Limpiado v. Limpiado

FIRST DIVISION

[G.R. No. 208689. October 3, 2018.]

RANULFO Z. LIMPIADO, FIDEL Z. LIMPIADO, EGBERTO Z. LIMPIADO AND ELVA L. ONREJAS, petitioners, vs.NICETO Z. LIMPIADO, JOINED BY HIS WIFE, LOLITA LIMPIADO, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution dated October 3, 2018which reads as follows:

"G.R. No. 208689 (Ranulfo Z. Limpiado, Fidel Z. Limpiado, Egberto Z. Limpiado and Elva L. Onrejas, Petitioners v. Niceto Z. Limpiado, Joined by His Wife, Lolita Limpiado, Respondents).

This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assailing the Decision 2 of the Court of Appeals (CA) dated January 31, 2013 and the Resolution 3 dated July 24, 2013 in CA G.R. CV No. 02291, which denied the petitioners' appeal.

Antecedents

Petitioners Ranulfo Z. Limpiado, Fidel Z. Limpiado, Egberto Z. Limpiado, Elva L. Onrejas, and respondent Niceto Z. Limpiado (Niceto) are siblings and heirs of the late Spouses Fidel and Benedicta Limpiado (Spouses Limpiado), who died intestate on May 25, 1982 and March 8, 1995, respectively. 4 It appears that during their lifetime, Spouses Limpiado acquired two properties (subject properties):

1. A parcel of residential land with a residential building situated at Sto. Niño Rosario, Naval, Biliran (Sto. Niño property), covered by Tax Declaration Nos. 00283 and 00284, respectively with a total assessed value of Eleven Thousand Two Hundred Eighty-Five Pesos (P11,285.00);

2. A parcel of land situated at Brgy. Mabini Higatangan Island, Naval, Biliran (Mabini property), covered by Tax Declaration No. 00078. 5

On February 5, 2001, Niceto filed a Complaint 6 against the petitioners, Bernarda L. Colomadre (Bernarda), Jeremias Z. Limpiado (Jeremias), Mila L. De Jesus (Mila), (collectively defendants) seeking a partition of the subject properties. Respondent Niceto further sought reimbursement for the improvements he allegedly made in the Mabini property, in the amount of Php857,870.05. In the alternative, Niceto prayed that defendants sell a portion of the Mabini property corresponding to their respective shares.

Mila, in her Answer, agreed with Niceto but argued that she should not be made liable to pay the amounts specified therein since she already agreed with Niceto that she will reimburse him upon her retirement from the government service. 7

The other defendants filed a Motion to Dismiss on the ground that no earnest effort towards a compromise agreement were made between the parties, and that there was no barangay conciliation conducted prior to the filing of the complaint. 8

The trial court denied the motion to dismiss.

In their Answer with Counterclaim, 9 the defendants therein agreed with Niceto's desire to partition the subject properties. They contested Niceto's claim for reimbursement, contending that such improvements were introduced without their consent. They reiterated the grounds they invoked in their motion to dismiss that there was failure to exert effort towards a compromise agreement and that there was no compliance with the rule on barangay conciliation. They also demanded for an accounting of the expenses incurred for the subject properties. 10

At the pre-trial, the parties agreed to the appointment of commissioners for the proper partition of the properties and computation of the amount of reimbursements. Niceto nominated Engr. Warlito Alagao, while the defendants therein nominated Samuel Bulatao, as commissioners. The Regional Trial Court (RTC) thereafter appointed its Clerk of Court as one of the commissioners. 11

Trial thereafter ensued.

Ruling of the RTC

In a Decision 12 dated May 24, 2007, the trial court ruled in favor of Niceto. The dispositive portion of the Decision, states:

WHEREFORE, premises considered, this Court finds in favor of the plaintiffs [respondents] and against the defendants Bernarda L. Calomadre, Ranulfo Z. Limpiado, Fidel A. Limpiado, Jeremias Z. Limpiado, Egberto Z. Limpiado and Elva L. Onrejas.

Thereby, ordering each one of them to pay the [respondents] the amount of P111,000.00 each.

And the costs.

