Francisco Motors V CA

SUPREME COURT REPORTS ANNOTATED VOLUME 309 08/01/2019, 12)20 PM
72 SUPREME COURT REPORTS ANNOTATED

Francisco Motors Corporation vs. Court of Appeals
*
G.R. No. 100812. June 25, 1999.
FRANCISCO MOTORS CORPORATION, petitioner, vs.

COURT OF APPEALS and SPOUSES GREGORIO and
LIBRADA MANUEL, respondents.
Corporation Law; „Piercing the Veil of Corporate Entity‰

Doctrine; Basic in corporation law is the principle that a corporation
has a separate personality distinct from its stockholders and from
other corporations to which it may be connected.·Basic in
corporation law is the principle that a corporation has a separate
personality distinct
_______________
* SECOND DIVISION.
73
VOL. 309, JUNE 25, 1999 73
from its stockholders and from other corporations to which it may

be connected. However, under the doctrine of piercing the veil of
corporate entity, the corporationÊs separate juridical personality
may be disregarded, for example, when the corporate identity is
used to defeat public convenience, justify wrong, protect fraud, or
defend crime. Also, where the corporation is a mere alter ego or
http://www.central.com.ph/sfsreader/session/000001682bad39f99b2ce31a003600fb002c009e/p/ATB883/?username=Guest Page 1 of 17
business conduit of a person, or where the corporation is so

organized and controlled and its affairs are so conducted as to make
it merely an instrumentality, agency, conduit or adjunct of another
corporation, then its distinct personality may be ignored. In these
circumstances, the courts will treat the corporation as a mere
aggrupation of persons and the liability will directly attach to them.
The legal fiction of a separate corporate personality in those cited
instances, for reasons of public policy and in the interest of justice,
will be justifiably set aside.
Same; Same; The rationale behind piercing a corporationÊs
identity in a given case is to remove the barrier between the
corporation from the persons comprising it to thwart the fraudulent
and illegal schemes of those who use the corporate personality as a
shield for undertaking certain proscribed activities.·In our view,
however, given the facts and circumstances of this case, the doctrine
of piercing the corporate veil has no relevant application here.
Respondent court erred in permitting the trial courtÊs resort to this
doctrine. The rationale behind piercing a corporationÊs identity in a
given case is to remove the barrier between the corporation from
the persons comprising it to thwart the fraudulent and illegal
schemes of those who use the corporate personality as a shield for
undertaking certain proscribed activities. However, in the case at
bar, instead of holding certain individuals or persons responsible for
an alleged corporate act, the situation has been reversed. It is the
petitioner as a corporation which is being ordered to answer for the
personal liability of certain individual directors, officers and
incorporators concerned. Hence, it appears to us that the doctrine
has been turned upside down because of its erroneous invocation.
Note that according to private respondent Gregorio Manuel his
services were solicited as counsel for members of the Francisco
family to represent them in the intestate proceedings over Benita
TrinidadÊs estate. These estate proceedings did not involve any
business of petitioner.
Same; Same; If corporate assets could be used to answer for the
liabilities of its individual directors, officers, and incorporators, the
74
same could easily prejudice the corporation, its own creditors, and
even other stockholders.·Note also that he sought to collect legal
fees not just from certain Francisco family members but also from
petitioner corporation on the claims that its management had
requested his services and he acceded thereto as an employee of
petitioner from whom it could be deduced he was also receiving a
salary. His move to recover unpaid legal fees through a
counterclaim against Francisco Motors Corporation, to offset the
unpaid balance of the purchase and repair of a jeep body could only
result from an obvious misapprehension that petitionerÊs corporate
assets could be used to answer for the liabilities of its individual
directors, officers, and incorporators. Such result if permitted could
easily prejudice the corporation, its own creditors, and even other
stockholders; hence, clearly inequitous to petitioner.
Same; Same; When directors and officers of a corporation are
unable to compensate a party for a personal obligation, it is
farfetched to allege that the corporation is perpetuating fraud or
promoting injustice, and be thereby held liable therefor by piercing
its corporate veil.·Considering the nature of the legal services
involved, whatever obligation said incorporators, directors and
officers of the corporation had incurred, it was incurred in their
personal capacity. When directors and officers of a corporation are
unable to compensate a party for a personal obligation, it is far-
fetched to allege that the corporation is perpetuating fraud or
promoting injustice, and be thereby held liable therefor by piercing
its corporate veil. While there are no hard-and-fast rules on
disregarding separate corporate identity, we must always be
mindful of its function and purpose. A court should be careful in
assessing the milieu where the doctrine of piercing the corporate
veil may be applied. Otherwise an injustice, although unintended,
may result from its erroneous application.
Same; Same; Actions; AttorneyÊs Fees; Parties; Counterclaims; A
claim for legal fees against the concerned individual incorporators,
officers and directors could not be properly directed against the
corporation without violating basic principles governing
corporations. Every action·including a counterclaim·must be
prosecuted or defended in the name of the real party in interest.
·The personality of the corporation and those of its incorporators,
directors and officers in their personal capacities ought to be kept
separate in this case. The claim for legal fees against the concerned
individual incorporators, officers and directors could not be properly
directed against the
75
VOL. 309, JUNE 25, 1999 75
corporation without violating basic principles governing

