VOL.

29, AUGUST 29, 1969

191

Ramirez Telephone Corp. vs. Bank of America

No. L22614. August 29, 1969.

RAMIREZ TELEPHONE CORPORATION, petitioner, vs.
BANK OF AMERICA, E. F. HERBOSA, THE SHERIFF OF
MANILA and THE COURT OF APPEALS, respondents.
Corporation law Corporate personality When corporate
personality may be disregarded Where defendant stockholder
holds 75% of the stock of the corporation together with his wife.
While respect for the corporate personality as such is the general
rule, the veil of corporate fiction may be pierced and the funds of
the corporation may be garnished to satisfy the debts of a
principal stockholder, to administer the ends of justice.
Remedial law Appeal from Court of Appeals to Supreme
Court Findings of fact of Court of Appeals.Factual findings of
the Court of Appeals are not subject to review in appealed cases to
,the Supreme Court.

PETITION for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.
Quijano & Arroyo, for petitioner.
Lichauco, Picazo & Agcaoili for respondent Bank of
America.
Vicente M. Magpoc for respondent E. F. Herbosa.
Fiscal Eulogio S. Serrano for respondent Sheriff of
Manila.
CAPISTRANO, J.:
This is a petition for review on certiorari of a decision of the
Court of Appeals of February 27, 1964, wherein the
judgment of the lower court was reversed and another
entered dismissing the complaint of plaintiff, now
petitioner, Ramirez Telephone Corporation, and ordering it
to pay to defendant, now respondent, Bank of America, the
sum of P500.00 and to the thirdparty defendant E. F.

Herbosa, now likewise respondent, the same amount, both

in the concept of attorney's fees, the costs being adjudged
likewise against petitioner. The judgment of the Court of
First Instance which
was reversed by the Court of Appeals
1
reads as follows:
________________
1

Statement of the Case, Brief for the Petitioner, p. 2.

192

192

SUPREME COURT REPORTS ANNOTATED

Ramirez Telephone Corp. vs. Bank of America

"In view of the foregoing considerations, judgment is hereby

rendered in favor of the plaintiff and against the defendant Bank
of America ordering the latter to pay the former the sum of
P3,000.00 in the form of actual damages, and to pay the costs of
these proceedings.
"Likewise, judgment is hereby rendered sentencing the third
party defendant, E. F. Herbosa, to indemnify ,or reimburse the
thirdparty plaintiff, Bank of America, any sum or sums which
the latter may pay the plaintiff by virtue of this
"The thirdparty complaint against the Sheriff of Manila as
well as the counterclaim of defendant Bank of America and third
party defendant E. F. Herbosa are hereby ordered dismissed."

The facts as found by the Court of Appeals,2 which we

cannot review are set forth in its decision, thus:
"Resultando: Que los hechos al parecer, no son muy em brollados
el demandado, Herbosa era y es dueo del edificio No. 612, Int. 3
Sta. Mesa se lo haba dado en arrendamiento a Ruben R.
Ramirez, y como este era el presidente de la Ramirez Telephone
Corporation, el taller de la corporacin aunque su oficina central
estaba en la Escolta, Natividad Building, Exh. D. fu trasladado
al local: pero habindose amontonado los alquilares sin pagar,
Herbosa present demanda de desahucio contra Ramirez en el
Juzgado Municipal de Manila. el 10 de Noviembre, 1949, y
elevada la causa al Juzgado del 1.a Instancia, Herbosa pudo
conseguir decisin favorable alli el 14 de Octubre, 1950, pero en Ia
vispera de la promulgacin de la sentencia a su favor haba ya
conseguido mandamiento de embargo preventivo contra Ramirez,
Exh. A, y el mismo, servido al Bank of America el 13 de Octubre,
1950, Exh. 2, lease como sigue:
Civil Case No. 10620
E. F. Herbosa, Plaintiff

versus

GARNISHMENT

Ruben R. Ramirez, Defendant

To: Bank of America
Manila
'Greetings:
You and each of you are hereby notified that, by virtue of an order of
attachment issued by the Court of
________________
2

Ibid., pp. 2531.

