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Remo, Jr. V IAC

This case involves Jose Remo Jr. appealing a court ruling that held him personally liable for debts owed by Akron Customs Brokerage Corporation to E.B. Marcha Transport Company. The Supreme Court ruled that the corporate fiction should not be disregarded to hold Remo liable, as there was no evidence the corporate form was used to commit fraud or that Akron was merely Remo's alter ego. While Remo was a board director and participated in approving the truck purchase, the resolution did not appear intended to defraud the plaintiff. The person who negotiated the deal and signed promissory notes, Feliciano Coprada, represented the corporation, not its individual directors or stockholders. The court reinst

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1K views2 pages

Remo, Jr. V IAC

This case involves Jose Remo Jr. appealing a court ruling that held him personally liable for debts owed by Akron Customs Brokerage Corporation to E.B. Marcha Transport Company. The Supreme Court ruled that the corporate fiction should not be disregarded to hold Remo liable, as there was no evidence the corporate form was used to commit fraud or that Akron was merely Remo's alter ego. While Remo was a board director and participated in approving the truck purchase, the resolution did not appear intended to defraud the plaintiff. The person who negotiated the deal and signed promissory notes, Feliciano Coprada, represented the corporation, not its individual directors or stockholders. The court reinst

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I. SHORT TITLE: REMO, JR. V.

IAC

II. FULL TITLE: Jose Remo, Jr. versus Intermediate Appellate Court and E.B. Marcha
Transport Company, Inc. – G.R. L-67626, April 18, 1989, J. Gancayco

III. TOPIC: Corporation Law- Piercing of the Corporate Fiction

IV. STATEMENT OF FACTS:


Sometime in 1977, the board of directors of Akron Customs Brokerage Corporation (Akron),
which included Jose Remo, Jr. (Remo), authorized the purchase of thirteen (13) trucks for use in
its business. The president then of Akron, Feliciano Coprada (Coprada) purchased from E.B.
Marcha Transport Company, Inc. (E.B. Marcha) the trucks as evidenced by a deed of absolute
sale, with the terms of payment as follow—downpayment of P50, 000 and the balance of P475,000
shall be payable within 60 days from the date of the execution of the agreement, which was secured
by the chattel mortgage on the trucks as a lien in case Akron fails to pay within 60 days and a
promissory note executed by Coprada in favor of Akron from the proceeds of a loan allegedly
obtained from Developmental Bank of the Philippines (DBP). Akron failed to pay the whole
balance even after the lapse of 90 days. Coprada, in two occasions, sent a letter to E.B. Marcha
begging for a grace period and eventually returned 10 trucks out of 13.

V. STATEMENT OF THE CASE:


E.B. Marcha filed a complaint for the recovery of the sum of P525,000.00 or the return of 13
trucks with damages against Akron and its officers/directors with Court of First Instance of Rizal
(CFI-Rizal). Only Remo answered the complaint who contended that he should not be held
personally liable for the corporation’s liabilities. Remo was later declared in default due to his
failure to appear during the pre-trial. The trial court ruled in favor of E.B. Marcha ordering Remo
to pay the purchase price for 13 trucks, rentals, attorney’s fees and the cost of suit. On appeal,
Intermediate Appellate Court (IAC) reversed the decision of the CFI-Rizal but subsequently
affirmed the same upon motion for reconsideration filed by E.B. Marcha.

VI. ISSUE:
1. Whether or not the veil of corporate fiction should be disregarded as to
hold Remo personally liable.

VII. RULING:
No, the Corporate fiction or the notion of legal entity may only be disregarded or pierced when it
is used to defeat public convenience, justify wrong, protect fraud, or defend crime. It may also be
disregarded when it is a mere alter ego or business conduit of a person. In the present case, there
is no cogent basis to pierce the corporate veil of Akron and hold Remo personally liable for the
former’s obligation to E.B. Marcha. Although Remo is still a member of the board of directors of
Akron and actively participated in the adoption of the resolution authorizing the purchase of 13
trucks for the use in the brokerage business of Akron to be paid out of a loan to be secured from a
lending institution, it does not appear that the said resolution was intended to defraud E.B.
Marcha. Moreover, it was Coprada who negotiated with E.B Marcha and even signed the
promissory note to guarantee the payment of the unpaid balance out of the proceeds of a loan he
supposedly sought from DBP. Furthermore, the word “we” in the promissory note refers to the
corporation, which Coprada represented and not its stockholders or directors.
VIII. DISPOSITIVE PORTION:
WHEREFORE, the petition is GRANTED. The questioned resolution of the Intermediate
Appellate Court dated February 8, 1984 is hereby set aside and its decision dated June 30, 1983
setting aside the decision of the trial court dated October 28, 1980 insofar as petitioner is
concemed is hereby reinstated and affirmed, without costs.

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