corporations. Moreover, every action·including a counterclaim·
must be prosecuted or defended in the name of the real party in
interest. It is plainly an error to lay the claim for legal fees of
private respondent Gregorio Manuel at the door of petitioner (FMC)
rather than individual members of the Francisco family.
Actions; Pleadings and Practice; Summons; Counterclaims;
Summons need not first be served on the defendant before an answer
to counterclaim is made.·With regard to the procedural issue
raised by petitionerÊs allegation, that it needed to be summoned
anew in order for the court to acquire jurisdiction over it, we agree
with respondent courtÊs view to the contrary. Section 4, Rule 11 of
the Rules of Court provides that a counterclaim or cross-claim must
be answered within ten (10) days from service. Nothing in the Rules
of Court says that summons should first be served on the defendant
before an answer to counterclaim must be made. The purpose of a
summons is to enable the court to acquire jurisdiction over the
person of the defendant. Although a counterclaim is treated as an
entirely distinct and independent action, the defendant in the
counterclaim, being the plaintiff in the original complaint, has
already submitted to the jurisdiction of the court. Following Rule 9,
Section 3 of the 1997 Rules of Civil Procedure, if a defendant (herein
petitioner) fails to answer the counterclaim, then upon motion of
plaintiff, the defendant may be declared in default. This is what
happened to petitioner in this case, and this Court finds no
procedural error in the disposition of the appellate court on this
particular issue. Moreover, as noted by the respondent court, when
petitioner filed its motion seeking to set aside the order of default,
in effect it submitted itself to the jurisdiction of the court.
PETITION for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.

Acaban and Sabado for petitioner.
Flor, Manuel, Padre & Associates for private
respondents.
76

QUISUMBING, J.:
This petition for review on certiorari, under1 Rule 45 of the

Rules of Court, seeks to annul the decision of the Court of
Appeals in C.A. G.R. CV No. 10014 affirming the decision
rendered by Branch 135, Regional Trial Court of Makati,
Metro Manila. The procedural antecedents of this petition
are as follows: 2
On January 23, 1985, petitioner filed a complaint
against private respondents to recover three thousand four
hundred twelve and six centavos (P3,412.06), representing
the balance of the jeep body purchased by the Manuels
from petitioner; an additional sum of twenty thousand four
hundred fifty-four and eighty centavos (P20,454.80)
representing the unpaid balance on the cost of repair of the
vehicle; and six thousand
3
pesos (P6,000.00) for cost of suit
and attorneyÊs fees. To the original balance4
on the price of
jeep body were added the costs of repair. In their answer,
private respondents interposed a counterclaim for unpaid
legal services by Gregorio Manuel in the amount of fifty
thousand pesos (P50,000) which was not paid by the
incorporators, directors and officers of the petitioner. The
trial court decided the case on June 26, 1985, in favor of
petitioner in regard to the petitionerÊs claim for money, but
also allowed the counter-claim of private respondents. Both
parties appealed. On April 15, 1991, 5the Court of Appeals
sustained the trial courtÊs decision. Hence, the present
petition.
For our review in particular is the propriety of the
permissive counterclaim which private respondents filed
together with their answer to petitionerÊs complaint for a

