HALLEY vs.

PRINTWELL
G.R. No. 157479 May 30, 2011

DOCTRINE
Stockholders of a corporation are liable for the debts of the corporation up to the extent
of their unpaid subscriptions. They cannot invoke the veil of corporate identity as a shield from
liability, because the veil may be lifted to avoid defrauding corporate creditors.

FACTS
The petitioner was an incorporator and original director of Business Media Philippines, Inc.
(BMPI), BMPI commissioned Printwell for the printing of the magazine Philippines, Inc. (together
with wrappers and subscription cards) that BMPI published and sold. For that purpose, Printwell
extended 30-day credit accommodations to BMPI. BMPI placed with Printwell several orders on
credit, that BMPI paid only P25,000.00. Printwell sued BMPI for the collection of the unpaid
balance. Printwell amended the complaint in order to implead as defendants all the original
stockholders and incorporators to recover on their unpaid subscriptions. The RTC rendered a
decision in favor of Printwell, rejecting the allegation of payment in full of the subscriptions in
view of an irregularity in the issuance of the ORs and observing that the defendants had used
BMPIs corporate personality to evade payment and create injustice. The CA concurred with the
RTC on theapplicability of thetrust fund doctrine, under which corporate debtors might look to
the unpaid subscriptions for the satisfaction of unpaid corporate debts.

ISSUE
WON THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE REGIONAL TRIAL
COURT WHICH ESSENTIALLY ALLOWED THE PIERCING OF THE VEIL OF CORPORATE FICTION

HELD
Although a corporation has a personality separate and distinct from those of its
stockholders, directors, or officers, such separate and distinct personality is merely a fiction
created by law for the sake of convenience and to promote the ends of justice. The corporate
personality may be disregarded, and the individuals composing the corporation will be treated
as individuals, if the corporate entity is being used as a cloak or cover for fraud or illegality; as a
justification for a wrong; as an alter ego, an adjunct, or a business conduit for the sole benefit of
the stockholders. In the case at bench, it is undisputed that BMPI made several orders on credit
from appellee PRINTWELL. The said goods were delivered to and received by BMPI but it failed
to pay its overdue account to appellee as well as the interest thereon. It was also during this
time that appellants stockholders were in charge of the operation of BMPI despite the fact that
they were not able to pay their unpaid subscriptions to BMPI yet greatly benefited from said
transactions. In view of the unpaid subscriptions, BMPI failed to pay appellee of its liability, hence
appellee in order to protect its right can collect from the appellants stockholders regarding their
unpaid subscriptions.
PHILTRANCO v FELIX PARAS AND INLAND TRAILWAYS, INC., AND CA
G.R. No. 161909 April 25, 2012

Doctrine
In an action for breach of contract of carriage commenced by a passenger against his
common carrier, the plaintiff can recover damages from a third-party defendant brought into
the suit by the common carrier upon a claim based on tort or quasi-delict. The liability of the
third-party defendant is independent from the liability of the common carrier to the passenger.

FACTS
Paras, on his way home to Manila from Bicol Region, boarded a bus owned and
operated by Inland and driven by its driver Coner. While the said bus was travelling, it was
bumped at the rear by another bus owned and operated by Philtranco. The Inland bus was
pushed forward and smashed into a cargo truck parked along the outer right portion of the
highway and the shoulder thereof. Consequently, the said accident bought considerable
damage to the vehicles involved and caused physical injuries to the passengers and crew of the
two buses, including the death of Coner who was the driver of the Inland Bus at the time of the
incident. Paras was found and diagnosed to be affected with injuries. Paras underwent two (2)
operations affecting the fractured portions of his body. Unable to obtain sufficient financial
assistance from Inland for the costs of his operations, hospitalization, doctors fees and other
miscellaneous expenses, Paras filed a complaint for damages based on breach of contract of
carriage against Inland. Inland denied responsibility, by alleging, among others, that its driver
Coner had observed an utmost and extraordinary care and diligence to ensure the safety of its
passengers.

ISSUE
WON the CA committed grave abuse of discretion amounting to lack of jurisdiction in
awarding moral damages to Paras despite the fact that the complaint had been anchored on
breach of contract of carriage.

RULING
Paras can recover moral damages in this suit based on quasi-delict As a general rule,
indeed, moral damages are not recoverable in an action predicated on a breach of contract.
The award of moral damages to Paras was nonetheless proper and valid. There is no question
that Inland filed its third-party complaint against Philtranco and its driver in order to establish in
this action that they, instead of Inland, should be directly liable to Paras for the physical injuries
he had sustained because of their negligence. To be precise, Philtranco and its driver were
brought into the action on the theory of liability that the proximate cause of the collision
between Inlands bus and Philtrancos.
Article 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a quasi-delict and is governed by the
provisions of this chapter.
Article 2180. The obligation imposed by article 2176 is demandable not only for ones own
acts or omissions, but also for those of persons for whom one is responsible.