TAN BOON BEE & CO., INC. vs. THE HONORABLE HILARION U. JARENCIO, PRESIDING JUDGE OF BRANCH XVIII of the Court of First Instance of Manila, GRAPHIC PUBLISHING, INC., and PHILIPPINE AMERICAN CAN DRUG COMPANY
G.R. No. L-41337 June 30, 1988
Facts:
1. Petitioner doing business under the name and style of Anchor Supply Co., sold on credit to Graphic Publishing, Inc. paper products.
2. GRAPHIC made partial payment by check to petitioner and a promissory note was executed to cover the balance.
3. For failure of GRAPHIC to pay any installment, petitioner filed a Civil case for a Sum of Money.
4. In a Decision the trial court ordered GRAPHIC to pay the petitioner.
5. On motion of petitioner, a writ of execution was issued by respondent judge; but the writ having expired without the sheriff finding any property of GRAPHIC, an alias writ of execution was issued.
6. Pursuant to the said issued alias writ of execution, the executing sheriff levied upon one unit printing machine found in the premises of GRAPHIC.
7. Said printing machine was scheduled for auction sale but Philippine American Drug Company had informed the sheriff that the printing machine is its property and not that of GRAPHIC.
8. The plaintiff, however, contends that the controlling stockholders of the PADC are also the same controlling stockholders of Graphic and, therefore, the levy upon the said machinery which was found in the premises occupied by the Graphic Publishing, Inc. should be upheld.
Issue:
Whether or not the corporate fiction of the two corporations shall be disregarded
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Ruling:
In the instant case, petitioner's evidence established that PADCO was never engaged in the printing business; that the board of directors and the officers of GRAPHIC and PADCO were the same; and that PADCO holds 50% share of stock of GRAPHIC. Petitioner likewise stressed that PADCO's own evidence shows that the printing machine in question had been in the premises of GRAPHIC since May, 1965, long before PADCO even acquired its alleged title on July 11, 1966 from Capitol Publishing. That the said machine was allegedly leased by PADCO to GRAPHIC on January 24, 1966, even before PADCO purchased it from Capital Publishing on July 11, 1966, only serves to show that PADCO's claim of ownership over the printing machine is not only farce and sham but also unbelievable.
Considering the principles and the circumstances established in this case, respondent judge should have pierced PADCO's veil of corporate Identity.
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