Boyer Roxas vs CA

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BOYER – ROXAS VS. COURT OF APPEALS211 SCRA 470 (1992)

FACTS OF THE CASEWhen Eugenia V. Roxas died, her heirs formed a corporation under the name and style of Heirs of EugeniaV. Roxas, Inc. using her estate as the capital of the corporation, the private respondent herein. It wasprimarily engaged in agriculture business, however it amended its purpose to enable it to engage in resortand restaurant business. etitioners are stoc!holders of the corporation and two of the heirs of Eugenia. "ytolerance, they were allowed to occupy some of the properties of the corporation as their residenceHowever, the board of directors of the corporation passed a resolution evicting the petitioners from theproperty of the corporation because the same will be needed for expansion.#t the R$%, private respondent presented its evidence averring that the sub&ect premises are owned by thecorporation. etitioners failed to present their evidence due to alleged negligence of their counsel. R$%handed a decision in favor of private respondent.etitioners appealed to the %ourt of #ppeals but the latter denied the petition and a'rmed the ruling othe R$%. Hence, they appealed to the (upreme %ourt. In their appeal, petitioners argues that the %# madea mista!e in upholding the decision of the R$%, and that their occupancy of the sub&ect premises should berespected because they own an ali)uot part of the corporation as stoc!holders, and that the veil ofcorporate *ction must be pierced by virtue thereof.

ISSUE+. Whether petitioners contention were correct as regards the piercing of the corporate veil.-. Whether petitioners were correct in their contention that they should be respected as regards theiroccupancy since they own an ali)uot part of the corporation.

RULING+.etitioners contention to pierce the veil of corporate *ction is untenable. #s aptly held by the court/..$he separate personality of a corporation may 0123 be disregarded when the corporation is used as acloak or cover for fraud or illegality, or to work injustice, or when necessary to achieve equity or whennecessary for the protection of creditors.4-. #s regards petitioners contention that they should be respected on their occupancy by virtue of anali)uot part they own on the corporation as stoc!holders, it also fails to hold water. $he court held that/ properties owned by a corporation are owned by it as an entity separate and distinct from its members.While shares of stocks are personal property, they do not represent property of the corporation. A share ofstock only typies an aliquot part of the corporation’s property, or the right to share in its proceeds to thatetent when distributed according to law and equity, but its holder is not the owner of any part of the

capital of the corporation. !or is he entitled to the possession of any denite portion of its property orassets. "he holder is not a co#owner or a tenant in common of the corporate property.$

Republic of the hilippines

SUPREME COURT

5anila $HIR6 6IVI(I01

G.R. N. 100!"" #$%& 14' 1992REBECCA BOYERROXAS *+ GUILLERMO ROXAS' petitioners,

vs.HON. COURT OF APPEALS *+ HEIRS OF EUGENIA V. ROXAS' INC.' respondents. GUTIERRE,' JR., J.:

$his is a petition to review the decision and resolution of the %ourt of #ppeals in %#78.R. 1o. +9:;<

a'rming the earlier decision of the Regional $rial %ourt of 2aguna, "ranch ;=, at %alamba, in the

consolidated R$% %ivil %ase 1os. ><-7>97% and ><;7>97% entitled ?Heirs of Eugenia V. Roxas, Inc. v.

Rebecca "oyer7Roxas? and Heirs of Eugenia V. Roxas, Inc. v. 8uillermo Roxas,? the dispositive portion of

which readsI1 VIEW 0@ $HE @0RE80I18, &udgment is hereby rendered in favor of the plaintiA and

against the defendants, by ordering as it is hereby ordered that



+B In R$% %ivil %ase 1o. ><-7>97% Rebecca "oyer7Roxas and all persons claiming under her

toaB Immediately vacate the residential house near the "alugbugan pool located inside the

premises of the Hidden Valley (prings Resort at 2imao, %alauan, 2agunaCbB ay the plaintiA the amount of ;<<.<< per month from (eptember +<, +D>;, for her

