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RYUICHI YAMAMOTO v. NISHINO LEATHER INDUSTRIES

FACTS:

Ryuichi Yamamoto, a Japanese national, formed Wako Enterprises Manila, Incorporated (WAKO) in 1983. In 1987, Yamamoto and Ikuo Nishino, also a Japanese national, entered into a joint venture where Nishino would acquire 70% of WAKO's authorized capital stock. Over time, Nishino and his brother acquired more than 70% of WAKO's capital stock, reducing Yamamoto's investment to less than 10%. The corporate name of WAKO was changed to Nishino Leather Industries, Inc. (NLII).

During negotiations for Nishino's takeover of NLII, Yamamoto claimed ownership of machinery and equipment he alleged were part of his investment. Respondents argued that the machinery and equipment were corporate property of NLII and could not be retrieved without the authority of the board of directors.

Yamamoto filed a complaint for replevin seeking to recover the machinery and equipment, which was granted by the trial court. However, the Court of Appeals reversed the decision on appeal, dismissing Yamamoto's complaint.

Yamamoto then filed a petition before the Supreme Court, asserting errors committed by the Court of Appeals in its decision. The main issue in contention is whether the advice given in a letter by respondents' counsel, Atty. Doce, that Yamamoto may retrieve the machinery and equipment, binds the corporation.

ISSUES:

  1. Whether the advice in the letter of Atty. Doce to Yamamoto that he may retrieve the machineries and equipment bound the corporation.

  2. Whether the doctrine of piercing the veil of corporate fiction applies in this case.

  3. Whether respondents are liable for attorney's fees.

RULING:

  1. The Court holds that the advice in the letter of Atty. Doce to Yamamoto that he may retrieve the machineries and equipment did not bind the corporation. Without a Board Resolution authorizing respondent Nishino to act for and on behalf of the corporation, he cannot bind the corporation. Corporate powers are generally exercised by the Board of Directors.

  2. The Court held that there is no ground to pierce the veil of corporate fiction in this case. Yamamoto's argument to pierce the veil of corporate fiction was not supported by sufficient evidence.

  3. The Court held that respondents are not liable for attorney's fees.

PRINCIPLES: