G.R. No. 215910 February 6, 2017
MANUEL C. UBAS, SR., Petitioner vs. WILSON CHAN, Respondent

FACTS

Petitioner Manuel Ubas, Sr. filed a Complaint for Sum of Money against respondent Wilson Chan, alleging a debt of ₱1,500,000 for construction materials supplied for the Macagtas Dam project. Ubas claimed he entered into a verbal agreement with Chan and presented three checks, each for ₱500,000, issued by Chan but dishonored due to a stop payment order. Ubas asserted these checks proved the obligation and Chan’s fraudulent refusal to pay.
Respondent Chan, in his defense, moved to dismiss for lack of cause of action. He argued the checks were issued by Unimasters Conglomeration, Inc., a corporation with a separate juridical personality, for which he acted as President. He claimed the checks were lost and intended for a project engineer’s revolving fund, not for Ubas, and that no contract or delivery receipts existed between him and Ubas personally.

ISSUE

Whether the petitioner has a cause of action against the respondent personally for the sum of money represented by the dishonored checks.

RULING

No. The Supreme Court affirmed the Court of Appeals’ dismissal of the complaint for lack of cause of action. The legal logic rests on the distinction between corporate and personal liability and the failure to prove the respondent was the obligor. A cause of action exists only if the plaintiff’s allegations establish a correlative right of the plaintiff and a duty of the defendant violated by the latter.
First, the checks themselves, the primary evidence, were corporate instruments. They were drawn against the account of “UNIMASTER,” which the evidence established referred to the incorporated entity Unimasters Conglomeration, Inc., not the respondent in his personal capacity. The respondent signed the checks in his official capacity as corporate president. Under the doctrine of separate corporate personality, obligations incurred by the corporation, acting through its agents, are its own, not those of its shareholders or officers, absent proof of misuse of the corporate fiction.
Second, petitioner failed to substantiate the existence of a personal contract with respondent. The alleged verbal agreement was not corroborated by any purchase order, delivery receipt, or other documentary evidence typically generated in such commercial transactions. The mere possession of the dishonored corporate checks is insufficient to overturn the presumption of corporate identity and pin personal liability on the respondent. Since the alleged vinculum juris or juridical tie was not proven to exist between the petitioner and the respondent individually, but rather pointed to the corporation, no cause of action lies against the respondent. The proper party defendant was the corporation.