occupancy of the residential house until the same is vacatedCcB Remove the un*nished building erected on the land of the plaintiA within ninety D<B days

from receipt of this decisionCdB ay the plaintiA the amount of +<<.<< per month from (eptember +<, +D>;, until the

said un*nished building is removed from the land of the plaintiAC andeB ay the costs.-B In R$% %ivil %ase 1o. ><;7>97% 8uillermo Roxas and all persons claiming under him toaB Immediately vacate the residential house near the tennis court located within the

premises of the Hidden Valley (prings Resort at 2imao, %alauan, 2agunaCbB ay the plaintiA the amount of ;<<.<< per month from (eptember +<, +D>;, for his

occupancy of the said residential house until the same is vacatedC andcB ay the costs. %ollo, p. ;FB

In two -B separate complaints for recovery of possession *led with the Regional $rial %ourt of 2aguna

against petitioners Rebecca "oyer7Roxas and 8uillermo Roxas respectively, respondent corporation, Heirs

of Eugenia V. Roxas, Inc., prayed for the e&ectment of the petitioners from buildings inside the Hidden

Valley (prings Resort located at 2imao, %alauan, 2aguna allegedly owned by the respondent corporation.In the case of petitioner Rebecca "oyer7Roxas %ivil %ase 1o7><-7>97%B, the respondent corporation alleged

that Rebecca is in possession of two -B houses, one of which is still under construction, built at theexpense of the respondent corporationC and that her occupancy on the two -B houses was only upon the

tolerance of the respondent corporation.In the case of petitioner 8uillermo Roxas %ivil %ase 1o. ><;7>97%B, the respondent corporation alleged that

8uillermo occupies a house which was built at the expense of the former during the time when 8uillermoGs

father, Eriberto Roxas, was still living and was the general manager of the respondent corporationC that the

house was originally intended as a recreation hall but was converted for the residential use of 8uillermoC

and that 8uillermoGs possession over the house and lot was only upon the tolerance of the respondent

corporation.In both cases, the respondent corporation alleged that the petitioners never paid rentals for the use of the

buildings and the lots and that they ignored the demand letters for them to vacate the buildings.In their separate answers, the petitioners traversed the allegations in the complaint by stating that they

are heirs of Eugenia V. Roxas and therefore, co7owners of the Hidden Valley (prings ResortC and as co7owners of the property, they have the right to stay within its premises. $he cases were consolidated and tried &ointly.#t the pre7trial, the parties limited the issues as follows

+B whether plaintiA is entitled to recover the )uestioned premisesC-B whether plaintiA is entitled to reasonable rental for occupancy of the premises in

)uestionC;B whether the defendant is legally authoried to pierce the veil of corporate *ction and

interpose the same as a defense in an accion publicianaC9B whether the defendants are truly builders in good faith, entitled to occupy the )uestioned

premisesC:B whether plaintiA is entitled to damages and reasonable compensation for the use of the

)uestioned premisesC

FB whether the defendants are entitled to their counterclaim to recover moral and exemplarydamages as well as attorneyGs fees in the two casesC=B whether the presence and occupancy by the defendants on the premises in )uestioned

sicB hampers, deters or impairs plaintiAGs operation of Hidden Valley (prings ResortC and>B whether or not a unilateral and sudden withdrawal of plaintiAs tolerance allowing

defendantsG occupancy of the premises in )uestioned sicB is un&ust enrichment. 0riginal

Records, 9>FBpon motion of the plaintiA respondent corporation, residing Judge @rancisco 5a. 8uerrero of "ranch ;9

issued an 0rder dated #pril -:, +D>F inhibiting himself from further trying the case. $he cases were re7

raKed to "ranch ;= presided by Judge 0dilon "autista. Judge "autista continued the hearing of the cases.@or failure of the petitioners defendants belowB and their counsel to attend the 0ctober --, +D>F hearing

despite notice, and upon motion of the respondent corporation, the court issued on the same day, 0ctober



