Soriano vs. Court of Appeals

Officers who execute a contract in their official capacities, for and on behalf of a corporation expressly identified as the other party's counterparty, bind the corporation and not themselves personally, absent proof that the separate corporate personality was used for a fraudulent, unfair, or illegal purpose.

Paulino Soriano, Nenita C. Esperanza, and Alejandro/Jandro G. Macadangdang were President, Secretary-Treasurer, and Manager, respectively, comprising the majority of the Board of Directors of Bacarra (I.N.) FaCoMa, Inc., a farmers' cooperative marketing association engaged in channeling members' Virginia tobacco to redrying plants for payment by the Philippine Virginia Tobacco Administration. Gervacio Cu was a non-member, Chinese national owner of Virginia tobacco seeking to move his produce through the cooperative's facilities and guia system. The cooperative ordinarily accepted consignments even from non-members, but alienage presented a distinct procedural complication for documentation in Cu's own name.

On August 10, 1964 at Bacarra, Ilocos Norte, Paulino Soriano as President, Nenita C. Esperanza as Secretary-Treasurer, Bienvenido E. Acosta as Director and Official Representative (signed by Erlinda V. Acosta), and A. Macadangdang as Manager executed a receipt stating that they, as President, Manager, Treasurer and Director Representative of Bacarra (I.N.) Facoma, Inc., received from Gervacio Cu one truckload of Virginia tobacco consisting of 160 bales of 50 kilos each, of different grades or classes from E to A, to be shipped to redrying plants through the Bacarra Facoma under Guia No. 236. The receipt provided as conditions of the deal between Mr. Cu and the Association that upon payment for the tobacco by the Philippine Virginia Tobacco Administration, Cu would collect the corresponding payments as graded by the redrying plant, with the further stipulation that the check representing payment would be cashed only in the presence of Cu or his authorized representative.

Because Cu was a non-member and a Chinese national, the transaction was not documented in the cooperative's usual manner. The guia and other transport documents covering his tobacco were listed not in his name but in the names of several farmers which he himself furnished to the Association, and the receipt was executed in the manner it was to expedite shipment through the FaCoMa despite his alienage. Thereafter, the tobacco was diverted by defendant Bienvenido E. Acosta to another redrying plant, as became apparent from the testimony of private respondent's only witness, Rafael Ayson, the driver of the truck used in transporting the tobacco. Ayson also testified that the receipt and invoices used in transporting the tobacco were in the name of Bacarra (I.N.) FACOMA, Inc. and not in the names of the individual signatories.

Because no payment for the tobacco followed, Cu filed on January 31, 1969 a complaint for collection of a sum of money against all signatories to the receipt. During trial, the petitioners, professing lack of knowledge of Acosta's diversion and absence of authority or consent therefor, moved on January 8, 1971 for leave to file a cross-claim against their co-defendants, the Acosta spouses, which the trial court denied on January 11, 1971. After trial, the trial court found the transaction a sale on credit to the officers in their private capacities, found consignment through the FaCoMa not established, and ordered defendants jointly and severally to pay Cu P19,350.00 with legal interest from filing, P2,000.00 attorney's fees, P320.00 value of empty sacks, P80.00 cost of baling, P350.00 transportation expenses, and costs of suit, which findings the Court of Appeals sustained in full.

• Corporate vs. Personal Capacity: Petitioner argued that they entered into the deal with private respondent as officers of Bacarra (I.N.) FaCoMa, Inc. and not in their personal capacities, so any accountability under the receipt should attach to the corporation.
• Joint vs. Solidary Liability: Petitioner maintained that even if liability were personal in character, it should only be joint and not solidary, there being nothing in the agreement indicating a solidary undertaking.
• Unauthorized Act and Cross-Claim: Petitioner argued that co-defendant Bienvenido E. Acosta acted without their authority and consent in diverting the tobacco, so he alone should answer for any loss, and that the trial court erred in refusing due course to their cross-claim against the Acosta spouses, an error the appellate court ignored.

• Personal vs. Corporate Liability: Whether the transaction was a sale on credit to petitioners in their private capacities or a corporate transaction binding Bacarra (I.N.) FaCoMa, Inc., such that petitioners are not personally liable.
• Joint vs. Solidary Liability: Whether petitioners, if liable at all, are bound jointly and severally or only jointly under the receipt.
• Cross-Claim: Whether the trial court erred in denying admission of petitioners' cross-claim against defendants Bienvenido E. Acosta and Erlinda V. Acosta.

• Personal vs. Corporate Liability: No personal liability. The receipt, designations, reference to the Association, and transport documents showed a corporate deal, with no fraud to pierce separate personality.
• Joint vs. Solidary Liability: No solidary liability. An obligation is presumed joint under Articles 1207 and 1208, and the receipt contained no stipulation of solidarity.
• Cross-Claim: No need to resolve. With liability held corporate and complaint dismissed as to petitioners, discussion of the denied cross-claim was rendered unnecessary.

