ARCILLA VS CA CASE DIGEST

G.R. No. 89804 October 23, 1992
CALVIN S. ARCILLA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and EMILIO RODULFO, respondents.

CORPORATION LAW; DUE PROCESS

FACTS:

• The defendant, taking advantage of his close friendship with the plaintiff, succeeded in securing on credit from the plaintiff, various items, cash and checks, which the plaintiff willingly extended because of the representations of the defendant that he was a successful financial consultant of local and international businessmen

• That defendant's indebtedness is shown and described in thirty (30) "vales" signed by him or by persons authorized by him, all of which documents are in the possession of the plaintiff for being unredeemed or unpaid

• Plaintiff had made numerous demands for payment but the respondent acted in gross and evident bad faith in refusing to satisfy the plaintiff's claim

• Plaintiff is left without any recourse other than to enforce his claim in court

• In his Answer, defendant's main defense is payment, in his Pre-Trial Brief, he alleges that "as President of CSAR Marine Resources, Inc., he requested for a pro-forma Invoice for said corporation to support the loan application with the Kilusang Kabuhayan at Kaunlaran (KKK for short), with the Ministry of Human Settlement 

• The court ordered petitioner to pay private respondent

• CA affirmed the trial court's, but reversed the lower court decision ordering the dismissal of plaintiff-appellee's complaint upon motion for reconsideration

• The appellee prayed for a new trial for appellant to present additional evidence 

• Hearing was thereafter conducted to receive the petitioner's so-called newly discovered evidence consisting of a letter of Rafael Rodulfo, to General Clemente A. Racela wherein the former, as General Manager of private respondent's Universal Enterprises, informed the latter that:
• Csar Marine Resources, Inc. c/o Atty. Calvin Arcilla has an outstanding obligation of TWENTY THREE THOUSAND SIX PESOS to Universal Enterprises as a result of various purchases of construction materials.

• CA amended its decision ordering defendant-appellant to pay plaintiff-appellee in his capacity as President of Csar Marine Resources, Inc.

• Petitioner filed a Motion For Clarificatory Judgment and prays that an order be issued clarifying the liability of defendant-appellant in his personal capacity, if any, otherwise, the case be dismissed against him. 

• Public respondent denied this motion

ISSUE:

Whether or not CA erred in holding Csar Marine Resources, Inc., where petitioner is the president liable to the private respondent without being impleaded as a party 

HELD:

• The grant of affirmative relief based on this assigned error would really redound to the benefit of an entirety which was not made a party in the main case and which did not seek to intervene therein. Therefore, it has no personality to seek as review of the public respondent's amended decision.

• By its clear and unequivocal language, it is the petitioner who was declared liable therefor and consequently made to pay. That the latter was ordered to do so as president of the corporation would not free him from the responsibility of paying the due amount simply because according to him, he had ceased to be corporate president; such conclusion stems from the fact that the public respondent, in resolving his motion for clarificatory judgment, pierced the veil of corporate fictional and cast aside the contention that both he and the corporation have separate and distinct personalities. In short, even if We are to assume arguendo that the obligation was incurred in the name of the corporation, the petitioner would still be personally liable therefor because for all legal intents and purposes, he and the corporation are one and the same. Csar Marine Resources, Inc. is nothing more than his business conduit and alter ego. The fiction of a separate juridical personality conferred upon such corporation by law should be disregarded. 

• Significantly, petitioner does not seriously challenge the public respondent's application of the doctrine which permits the piercing of the corporate veil and the disregarding of the fiction of a separate juridical personality; this is because he knows only too well that from the very beginning, he merely used the corporation for his personal purposes.

• Petitioner also neglected to set up in his Answer the defense that he is not personally liable to private respondent because the "vales" were corporate obligations of Csar Marine Resources, Inc.. Of course, that defense would have been inconsistent with his volunteered admission that the KKK loan which resulted in the procurement of the pro-forma invoice from the private respondent was for his benefit. In any case, the failure to set it up as an affirmative defense amounted to a waiver thereof. 

• A judgment rendered against a person "in his capacity as President" of the corporation was enforceable against the assets of such officer when the decision itself found that he merely used the corporation as his alter ego or as his business conduit.