--, +D>F, an 0rder considering the cases submitted for decision. #t this stage of the proceedings, the

petitioners had not yet presented their evidence while the respondent corporation had completed the

presentation of its evidence. $he evidence of the respondent corporation upon which the lower court based its decision is as follows

$o support the complaints, the plaintiA oAered the testimonies of 5aria 5ilagros Roxas and

that of Victoria Roxas Villarta as well as Exhibits ?#? to ?57;?. $he evidence of the plaintiA established the following that the plaintiA, Heirs of Eugenia V

Roxas, Incorporated, was incorporated on 6ecember 9, +DF- Exh. ?%?B with the primary

purpose of engaging in agriculture to develop the properties inherited from Eugenia V. Roxas

and that of y Eufrocino RoxasC that the #rticles of Incorporation of the plaintiA, in +D=+, wasamended to allow it to engage in the resort business Exh.

?%7+?BC that the incorporators as original members of the board of directors of the plaintiA

were all members of the same family, with Eufrocino Roxas having the biggest shareC that

accordingly, the plaintiA put up a resort !nown as Hidden Valley (prings Resort on a portion

of its land located at "o. 2imao, %alauan, 2aguna, and covered by $%$ 1o. ;-F;D Exhs. ?#?

and ?#7l?BC that improvements were introduced in the resort by the plaintiA and among them

were cottages, houses or buildings, swimming pools, tennis court, restaurant and open

pavilionsC that the house near the "alugbugan ool Exh. ?"7l?B being occupied by Rebecca

". Roxas was originally intended as staA house but later used as the residence of Eriberto

Roxas, deceased husband of the defendant Rebecca "oyer7Roxas and father of 8uillermo

RoxasC that this house presently being occupied by Rebecca ". Roxas was built from

corporate fundsC that the construction of the un*nished house Exh. ?"7-?B was started bythe defendant Rebecca "oyer7Roxas and her husband Eriberto RoxasC that the third building

Exh. ?"7;?B presently being occupied by 8uillermo Roxas was originally intended as a

recreation hall but later converted as a residential houseC that this house was built also from

corporate fundsC that the said house occupied by 8uillermo Roxas when it was being built

had nipa roo*ng but was later changed to galvanied iron sheetsC that at the beginning, it

had no partition downstairs and the second Loor was an open spaceC that the conversion

from a recreation hall to a residential house was with the !nowledge of Eufrocino Roxas and

was not ob&ected to by any of the "oard of 6irectors of the plaintiAC that most of the

materials used in converting the building into a residential house came from the materials

left by %oppola, a *lm producer, who *lmed the movie ?#pocalypse 1ow?C that %oppola left

the materials as part of his payment for rents of the rooms that he occupied in the resortC

that after the said recreation hall was converted into a residential house, defendant

8uillermo Roxas moved in and occupied the same together with his family sometime in +D==

or +D=>C that during the time Eufrocino Roxas was still alive, Eriberto Roxas was the general

manager of the corporation and there was seldom any board meetingC that Eufrocino Roxas

together with Eriberto Roxas were sicB the ones who were running the corporationC that

during this time, Eriberto Roxas was the restaurant and wine concessionaire of the resortC

that after the death of Eufrocino Roxas, Eriberto Roxas continued as the general manager

until his death in +D><C that after the death of Eriberto Roxas in +D><, the defendants

Rebecca ". Roxas and 8uillermo Roxas, committed acts that impeded the plaintiAGs

expansion and normal operation of the resortC that the plaintiA could not even use its own

pavilions, !itchen and other facilities because of the acts of the defendants which led to the

*ling of criminal cases in courtC that cases were even *led before the 5inistry of $ourism,

"ureau of 6omestic $rade and the 0'ce of the resident by the parties hereinC that the

defendants violated the resolution and orders of the 5inistry of $ourism dated July ->, +D>;,#ugust ;, +D>; and 1ovember -F, +D>9 Exhs. ?8?, ?H? and ?H7l?B which ordered them or the

corporation they represent to desist from and to turn over immediately to the plaintiA the

management and operation of the restaurant and wine outlets of the said resort Exh. ?87l?BC

that the defendants also violated the decision of the "ureau of 6omestic $rade dated

