FRANCISCO MOTORS CORPORATION vs. COURT OF APPEALS and SPOUSES GREGORIO and LIBRADA MANUEL
G.R. No. 100812. June 25, 1999
Facts:
1. Petitioner filed a complaint against respondents to recover P3,412.06, representing the balance of the jeep body purchased by the Manuels from petitioner.
2. Respondents interposed a counterclaim for unpaid legal services by Gregorio Manuel in the amount of P50,000 which was not paid by the incorporators, directors and officers of the petitioner.
3. The trial court decided the case in favor of petitioner in regard to the petitioners claim for money, but also allowed the counter-claim of private respondents.
4. Private respondent Gregorio Manuel, while he was petitioners Assistant Legal Officer, he represented members of the Francisco family in the intestate estate proceedings of the late Benita Trinidad.
5. However, even after the termination of the proceedings, his services were not paid.
6. Said family members, he said, were also incorporators, directors and officers of petitioner. And that is his basis in saying that the corporation is liable.
Issue:
Whether or not the corporation is liable to the unpaid legal services
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Ruling:
Given the facts and circumstances of this case, the doctrine of piercing the corporate veil has no relevant application here. The rationale behind piercing a corporation’s identity in a given case is to remove the barrier between the corporation from the persons comprising it to thwart the fraudulent and illegal schemes of those who use the corporate personality as a shield for undertaking certain proscribed activities. However, in the case at bar, instead of holding certain individuals or persons responsible for an alleged corporate act, the situation has been reversed. It is the petitioner as a corporation which is being ordered to answer for the personal liability of certain individual directors, officers and incorporators concerned. Hence, it appears to us that the doctrine has been turned upside down because of its erroneous invocation. Note that according to Gregorio Manuel his services were solicited as counsel for members of the Francisco family to represent them in the intestate proceedings over Benita Trinidads estate. These estate proceedings did not involve any business of petitioner.
His move to recover unpaid legal fees through a counterclaim against Francisco Motors Corporation, to offset the unpaid balance of the purchase and repair of a jeep body could only result from an obvious misapprehension that petitioner’s corporate assets could be used to answer for the liabilities of its individual directors, officers, and incorporators. Such result if permitted could easily prejudice the corporation, its own creditors, and even other stockholders; hence, clearly inequitous to petitioner.
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