Case Summary (G.R. No. 67626)
Applicable Law
1987 Philippine Constitution (decided in 1989).
Section 2, Batas Pambansa Blg. 68 (Corporation Code of the Philippines).
Doctrine on piercing the corporate veil when used to defeat public convenience, protect fraud, or justify wrong.
Chronology of Key Events
– December 1977: Akron’s board (including petitioner) authorizes purchase of 13 trucks to be financed by loan.
– January 25, 1978: Coprada, on behalf of Akron, executes deed of sale for P525,000 and side agreement for P50,000 downpayment, P475,000 balance due in 60 days, accruing as rental until fully paid, with chattel mortgage provision on default. Promissory note executed by Coprada to secure payment from anticipated DBP loan.
– After 90 days: No DBP loan filed; private respondent demands payment; Akron pays rentals temporarily.
– March–December 1978: Two trucks sold under pacto de retro; Akron amends corporate name to Akron Transport International, Inc.; Coprada informs respondent of partial return of trucks and board resolutions.
– October 28, 1980: Trial court orders Akron, its officers, directors, and petitioner jointly and severally to pay P525,000, rentals, attorney’s fees, and costs.
– June 30, 1983: IAC sets aside trial court decision as to petitioner.
– February 8, 1984: IAC, on reconsideration, reinstates trial court decision, holding petitioner liable.
– April 18, 1989: Supreme Court grants petition, reverses IAC’s February 1984 resolution, and reinstates IAC’s June 1983 decision absolving petitioner.
Factual Findings
- Petitioner participated in board resolution authorizing purchase but did not negotiate, sign the deed of sale, or execute the promissory note.
- Coprada personally negotiated terms, executed debt instruments, and represented Akron throughout.
- No evidence showed that petitioner engaged in fraud, misrepresentation, or used his status to defeat public convenience.
- Corporate amendments and sale under pacto de retro were within Akron’s corporate powers and did not prejudice private respondent’s mortgage lien.
Legal Issues Presented
I. Whether the IAC erred in piercing the corporate veil and holding petitioner personally liable for Akron’s obligation.
II. Whether sanctioning a merger of corporate and personal personalities violated established doctrine on corporate entity.
Supreme Court’s Analysis and Ruling
– The corporate entity is distinct from its stockholders and directors; piercing the veil requires clear proof of fraud or misuse.
– The promissory note executed by Coprada unequivocally boun
Case Syllabus (G.R. No. 67626)
Facts of the Case
- A corporation is a legal entity distinct from its stockholders by fiction of law; this fiction may be pierced to prevent fraud or wrong.
- December 1977: Board of Akron Customs Brokerage Corporation, including petitioner Jose Remo, Jr., adopts resolution to purchase thirteen (13) trucks using proceeds of a loan.
- January 25, 1978: President Feliciano Coprada acquires the 13 trucks from E.B. Marcha Transport Company, Inc. for ₱525,000 by deed of absolute sale.
- Side agreement of the same date provides:
- Downpayment of ₱50,000; balance of ₱475,000 due within 60 days.
- Downpayment deemed rentals until full payment.
- On default, balance becomes chattel mortgage lien; 30-day extension possible; thereafter vendor may revoke contract and reclaim trucks.
- Coprada executes promissory note in favor of Akron, stating balance to be paid from proceeds of a Development Bank of the Philippines (DBP) loan within 60 days.
- After 90 days without payment, private respondent demands from Coprada; Coprada promises payment upon DBP loan release.
- March 15, 1978: Board resolution authorizes pacto de retro sale of two trucks to a bank; inquiry reveals Akron never applied for DBP loan.
- April 27–May 31, 1978: Akron pays rentals of ₱500 per day; thereafter rentals cease.
- July 17, 1978: Coprada requests grace period until month-end or will return trucks.
- August 1, 1978: Respondent demands return of all 13 trucks and ₱25,000 back rentals.
- August 8, 1978: Coprada seeks extension to August 31; returns ten trucks to Bagbag, Novaliches.
- December 9, 1978: Coprada informs of assignment of ₱475,000 obligation from proceeds of a loan obtained by Akron from State Investment House, Inc.
Procedural History
- Private respondent files complaint for recovery of ₱525,000 or return of 13 trucks with damages against Akron and its officers, including petitioner, in Court of First Instance, Rizal.
- Petit