SO ORDERED. 13

The trial court found that the Sto. Niño property was already subdivided into eight lots corresponding to the parties therein, as the eight (8) heirs of Spouses Limpiado. Such partition was confirmed by the Limpiado siblings when they ventured and organized a corporation registered as Limpiado Development Corporation (LDC).

Also, the trial court found that in the Mabini Higatangan Island property (Mabini property), LDC built a beach resort called "Limpiado Beach Resort." This resort was registered as an asset of LDC, with a value of Php250,000.00, divided equally among the eight (8) heirs at Php31,250.00, and converted into 3,125 capital shares for each heir as subscribed capital stock of LDC. aScITE

The trial court found that Niceto, as LDC's President and General Manager, was authorized to develop the resort and secure permits for its lawful operation.

Contrary to the defendants' claim therein, the court found that they consented to the development of the beach resort. The trial court thus held defendants liable in their capacity as co-owners of the subject properties.

Ruling of the Court of Appeals

Petitioners Bernarda, Jeremias, and Mila then appealed the Decision of the RTC to the CA.

On January 31, 2013, the CA promulgated its Decision 14 affirming in toto the findings of the RTC.

Hence, the instant petition.

Issues

Petitioners raised the following issues in support of their petition:

I. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PLAINTIFFS-APPELLEES [RESPONDENTS] HAVE COMPLIED WITH THE MANDATORY PROVISIONS OF ARTICLE 151 OF THE FAMILY CODE;

II. THE HONORABLE COURT OF APPEALS ERRED IN PIERCING THE VEIL OF CORPORATE FICTION OF LIMPIADO DEVELOPMENT CORPORATION EVEN IF IT DID NOT ACQUIRE JURISDICTION OVER IT;

III. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PARTITION OF THE SUBJECT PROPERTIES IS NO LONGER AN ISSUE TO BE RESOLVED WHEN IT WAS THE MAIN PRAYER OF THE RESPONDENTS' (sic) IN THEIR COMPLAINT;

IV. THE HONORABLE COURT OF APPEALS ERRED IN CONSIDERING EVIDENCES WHICH WERE NOT FORM (sic) PART OF THE RECORDS OF THIS CASE. 15

Stripped to the bare essentials, the material issue for this Court's determination is the petitioners' liability on the expenses Niceto incurred for developing the Mabini property.

Our Ruling

In a petition for review under Rule 45, "only questions of law may be raised and they must be distinctly set forth." 16 Determination of the circumstances warranting the piercing of the veil of corporate fiction requires that the Court look into factual circumstances, which is beyond the province of a petition for review under Rule 45. 17

Similarly fundamental is the rule that factual findings of the CA, affirmatory of those of the trial court, are final and conclusive on the Court and may not be reviewed on appeal, except for the most compelling reasons, such as:

(1) when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain facts not disputed by the parties, which, if properly considered, would justify a different conclusion. 18 (Emphasis supplied)

In this case, the factual findings of both the RTC and the CA are the same in holding petitioners liable to reimburse respondent Niceto of the expenses he incurred in developing their co-owned Mabini property.

There was substantial compliance with Article

Article 151 of the Family Code provides:

Art. 151. No suit between members of the same family shall prosper unless it should appear from the verified complaint or petition that earnest efforts toward a compromise have been made, but that the same have failed. If it is shown that no such efforts were in fact made, the case must be dismissed.

This rule shall not apply to cases which may not be the subject of compromise under the Civil Code. (222a)

The rule on encouraging compromise between family members is a recognition of the reality "that a lawsuit between close relatives generates deeper bitterness than between strangers." 19 Such is the reason why exerting efforts toward a compromise between family members is made a condition precedent before filing an action in court.

In this case, We find that there was compliance with the aforesaid requirement. Rule 8, Section 3 of the 1997 Rules of Civil Procedure provides that conditions precedent may be generally averred in the pleadings. Paragraph 4 of Niceto's complaint, states: HEITAD

4. Plaintiff NICETO Z. LIMPIADO exerted efforts to have the aforesaid properties extra-judicially settled among themselves but to no avail because defendants refused to cooperate. In fact, the matter was brought for conciliation before the Office of the Brgy. Captain of Brgy. Smo. Rosario but to (sic) avail, hence, the said office issued a Certificate to File Action evidenced by (sic) photocopy of the Certificate hereto attached and made part hereof as Annex "A"; 20

Evidently, the aforesaid allegation suffices. It is worthwhile to note that such allegations are supported by the testimony of respondent Niceto that there were various attempts to negotiate with his siblings, viz.:

ATTY. SUMAYOD:

Q: Did you inquire why they did not, despite the agreement that you have or (sic) a resolution of it?

