PNB v. Ritratto Group, Inc.
G.R. No. 142616, July 31, 2001
Corporation Law Case Digest by John Paul C.
Ladiao (15 March 2016)
(Topic: Right to bring action, acquire and
possess property --- relate with Art. 46 of NCC)
FACTS:
On May 29,
1996, PNB International Finance Ltd. (PNB-IFL), a subsidiary company of PNB,
organized and doing business in Hong Kong, extended a letter of credit in favor
of the respondents in the amount of US$300,000.00 secured by real estate
mortgages constituted over four (4) parcels of land in Makati City. This credit
facility was later increased successively to US$1,140,000.00 in September 1996;
to S$1,290,000.00 in November 1996; to US$1,425,000.00 in February 1997; and
decreased to S$1,421,316.18 in April
1998. Respondents made repayments of the loan incurred by remitting those
amounts to their loan account with PNB-IFL in Hong Kong.
However, as
of April 30, 1998, their outstanding obligations stood at US$1,497,274.70.
Pursuant to the terms of the real estate mortgages, PNB-IFL, through its
attorney-in-fact PNB, notified the respondents of the foreclosure of all the real
estate mortgages and that the properties subject thereof were to be sold at a
public auction on May 27, 1999 at the Makati City Hall.
On May 25,
1999, respondents filed a complaint for injunction with prayer for the issuance
of a writ of preliminary injunction and/or temporary restraining order before
the Regional Trial Court of Makati. The Executive Judge of the Regional Trial
Court of Makati issued a 72-hour temporary restraining order.
PNB-IFL is a
wholly owned subsidiary of defendant Philippine National Bank, the suit against
the defendant PNB is a suit against PNB-IFL.
ISSUE:
Whether or
not respondents justified the act of the court a quo in applying the doctrine
of "Piercing the Veil of Corporate Identity" by stating that
petitioner is merely an alter ego or a business conduit of PNB-IFL?
HELD:
No.
herein
petitioner is an agent with limited authority and specific duties under a
special power of attorney incorporated in the real estate mortgage. It is not
privy to the loan contracts entered into by respondents and PNB-IFL.
The mere
fact that a corporation owns all of the stocks of another corporation, taken
alone is not sufficient to justify their being treated as one entity. If used
to perform legitimate functions, a subsidiary's separate existence may be
respected, and the liability of the parent corporation as well as the
subsidiary will be confined to those arising in their respective business.
as a general
rule the stock ownership alone by one corporation of the stock of another does
not thereby render the dominant corporation liable for the torts of the
subsidiary unless the separate corporate existence of the subsidiary is a mere
sham, or unless the control of the subsidiary is such that it is but an
instrumentality or adjunct of the dominant corporation.
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