Case Summary (G.R. No. 157549)
Petitioner
Donnina C. Halley, original subscriber to BMPI’s capital stock (35,000 shares), allegedly fully paid her subscription but impleaded by Printwell to reach unpaid corporate debts.
Respondent
Printwell, Inc., creditor of BMPI for P291,342.76 in unpaid printing services, seeking recovery from BMPI’s stockholders under their unpaid subscriptions.
Key Dates
– November 12, 1987: BMPI incorporation with authorized capital of P3,000,000 (300,000 shares, P10 par value) and initial subscription of 75,000 shares
– October 11, 1988 – July 12, 1989: BMPI’s several print orders on 30-day credit totaling P316,342.76
– January 26, 1990: Printwell sues BMPI for unpaid P291,342.76
– February 8, 1990: Complaint amended to implead stockholders for unpaid subscriptions (totaling P562,500)
– November 3, 1993: RTC decision for Printwell, citing irregular official receipts and piercing corporate veil
– August 14, 2002: CA affirms RTC on piercing veil and trust fund doctrine
– May 30, 2011: SC decision applies the 1987 Constitution as the case decision date is post-1990
Applicable Law
– 1987 Philippine Constitution, Article VIII, Section 14 (requirements for judgments)
– Corporation Code (separate corporate personality; subscriber liability)
– Civil Code provisions on obligations and payment (Arts. 1232, 1249)
– Trust fund doctrine (creditors’ right to unpaid subscriptions)
– Doctrine of piercing the corporate veil (equity exception for fraud or evasion of obligations)
Background and Corporate Structure
BMPI was capitalized at P3 million, with five initial subscribers who collectively paid only P187,500 of their P750,000 subscriptions. Printwell provided printing services to BMPI on credit, after which BMPI’s payments were insufficient.
Credit Transactions and Unpaid Obligations
Between October 1988 and July 1989, BMPI incurred P316,342.76 in invoices; only P25,000 was paid. Printwell sued for the outstanding P291,342.76 and later impleaded the five original subscribers for their unpaid subscriptions totaling P562,500.
RTC Ruling: Irregular Receipts and Piercing Corporate Veil
The RTC found that the official receipts submitted by stockholders to prove payment bore serial-number anomalies—indicative of belated issuance to suit their theory. Because stockholders controlled BMPI and benefited from its credit, the court pierced the corporate veil to prevent injustice and applied the trust fund doctrine pro rata, holding each stockholder liable up to the extent of unpaid subscription. Judgment awarded Printwell P291,342.76 plus 20% interest and attorney’s fees.
CA Ruling: Affirmation on Veil Piercing and Trust Fund Doctrine
The Court of Appeals affirmed. It held that corporate fiction may be disregarded when used to perpetrate fraud or evade obligations. BMPI’s stockholders, who ran the corporation without fully paying subscriptions, could not invoke separation of personality. The trust fund doctrine entitled Printwell to satisfy its claim from the unpaid subscriptions. Serial inconsistencies in receipts confirmed stockholders had not discharged their obligations.
Supreme Court’s Ruling: Adequacy of RTC and CA Decisions
The Supreme Court denied procedural challenge that the RTC merely copied Printwell’s memorandum, finding that decisions need only state facts and law clearly—requirements met. It held no bias arose from adopting arguments that correctly resolved the issues.
Supreme Court’s Analysis on Corporate Veil
Under the 1987 Constitution and relevant jurisprudence, corporate personality is a legal fiction that must yield when used to shield wrongdoing or evasion of a just debt. Petitioners, as BMPI’s controlling stockholders, could not hide behind corporate separation when they failed to pay their subscriptions yet benefited from Pri
...continue readingCase Syllabus (G.R. No. 157549)
Procedural History
- Printwell, Inc. extended printing services on 30-day credit to Business Media Philippines, Inc. (BMPI) from October 11, 1988 to July 12, 1989, generating invoices totaling ₱316,342.76.
- BMPI paid only ₱25,000.00; Printwell sued BMPI in January 1990 for the remaining ₱291,342.76.
- In February 1990, Printwell amended its complaint to implead BMPI’s original stockholders (including Donnina C. Halley) to recover unpaid capital subscriptions totaling ₱562,500.00.
- The defendants answered, alleging full payment of subscriptions, separate corporate personality, share assignment, and a pending corporate dissolution.
- November 3, 1993: RTC held stockholders liable pro rata for BMPI’s unpaid debt, ordering payment of ₱291,342.76 plus 20% interest and ₱30,000 attorney’s fees.
- August 14, 2002: Court of Appeals (CA) affirmed, lifting the corporate veil and applying the trust fund doctrine.
- Petitioner Halley moved for reconsideration in the CA—denied. She then filed a petition for review before the Supreme Court.
Facts
- BMPI was incorporated on November 12, 1987, with authorized capital stock of ₱3,000,000 divided into 300,000 shares at ₱10 par value; 75,000 shares were subscribed initially:
• Donnina C. Halley: 35,000 shares; ₱350,000 subscription; ₱87,500 paid
• Roberto V. Cabrera, Jr.: 18,000 shares; ₱180,000 subscription; ₱45,000 paid
• Albert T. Yu: 18,000 shares; ₱180,000 subscription; ₱45,000 paid
• Zenaida V. Yu: 2,000 shares; ₱20,000 subscription; ₱5,000 paid
• Rizalino C. Vineza: 2,000 shares; ₱20,000 subscription; ₱5,000 paid - Printwell delivered printed magazines, wrappers, and subscription cards but BMPI defaulted on most invoices.
- Stockholders submitted official receipts (ORs), financial statements, audit report, tax returns, journals, deposit slips, and a BPI passbook to prove full payment.
RTC Decision (November 3, 1993)
- Found ORs irregular: later-dated receipts bore lower serial numbers—indicating belated issuance to suit a payment theory.
- Rejected board-call defense: directors could have prevented nonpayment but did not.
- Applied the trust fund doctrine: subscriptions co