A: I called each one of them regarding the reimbursement and the partition and we have (sic) a meeting in Higatangan Island for the reimbursement of P882,101.40 and during that meeting, some of my brothers and sisters promised to pay me when they have money. We have (sic) also a meeting inside the UCCC with the presence of our pastor and Atty. Clemencio C. Sabitsana, Jr., but (sic) said meeting again some of them promised to pay when they have already money. And that meeting inside the law office of Atty. Clemencio C. Sabitsana, Jr., for the compromise agreement that the 6,000 sq. mts. Agricultural land in Brgy. Antipolo will serve as the reimbursement of their payment. 21 (Underscoring omitted)

Piercing the veil of corporate fiction was

"[A] corporation is a juridical entity which is vested with a legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it." 22 Such legal fiction may, however, be disregarded if it is used as a means to perpetrate fraud or an illegal act, or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, or to confuse legitimate issues. Considering these generally separate entities as one is called piercing the veil of corporate fiction. 23

In Pantranco Employees Association (PEA-PTGWO) v. National Labor Relations Commission, et al., 24 this Court further elaborated that:

Under the doctrine of "piercing the veil of corporate fiction," the court looks at the corporation as a mere collection of individuals or an aggregation of persons undertaking business as a group, disregarding the separate juridical personality of the corporation unifying the group. Another formulation of this doctrine is that when two business enterprises are owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect the rights of third parties, disregard the legal fiction that two corporations are distinct entities and treat them as identical or as one and the same.

Whether the separate personality of the corporation should be pierced hinges on obtaining facts appropriately pleaded or proved. However, any piercing of the corporate veil has to be done with caution, albeit the Court will not hesitate to disregard the corporate veil when it is misused or when necessary in the interest of justice. x x x 25 (Emphasis ours)

Piercing the veil of corporate fiction is subject to the premise that the court has lawfully acquired jurisdiction over the corporation. "[I]t is not available to confer on the court a jurisdiction it has not acquired, in the first place, over a party not impleaded in a case." 26 Stated differently, "[i]f the court has no jurisdiction over the corporation, it follows that the court has no business in piercing its veil of corporate fiction because such action offends the corporation's right to due process." 27

In this case, while this Court notes that LDC was not impleaded as a party to the case in the court a quo, the ruling of the lower courts ordering reimbursement of the expenses incurred for the resort was against the defendants therein only and did not extend to LDC, and the latter's properties. The dispositive portion of the RTC Decision reads:

WHEREFORE, premises considered, this Court finds in favor of the plaintiffs and against the defendants Bernarda L. Calomadre, Ranulfo Z. Limpiado, Fidel A. Limpiado, Jeremias Z. Limpiado, Egberto Z. Limpiado and Elva L. Onrejas.

Thereby, ordering each one of them to pay the plaintiffs the amount of P111,000.00 each.

And the costs.

SO ORDERED. 28

When the case reached the appellate court, the CA affirmed in toto the RTC's ruling. Hence, it is at once apparent that while the lower courts discussed and found that LDC is composed of petitioners as stockholders, the same did not order the corporation to pay for the petitioners' liability to the respondent. Hence, We see no reason to invalidate the assailed Decision on this ground. At most, the discussion of the RTC and the CA with respect to LDC, should be considered as an obiter dictum, or an "opinion expressed by a court upon some question of law which is not necessary to the decision of the case before it." 29 Verily, the complaint in the RTC never sought LDC liable for the expenses incurred by Niceto in the development of the resort. ATICcS

This Court is cognizant that there are instances where piercing of the veil of corporate fiction is justified even if the corporation has not been duly made a party-defendant and the court did not properly acquire jurisdiction over it. In this Court's recent ruling in International Academy of Management and Economics (I/AME) v. Litton and Company, Inc., 30 it was discussed as follows:

The piercing of the corporate veil is premised on the fact that the corporation concerned must have been properly served with summons or properly subjected to the jurisdiction of the court a quo. Corollary thereto, it cannot be subjected to a writ of execution meant for another in violation of its right to due process.

