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[G.R. No. 131019. October 9, 2000]

BUENO IND'L. & DEV'T CORP. vs. CA, et al.

SECOND DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated OCT 9 2000.

G.R. No. 131019 (Bueno Industrial & Development Corporation v. Court of Appeals and P.N. Roa Realty Corporation.)

In a Resolution dated July 19, 1999, the Court denied the petition for review on certiorari of petitioner Bueno Industrial & Development Corporation (BIDCOR) on the ground that the Court of Appeals committed no reversible error when it rendered the following judgment:

WHEREFORE, the petition is hereby GRANTED. The assailed order insofar as it declared that petitioner [P.N. Roa Realty Corporation], ROA Enterprises and ROA Wood Industries are one and the same and that the "properties registered in the name of [P.N. Roa Realty Corporation] can be treated as also those of the other two corporations" is hereby nullified and set aside.

The preliminary injunction earlier issued insofar as it ordered respondents to desist from enforcing any writ or orders that the court a quo may have issued in the case affecting properties of [P.N. Roa Realty Corporation] is MADE PERMANENT. ¹ Rollo , p. 66.

Petitioner now seeks clarification and reconsideration of said Resolution. The Court, however, deems it no longer necessary to rule on the motion to clarify the alleged contradiction in the dispositive portion considering that BIDCOR acknowledges that the end effect of the Resolution is a denial of its petition.

In seeking reconsideration of the Courts Resolution, petitioner contends that the Court of Appeals lost sight of the nature of the doctrine of piercing the veil of corporate fiction by focusing on the alleged absence of the technical requirements mentioned in Concept Builders, Inc. vs. National Labor Relations Commission. ² 257 SCRA 149.Petitioner submits that there will be a "wrong that is justified, {a} fraud that is protected and {a} crime that is defended" should the Court maintain that private respondent P.N. Roe Realty Corporation (PNRRC) has a juridical personality separate and distinct from that of P.N. Roe Enterprises, Inc. (PNREI) and its president, Pedro Roe, Jr.

It will be noted that this case is rooted in a judgment rendered in another case finding R.C. Aquino Timber and Plywood Co. (RCA TIMPLY), PNREI and Roa, Jr., both as third-party defendants, solidarily liable to BIDCOR for damages. BIDCOR filed an amended Motion for Partial Execution Pending Appeal and for Execution "as far as third-party defendants are concerned." The trial court granted the motion and a writ of execution was issued against the properties of RCA TIMPLY, PNREI and Roa, Jr. Subsequently, a Sheriff's Notice of Levy was issued against "all titles, rights, interests, shares and participations of [PNREI] and [Roa, Jr.] which properties were listed as belonging to [PNRRC].

In arguing that the facts of this case justify application of the doctrine of piercing the veil of corporate fiction, BIDCOR maintains that since PNRRC and PNREI are owned, controlled and managed by .the same stockholders and directors, who are all members of the same family (and therefore close corporations), both corporations are one and the same. Thus, BIDCOR argues that the properties of PNRRC are those of PNREI which may be levied upon to satisfy the judgment in its favor.

It is a fundamental principle of corporation law that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related. ³ Yu v. National Labor Relations Commission, 245 SCRA 134, 144 (1995).While, as contended by BIDCOR, the separate juridical personality of a corporation may be pierced when it is used to defeat public convenience, justify wrong, protect fraud or defend a crime, it is nonetheless incumbent upon BIDCOR to prove that the separate corporate or juridical personality of PNRRC was purposely used for those illegal purposes. The wrongdoing must be clearly and convincingly established. It cannot be presumed. ⁴ !d. at 145.As held in San Juan Structural and Steel Fabricators, Inc. v. Court of Appeals, ⁵ 296 SCRA 631 (1998).the question of piercing the veil of corporate fiction is essentially a matter of proof. ⁶ Id. at 650.

The Court reiterates that it agrees with the Court of Appeals that BIDCOR failed to prove that the circumstances of this case would justify piercing the corporate veil of PNRRC. The mere fact that PNRRC and PNREI are admittedly close corporations owned, controlled and managed by the same members of the Roe family, or that a cited transaction allegedly shows that the "shots" or acts/decisions of PNRRC, PNREI and Roe Wood Industries emanate from a single source, do not necessarily or satisfactorily prove that the separate juridical personality of PNRRC, or for that matter the other corporations owned by the Roe family, has been misused to shield a fraud, an illegality or inequity. BIDCOR should bear in mind that restricted stock ownership and management by the stockholders are distinguishing features of close corporations like PNRRC and PNREI. ⁷ See Sections 96 and 97 of the Corporation Code.

WHEREFORE, the Court resolved to DENY WITH FINALITY the Motion for Clarification and Reconsideration of Bueno Industrial & Development Corporation for failure to show that the Court committed reversible error in rendering its Resolution dated July 19, 1999.

Very truly yours,

(Sgd.) TOMASITA B. MAGAY-DRIS

Clerk of Court

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