193

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193

Ramirez Telephone Corp. vs. Bank of America

First Instance of Manila, copy of which ' is hereto attached, levy is hereby
made (or attachment is hereby levied) upon all ,the goods, effects,
interests, credits, money, stocks, shares, any interests in stocks and
shares' and all debts owing by you to the defendant, Ruben R. Ramirez ,
in the above entitled case, and any other personal property' in your
possession or under your control, belonging' to the said defendanton
this date, to cover the amount of P2,400.00 and specially the x x x
x x x x x x x x x
'Manila, Philippines, October 18, 1950.
'MACARIO M., OFILADA
Sheriff of Manila'
(Exh. 2)

y fu contestado por el banco el mismo dia de la siguiente manera:

'Dear Sir:
In reply to your Garnishment of October 13, 1950, issued under the
abovesubject case we wish to inform you that we do not hold any fund in
the name of the defendant, Ruben R. Ramirez,
Yours very truly,' (Exh. 3)

pero el Sheriff reiter el embargo el 17 de Octubre, 1950, Exh.

B. notificando al Bank of America de que quedaba embargado,
'x x x the interest or participation which the defendant Ruben R. Ramirez
may or might have in the deposit of the Ramirez Telephone, Inc., with
that Bank sufficient to cover the said amount of P2,400.00' Exh, B y

la institucin bancaria en contetacin al Sheriff, de fecha 17 de

Octubre, 1950 6 sea el mismo dia, hizo constar que:

'x x x we are holding the amount of P2,400.00 in the name of the Ramirez
Telephone, Inc. subject to your further orders,' Exh. G

es decir acat la notificacin del embargo de los fondos de la

Ramirez Telephone ahora bien, recuerdase de que en aquella
fecha, 17 de Octubre, 1950, es Ramirez Telephone tenia en
deposito con el Bank of America, la suma de P4,789.53, Exh. 9 de
manera que con el embargo, se redujo los fondos libres a la
cantidad de P2,389.53 pero el dia siguiente, el Ramirez Tele
194

194

SUPREME COURT REPORTS ANNOTATED

Ramirez Telephone Corp. vs, Bank of America

phone retir la suma de P1,500.00, quedndo por tanto como

ultimo balance, nada ms que unos P889.00 de esto surgio la
presente contienda, pus, el 19 de Octubre, 1950, !a Ramirez
Telephone por medio de su presidente, el mismo demandado,
Ruben Ramirez, ya mencionado, habiendo expedido el 19 de
Octubre, 1950, otro cheque en la suma de P2,320.00 a favor de la
Ray Electronics, en pago de ciertos equipos vendidos por este
ultimo, Exhs. 15, 17, L, el cheque Exh. N, este cheque al ser
presentado a la Bank of America, fue rechazado por lo que el
abogado de la Ramirez Telephone el 23 de Octubre, 1950, envio
carta de requerimiento a! Bank of America, Exh. 14, manifestando
que su cliente haba sufrido 'considerable damage and
embarrassment,' y advirtiendole que si no se le diera completa
satisfaccin el dia siguiente, el presentaria !a demanda
correspondiente, 'without further notice," Exh. 14 esta carta la
contest la institucin bancaria el 24 de Octubre, 1950, alegando
que,
'With reference to your letter dated October 23, 1950, in which you are
writing in behalf of the Ramirez Telephone Corporation, it is suggested
that you obtain a release from the Court on Civil Case No. 10620, Ruben
E. Ramirez, defendant.
'This Bank is acting only in accordance with the garnishment and has
no interest whatsoever in the funds held,' Exh. 15

pero conforme con su advertencia, el abogado de la Ramirez

Telephone, Inc., incoo esta accin el 28 de Octubre, cuatro dias
despues y el motivo de accin se hace consistir en que el banco,
'x x x knows or should have known that Ruben N. Ramirez the defendant
in said Civil Case and whose property or fund was ordered attached has
no personal deposit in that bank and that the Ramirez Telephone
Corporation is entirely a distinct and separate entity regardless of the

fact that Ruben R. Ramirez happens to be its President and General

Manager.' par. 4, demanda

y alegando que con motivo de ello y la siguiente devolucin de

su cheque a favor de la Ray Electronics sin pagar, esta haba
cancelado su pedido para los equipos necesarios en la construccin
de sus lineas telefonicas en la region bicolana, asi que todas sus
operaciones se haban quedado paralizadas, par. 5, id. la
demandada Bank of America, emplazada de la demandada,
presento mocin de sobresimiento, que denegada, el 4 de
Deciembre, 1950, el banco sometio su contestacin el 28 de Di
195

