaz for unpaid renovation costs; Manlapaz was later excluded as defendant.
Respondent defaulted in filing an answer.
The RTC found respondent liable to pay CLN the unpaid balance of ₱112,876.02 plus 12% interest from June 18, 1990, and 20% attorney’s fees.

Respondent filed a complaint for damages against WPM and Manlapaz, claiming entitlement to reimbursement for the amount she was ordered to pay CLN.
She alleged her management role was limited to introducing parties and that Manlapaz and Neri (CLN’s GM) agreed on contract terms.
Respondent stated she was abroad during the prior case, only learning of the judgment after her return.
She prayed for reimbursement of ₱112,876.02 plus interest and attorney’s fees, moral damages of ₱100,000, and attorney’s fees of ₱20,000.

Manlapaz contended Edgar Alcansaje was in charge of Quickbite daily operations before respondent’s engagement.
He claimed respondent acted in her own capacity in contracting CLN, exceeding her authority.
He alleged the contract should bind only respondent, not WPM or himself personally.
Manlapaz prayed for dismissal and counterclaimed for moral and exemplary damages (₱350,000) and attorney’s fees (₱50,000).

RTC declared WPM in default for failure to file an answer.
RTC found that WPM was an instrumentality or business conduit of Manlapaz.
Since Manlapaz was chairman, president, and treasurer, RTC found he had complete control of WPM.
Ruled Manlapaz liable personally to reimburse respondent the amount she paid to CLN.

CA affirmed the RTC ruling with modification on attorney’s fees.
Held that petitioners tacitly ratified the renovation contract, barring denial of respondent’s authority.
Affirmed that WPM and Manlapaz were one and the same based on:

Manlapaz was principal stockholder.
He held multiple top positions in WPM in violation of Corporation Code.
Two out of four other stockholders were employed directly or indirectly by Manlapaz.
Manlapaz’s residence was WPM’s registered principal office.
WPM’s acronym was derived from Manlapaz’s initials.

Applied the piercing of corporate veil doctrine and held Manlapaz jointly liable with WPM.

Petitioners argued the CA gravely erred in piercing the veil of corporate fiction without clear and convincing evidence of fraud or abuse of corporate form.
Petitioners insisted Manlapaz could not be held personally liable solely by virtue of his positions and shareholdings.
Petitioners also argued that if liable, they should only pay the unpaid balance without interest, damages, or attorney’s fees.

Whether WPM was a mere instrumentality, alter ego, or business conduit of Manlapaz, justifying piercing the corporate veil.
Whether Manlapaz is jointly and severally liable with WPM to reimburse respondent including damages and interest.