sum of money. Private respondent Gregorio Manuel alleged
as an
__________________
1 Dated April 15, 1991. Rollo, pp. 31-35. Reconsideration thereof was
denied on July 1, 1991. Rollo, pp. 28-29.
2 Civil Case No. 9542. Records, RTC, pp. 1-3.
3 Rollo, p. 31.
4 Id. at 9.
5 Id. at 11.
77
VOL. 309, JUNE 25, 1999 77

affirmative defense that, while he was petitionerÊs

Assistant Legal Officer, he represented members of the
Francisco family in the intestate estate proceedings of the
late Benita Trinidad. However, even after the termination
of the proceedings, his services were not paid. Said family
members, he said, were also incorporators, directors and
officers of petitioner. Hence to counter petitionerÊs
collection suit, he filed
6
a permissive counterclaim for the
unpaid attorneyÊs fees.
For failure of petitioner to answer the counterclaim, the
trial court declared petitioner in default on this score, and
evidence ex-parte was presented on the counterclaim. The
trial court ruled in favor of private respondents and found
that Gregorio Manuel indeed rendered legal services to the
Francisco family in Special Proceedings Number 7803·„In
the Matter of Intestate Estate of Benita Trinidad.‰ Said
court also found that his legal services were not
compensated despite repeated demands, and thus ordered
petitioner to pay 7 him the amount of fifty thousand
(P50,000.00) pesos.
Dissatisfied with the trial courtÊs order, petitioner
elevated the matter to the Court of Appeals, posing the
following issues:
„I.
WHETHER OR NOT THE DECISION RENDERED BY THE

LOWER COURT IS NULL AND VOID AS IT NEVER ACQUIRED
JURISDICTION OVER THE PERSON OF THE DEFENDANT.
II.
WHETHER OR NOT PLAINTIFF-APPELLANT NOT BEING A

REAL PARTY IN THE ALLEGED PERMISSIVE
COUNTERCLAIM SHOULD BE HELD LIABLE TO THE CLAIM
OF DEFENDANT-APPELLEES.
___________________
6 Supra, note 4.
7 Supra, note 5.
78

III.
WHETHER OR NOT THERE IS FAILURE ON THE PART OF

PLAINTIFF-APPELLANT TO ANSWER THE ALLEGED
8
PERMISSIVE COUNTERCLAIM.‰
Petitioner contended that the trial court did not acquire

jurisdiction over it because no summons was validly served
on it together with the copy of the answer containing the
permissive counterclaim. Further, petitioner questions the
propriety of its being made party to the case because it was
not the real party in interest but the individual members of
the Francisco family concerned with the intestate case.
In its assailed decision now before us for review,
respondent Court of Appeals held that a counterclaim must
be answered in ten (10) days, pursuant to Section 4, Rule
11, of the Rules of Court; and nowhere does it state in the
Rules that a party still needed to be summoned anew if a
counterclaim was set up against him. Failure to serve
summons, said respondent court, did not effectively negate
trial courtÊs jurisdiction over petitioner in the matter of the

counterclaim. It likewise pointed out that there was no
reason for petitioner to be excused from answering the
counterclaim. Court records showed that its former
counsel, Nicanor G. Alvarez, received the copy of the
answer with counterclaim two (2) days prior to his
withdrawal as counsel for petitioner. Moreover when
petitionerÊs new counsel, Jose N. Aquino, entered his
appearance, three (3) days still remained within the period
to file an answer to the counterclaim. Having failed to
answer, petitioner 9
was correctly considered in default by
the trial court. Even assuming that the trial court
acquired no jurisdiction over petitioner, respondent court
also said, but having filed a motion for reconsideration
seeking relief from the said order of default, petitioner was
estopped from 10
further questioning the trial courtÊs
jurisdiction.
__________________
8 Rollo, pp.32-33.
9 Id. at 32.
10 Id. at 34.
79
VOL. 309, JUNE 25, 1999 79

