Corpo Case Digest

MATUGUINA INTEGRATED WOOD PRODUCTS, INC., Vs.COURT Of APPEALS

G.R. No. 98310, October 24, 1996

FACTS OF THE CASE

Milagros Matuguina, a sole proprietor, has a timber business named Matuguina Logging Enterprises in Davao under the Provisional Timber License No. 30 for a certain area. During the same time, Milagros became the majority stockholder of MIWP (Matuguina Integrated Wood Products) by buying 70% of stock ownership. Milagros requested to the director of Forest Development to transfer the management of the timber license no. 30, granted for MLE, to MIWP.

Pending the approval of the transfer of the license, DAVENCOR (private respondent) submitted a complaint regarding the encroachment of MLE in the concession area of DAVENCOR. , The Minister of Natural Resources, Hon. Ernesto M. Maceda rendered his decision against MLE for illegal logging operations on the portion of the land under the concession of DAVENCOR. DAVENCOR then requested the issuance of writ of execution for MLE and/or MIWP. MIWP, as a defense, filed for prohibition, damages and injunction, with prayer for restraining order on the grounds that they are a separate entity from MLE and, therefore, not a party to the complaint by DAVENCOR. Trial Court granted the TRO. RTC ruled in favor of MIWP which was reversed by the Court of Appeals; hence, this petition on certiorari.

ISSUE

WON the corporate veil of MIWP shall be pierced to be held liable for the acts of MLE

RULING

NO, MIWP cannot be held liable. A corporation has a separate personality. . It may not generally be held liable for that of the persons composing it unless when the juridical personality of the corporation is used to defeat public convenience, justify wrong, protect fraud or defend crime, the corporation shall be considered as a mere association of persons. But for the separate juridical personality of a corporation to be disregarded, the wrongdoing must be clearly and convincingly established. It cannot be presumed.

It is likewise improper to state that the MIWPI is the privy or the successor-in-interest of MLE, as the liability for the encroachment over DAVENCOR's timber concession is concerned, by reason of the transfer of interest in PTL No. 30 from MLE to MIWPI. The transfer has never become effective. More importantly, even if it is deemed that there was a valid change of name and transfer of interest in the PTL No. 30, this only signifies a transfer of authority, from MLE to MIWPI, to conduct logging operations in the area covered by PTL No. 30. It does not show indubitable proof that MIWPI was a mere conduit or successor of Milagros Matuguina/MLE, as far the latter's liability for the encroachment upon DAVENCOR's concession is concerned.