Case Summary (G.R. No. 100812)
Trial Court Findings
The RTC ruled for petitioner’s recovery of purchase and repair balances, declared petitioner in default on the counterclaim for failure to answer, and awarded Manuel ₱50,000.
Court of Appeals Ruling
The CA affirmed the RTC, holding that no separate summons was required for a permissive counterclaim, that petitioner had actual notice and failed to answer, and that petitioner’s motion for reconsideration estopped it from challenging jurisdiction. It also pierced the corporate veil to impose liability on the corporation for Manuel’s fees.
Issues on Review
- Whether the RTC acquired jurisdiction over petitioner’s counterclaim without new summons
- Whether the CA properly applied the doctrine of piercing the corporate veil to charge the corporation with personal legal fees
Jurisdiction over the Counterclaim
Under Rule 11 § 4, a defendant must answer a counterclaim within ten days of service; no new summons is required when the party already submitted to jurisdiction. Failure to answer justified default, and petitioner’s motion for reconsideration barred later jurisdictional objections.
Doctrine of Piercing the Corporate Veil
While courts may disregard corporate personality to prevent fraud or injustice, that doctrine protects third parties against misuse of the corporate form, not to transfer individual debts onto a separate entity.
Supreme Court Analysis
The SC found no basis for piercing the veil because Manuel’s services were personal to the individual heirs, not corporate business. Imposing
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Procedural Antecedents
- Petitioner filed Civil Case No. 9542 on January 23, 1985 to recover:
• ₱3,412.06 (balance on jeep body purchase)
• ₱20,454.80 (unpaid balance for vehicle repair)
• ₱6,000.00 (cost of suit and attorney’s fees) - Private respondents, spouses Gregorio and Librada Manuel, answered and interposed a permissive counterclaim of ₱50,000.00 for unpaid legal services by Gregorio Manuel.
- Trial court (Branch 135, RTC Makati) rendered judgment on June 26, 1985, granting both petitioner’s money claims and respondents’ counterclaim after declaring petitioner in default for failure to answer the counterclaim.
- Both parties appealed; on April 15, 1991, the Court of Appeals in C.A. G.R. CV No. 10014 affirmed the RTC decision. Reconsideration was denied on July 1, 1991.
- Petitioner filed a Rule 45 petition for review on certiorari (G.R. No. 100812) seeking annulment of the CA decision.
Facts
- Francisco Motors Corporation sold a jeep body to the Manuels and billed repair costs, aggregating the unpaid balances claimed.
- Gregorio Manuel, petitioner’s Assistant Legal Officer, represented members of the Francisco family (petitioner’s incorporators, directors and officers) in intestate estate proceedings for the late Benita Trinidad (Special Proceedings No. 7803).
- Despite repeated demands after termination of the estate proceedings, the Francisco family did not compensate Gregorio Manuel for his services.
- In the RTC, petitioner failed to answer the counterclaim within ten days; ex parte ev