On the question of its liability for attorneyÊs fees owing to

private respondent Gregorio Manuel, petitioner argued
that being a corporation, it should not be held liable
therefor because these fees were owed by the incorporators,
directors and officers of the corporation in their personal
capacity as heirs of Benita Trinidad. Petitioner stressed
that the personality of the corporation, vis-à-vis the
individual persons who hired the11 services of private
respondent, is separate and distinct, hence, the liability of
said individuals did not become an obligation chargeable
against petitioner.
Nevertheless, on the foregoing issue, the Court of
Appeals ruled as follows:
„However, this distinct and separate personality is merely a fiction

created by law for convenience and to promote justice. Accordingly,
this separate personality of the corporation may be disregarded, or
the veil of corporate fiction pierced, in cases where it is used as a
cloak or cover for found (sic) illegality, or to work an injustice, or
where necessary to achieve equity or when necessary for the
protection of creditors. (Sulo ng Bayan, Inc. vs. Araneta, Inc., 72
SCRA 347) Corporations are composed of natural persons and the
legal fiction of a separate corporate personality is not a shield for
the commission of injustice and inequity. (Chemplex Philippines,
Inc. vs. Pamatian, 57 SCRA 408)
„In the instant case, evidence shows that the plaintiff-appellant
Francisco Motors Corporation is composed of the heirs of the late
Benita Trinidad as directors and incorporators for whom defendant
Gregorio Manuel rendered legal services in the intestate estate case
of their deceased mother. Considering the aforestated principles and
circumstances established in this case, equity and justice demands
plaintiff-appellantÊs veil of corporate identity should be pierced and
the defendant be compensated for legal services rendered to the
12
heirs, who are directors of the plaintiff-appellant corporation.‰
Now before us, petitioner assigns the following errors:
__________________
11 Ibid.
12 Rollo, pp. 34-35.
80

„I.
THE COURT OF APPEALS ERRED IN APPLYING THE

DOCTRINE OF PIERCING THE VEIL OF CORPORATE ENTITY.
II.
THE COURT OF APPEALS ERRED IN AFFIRMING THAT

THERE WAS JURISDICTION OVER PETITIONER WITH
13
RESPECT TO THE COUNTERCLAIM.‰
Petitioner submits that respondent court should not have

resorted to piercing the veil of corporate fiction because the
transaction concerned only respondent Gregorio Manuel
and the heirs of the late Benita Trinidad. According to
petitioner, there was no cause of action by said respondent
against petitioner; personal concerns of the heirs should be
distinguished from those involving corporate affairs.
Petitioner further contends that the present case does not
fall among the instances wherein the courts may look
beyond the distinct personality of a corporation. According
to petitioner, the services for which respondent Gregorio
Manuel seeks to collect fees from petitioner are personal in
nature. Hence, it avers the heirs should have been sued 14
in
their personal capacity, and not involve the corporation.
With regard to the permissive counterclaim, petitioner
also insists that there was no proper service of the answer
containing the permissive counterclaim. It claims that the
counterclaim is a separate case which can only be properly
served upon the opposing party through summons. Further
petitioner states that by nature, a permissive counterclaim
is one which does not arise out of nor is necessarily
connected with the subject of the opposing partyÊs claim.
Petitioner avers that since there was no service of
summons upon it with regard to the counterclaim, then the
court did not acquire jurisdiction over petitioner. Since a
counterclaim is considered an action
__________________
13 Id. at 12.
14 Id. at 12-16.
81
VOL. 309, JUNE 25, 1999 81

independent from the answer, according to petitioner, then

in effect there should be two simultaneous actions between
the same parties: each party is at the same time both 15
plaintiff and defendant with respect to the other,
requiring in each case separate summonses.
In their Comment, private respondents focus on the two

questions raised by petitioner. They defend the propriety of
piercing the veil of corporate fiction, but deny the necessity
of serving separate summonses on petitioner in regard to
their permissive counterclaim contained in the answer.
Private respondents maintain both trial and appellate
courts found that respondent Gregorio Manuel was
employed as assistant legal officer of petitioner corporation,
and that his services were solicited by the incorporators,
directors and members to handle and represent them in
Special Proceedings No. 7803, concerning the Intestate
Estate of the late Benita Trinidad. They assert that the
members of petitioner corporation took advantage of their
positions by not compensating respondent Gregorio Manuel
after the termination of the estate proceedings despite his
repeated demands for payment of his services. They cite
findings of the appellate court that support piercing the
veil of corporate identity in this particular case. They
assert that the corporate veil may be disregarded when it is
used to defeat public convenience, justify wrong, protect
fraud, and defend crime. It may also be pierced, according
to them, where the corporate entity is being used as an
alter ego, adjunct, or business conduit for the sole benefit of
the stockholders or of another corporate entity. In these
instances, they aver, the corporation should16 be treated
merely as an association of individual persons.
Private respondents dispute petitionerÊs claim that its
right to due process was violated when respondentsÊ
counterclaim was granted due course, although no
summons was served
_________________
15 Id. at 18-21; See also Golden Ribbon Lumber Co., Inc. vs. Salvador
S. Santos and Rafaela M. Santos, C.A.-G.R. No. 12935, November 15,
1955.
16 Id. at 47-51.
82