There exists, however, an exception to this rule: if it is shown "by clear and convincing proof that the separate and distinct personality of the corporation was purposefully employed to evade a legitimate and binding commitment and perpetuate a fraud or like wrongdoings."

The resistance of the Court to offend the right to due process of a corporation that is a nonparty in a main case, may disintegrate not only when its director, officer, shareholder, trustee or member is a party to the main case, but when it finds facts which show that piercing of the corporate veil is merited.

Thus, as the Court has already ruled, a party whose corporation is vulnerable to piercing of its corporate veil cannot argue violation of due process.

In this case, the Court confirms the lower courts' findings that Santos had an existing obligation based on a court judgment that he owed monthly rentals and unpaid realty taxes under a lease contract he entered into as lessee with the Littons as lessor. He was not able to comply with this particular obligation, and in fact, refused to comply therewith.

This Court agrees with the CA that Santos used I/AME as a means to defeat judicial processes and to evade his obligation to Litton. Thus, even while I/AME was not impleaded in the main case and yet was so named in a writ of execution to satisfy a court judgment against Santos, it is vulnerable to the piercing of its corporate veil. We will further expound on this matter. (Emphasis ours; Citations omitted)

From the foregoing, it is clear that the courts simply disregarded the distinct and separate personality of the corporation absent evidence establishing that it was purposely used to perpetrate fraud or evade liability, especially when the court has not even lawfully acquired jurisdiction over the corporation. Evidently, legal technicalities cannot override fundamental principles of justice and equity.

In this case, this Court's review of the records, as well as the lower courts' dispositions reveal the lack of such evidence that petitioners intentionally used LDC to evade their obligations to Niceto. On the contrary, this Court notes that LDC was cognizant of the need for additional capital in order to develop the beach resort in the Mabini property. In the Minutes of the First Annual Stockholders' Meeting in April 1999, 31 it was stated:

PRESENTATION OF THE AGENDA:

xxx xxx xxx

6. Unfinished business

o Unpaid subscribed capital stock of each stockholder

o Completion of the construction of the Limpiado Beach Resort

o Raise up funds for the operation of the beach resort

o Submission of annual report to SEC to avoid penalty

xxx xxx xxx

Nice (sic) motioned that incorporators willing to put up or add more capital to finish the construction of LBR and make it operational may do so and the earnings of the corporation will be divided according to the number of shares of stock of the members. Duly seconded by Jim without objection from others.

Resolution #99-21 APPROVE the ADDITIONAL CAPITALIZATION OF THE INCORPORATORS FOR THE COMPLETION OF THE LIMPIADO BEACH RESORT TO MAKE IT OPERATIONAL AND THE EARNINGS OF LDC BE DIVIDED ACCORDING TO THE NUMBER OF SHARES OF STOCK OF THE MEMBERS. 32

It is true that the stockholders of LDC, the eight Limpiado siblings, are the same parties to this instant petition. Such fact alone, however, without a separate showing of intent to evade liability through the use of a corporation, does not suffice to justify the courts' perfunctory application of the equitable remedy of piercing the veil of corporate fiction.

Petitioners are liable to reimburse

"Necessary expenses may be incurred by one co-owner, subject to his right to collect reimbursement from the remaining co-owners." 33 In this case, both the RTC and the CA found petitioners liable to reimburse Niceto the expenses for the preservation and development of the Mabini property into a beach resort.

This Court finds that the conclusion reached by the courts a quo are supported by the evidence on record. Petitioners never contested the fact that expenses were indeed incurred by Niceto, only that they did not consent to the same. However, such contention is belied by the Minutes of the LDC Board Meeting, 34 where the construction and development of the beach property was taken up. To quote the relevant portion of the aforesaid minutes: TIADCc

99-08 The meeting continued the following day January 2, 1999

Nice (sic) proposed that if he is the one to undertake the on-going renovation/construction of the ancestral house and the Antipolo ricefield (Fausta place) will be the payment, then the heirs will sign a waiver of this portion of land. x x x

The total amount spent by Nice (sic) will be summed up and will be divided among the eight heirs, if the heirs cannot pay their share of expenses after the renovation is completely finished (except the generator purchase) and operational (sic) then their portion of that riceland will go to redeem (sic) Nice as their payment but those heirs who can reimburse their share of expenses including bank interest is given the option to redeem their share of that portion of land which was the guarantee.