VOL. 29, AUGUST 29, 1969

195

Ramirez Telephone Corp. vs. Bank of America,

iembre, 1950 con reconvencin para despues presentar denanda
contra el Sheriff, el 25 de Agosto, 1953, y contra Herbosa, el 16 de
Agosto, 1955 y este ultimo a su vez en contestacin, presento
contra reclamacin o mejor dicho, reconvencin contra la misma
demandante, Ramirez Telephone, y tambien contra el Bank of
America, el 10 de Septiembre, 1955, y el Juzgado Inferior, despues
de la vista, como ya se ha dicho, dictamino en favor de la
demandante contra el Bank of America en. In contrademanda de
este contra aquel x x x."
3

It was further found by the Court of Appeals:

"Considerando: Que el testimonio de Estanislao Herbosa al efecto

de que si bien Ruben R, Ramirez era su inquilino al principio,
pero es que mas tarde, este lo haba manifestado que 'the shop of
company was established downstairs,' es decir que la Ramirez
Telephone Corporation a la verdad ocupaba el local alquilado,
tanto que Ruben R. Ramirez solia pagar el alquilar en cheques de
la Ramirez Telephone Corporation, y esta declaracin, t.n. 10 y
11, 26 June 1956, estando Corroborada no solamente por el Exh,
12, en donde Ruben R. Ramirez, en papel con el embrete de la
Ramirez Telephone, habia enviado el abogado de Herbosa, el
cheque No. C78900, manifestando en !a carta de que:
'In accordance with your agreement yesterday with my attorney, Mr. Jose
L. de Leon, I am sending you herewith check No. C78900 for the amount
of P812.60, rentals for the premises I am occupying at the rate of P161.00
a month for the period from February 1, 1949 to June 30. 1949, both
dates, inclusive, plus P7.00 for the court costs.' Exh. 12

y esta carta, leida en relacin con el Exh. 3, en donde se ve que

Ruben R. Ramirez y tena fondos depositados en el banco

mencionado, Bank of America, asi que resulta evidente que los

fondos de la Ramirez Telephone los eran a la verdad, fondos de
que buenasanta podia disponer su Presidente, Ruben R. Ramirez,
para el pago de los alquilares por el debidos a Herbosa, y luego,
tambien resulta evidente de que la casa por el alquilada Ramirez
Telephone, y estos hechos agregados el otro hecho tambien
probado, de que el 75% de las acciones de la compaia per tenecia
a Ruben Ramirez y su esposa, Rizalina P. de Ramirez, Exh, E,
todos estos no pueden menos de justificar la conclusion de que el
embargo de los fondos de !a Ramirez Telephone por
________________
3

Ibid., pp. 3637.

196

196

SUPREME COURT REPORTS ANNOTATED

Ramirez Telephone Corp, vs, Bank of America

y en virtud de un mandamiento judicial de embargo contra Ruben

R. Ramirez, especialmente teniendo en cuenta que el em bargo
solo abarcaba,
The interest or participation which. the defendant Ruben R. Ramirez
may or might have in the deposit of the Ramirez Telephone, Inc., in the
amount of P2,400.00' Exh. B cuando entonces estaba depositada la
cantidad de P4,857.28.

Exh. 9, era un acto de justicia a favor del acreedor Herbosa y a

la verdad, de no haberse permitido el mencionado embargo, este
se hubiera visto en igual situacin que aquel pobre agraviado que
como se dice vulgarmente, tras de cornudo, fue apaleado x x x,"

The aforestated facts notwithstanding, which must be

considered conclusive and binding on us, plaintiff in the
lower court, now petitioner, Ramirez Telephone
Corporation, as
noted, appealed, assigning' the following
4
alleged errors:
"I
"The Court of Appeals erred in not applying the settled legal
principle that a corporation has a personality separate and
distinct from that of its stockholders and, therefore, the funds of a
corporation cannot be reached to satisfy the debt of its
stockholders.
"II

"The Court of Appeals erred in not taking into account the

significant fact that when the events that gave rise to this case
took place, the lawyer of both respondents, i.e., the Bank of
America and E. F. Herbosa, was one and the same.
"III
"The Court of Appeals erred in not granting petitioner damages
as awarded by the lower court likewise, the Court of Appeals
erred in declaring instead that it is petitioner that should pay
respondents attorneys' fees."