upon it. They claim that no provision in the Rules of Court

requires service of summons upon a defendant in a
counterclaim. Private respondents argue that when the
petitioner filed its complaint before the trial court it
voluntarily submitted itself to the jurisdiction of the court.
As a consequence, the issuance of summons on it was no
longer necessary. Private respondents say they served a
copy of their answer with affirmative defenses and
counterclaim on petitionerÊs former counsel, Nicanor G.
Alvarez. While petitioner would have the Court believe
that respondents served said copy upon Alvarez after he
had withdrawn his appearance as counsel for the
petitioner, private respondents assert that this contention
is utterly baseless. Records disclose that the answer was
received two (2) days before the former counsel for
petitioner withdrew his appearance, according to private
respondents. They maintain that the present petition is but
a form of dilatory appeal, to set off petitionerÊs obligations
to the respondents by running up more interest it could
recover from them. Private 17
respondents therefore claim
damages against petitioner.
To resolve the issues in this case, we must first
determine the propriety of piercing the veil of corporate
fiction.
Basic in corporation law is the principle that a
corporation has a separate personality distinct from its
stockholders and
18
from other corporations to which it may
be connected. However, under the doctrine of piercing the
veil of corporate entity, the corporationÊs separate juridical
personality may be disregarded, for example, when the
corporate identity is used to defeat public convenience,
justify wrong, protect fraud, or defend crime. Also, where
the corporation is a mere alter ego or business conduit of a
person, or where the corporation is so organized and
controlled and its affairs are so conducted as to make it
merely an instrumentality, agency, conduit or adjunct
_________________
17 Id. at 52-60.
18 Concept Builders, Inc. vs. NLRC, 257 SCRA 149, 157 (1996); See
also Emilio Cano Enterprises, Inc. vs. CIR, 13 SCRA 290 (1965) and
Yutivo Sons Hardware Co. vs. CTA, 1 SCRA 160 (1961).
83
VOL. 309, JUNE 25, 1999 83

of another
19
corporation, then its distinct personality may be
ignored. In these circumstances, the courts will treat the
corporation as a mere aggrupation of persons and the
liability will directly attach to them. The legal fiction of a
separate corporate personality in those cited instances, for
reasons of public policy and in the interest of justice, will be
justifiably set aside.
In our view, however, given the facts and circumstances
of this case, the doctrine of piercing the corporate veil has
no relevant application here. Respondent court erred in
permitting the trial courtÊs resort to this doctrine. The
rationale behind piercing a corporationÊs identity in a given
case is to remove the barrier between the corporation from
the persons comprising it to thwart the fraudulent and
illegal schemes of those who use the corporate personality
as a shield for undertaking certain proscribed activities.
However, in the case at bar, instead of holding certain
individuals or persons responsible for an alleged corporate
act, the situation has been reversed. It is the petitioner as a
corporation which is being ordered to answer for the
personal liability of certain individual directors, officers
and incorporators concerned. Hence, it appears to us that
the doctrine has been turned upside down because of its
erroneous invocation. Note that according to private
respondent Gregorio Manuel his services were solicited as
counsel for members of the Francisco family to represent
them in the intestate proceedings over Benita TrinidadÊs
estate. These estate proceedings did not involve any
business of petitioner.
Note also that he sought to collect legal fees not just
from certain Francisco family members but also from
petitioner corporation on the claims that its management
had requested his services and he acceded thereto as an
employee of petitioner from whom it could be deduced he
was also receiving a salary. His move to recover unpaid
legal fees through a coun-
___________________
19 Indophil Textile Mill Workers Union vs. Calica, 205 SCRA 697, 704
(1992); See also Umali et al. vs. CA, 189 SCRA 529, 542 (1990).
84

