Francisco Motors Corporation v. CA and Sps. Manuel (G.R. No. 100812)

Facts:

Petitioner Francisco Motors Corp filed a complaint to recover from respondent spouses Manuel the unpaid balance of the jeepney bought by the latter from them. As their answer, respondent spouses interposed a counterclaim for unpaid legal services by Gregorio Manuel which was not paid by petitioner corporation’s directors and officers. Respondent Manuel alleges that he represented members of the Francisco family who were directors and officers of herein petitioner corporation in an intestate estate proceeding but even after its termination, his services were not paid. The trial court ruled in favor of petitioner but also allowed respondent spouses’ counterclaim. CA affirmed.

Issue:

Whether or not petitioner corporation may be held liable for the liability incurred by its directors and officers in their personal capacity.

Ruling: NO.

In our view, however, given the facts and circumstances of this case, the doctrine of piercing the corporate veil has no relevant application here. Respondent court erred in permitting the trial court’s resort to this doctrine.

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 private respondent Gregorio Manuel his services were solicited as counsel for members of the Francisco family to represent them in the intestate proceedings over Benita Trinidad’s estate. These estate proceedings did not involve any business of petitioner.

Furthermore, considering the nature of the legal services involved, whatever obligation said incorporators, directors and officers of the corporation had incurred, it was incurred in their personal capacity. When directors and officers of a corporation are unable to compensate a party for a personal obligation, it is far-fetched to allege that the corporation is perpetuating fraud or promoting injustice, and be thereby held liable therefore by piercing its corporate veil.

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