Such liability of the petitioners as co-heirs, as stated in the aforesaid minutes is consistent with the action of Mila, one of the original defendants in the RTC, when she paid her share in the expenses in the amount of Php111,000.00, as evidenced by the Receipt 35 dated February 18, 2003. Verily, "in determining the intention of the parties, their contemporaneous and subsequent acts shall be principally considered." 36

WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals dated January 31, 2013 and the Resolution dated July 24, 2013 in CA G.R. CV No. 02291 are hereby AFFIRMED.

The petitioners' urgent motion for leave to file a reply, praying that they be granted leave to file their reply within twenty (20) days from August 27, 2018; and the registry of appearance as collaborating counsel for petitioners, by Atty. Melvin O. Vaporoso of Vaporoso Law Office, with request that all orders, processes, notices and pleadings be furnished at 2nd Floor R. Parilla Building, P. Inocentes Street, Naval, 6560 Biliran, Philippines, with reply to the respondent's comment on the petition for review on certiorari, in compliance with the Resolution dated April 23, 2018, are both NOTED.

Atty. Melvin O. Vaporoso is hereby required to SUBMIT within five (5) days from notice hereof, a soft copy in compact disc, USB or e-mail containing the PDF file of the signed registry of appearance with reply to the respondent's comment pursuant to A.M. Nos. 10-3-7-SC and 11-9-4-SC.

SO ORDERED." Bersamin, J., on official business; Del Castillo, J., designated Acting Working Chairperson per Special Order No. 2605 dated September 28, 2018.

Very truly yours,

(SGD.) LIBRADA C. BUENADivision Clerk of Court

 

Footnotes

1.Rollo, pp. 12-28.

2. Penned by Associate Justice Gabriel T. Ingles and concurred in by Associate Justices Edgardo L. Delos Santos and Pedro B. Corales; id. at 31-39.

3.Id. at 41-42.

4.Id. at 19.

5.Id. at 89.

6.Id. at 43-49.

7.Id. at 33.

8.Id.

9.Id. at 53-57.

10.Id. at 33-34 and 53.

11.Id. at 34.

12. Penned by Executive Judge Enrique C. Asis; rollo, pp. 64-70

13.Id. at 70.

14.Id. at 31-39.

15.Id. at 20.

16.Lacanilao v. Court of Appeals, 330 Phil. 1074, 1079 (1996).

17. See International Academy of Management and Economics v. Litton and Company, Inc., G.R. No. 191525, December 13, 2017.

18. See E.Y. Industrial Sales, Inc., et al. v. Shen Dar Electricity & Machinery Co., Ltd., 648 Phil. 572, 580-581 (2010).

19. See Martinez v. Martinez, 500 Phil. 332, 339 (2005).

20.Rollo, pp. 45-46.

21.Rollo, p. 110.

22.Heirs of Fe Tan Uy v. International Exchange Bank, 703 Phil. 477 (2013).

23. See Lanuza, Jr., et al. v. BF Corporation, et al., 744 Phil. 612 (2014).

24. 600 Phil. 645 (2009).

25.Id. at 661.

26.Kukan International Corp. v. Hon. Judge Reyes, et al., 646 Phil. 210, 234 (2010).

27. Pacific Rehouse Corp. v. Court of Appeals, et al., 730 Phil. 325, 344 (2014).

28. Rollo, p. 70.

29. See Francisco N. Villanueva, Jr. v. The Hon. Court of Appeals, 429 Phil. 194 (2002).

30. G.R. No. 191525, December 13, 2017.

31. Rollo, pp. 58 & 63.

32. Id. at 61.

33. Rustico Adillle v. The Honorable Court of Appeals, Emeteria Asejo, Teodorica Asejo, Domingo Asejo, Josefa Asejo and Santiago Asejo, G.R. No. L-44546, January 29, 1988.

34. Rollo, pp. 133-136.

35. Id. at 137.

36. Sps. Dela Cruz v. Planters Products, Inc., 704 Phil. 28, 38 (2013).