terclaim against Francisco Motors Corporation, to offset

the unpaid balance of the purchase and repair of a jeep
body could only result from an obvious misapprehension
that petitionerÊs corporate assets could be used to answer
for the liabilities of its individual directors, officers, and
incorporators. Such result if permitted could easily
prejudice the corporation, its own creditors, and even other
stockholders; hence, clearly inequitous to petitioner.
Furthermore, considering the nature of the legal
services involved, whatever obligation said incorporators,
directors and officers of the corporation had incurred, it
was incurred in their personal capacity. When directors and
officers of a corporation are unable to compensate a party
for a personal obligation, it is far-fetched to allege that the
corporation is perpetuating fraud or promoting injustice,
and be thereby held liable therefor by piercing its corporate
veil. While there are no hard and fast rules on disregarding
separate corporate identity, we must always be mindful of
its function and purpose. A court should be careful in
assessing the milieu where the doctrine of piercing the
corporate veil may be applied. Otherwise an injustice,
although unintended, may result from its erroneous
application.
The personality of the corporation and those of its
incorporators, directors and officers in their personal
capacities ought to be kept separate in this case. The claim
for legal fees against the concerned individual
incorporators, officers and directors could not be properly
directed against the corporation without violating basic
principles governing corporations. Moreover, every action·
including a counterclaim·must be prosecuted20

or defended
in the name of the real party in interest. It is plainly an
error to lay the claim for legal fees of private respondent
Gregorio Manuel at the door of petitioner (FMC) rather
than individual members of the Francisco family.
__________________
20 Section 2, Rule 3 of the RULES OF COURT; See also, De Leon vs.

Court of Appeals, 277 SCRA 478, 486 (1997).
85
VOL. 309, JUNE 25, 1999 85

However, with regard to the procedural issue raised by

petitionerÊs allegation, that it needed to be summoned
anew in order for the court to acquire jurisdiction over it,
we agree with respondent courtÊs view to the contrary.
Section 4, Rule 11 of the Rules of Court provides that a
counterclaim or crossclaim must be answered within ten
(10) days from service. Nothing in the Rules of Court says
that summons should first be served on the defendant
before an answer to counterclaim must be made. The
purpose of a summons is to enable the court to acquire
jurisdiction over the person of the defendant. Although a
counterclaim is treated as an entirely distinct and
independent action, the defendant in the counterclaim,
being the plaintiff in the original complaint, has already
submitted to the jurisdiction of the court. Following Rule
21
9,
Section 3 of the 1997 Rules of Civil Procedure, if a
defendant (herein petitioner) fails to answer the
counterclaim, then upon motion of plaintiff, the defendant
may be declared in default. This is what happened to
petitioner in this case, and this Court finds no procedural
error in the disposition of the appellate court on this
particular issue. Moreover, as noted by the respondent
court, when petitioner filed its motion seeking to set aside
the order of default, in effect it submitted itself to the
jurisdiction of the court. As well said by respondent court:
„Further on the lack of jurisdiction as raised by plaintiff-appellant[,]

[t]he records show that upon its request, plaintiff-appellant was
granted time to file a motion for reconsideration of the disputed
decision. Plaintiff-appellant did file its motion for reconsideration to
set aside the order of default and the judgment rendered on the
counterclaim.
„Thus, even if the court acquired no jurisdiction over plaintiff-
appellant on the counterclaim, as it vigorously insists, plaintiff-
appellant is considered to have submitted to the courtÊs jurisdiction
when it filed the motion for reconsideration seeking relief from the
court. (Soriano vs. Palacio, 12 SCRA 447). A party is estopped from
assailing the jurisdiction of a court after voluntarily submitting
____________________
21 In the Court of Appeals Decision, Section 3 of Rule 9 was still under

Section 1 of Rule 18 of the Rules of Court.
86

himself to its jurisdiction. (Tejones vs. Gironella, 159 SCRA 100).

