HYATT ELEVATORS AND ESCALATORS CORPORATION vs. GOLDSTAR ELEVATORS PHILS., INC.

October 24, 2005

Issue: Is a corporation a juridical person?

Facts: Petitioner Hyat and respondent Goldstar are domestic corporations engaged in the business of
importing, installing and maintaining elevators and escalators, both with address at Makati. Hyat filed a
complaint for unfair trade practices and damages against LG and Goldstar after LG terminated their
Exclusive Distributorship Agreement.

The issue on venue was raised and in connection, the residence of Hyat. But since both parties to the
case are corporations, the Court first determined the personality of a corporation.

Ruling: Yes, a corporation is a juridical person. The law recognizes two types of persons: (1) natural and
(2) juridical. Corporations come under the later in accordance with Article 44(3) of the Civil Code.

Prisma Construction & Development Corporation vs. Menchavez | March 9, 2010 G.R. No. 160545

Issue: Does the doctrine of piercing the corporate veil apply in this case?

Facts: Pantaleon, the President and Chairman of the Board of PRISMA, obtained a P1M loan from
respondent Menchavez. To secure its payment, he issued a promissory note and six postdated checks. He
signed the promissory note in his personal capacity, and as duly authorized by the Board of Directors of
PRISMA.

The respondent filed a complaint for sum of money when the petitioners failed to completely pay the
loan within the stipulated period. In his Answer, Pantaleon denied that he made himself personally
liable.

Ruling: No. The doctrine of piercing the corporate veil applies only in three (3) basic instances, namely: a)
when the separate and distinct corporate personality defeats public convenience, as when the corporate
fiction is used as a vehicle for the evasion of an existing obligation; b) in fraud cases, or when the
corporate entity is used to justify a wrong, protect a fraud, or defend a crime; or c) is used in alter ego
cases, i.e., where a corporation is essentially 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 so conducted as to make it
merely an instrumentality, agency, conduit or adjunct of another corporation. In the absence of malice,
bad faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be
made personally liable for corporate liabilities.
Here, there is no competent and convincing evidence of any wrongful, fraudulent or unlawful act on the
part of PRISMA to justify piercing its corporate veil. While Pantaleon denied personal liability in his
Answer, he made himself accountable in the promissory note in his personal capacity and as authorized
by the Board Resolution of PRISMA.