0ctober -;, +D>; Exh. ?%?BC that on #ugust -=, +D>;, because of the acts of the defendants

the "oard of 6irectors of the plaintiA adopted Resolution 1o. >;7+- series of +D>; Exh. ?@?B

authoriing the e&ectment of the defendants from the premises occupied by themC that on

(eptember +, +D>;, demand letters were sent to Rebecca "oyer7Roxas and 8uillermo Roxas

Exhs. ?6? and ?67+?B demanding that they vacate the respective premises they occupyC and

that the dispute between the plaintiA and the defendants was brought before the barangay

level and the same was not settled Exhs. ?E? and ?E7l?B. 0riginal Records, pp. 9:979:FB



$he petitioners appealed the decision to the %ourt of #ppeals. However, as stated earlier, the appellate

court a'rmed the lower courtGs decision. $he etitionersG motion for reconsideration was li!ewise denied.Hence, this petition.In a resolution dated @ebruary :, +DD-, we gave due course to the petition.

$he petitioners now contendI Respondent %ourt erred when it refused to pierce the veil of corporate *ction over private respondent and

maintain the petitioners in their possession andMor occupancy of the sub&ect premises considering that

petitioners are owners of ali)uot part of the properties of private respondent. "esides, private respondent

itself discarded the mantle of corporate *ction by acts andMor omissions of its board of directors andMor

stoc!holders.II $he respondent %ourt erred in not holding that petitioners were in fact denied due process or their day in

court brought about by the gross negligence of their former counsel.III $he respondent %ourt misapplied the law when it ordered petitioner Rebecca "oyer7Roxas to remove the

un*nished building in R$% %ase 1o. ><-7>97%, when the trial court opined that she spent her own funds for

the construction thereof. %# %ollo, pp. +=7+>BWere the petitioners denied due process of law in the lower courtN#fter the cases were re7raKed to the sala of residing Judge 0dilon "autista of "ranch ;= the following

events transpired0n July ;, +D>F, the lower court issued an 0rder setting the hearing of the cases on July -+, +D>F.

etitioner Rebecca V. Roxas received a copy of the 0rder on July +:, +D>F, while petitioner 8uillermo Roxas

received his copy on July +>, +D>F. #tty. %onrado 5anicad, the petitionersG counsel received another copy

of the 0rder on July ++, +D>F. 0riginal Records, p. -F<B

0n motion of the respondent corporationGs counsel, the lower court issued an 0rder dated July +:, +D>Fcancelling the July -+, +D>F hearing and resetting the hearing to #ugust ++, +D>F. 0riginal records, -F-7

-F;B $hree separate copies of the order were sent and received by the petitioners and their counsel.

0riginal Records, pp. -F>, -FD, -=+B# motion to cancel and re7schedule the #ugust ++, +D>F hearing *led by the respondent corporationGs

counsel was denied in an 0rder dated #ugust >, +D>F. #gain separate copies of the 0rder were sent and

received by the petitioners and their counsel. 0riginal Records, pp. -=F7-=DB#t the hearing held on #ugust ++, +D>F, only #tty. "enito . @abie, counsel for the respondent corporation

appeared. 1either the petitioners nor their counsel appeared despite notice of hearing. $he lower court

then issued an 0rder on the same date, to wit0 R 6 E R

When these cases were called for continuation of trial, #tty. "enito . @abie appeared before

this %ourt, however, the defendants and their lawyer despite receipt of the 0rder setting thecase for hearing today failed to appear. 0n 5otion of #tty. @abie, further cross examination of

witness Victoria Vallarta is hereby considered as having been waived. $he plaintiA is hereby given twenty -<B days from today within which to submit formal oAer

of evidence and defendants are also given ten +<B days from receipt of such formal oAer of

evidence to *le their ob&ection thereto.In the meantime, hearing in these cases is set to (eptember -D, +D>F at +<<< oGcloc! in the

morning. 0riginal Records, p. ->FB%opies of the 0rder were sent and received by the petitioners and their counsel on the following dates O

