Case Summary (G.R. No. 175581)
Petitioner
Ryuichi Yamamoto
Respondents
Nishino Leather Industries, Inc. (formerly WAKO)
Ikuo Nishino
Key Dates
• 1983 – Organization of WAKO under Philippine law.
• 1987 – Memorandum of Agreement for 70% share acquisition by Nishino.
• October 30, 1991 – Atty. Doce’s letter offering Yamamoto the return of certain machinery, subject to valuation deduction.
• January 15, 1992 – Yamamoto’s replevin complaint filed before RTC Makati.
• June 9, 1995 – RTC decision awarding Yamamoto ownership of the seized machinery.
• May 30, 2001 – Court of Appeals decision reversing RTC and dismissing the complaint.
• April 16, 2008 – Supreme Court decision denying Yamamoto’s petition.
Applicable Law
– 1987 Philippine Constitution
– Corporation Code, particularly sections governing corporate powers and board authority (e.g., Section 23)
– Civil Code of the Philippines, Articles 1181 (conditional obligations), 1318–1319 (requisites for contracts)
– Jurisprudence on piercing the corporate veil (instrumentality and alter-ego doctrines)
– Trust fund doctrine concerning corporate capital and protection of corporate creditors
Facts
- Yamamoto organized WAKO in 1983 with a minority share.
- In 1987, the Nishinos acquired over 70% of WAKO, diluting Yamamoto’s equity to about 10%.
- Negotiations for a full buy-out ensued. On October 30, 1991, Atty. Doce sent a letter stating that Yamamoto could remove certain tanning machinery, “provided the value … is deducted from … capital contributions.”
- Yamamoto, relying on this letter, sought replevin of the machinery in January 1992.
- The RTC granted replevin and declared Yamamoto owner of the machinery.
- The Court of Appeals reversed, holding the machinery to be corporate property, not subject to unilateral removal without board authorization, and rejecting promissory estoppel.
Issues
- Whether Atty. Doce’s letter bound NLII to allow Yamamoto to remove the machinery.
- Whether the corporate veil must be pierced to recognize Yamamoto’s claim.
- Whether the doctrine of promissory estoppel applies to compel NLII to honor the letter.
- Whether respondents are liable for attorney’s fees.
Decision
The petition is DENIED. Costs against petitioner.
Corporate Authority and Board Resolution
Under the Corporation Code, corporate powers are exercised by the Board of Directors unless otherwise provided. A mere letter from corporate counsel, without a board resolution authorizing such act, cannot bind the corporation. Here, NLII’s board never approved the removal of machinery, so the letter constituted no binding corporate act.
Piercing the Corporate Veil
The alter-ego doctrine requires (1) complete domination of finances, policy, and practice; (2) use of that control to commit fraud or wrong; and (3) proximate causation of injury. Mere majority ownership, even near total control, is insufficient. There was no clear and convincing evidence that the Nishinos treated NLII as a sham or used its corporate form to perpetrate injustice against Yamamoto.
Promissory Estoppel
Promissory estoppel arises only from an unqualified promise intended for reliance, and reliance that would make failure to enforce the p
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Facts
- In 1983, petitioner Ryuichi Yamamoto, a Japanese national, organized Wako Enterprises Manila, Inc. (later renamed Nishino Leather Industries, Inc. or NLII) principally engaged in leather tanning.
- In 1987, Yamamoto and respondent Ikuo Nishino forged a Memorandum of Agreement for a joint venture under which Nishino would acquire 70% of Wako’s authorized capital stock. Nishino and his brother Yoshinobu eventually held over 70%, reducing Yamamoto’s stake to roughly 10%.
- On October 30, 1991, counsel for Nishino and Yoshinobu, Atty. Emmanuel Doce, sent Yamamoto a letter stating that Yamamoto “may take” the machinery and equipment he contributed—splitting machine, samming machine, forklift, four drums, two toggling machines—provided their value be deducted from his capital contribution in any buy-out.
- Yamamoto sought to recover these machines but was prevented by respondents, prompting him to file a replevin complaint on January 15, 1992 before the Makati RTC.
Procedural History
- RTC, Makati Branch 45 granted Yamamoto a writ of replevin upon bond posting and, by Decision of June 9, 1995, declared him rightful owner and possessor of the machines, made the writ permanent, awarded him ₱50,000 attorney’s fees, dismissed respondents’ counterclaims, and ordered costs against respondents.
- Respondents appealed. The Court of Appeals reversed on May 30, 2001, holding that the machines were corporate property of NLII, that Yamamoto could not pierce the corporate veil or invoke promissory estoppel, and found no merit in respondents’ counterclaim. Their motion for reconsiderati