ROBERTO A. JACINTO, PETITIONER, VS. HONORABLE COURT OF APPEALS AND METROPOLITAN BANK AND TRUST COMPANY, RESPONDENTS.

This is an appeal by certiorari
to partially set aside the Decision of the Court of Appeals in C.A.-G.R. CV No. 08153^[1] promulgated on 19 August 1987, which
affirmed in toto the decision of the Regional Trial Court of Manila, Branch 11, in Civil Case No. 133164 entitled “Metropolitan Bank and Trust Co. vs.
Inland Industries Inc. and Roberto Jacinto,” the dispositive portion of
which reads:

“WHEREFORE, judgment is hereby rendered ordering defendants to
pay, jointly and severally, the plaintiff, the principal obligation of
P382,015.80 (Annex J-1 to J-3 of
Stipulation), with interest/charges thereon at the rate of 16% per annum from
January 1, 1979 up to the time the said amount is fully paid, plus the sum of
P20,000.00 as attorney’s fees.  Said
defendants are further ordered to pay in solidum the costs of this suit.

SO ORDERED.”^[2]

Petitioner’s co-defendant in the courts below, Inland Industries Inc., just as in the case of
petitioner’s motion to reconsider the questioned decision,^[3]
chose not to join him in this appeal.

In Our resolution of 28
August 1988 We required the respondents to
comment on the petition.  Respondent
Metropolitan Bank and Trust Co. filed its comment^[4]
on 12 October 1988.  We required the petitioner to file a reply
thereto,^[5]
which he complied with on 20 December
1988.^[6]

We gave due course to the petition on 8 May 1989^[7]
and required the parties to submit their respective memoranda.

Private respondent filed its memorandum on 29 June 1989^[8]
while petitioner asked leave to adopt his petition and reply as his memorandum,^[9]
which We granted on 14 June 1989.^[10]

Petitioner submits the
following issues:

“1. Whether or
not the respondent Court of Appeals can validly pierce the fiction of corporate
identity of the defendant corporation Inland Industries, Inc. even if there is
no allegation in the complaint regarding the same, nor is there anything in the
prayer demanding the piercing of the corporate
veil of the corporation Inland Industries, Inc.;

2.  Whether or not the Court of Appeals
can validly pierce the fiction of corporate identity of the defendant Inland
Industries, Inc. even if absolutely no proof was presented in court to serve as
legal justification for the same.”

We find this petition to
be bereft of merit.  The issues are
basically factual and a careful scrutiny of the decisions of both courts below
reveals that their findings and conclusions on the matter of piercing the veil
of corporate fiction and on the liability of herein petitioner are
overwhelmingly supported by the evidence.

Insofar as material and
relevant to the issues raised, the trial court found
and held:^[11]

“As to [the] liability of [the] defendant Roberto A. Jacinto,
it would appear that he is in factetum (sic), or, in fact, the corporation
itself known as Inland Industries, Inc. 
Aside from the fact that he is admittedly the President and General
Manager of the corporation and a substantial stockholders
(sic) thereof, it was defendant Roberto A. Jacinto who dealt entirely with the
plaintiff in those transactions.  In the
Trust Receipts that he signed supposedly in behalf of Inland Industries, Inc.,
it is not even mentioned that he did so in this official capacity.

x x x

In this case, the Court is satisfied that Roberto A. Jacinto was
practically the corporation itself, the Inland Industries, Inc.”

In a detailed fashion, the
respondent Court of Appeals brushed aside the posturings of petitioner as
follows:

“Defendant Roberto Jacinto, tried to escape liability and
shift the entire blame under the trust receipts solely and exclusively on
defendant-appellant corporation.  He asserted that he cannot be held solidarily
liable with the latter (defendant corporation) because he just signed said
instruments in his official capacity as president of Inland Industries, Inc.
and the latter (defendant corporation) has a juridical personality distinct and
separate from its officers and
stockholders.  It is likewise asserted,
citing an American case, that the principle of piercing the fiction of
corporate entity should be applied with great caution and not precipitately,
because a dual personality by a
corporation and its stockholders would defeat the principal purpose for which a
corporation is formed.  Upon the other hand, plaintiff-appellee reiterated its allegation in the
complaint that defendant corporation is just a mere
alter ego of defendant Roberto Jacinto who is its President and
General Manager, while the wife of the latter owns a majority of its shares of
stock.

