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NUCCIO SAVERIO v. ALFONSO G. PUYAT

FACTS:

Petitioners Nuccio Saverio and NS International, Inc. (NSI) filed a petition for review on certiorari against respondent Alfonso G. Puyat, challenging the decision of the Court of Appeals (CA) in CA-G.R. CV. No. 87879. The CA decision affirmed the decision of the Regional Trial Court (RTC) in Civil Case No. 00-594. The respondent granted a loan to NSI on July 22, 1996, pursuant to a Memorandum of Agreement and Promissory Note (MOA). The loan had an interest rate of 17% per annum, or 25% per annum if payment is beyond the stipulated period. The petitioners received P300,000.00 and machineries for their fertilizer processing plant business. The business failed to materialize and the petitioners allegedly had an outstanding balance of P460,505.86 as of December 16, 1999. The respondent filed a collection suit with the RTC, claiming that the petitioners still owe him for the value of the machineries. The petitioners claimed that they have already paid the loan and that their remaining obligation, if any, has been extinguished. The RTC ruled in favor of the respondent, finding that the petitioners' obligation also covered the payment of the machineries' value. The court also concluded that the interest rates in the MOA were not usurious and awarded attorney's fees. The CA affirmed the RTC's ruling, declaring the petitioners jointly and severally liable for the amount claimed by the respondent. The petitioners appealed the CA ruling to the Supreme Court.

ISSUES:

  1. Whether the present petition raises factual issues that are not permissible under the Rule 45 petition.

  2. Whether the amount of the petitioners' indebtedness has been determined with certainty.

  3. Whether the lower courts adequately supported their determination of the actual amount of the petitioners' indebtedness.

  4. Whether the prayer for proper accounting to determine the petitioners' actual remaining indebtedness should be granted.

  5. Whether the piercing the veil of corporate fiction doctrine should be applied.

  6. Whether NS International, Inc. (NSI) should be held liable for the obligations of Nuccio Shoes International, Inc. (Nuccio).

  7. Whether attorney's fees should be awarded to respondent Alfonso G. Puyat.

RULING:

  1. The present petition raises factual issues that are not permissible under the Rule 45 petition.

  2. The extent of the petitioners' indebtedness has not been determined with certainty.

  3. The lower courts did not adequately support their determination of the actual amount of the petitioners' indebtedness.

  4. The prayer for proper accounting should be granted as it is necessary to determine the petitioners' actual remaining indebtedness. The case is remanded for the presentation of additional evidence.

  5. The piercing the veil of corporate fiction doctrine should not be applied as the circumstances do not warrant it. The mere ownership by a single stockholder or another corporation of all or nearly all of the capital stocks of the corporation is not sufficient to disregard the separate corporate personality. The RTC and CA failed to provide a clear and convincing explanation for the application of the doctrine.

  6. NSI's liability should not attach to Nuccio.

  7. The respondent is entitled to attorney's fees of 10% of the total amount due. The award of appearance fee and litigation cost should stand.

PRINCIPLES:

  • In a Rule 45 proceeding, the determination of questions of fact is improper. However, the Supreme Court may take cognizance of factual issues under exceptional circumstances.

  • The exceptions to the rule that the Supreme Court does not normally undertake the re-examination of evidence include cases where the findings are grounded entirely on speculation, when there is grave abuse of discretion, when the findings of fact are conflicting, and when the facts set forth are not disputed by the parties, among others.

  • A determination of the actual amount of indebtedness must be supported by evidence and explained in the court's decision. The breakdown of liability must be clear and instructive, specifying how the amount was arrived at and how interest and penalties were calculated.

  • A corporation has a separate and distinct personality from its stockholders.

  • Stockholders are generally not answerable for the acts or liabilities of the corporation.

  • Mere ownership of capital stocks by a single stockholder or another corporation is not sufficient to disregard the separate corporate personality.

  • To apply the piercing the veil of corporate fiction doctrine, the following elements must be established: (a) control or complete domination of the corporation's finances, (b) use of control to commit a wrong or fraud, and (c) control as the proximate cause of the loss or injury.

  • The liability of a corporation should not automatically extend to its sister corporation, even if they have the same stockholders.

  • The court may equitably reduce the penalty imposed when the principal obligation has been partly or irregularly complied with by the debtor.

  • Attorney's fees may be awarded to a litigant forced to protect his interest in litigation, with the court having the discretion to reduce the amount if the circumstances warrant.