1. Ramoso vs CA GR No.

117416
2. Umali vs CA 89 SCRA 529
3. Indophil Textile Mill Workers Union vs CALECA, 25 SCRA 52
4. Manila Hotel Corporation vs NLRC, 343 sCra 1
5. WInoso IV vs CA, GR 116124-25
6. PNB vs RItratto Group Inc, et al 142616

Buenaflor Umali vs Court of Appeals

189 SCRA 529

Mauricia Castillo was the administratrix in charge over a parcel of land left be Felipe
Castillo. Said land was mortgaged to the Development Bank of the Philippines and was
about to be foreclosed but then Mauricia’s nephew, Santiago Rivera, proposed that they
convert the land into 4 subdivisions so that they can raise the necessary money to avoid
foreclosure. Mauricia agreed. Rivera sought to develop said land through his company,
Slobec Realty Corporation (SRC), of which he was also the president. SRC then
contracted with Bormaheco, Inc. for the purchase of one tractor. Bormaheco agreed to
sell the tractor on an installment basis. At the same time, SRC mortgaged said tractor to
Bormaheco as security just in case SRC will default. As additional security, Mauricia
and other family members executed a surety agreement whereby in case of default in
paying said tractor, the Insurance Corporation of the Philippines (ICP) shall pay the
balance. The surety bond agreement between Mauricia and ICP was secured by
Mauricia’s parcel of land (same land to be developed).
SRC defaulted in paying said tractor. Bormaheco foreclosed the tractor but it wasn’t
enough hence ICP paid the deficiency. ICP then foreclosed the property of Mauricia.
ICP later sold said property to Philippine Machinery Parts Manufacturing Corporation
(PMPMC). PMPMC then demanded Mauricia et al to vacate the premises of said
property.
While all this was going on, Mauricia died. Her successor-administratrix, Buenaflor
Umali, questioned the foreclosure made by ICP. Umali alleged that all the transactions
are void and simulated hence they were defrauded; that through Bormaheco’s
machinations, Mauricia was fooled into entering into a surety agreement with ICP; that
Bormaheco even made the premium payments to ICP for said surety bond; that the
president of Bormaheco is a director of PMPMC; that the counsel who assisted in all the
transactions, Atty. Martin De Guzman, was the legal counsel of ICP, Bormaheco, and
PMPMC.
ISSUE: Whether or not the veil of corporate fiction should be pierced.
HELD: No. There is no clear showing of fraud in this case. The mere fact that
Bormaheco paid said premium payments to ICP does not constitute fraud per se. As it
turned out, Bormaheco is an agent of ICP. SRC, through Rivera, agreed that part of the
payment of the mortgage shall be paid for the insurance. Naturally, when Rivera was
paying some portions of the mortgage to Bormaheco, Bormaheco is applying some
parts thereof for the payment of the premium – and this was agreed upon beforehand.
Further, piercing the veil of corporate fiction is not the proper remedy in order that the
foreclosure conducted by ICP be declared a nullity. The nullity may be attacked directly
without disregarding the separate identity of the corporations involved. Further still,
Umali et al are not enforcing a claim against the individual members of the corporations.
They are not claiming said members to be liable. Umali et al are merely questioning the
validity of the foreclosure.
The veil of corporate fiction can’t be pierced also by the simple reason that the
businesses of two or more corporations are interrelated, absent sufficient showing that
the corporate entity was purposely used as a shield to defraud creditors and third
persons of their rights. In this case, there is no justification for disregarding their
separate personalities.