Estoppel is a bar against any claims of lack of jurisdiction. (Balais
22
vs. Balais, 159 SCRA 37).‰
WHEREFORE, the petition is hereby GRANTED and the

assailed decision is hereby REVERSED insofar only as it
held Francisco Motors Corporation liable for the legal
obligation owing to private respondent Gregorio Manuel;
but this decision is without prejudice to his filing the
proper suit against the concerned members of the Francisco
family in their personal capacity. No pronouncement as to
costs.
SO ORDERED.
Bellosillo (Chairman), Puno, Mendoza and Buena,

JJ., concur.
Petition granted, judgment reversed.
Notes.·A counterclaim is considered a complaint where
the original defendant becomes the plaintiff. (Vda. de Chua

vs. Intermediate Appellate Court, 229 SCRA 99 [1994])
No docket fees are required to be paid in connection with
the filing of a compulsory counterclaim. (Cabaero vs.
Cantos, 271 SCRA 391 [1997])
··o0o··
__________________
22 Rollo, p. 34.
87
© Copyright 2019 Central Book Supply, Inc. All rights reserved.

Francisco Motors V CA

Uploaded by

Copyright:

Available Formats

Francisco Motors V CA

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Francisco Motors V CA

Uploaded by

Copyright:

Available Formats

SUPREME COURT REPORTS ANNOTATED VOLUME 309 08/01/2019, 12)20 PM

72 SUPREME COURT REPORTS ANNOTATED

FRANCISCO MOTORS CORPORATION, petitioner, vs.

Corporation Law; „Piercing the Veil of Corporate Entity‰

VOL. 309, JUNE 25, 1999 73

Francisco Motors Corporation vs. Court of Appeals

from its stockholders and from other corporations to which it may

business conduit of a person, or where the corporation is so

74 SUPREME COURT REPORTS ANNOTATED

Francisco Motors Corporation vs. Court of Appeals

VOL. 309, JUNE 25, 1999 75

Francisco Motors Corporation vs. Court of Appeals

corporation without violating basic principles governing

PETITION for review on certiorari of a decision of the

The facts are stated in the opinion of the Court.

76 SUPREME COURT REPORTS ANNOTATED

This petition for review on certiorari, under1 Rule 45 of the

together with their answer to petitionerÊs complaint for a

VOL. 309, JUNE 25, 1999 77

affirmative defense that, while he was petitionerÊs

WHETHER OR NOT THE DECISION RENDERED BY THE

WHETHER OR NOT PLAINTIFF-APPELLANT NOT BEING A

78 SUPREME COURT REPORTS ANNOTATED

WHETHER OR NOT THERE IS FAILURE ON THE PART OF

Petitioner contended that the trial court did not acquire

trial courtÊs jurisdiction over petitioner in the matter of the

VOL. 309, JUNE 25, 1999 79

On the question of its liability for attorneyÊs fees owing to

„However, this distinct and separate personality is merely a fiction

Now before us, petitioner assigns the following errors:

80 SUPREME COURT REPORTS ANNOTATED

THE COURT OF APPEALS ERRED IN APPLYING THE

THE COURT OF APPEALS ERRED IN AFFIRMING THAT

Petitioner submits that respondent court should not have

VOL. 309, JUNE 25, 1999 81

independent from the answer, according to petitioner, then

In their Comment, private respondents focus on the two

82 SUPREME COURT REPORTS ANNOTATED

upon it. They claim that no provision in the Rules of Court

Yutivo Sons Hardware Co. vs. CTA, 1 SCRA 160 (1961).

VOL. 309, JUNE 25, 1999 83

legal fees through a coun-

84 SUPREME COURT REPORTS ANNOTATED

terclaim against Francisco Motors Corporation, to offset

including a counterclaim·must be prosecuted20

20 Section 2, Rule 3 of the RULES OF COURT; See also, De Leon vs.

VOL. 309, JUNE 25, 1999 85

However, with regard to the procedural issue raised by

„Further on the lack of jurisdiction as raised by plaintiff-appellant[,]

21 In the Court of Appeals Decision, Section 3 of Rule 9 was still under

86 SUPREME COURT REPORTS ANNOTATED

himself to its jurisdiction. (Tejones vs. Gironella, 159 SCRA 100).

WHEREFORE, the petition is hereby GRANTED and the

Bellosillo (Chairman), Puno, Mendoza and Buena,

Petition granted, judgment reversed.

Notes.·A counterclaim is considered a complaint where

the original defendant becomes the plaintiff. (Vda. de Chua

© Copyright 2019 Central Book Supply, Inc. All rights reserved.

You might also like