NATIONAL MARKETING CORPORATION (NAMARCO) vs. ASSOCIATED FINANCE COMPANY, INC., and FRANCISCO SYCIP, FRANCISCO SYCIP
G.R. No. L-20886 April 27, 1967
Facts:
1. ASSOCIATED, through its President, Francisco Sycip, entered into an agreement to exchange sugar with NAMARCO whereby the former would deliver to the latter "Victorias" and/or "National" refined sugar in exchange for "Busilak" and "Pasumil" raw sugar belonging to NAMARCO.
2. Pursuant thereto, NAMARCO delivered to ASSOCIATED "Busilak" and "Pasumil" domestic raw sugar.
3. As ASSOCIATED failed to deliver to NAMARCO the "Victoria" and/or "National" refined sugar agreed upon, the latter, demanded in writing from the ASSOCIATED either immediate delivery thereof, or payment of its equivalent cash value.
4. As ASSOCIATED refused to deliver the raw sugar or pay for the refined sugar delivered to it, inspite of repeated demands therefore NAMARCO instituted the present action
Issue:
Whether Francisco Sycip may be held liable, jointly and severally with his co-defendant
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Ruling:
The evidence of record shows that, of the capital stock of ASSOCIATED, Sycip owned P60,000.00 worth of shares, while his wife — the second biggest stockholder — owned P20,000.00 worth of shares; that the par value of the subscribed capital stock of ASSOCIATED was only P105,000.00; that negotiations that lead to the execution of the exchange agreement in question were conducted exclusively by Sycip on behalf of ASSOCIATED; that, as a matter of fact, in the course of his testimony, Sycip referred to himself as the one who contracted or transacted the business in his personal capacity, and asserted that the exchange agreement was his personal contract; that it was Sycip who made personal representations and gave assurances that ASSOCIATED was in actual possession of the "Victorias" and/or "National" refined sugar which the latter had agreed to deliver to NAMARCO, and that the same was ready for delivery; that, as a matter of fact, ASSOCIATED was at that time already insolvent; that when NAMARCO made demands upon ASSOCIATED to deliver the refined sugar it was under obligation to deliver to the former, ASSOCIATED and Sycip, instead of making delivery of the sugar, offered to pay its value at the rate of P15.30 per bag — a clear indication that they did not have the sugar contracted for.
The foregoing facts can lead to no other conclusion than that Sycip was guilty of fraud because through false representations he succeeded in inducing NAMARCO to enter into the aforesaid exchange agreement, with full knowledge, on his part, on the fact that ASSOCIATED whom he represented and over whose business and affairs he had absolute control, was in no position to comply with the obligation it had assumed. Consequently, he cannot now seek refuge behind the general principle that a corporation has a personality distinct and separate from that of its stockholders and that the latter are not personally liable for the corporate obligations. It is justified in "piercing the veil of corporate fiction" and in holding Sycip personally liable, jointly and severally with his co-defendant, for the sums of money adjudged in favor of appellant.
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