Rebecca "oyer7Roxas on #ugust -<, +D>F, 8uillermo Roxas on #ugust -F, +D>F, and #tty. %onrado 5anicad

on (eptember +D, +D>F. 0riginal Records, pp. ->>7-D<B0n (eptember +, +D>F, the respondent corporation *led its ?@ormal 0Aer of Evidence.? In an 0rder dated

(eptember -D, +D>F, the lower court issued an 0rder admitting exhibits ?#? to ?57;? submitted by the

respondent corporation in its ?@ormal 0Aer of Evidence . . . there being no ob&ection . . .? 0riginal Records,p. 9+>B %opies of this 0rder were sent and received by the petitioners and their counsel on the following

dates Rebecca "oyer7Roxas on 0ctober D, +D>FC 8uillermo Roxas on 0ctober D, +D>F and #tty. %onrado

5anicad on 0ctober 9, +D>F 0riginal Records, pp. 9-<, 9-+, 9->B. $he scheduled hearing on (eptember -D, +D>F did not push through as the petitioners and their counsel

were not present prompting #tty. "enito @abie, the respondent corporationGs counsel to move that the

cases be submitted for decision. $he lower court denied the motion and set the cases for hearing on

0ctober --, +D>F. However, in its 0rder dated (eptember -D, +D>F, the court warned that in the event the

petitioners and their counsel failed to appear on the next scheduled hearing, the court shall consider the

cases submitted for decision based on the evidence on record. 0riginal Records, p. 9-D, 9;< and 9;+B



(eparate copies of this 0rder were sent and received by the petitioners and their counsel on the following

dates Rebecca "oyer7Roxas on 0ctober D, +D>F, 8uillermo Roxas on 0ctober D, +D>FC and #tty. %onrado

5anicad on 0ctober +, +D>F. 0riginal Records, pp. 9-D79;<B6espite notice, the petitioners and their counsel again failed to attend the scheduled 0ctober --, +D>F

hearing. #tty. @abie representing the respondent corporation was present. Hence, in its 0rder dated

0ctober --, +D>F, on motion of #tty. @abie and pursuant to the order dated (eptember -D, +D>F, the %ourt

considered the cases submitted for decision. 0riginal Records, p. 9;FB0n 1ovember +9, +D>F, the respondent corporation, *led a ?5anifestation?, stating that ?. . . it is

submitting without further argument its ?0pposition to the 5otion for Reconsideration? for the

consideration of the Honorable %ourt in resolving sub&ect incident.? 0riginal Records, p. 99-B0n 6ecember +F, +D>F, the lower court issued an 0rder, to wit

0 R 6 E R%onsidering that the %ourt up to this date has not received any 5otion for Reconsideration

*led by the defendants in the above7entitled cases, the %ourt cannot act on the 0pposition

to 5otion for Reconsideration *led by the plaintiA and received by the %ourt on 1ovember

+9, +D>F. 0riginal Records, p. 99FB0n January +:, +D>=, the lower court rendered the )uestioned decision in the two -B cases. 0riginal

Records, pp. 9:;79:DB0n January -<, +D>=, #tty. %onrado 5anicad, the petitionersG counsel *led an &#'arte5anifestation and

attached thereto, a motion for reconsideration of the 0ctober --, +D>F 0rder submitting the cases for

decision. He prayed that the 0rder be set aside and the cases be re7opened for reception of evidence for

the petitioners. He averred that +B within the reglementary period he prepared the motion for

reconsideration and among other documents, the draft was sent to his law o'ce thru his messengerC after

signing the *nal copies, he caused the service of a copy to the respondent corporationGs counsel with the

instruction that the copy of the %ourt be *ledC however, there was a miscommunication between his

secretary and messenger in that the secretary mailed the copy for the respondent corporationGs counsel

and placed the rest in an envelope for the messenger to *le the same in court but the messenger thought

that it was the secretary who would *le itC it was only later on when it was discovered that the copy for the

