G.R. No.

197530               July 9, 2014

ABOITIZ EQUITY VENTURES, INC., Petitioner,

SC DECISION: Petition is GRANTED. Decision of RTC is declared void and ordered to dismiss the case.

RTC DECISION: DISMISSED THE 1ST COMPLAINT WITH RESPECT TO ABOITIZ AND DIRECT THE REMAINING PARTIES
TO PROCEED WITH ARBITRATION.

DENIED THE MOTION TO DISMISS ON THE 2ND COMPLAINT.

FACTS:

 Aboitiz Shipping Corporation ("ASC"), principally owned by the Aboitiz family, CAGLI, principally owned by
the Gothong family, and William Lines, Inc.("WLI"), principally owned by the Chiongbian family, entered
into an agreement (the "Agreement"), whereby ASC and CAGLI would transfer their shipping assets to WLI
in exchange for WLI’s shares of stock. WLI, in turn, would run their merged shipping businesses and,
henceforth, be known as WG&A, Inc. ("WG&A").
 Under the agreement, any disputes arising from the agreement should be settled by arbitration in
accordance with the Arbitration Law.
 Among the attachments to the agreement is Annex SL-V, a letter from WLI confirming their commitment
to acquire certain inventories of CAGLI. These inventories would havea total aggregate value of, at most,
₱400 million, "as determined after a special examination of the inventories." Annex SL-V also specifically
stated that such acquisition was "pursuant to the Agreement."
 Pursuant to Annex SL-V, inventories were transferred from CAGLI to WLI. These inventories were assessed
to have a value of 514 million, which was later adjusted to 558.89 million. Of the total amount of 558.89
million, "CAGLI was paid the amount of 400 Million." In addition to the payment of 400 million, petitioner
Aboitiz Equity Ventures ("AEV") noted that WG&A shares with a book value of 38.5 million were
transferred to CAGLI.
 As there was still a balance, in2001, CAGLI sent WLI demand letters "for the return of or the payment for
the excess inventories." Amounting to 120.04 Million.
 Sometime in 2002, the Chiongbian and Gothong families decided to leave the WLI and sell their interest in
WLI to the Aboitiz family. As such, a share purchase agreement ("SPA") was entered into by Aboitiz and
the respective shareholders groups of the Chiongbians and Gothongs. In the SPA, Aboitiz agreed to
purchase the Chiongbian group's 40.61% share and the Gothong group's 20.66% share in WLI’s issued and
outstanding stock.
 The SPA provided for arbitration as the mode of settling disputes arising from it and further provided that
the Agreement shall be deemed terminated except its Annex SL-V. And as part of the SPA, the parties
entered into an Escrow Agreement whereby ING Bank N.V.-Manila Branch was to take custody of the
shares subject of the SPA.
 As a result of the SPA, Aboitiz became a stockholder of WLI. Subsequently, renamed Aboitiz Transport
Shipping Corporation ("ATSC").
 Petitioner alleged that sometime in 2008, CAGLI resumed making demands despite having already
received 120.04 million worth of excess inventories through a letter.
 Aboitiz responded to CAGLI’s demands through several letters. In these letters, they rebuffed CAGLI's
demands noting that: (1) CAGLI already received the excess inventories; (2) it was not a party to CAGLI's
claim as it had a personality distinct from WLI/WG&A/ATSC; and (3) CAGLI's claim was already barred by
prescription.
RESPONDENT’S REPLY:

 CAGLI claimed that it was unaware of the delivery to it of the excess inventories and asked for copies of
the corresponding delivery receipts and threatened that unless it received proof of payment or return of
excess inventories it would pursue arbitration.
 However, in letters written for Aboitiz, it was noted that the excess inventories were delivered to GT Ferry
Warehouse. Attached to these letters were a listing and/or samples of the corresponding delivery receipts
and it was also noted that the amount of excess inventories delivered (120.04 million) was actually in
excess of the value of the supposedly unreturned inventories (119.89 million). Thus, it was pointed out
that it was CAGLI which was liable to return the difference between 120.04 million and 119.89 million.
 Thus not having been satisfied, CAGLI filed the first of two applications for arbitration.

PETITIONER’S RESPONSE:

 AEV filed a motion to dismiss arguing that CAGLI failed to state a cause of action as there was no
agreement to arbitrate between CAGLI and AEV. They pointed out that:
o AEV was never a party to the January 8, 1996 Agreement or to its Annex SL-V;
o While AEV is a party to the SPA and Escrow Agreement, CAGLI's claim had no connection to
either agreement;
o The unsigned and unexecuted SPA attached to the complaint cannot be a source of any right to
arbitrate; and
o CAGLI did not say how WLI/WG&A/ATSC's obligation to return the excess inventories can be
charged to AEV.

ISSUE: Whether petitioner, Aboitiz Equity Ventures, Inc., is bound by an agreement to arbitrate with Carlos A.
Gothong Lines, Inc., with respect to the latter’s claims for unreturned inventories delivered to William Lines,
Inc./WG&A, Inc./Aboitiz Transport System Corporation.

