G.R. No. 129459 September 29, 1998
SAN JUAN STRUCTURAL AND STEEL FABRICATORS, INC., petitioner, vs. COURT OF APPEALS, MOTORICH SALES CORPORATION, NENITA LEE GRUENBERG, ACL DEVELOPMENT CORP. and JNM REALTY AND DEVELOPMENT CORP., respondents.

FACTS

Petitioner San Juan Structural and Steel Fabricators, Inc., represented by its President Andres T. Co, entered into an Agreement dated February 14, 1989, with respondent Motorich Sales Corporation, represented by its Treasurer Nenita Lee Gruenberg. The Agreement was for the sale of a parcel of land owned by Motorich. Petitioner paid a downpayment of P100,000.00, with the balance payable on or before March 2, 1989. On March 1, 1989, petitioner requested a computation of the balance and was ready to pay with a cashier’s check on March 2, 1989. However, respondent Gruenberg did not appear for the meeting. Motorich and Gruenberg refused to execute the necessary Transfer of Rights/Deed of Assignment. They contended that Gruenberg’s signature alone was inadequate to bind the corporation, as the signature of the President and Chairman, Reynaldo Gruenberg (her husband), was required, and that petitioner failed to pay in legal tender within the stipulated period. The Regional Trial Court dismissed the complaint, finding no evidence that Gruenberg was authorized by Motorich’s board of directors to sell the corporate property, as required by Section 40 of the Corporation Code. The Court of Appeals affirmed but modified the decision, ordering Gruenberg to refund the P100,000.00 downpayment to petitioner.

ISSUE

1. May a corporate treasurer, by herself and without any authorization from the board of directors, validly sell a parcel of land owned by the corporation?
2. May the veil of corporate fiction be pierced on the mere ground that almost all of the shares of stock of the corporation are owned by said treasurer and her husband?

RULING

1. No. Under Section 40 of the Corporation Code, a corporation may sell all or substantially all of its property and assets only upon authorization by a majority vote of its board of directors and the vote of stockholders representing at least two-thirds of the outstanding capital stock. The evidence showed that respondent Nenita Lee Gruenberg, as treasurer, had no such authorization from Motorich’s board to sell the subject property. The Agreement, signed solely by her, was therefore unenforceable against the corporation. Petitioner, being a corporation itself, was expected to know this corporate requirement and should have verified her authority.
2. No. The veil of corporate fiction cannot be pierced merely because a single individual or a couple owns almost all of the corporation’s capital stock. Piercing the corporate veil is an equitable remedy applied only when the corporate entity is used to commit fraud, illegality, or injustice, or to evade a lawful obligation. The mere ownership of a majority of stock and the holding of corporate offices are insufficient grounds to disregard the separate juridical personality of the corporation. The Court found no evidence that Motorich was used as an alter ego or to perpetrate a wrong in this case.
The Court affirmed the Decision of the Court of Appeals ordering Nenita Lee Gruenberg to refund the P100,000.00 downpayment. Since the Agreement was unenforceable, there was no right to retain the payment, and its retention would constitute unjust enrichment. The obligation to return arises under Article 2154 of the Civil Code on solutio indebiti.