Defendants-appellants’ assertion is plainly without legal
basis.  This is shown by the undisputed
fact that Roberto Jacinto even admitted that he and his wife own 52% of the
stocks of defendant corporation (TSN, April 22, 1985,
p. 6).  We cannot accept as true the
assertion of defendant Jacinto that he only acted in his official capacity as
President and General Manager of Inland Industries, Inc. when he signed the
aforesaid trust receipts.  To Our mind
the same is just a clever ruse and a convenient ploy to thwart his personal
liability therefor by taking refuge under the protective mantle of the separate
corporate personality of defendant corporation.

As could be expected, Roberto Jacinto in his direct testimony
presented a different corporate scenario regarding Inland Industries, Inc. and
vehemently declared that it is Bienvenida Catabas who is its President, while
Aurora Heresa is its Chairman of the Board. 
His assertion on this point, however, is not convincing in view of his
admission in the same breath, that his wife, Hedy U. Jacinto, own (sic) with
him 52% of the shares of stock of said corporation.  Indeed, this circumstance – even if standing
alone – cannot but engender in the most unprejudiced mind doubt and misgiving
why Catabas and Heresa would be defendant corporation’s President and Chairman
of the Board, respectively.  Pertinent
portion of his testimony on this point is quoted hereunder:

‘Atty. Carlos         –           Do you know the defendant Inland
Industries, Inc.?

A       –      Yes, sir. 
Because I am the General Manager of this corporation.

Q      –      Aside from being the General Manager of the
defendant corporation are you in any other way connected with the same?

A       –      I am also a stockholder.

Q      –      Does your corpora­tion have a Board of
Directors?

A       –      Yes, sir.

Q      –      By the way, who are the stockholders of
this corporation?

A       –      Bienvenida Catabas, Aurora Heresa, Paz
Yulo, Hedy Y. Jacinto and myself.

Q      –      Who is the Presi­dent of the defend­ant
corporation?

A       –      Bienvenida Catabas.

Q      –      Who is the Chairman of the Board?

A       –      Aurora Heresa.

Q      –      Do you have any relation with Hedy Y.
Jacinto?

A       –      She is my wife.

Q      –      If you combine the stockholdings of your
wife together with yours and percentage wise, how much is your equity?

Atty. Dizon raised some objections. 
However, the Court allowed the same.

A       –      About 52%.

(Ibid.,
pp. 3-6)

Furthermore, a cursory perusal of the Stipulation of facts clearly
shows that defendant Roberto Jacinto acted in his capacity as President and
General Manager of Inland Industries, Inc. when he signed said trust
receipts.  Pertinent portion of his
testimony are quoted below:

`(d)  All the goods covered by the three (3) Letters
of Credit (Annexes “A”, “B” & “C”) and paid
for under the Bills of Exchange (Annexes “D”, “E” &
“F”) were delivered to and received by defendant Inland Industries,
Inc. through its co-defendant Roberto
A. Jacinto, its President and General Manager, who signed for and in behalf of
defendant Inland and agreed to the terms and conditions of three (3) separate
trust receipts covering the same and herein identified as follows:  x x x.’ (p. 3 of Stipulations of Facts and Formulation of Issues (p. 95,
Records)).

The conflicting statements by defendant Jacinto place in extreme
doubt his credibility anent his alleged participation in said transactions and We are thus persuaded to agree with the findings of the
lower court that the latter (Roberto
Jacinto) was practically the corporation itself.  Indeed, a painstaking examination of the
records show that there is no clear-cut delimitation between the personality of
Roberto Jacinto as an individual and the personality of Inland Industries, Inc.
as a corporation.

The circumstances aforestated lead Us to
conclude that the corporate veil that en-shrouds defendant Inland Industries,
Inc. could be validly pierced, and a host of cases decided by our High Court is
supportive of this view.  Thus it held
that ‘when the veil of corporate fiction is made as a shield to perpetuate
fraud and/or confuse legitimate issues, the same should be pierced.’ (Republic vs. Razon, 20 SCRA 234; A.D. Santos, Inc. vs. Vasquez, 22 SCRA 1156; Emilio
Cano Enterprises, Inc. vs. Court of Appeals, 13 SCRA 290).  Almost in the same vein is the dictum
enunciated by the same court in the case of Commissioner of Internal Revenue
vs. Norton & Harrison Co., (11 SCRA 714), that ‘Where a corporation is
merely an adjunct, business conduit or alter ego, the fiction of separate and
distinct corporate entity should be disregarded’.”