Petitioner's main grievance in the first assigned error is

that the Court of Appeals disregarded its corporate
personality it relies on the general principle "that the cor
________________
4

Assignment of Errors, Brief for the Petitioner.

197

VOL. 29, AUGUST 29, 1969

197

Ramirez Telephone Corp. vs, Bank of America

porate entity will not be disregarded no matter how large

the holding 5 a particular stockholder may have in the
corporation." Petitioner would thus maintain that the
personality as an entity separate and. distinct from its
major stockholders, Ruben R. Ramirez and his wife, was
not to be disregarded
even if they did own 75% of the stock
6
of the corporation. The conclusion that would thus emerge,
in petitioner's opinion, is that its funds as a corporation
cannot be garnished to satisfy the debts of a principal
stockholder.
While respect for the corporate personality as such is the
general rule, there are exceptions. In appropriate cases, the
veil of corporate fiction may be pierced. From the "facts as
found which must remain undisturbed, this is such a case.
This assignment of error has no merit, in view of a number
of cases decided by this Court,
the latest of which is Albert
7
v. Court of First Instance reaffirming a 1965 resolution
in
8
Albert v, University Publishing Co., Inc.
In that
resolution, the principle is restated thus: "Even with regard
to corporations duly organized and existing under the law,
we have in many a case pierced the veil of corporate fiction
to administer the ends of justice." In support of the above
principle, the following cases were cited: Arnold vs. Willits
& Patterson, Ltd., 44 Phil. 634 Koppel (Phil.), Inc. vs.

Yatco, 77 Phil. 496 La Campana Coffee Factory, Inc. vs.

Kaisahan ng mga Manggagawa sa La Campana, 93 Phil,
160 Marvel Building Corporation vs. David, 94 Phil. 376
Madrigal Shipping Co., Inc. vs. Ogilvie, L8431, Oct. 30,
1958 Laguna Transportation Co., Inc. vs. S.S.S., L14606,
April 28, 1960 McConnel vs. C.A., L10510, March 17,
1961 Liddel & Co., Inc. vs. Collector of Internal Revenue,
L9687, June 80, 1961 Palacio vs. Fely Transportation Co.,
________________
5

Statement of Facts, Brief for the Petitioner, p. 10.

Ibid., p, 12.

23 SCRA 948 (1968).

L19118, January 30, 1965.

198

198

SUPREME COURT REPORTS ANNOTATED

Anduiza vs. DyKia

L15121, August 31, 1962. Hence, to repeat, the first

assigned error cannot be sustained.
The next two errors assigned likewise fail to call for a
reversal of the judgment now on appeal. The second alleged
error would find fault with the decision because the Court
of Appeals allegedly did not take into account a significant
fact, namely, that only one lawyer represented both' the
respondent Bank of America and respondent E. F. Herbosa,
We are not called upon to consider this particular
assignment of error as it is essentially factual, which is a
matter for the Court of Appeals, not for us, to determine.
The last assigned error would in effect seek a restatement
of the damages awarded petitioner on the theory that the
Court of Appeals decided the matter erroneously. Since, as
we made clear in ' the foregoing, the decision of the Court
of Appeals is in accordance with law 011 the facts as found,
this alleged error likewise is not meritorious.
PREMISES CONSIDERED, the judgment of the Court
of Appeals of February 27, 1964 is affirmed, with costs
against petitioner Ramirez Telephone Corporation.
Concepcion, C.J., Dizon, Makalintal, Sanchez,
Castro, Fernando, Teehankee and Barredo, JJ., concur,
Reyes, J.B.L., and Zaldivar, JJ., are on leave.
Judgment affirmed.

Note.See the annotation on "Piercing the Veil of

Corporate Fiction," 22 SCRA 11591163.
______________

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