G.R. No. 182378, 6 March 2013
Salve Dealca Latosa filed before the RTC a Complaint for the recovery of ownership of a portion of her residential land. According to her, Atty. Henry Amado Roxas (Roxas), represented by petitioner herein, encroached on a quarter of her property by arbitrarily extending his concrete fence beyond the correct limits.
In his Answer, Roxas imputed the blame to respondent Our Lady’s Village Foundation, Inc., now Our Lady’s Foundation, Inc. (OLFI). He then filed a Third-Party Complaint against respondent and claimed that he only occupied the adjoining portion in order to get the equivalent area of what he had lost when OLFI trimmed his property for the subdivision road. The RTC admitted the Third-Party Complaint and proceeded to trial on the merits.
After considering the evidence of all the parties, the trial court held that Latosa had established her claim of encroachment by a preponderance of evidence. It found that Roxas occupied a total of 112 square meters of Latosa’s lots, and that, in turn, OLFI trimmed his property by 92 square meters.
To collect the aforementioned amount, Notices of Garnishmentwere then issued by the sheriff to the managers of the Development Bank of the Philippines and the United Coconut Planters Bank for them to garnish the account of Bishop Robert Arcilla-Maullon (Arcilla-Maullon), OLFI’s general manager.
The CA nullified the Notices of Garnishment issued against the bank accounts of Arcilla-Maullon. It noted that since the general manager of OLFI was not impleaded in the proceedings, he could not be held personally liable for the obligation of the corporation.
Before this court, petitioner argues that because OLFI is a dummy corporation, the bank accounts of its general manager can be garnished to collect the judgment obligation of respondent.
Whether it is proper to issue the Notices of Garnishment against the bank accounts of Arcilla-Maullon as OLFI’s general manager.
NO, Arcilla-Maullon cannot be held personally liable for the obligation of the corporation.
To hold the general manager of OLFI liable, petitioner claims that it is a mere business conduit of Arcilla-Maullon, hence, the corporation does not maintain a bank account separate and distinct from the bank accounts of its members. In support of this claim, petitioner submits that because OLFI did not rebut the attack on its legal personality, as alleged in petitioner’s Opposition and Comments on the Motion to Quash Notice/Writ of Garnishment, respondent effectively admitted by its silence that it was a mere dummy corporation. This argument does not persuade us, for any piercing of the corporate veil has to be done with caution. Save for its rhetoric, petitioner fails to adduce any evidence that would prove OLFI’s status as a dummy corporation.
In any event, in order for us to hold Arcilla-Maullon personally liable alone for the debts of the corporation and thus pierce the veil of corporate fiction, we have required that the bad faith of the officer must first be established clearly and convincingly.Petitioner, however, has failed to include any submission pertaining to any wrongdoing of the general manager. Necessarily, it would be unjust to hold the latter personally liable.
Therefore, we refuse to allow the execution of a corporate judgment debt against the general manager of the corporation, since in no legal sense is he the owner of the corporate property.Consequently, this Court sustains the CA in nullifying the Notices of Garnishment against his bank accounts.
*Case digest by Doreena Pauline V. Aranal, JD – 4, Andres Bonifacio College, SY 2019 – 2020