In its resolution of 29
September 1987, the respondent Court of Appeals, on the contention
again of petitioner that the finding that defendant corporation is his mere
alter ego is not supported by the evidence and has no legal justification,
ruled that:

“The contention . . . is nothing but an empty assertion.  A cursory perusal of the decision would at
once readily show on pages 11-13 of the same that said factual findings of the
court is well grounded as the
same in fact even include a portion of the very testimony of said
defendant-appellant admitting that he and his wife own 52% of the stocks of
defendant corporation.  The stipulation
of facts also show (sic) that appellant Roberto Jacinto acted in his capacity
as President/General Manager of defendant corporation and that ‘all the goods
covered by the three (3) Letters of Credit (Annexes “A”,
“B” & “C”) and paid for under the Bills of Exchange
(Annexes “D”, “E” & “F”) were delivered to
and received by defendant Inland Industries, Inc. through its co-defendant
Roberto A. Jacinto, its President and General Manager, who signed for and in
behalf of defendant Inland and agreed to the terms and conditions of three (3)
separate trust receipts covering the same’.”

Petitioner, however, faults the courts below for piercing the
veil of corporate fiction despite the absence of any allegation in the
complaint questioning the separate identity and existence of Inland Industries,
Inc.  This is not accurate.  While on the face of the complaint there is no specific allegation that the
corporation is a mere alter ego of petitioner, subsequent developments, from
the stipulation of facts up to the presentation of evidence and the examination
of witnesses, unequivocably show that respondent Metropolitan Bank and Trust
Company sought to prove that petitioner and
the corporation are one or that he is the corporation.  No serious objection was heard from
petitioner.

Section 5 of Rule 10 of the Rules of Court provides:

“SEC. 5.  Amendment to conform to or authorize
presentation of evidence.  ? When issues not raised by the
pleadings are tried by express or implied consent of the parties, they shall be
treated in all respects, as if they had been raised in the pleadings.  Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and to raise these issues
may be made upon motion of any party at any time, even after judgment; but
failure so to amend does not affect the trial of these issues.  If the evidence is objected to at the time of
trial on the ground that it is not within the issues made by the pleadings, the
court may allow the pleadings to be amended and shall do so freely when the
presentation of the merits of the action will be subserved thereby and the
objecting party fails to satisfy the court that the admission of such evidence
would prejudice him in maintaining his action or defense upon the merits.  The court may grant continuance to enable the
objecting party to meet such evidence.”

Pursuant thereto, “when evidence is presented by one party,
with the express or implied consent of the adverse party, as to issues not
alleged in the pleadings, judgment may be rendered validly as regards those
issues, which shall be considered as if they have been raised in the
pleadings.  There is implied consent to
the evidence thus presented when the adverse party fails to object
thereto.”^[12]

WHEREFORE, for lack of merit, the Petition is DISMISSED
with costs against petitioner.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Feliciano, and Bidin, JJ., concur.

^[1]
Annex “A” of Petition; Rollo,
27-41; per Justice Fule, concurred in by Justices Mendoza and Bellosillo.

^[2]
Rollo, 28.

^[3]
Annex “B” of Petition; Id.,
42-46.  The motion was denied in the
Resolution of 29 September 1987; Annex “C” of Petition; Id.,
47-49.

^[4]
Id., 92-97.

^[5]
Resolution of 7 November 1988; Id., 101.

^[6]
Id., 104-113.

^[7]
Resolution of 8 May 1989; Id., 114.

^[8]
Id., 121 et seq.

^[9]
Id., 118.

^[10]
Id., 120.

^[11]
As quoted on pages 12-14 of private respondent’s Memorandum; Rollo, 121
et seq.  A copy of the decision of the
RTC is not attached to the petition.

^[12]
MORAN, Comments on the Rules of Court, vol. 1, 1979 ed., p. 377, citing Roces vs.
Jalandoni, 12 Phil. 599, 601; Valmilero vs. Kong Chang Seng, 33 Phil.
84; Lizarraga Hermanos vs. Yap Tico, 24 Phil. 504; Del Val vs.
Del Val, 29 Phil. 534; Karagdag vs. Barado, 33 Phil. 529.