RULING:

 There is no agreement binding AEV to arbitrate with CAGLI on the latter’s claims arising from Annex SL-V.
For arbitration to be proper, it is imperative that it be grounded on an agreement between the parties.
 In this petition, not one of the parties — AEV, CAGLI, Victor S. Chiongbian, and Benjamin D. Gothong —
has alleged and/or shown that the controversy is properly the subject of "compulsory arbitration [as]
provided by statute." Thus, the propriety of compelling AEV to submit itself to arbitration must necessarily
be founded on contract. It is clear, pursuant to this court’s pronouncements in Ormoc Sugarcane Planters’
Association, that neither WLI nor CAGLI can compel arbitration under Annex SL-V. Plainly, there is no
agreement to arbitrate.
 It is basic that a corporation has a personality separate and distinct from that of its individual
stockholders. Thus, a stockholder does not automatically assume the liabilities of the corporation of which
he is a stockholder. As explained in Philippine National Bank v. Hydro Resources Contractors Corporation.
 A corporation is an artificial entity created by operation of law. It possesses the right of succession and
such powers, attributes, and properties expressly authorized by law or incident to its existence. It has a
personality separate and distinct from that of its stockholders and from that of other corporations to
which it may be connected. As a consequence of its status as a distinct legal entity and as a result of a
conscious policy decision to promote capital formation, a corporation incurs its own liabilities and is
legally responsible for payment of its obligations. In other words, by virtue of the separate juridical
personality of a corporation, the corporate debt or credit is not the debt or credit of the stockholder. This
protection from liability for shareholders is the principle of limited liability.
G.R. No. 204782, September 18, 2019

GENUINO AGRO-INDUSTRIAL DEVELOPMENT CORPORATION, PETITIONER, v. ARMANDO G. ROMANO, JAY A.

SC: Premises considered, the petition is partially GRANTED. Resolution of CA is AFFIRMED with MODIFICATION.
Genuino Ice Company, Inc. is adjudged solidarity liable with petitioner Genuino Agro-Industrial Development
Corporation and Vicar General Contractor and Management Services to pay the monetary claims due to the
respondents.

LA DECISION: Held that respondents were regular employees of the petitioner and they were illegally dismissed
since they were performing functions that were necessary and desirable to the operations of the ice plant.

NLRC: Rendered its Decision finding that the Labor Arbiter did not err in holding the petitioner and Vicar guilty of
illegal dismissal, and ordering respondents' reinstatement with full backwages. The NLRC held that they could not
justify respondents' dismissal on the ground of retrenchment considering that petitioner and Vicar totally
disregarded the requirements laid down in Article 298 of the Labor Code and failed to adduce documentary proof,
like an audited financial statement, to substantiate their claim.

CA: Found no grave abuse of discretion on the part of the NLRC in deciding the case as it did and denied the
petition.

FACTS:

 Respondents are brine men at Genuino Ice Company Inc.'s. Romano was hired through the man power
agency, Vicar General Contractor and Management Services (Vicar), while Sarmiento and Cabrera were
hired through L.C. Moreno General Contractor and Management Services (L.C. Moreno).
 They averred that they were given a work schedule which they will not work for 15 days for a period of 90
days.
 When Romano reported back to work after his 15 days forced leave, he was told then and there that his
employment was already terminated. Sarmiento and Cabrera also suffered the same. Thus they filed a
complaint against Genuino and Vicar for illegal dismissal.

PETITIONER'S DEFENSE

 Genuino claimed that respondents charged the wrong party as they were never its employees but of
petitioner, its affiliate company. They were contractual employees of Vicar and L.C. Moreno which
deployed them to work at Genuino's ice plant. Due to the continuous and tremendous decline in the
demand for ice products being produced by the petitioner, it shut down its block ice production plant
facilities. Its six workers were reduced to two. Among those affected were the respondents who were
relieved from their posts by Vicar and L.C Moreno.
 By reason of Genuino Ice's contention that respondents charged the wrong party, they amended their
complaint by impleading the petitioner, including the relief of reinstatement, and asking for attorney's
fees.

ISSUE: [RESPONDENTS'] MOTION PRAYING THAT GENUINO ICE COMPANY, INC. BE HELD SOLIDARILY LIABLE WITH
PETITIONER GENUINO AGRO DEVELOPMENT CORPORATION FOR THE PAYMENT OF MONETARY AWARDS OF THE
LABOR ARBITER IS OUT OF CONTEXT, AND HAS NO FACTUAL AND LEGAL BASIS.
RULING: It is an elementary and fundamental principle of corporation law that a corporation is an artificial being
invested by law with a personality separate and distinct from its stockholders and from other corporations to
which it may be connected. However, the corporate mask may be lifted and the corporate veil may be pierced
when a corporation is just but the alter ego of a person or of another corporation. Moreover, piercing the
corporate veil may also be resorted to by the courts or quasi-judicial bodies when "[the separate personality of a
corporation] is used as a means to perpetrate fraud or an illegal act, or as a vehicle for the evasion of an existing
obligation, the circumvention of statutes, or to confuse legitimate issues." Furthermore, the veil of corporate
fiction may also be pierced as when the same is made as a shield to confuse legitimate issues.

The doctrine of piercing the corporate veil applies in three (3) basic areas, namely:

1) Defeat of public convenience as when the corporate fiction is used as a vehicle for the evasion of an
existing obligation;

2) Fraud cases or when the corporate entity is used to justify a wrong, protect fraud, or defend a crime; or

3) Alter ego cases, where a corporation is merely a farce since it is a mere alter ego or business conduit of
a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it
merely an instrumentality, agency, conduit or adjunct of another corporation.

Furthermore, once the veil of corporate fiction is pierced, the separate but related corporation becomes solidarity
liable in labor cases.