GR 67626; (April, 1989) (Digest)
G.R. No. L-67626 April 18, 1989
JOSE REMO, JR., petitioner, vs. THE HON. INTERMEDIATE APPELLATE COURT and E.B. MARCHA TRANSPORT COMPANY, INC., represented by APIFANIO B. MARCHA, respondents.
FACTS
Akron Customs Brokerage Corporation, through its President Feliciano Coprada, purchased thirteen trucks from respondent E.B. Marcha Transport Company for P525,000.00. The agreement stipulated a downpayment and required the balance to be paid within sixty days from a loan to be secured from the Development Bank of the Philippines (DBP). Akron failed to pay the balance. Despite subsequent agreements for extensions and rental payments, Akron defaulted. The corporation later amended its articles of incorporation, changing its name to Akron Transport International, Inc., which assumed the liability. During the pendency of the collection case filed by respondent, petitioner Jose Remo, Jr., a director and stockholder of Akron, sold all his shares in the corporation to Coprada.
ISSUE
Whether the corporate veil of Akron Customs Brokerage Corporation should be pierced to hold petitioner Jose Remo, Jr., personally liable for the corporation’s unpaid obligation.
RULING
No. The Supreme Court ruled that the corporate fiction cannot be disregarded in this instance. The fundamental principle is that a corporation has a personality separate and distinct from its stockholders and officers. This veil may only be pierced when it is used as a shield to commit fraud, justify a wrong, evade an obligation, or defeat public convenience. In this case, the respondent failed to present clear and convincing evidence that the corporation was used to perpetrate a fraud or that petitioner Remo utilized the corporate entity to justify a wrong. The change in the corporate name and the assumption of liability by the new entity did not indicate an attempt to evade payment but rather a corporate reorganization. Petitioner’s act of selling his shares during litigation was an exercise of a stockholder’s inherent right and, by itself, did not constitute fraud. The Court found that any fault lay principally with Coprada, the corporation’s president, with whom the respondent directly transacted. Since no fraud attributable to Remo was proven, the separate corporate personality must be respected, and he cannot be held personally liable for the corporate debt.