• Personal vs. Corporate Liability: The official designations were not meaningless description personae but, taken with other circumstances, disclosed representative capacity. The receipt itself stated the conditions were between Cu and the Association, which could only be Bacarra (I.N.) FaCoMa, Inc., a farmers' cooperative marketing association; the use of Association rather than the undersigned was deliberate. Corroboration came from Ayson's testimony that transport receipts and invoices were in the FaCoMa's name, inconsistent with a personal sale. Lack of separate board authorization was sufficiently explained because the signatories comprised the majority of the Board, making a separate authorizing resolution a redundancy. Departure from usual business practice was traced to Cu's status as a non-member alien, requiring documentation in names of farmers he supplied, which also explained why petitioners could not produce those farmers, whose names might even be fictitious.
• Joint vs. Solidary Liability: Under the law and well-established jurisprudence, solidarity is not presumed and must be clearly expressed. Nothing in the receipt indicated that petitioners bound themselves solidarily, if they bound themselves personally at all.
• Cross-Claim: In view of the ruling that liability was corporate and pertained to Bacarra (I.N.) FaCoMa, Inc. rather than petitioners, extended discussion of the cross-claim denial and solidarity issue was deemed unnecessary beyond the presumption of joint obligation.

• Separate corporate personality — A corporation has a personality distinct and separate from its officers and members-stockholders; obligations contracted by officers in their official capacity for the corporation attach to the corporation. Applied here to hold that the receipt bound Bacarra (I.N.) FaCoMa, Inc., not the individual signatories who signed with their corporate titles for the Association.
• Piercing the corporate veil — The protective mantle of separate personality may be pierced and liability attached directly to officers and/or members-stockholders only when used for a fraudulent, unfair, or illegal purpose. Applied to refuse personal liability because no showing existed that the Association entered the transaction to defraud Cu or that the majority directors used its personality as a shield for wrongdoing.
• Presumption of joint obligation — An obligation is presumed joint and not solidary absent clear stipulation or legal provision imposing solidarity. Applied to reject joint-and-several liability because the receipt contained no indication of a solidary undertaking, citing Articles 1207 and 1208 and jurisprudence such as Compania General de Tabacos vs. Obed and Agoncillo vs. Javier.
• Authority of majority directors to bind corporation — Where signatories comprise the majority of the board of directors, no separate board resolution is needed to authorize the corporate transaction, a further authorization being a redundancy. Applied to excuse petitioners' failure to present a separate corporate authorization.

• "It is the general rule that the protective mantle of a corporation's separate and distinct personality could only be pierced and liability attached directly to its officers and/or members-stockholders, when the same is used for fraudulent, unfair or illegal purpose." — States the controlling test for piercing the veil and why personal liability was rejected absent fraud or misuse.
• "In the light of the foregoing, it is clear that the liability of the petitioners under the document subject of the instant case, is not personal but corporate, and therefore attached to the Bacarra (I.N.) FaCoMa, Inc. which, being a corporation, has a personality distinct and separate from that of the petitioners who are only its officers." — Articulates the ratio decidendi that the receipt bound the cooperative rather than its officers individually.
• "Suffice it to state that under the law and well-established jurisprudence, an obligation is presumed joint and not solidary." — States the canonical rule defeating the lower courts' imposition of joint-and-several liability.

• Yutivo Sons Hardware Company vs. Court of Tax Appeals, No. L-13203, January 28, 1961, 1 SCRA 160 — Cited as authority for the general rule on separate corporate personality and the limited exception for fraudulent, unfair, or illegal use.
• Cease vs. Court of Appeals, No. L-33172, October 18, 1979, 93 SCRA 483 — Cited in the same group supporting non-piercing absent misuse of corporate fiction.
• Guerrero vs. Court of Appeals, No. L-35250, November 29, 1983, 126 SCRA 109 — Cited in the same group supporting corporate separateness.
• National Federation of Labor Union (NAFLU) vs. Ople, No. 68661, July 22, 1986, 143 SCRA 124 — Cited in the same group supporting corporate separateness.
• Compania General de Tabacos vs. Obed, 13 Phil. 391 (1909) — Cited as well-established jurisprudence that obligations are presumed joint, not solidary.
• Agoncillo, et al. vs. Javier, 38 Phil. 424 (1918) — Cited for the same presumption of joint obligation.

• Articles 1207 and 1208, Civil Code of the Philippines — Provide that concurrence of two or more creditors or debtors does not imply solidarity and that solidary obligations must be expressly stipulated or imposed by law; applied to hold that the receipt, lacking any solidarity clause, could at most create a joint obligation.

Melencio-Herrera (Chairperson), Paras, Padilla and Regalado, JJ., concur.