%ourt has not yet been *led and that such failure to *le the motion for reconsideration was due to

excusable neglect andMor accident. $he motion for reconsideration contained the following allegations that

on the date set for hearing 0ctober --, +D>FB, he was on his way to %alamba to attend the hearing but his

car suAered transmission brea!downC and that despite eAorts to repair said transmission, the car remained

inoperative resulting in his absence at the said hearing. 0riginal Records, pp. 9F<79FDB0n @ebruary ;, +D>=, #tty. 5anicad *led a motion for reconsideration of the January +:, +D>= decision. He

explained that he had to *le the motion because the receiving cler! refused to admit the motion forreconsideration attached to the e#parte manifestation because there was no proof of service to the other

party. Included in the motion for reconsideration was a notice of hearing of the motion on @ebruary ;,

+D>=. 0riginal Records, p. 9=F7#B0n @ebruary 9, +D>=, the respondent corporation through its counsel *led a 5anifestation and 5otion

manifesting that they received the copy of the motion for reconsideration only today @ebruary 9, +D>=B,

hence they prayed for the postponement of the hearing. 0riginal Records, pp. 9=>79=DB0n the same day, @ebruary 9, +D>=, the lower court issued an 0rder setting the hearing on @ebruary +;,

+D>= on the ground that it received the motion for reconsideration late. %opies of this 0rder were sent

separately to the petitioners and their counsel. $he records show that #tty. 5anicad received his copy on

@ebruary ++, +D>=. #s regards the petitioners, the records reveal that Rebecca "oyer7Roxas did not receive

her copy while as regards 8uillermo Roxas, somebody signed for him but did not indicate when the copy

was received. 0riginal Records, pp. 9>+79>;B#t the scheduled @ebruary +;, +D>= hearing, the counsels for the parties were present. However, the

hearing was reset for 5arch F, +D>= in order to allow the respondent corporation to *le its opposition to

the motion for reconsideration. 0rder dated @ebruary +;, +D>=, 0riginal Records, p. 9>FB %opies of the

0rder were sent and received by the petitioners and their counsel on the following dates Rebecca "oyer7

Roxas on @ebruary -;, +D>=C 8uillermo Roxas on @ebruary -;, +D>= and #tty. 5anicad on @ebruary +D,

+D>=. 0riginal Records, pp. 9>=, 9>D79D<B $he records are not clear as to whether or not the scheduled hearing on 5arch F, +D>= was held.

1evertheless, the records reveal that on 5arch +;, +D>=, the lower court issued an 0rder denying the

motion for reconsideration. $he well7settled doctrine is that the client is bound by the mista!es of his lawyer. #guila v. %ourt of @irst

Instance of "atangas, "ranch I, +F< (%R# ;:- P+D>>QC (ee also Vivero v. (antos, et al., D> hil. :<< P+D:FQC



Isaac v. 5endoa, >D hil. -=D P+D:+QC 5ontes v. %ourt of @irst Instance of $ayabas, 9> hil. F9< P+D-FQC

eople v. 5ananilla, 9; hil. +F= P+D--QC nited (tates v. 6ungca, -= hil. -=9 P+D+9QC and nited (tates

v. mali, +: hil. ;; P+D+<QB $his rule, however, has its exceptions. $hus, in several cases, we ruled that

the party is not bound by the actions of his counsel in case the gross negligence of the counsel resulted in

the clientGs deprivation of his property without due process of law. In the case of (egarda v. )ourt of

Appeals +D: (%R# 9+> P+DD+QB, we saidIn eopleGs Homesite Housing %orp. v. $iongco and Escasa +- (%R# 9=+ P+DF9QB, this

%ourt ruled as followsrocedural technicality should not be made a bar to the vindication of a

legitimate grievance. When such technicality deserts from being an aid to Justice, the courts are &usti*ed in excepting from its operation a particular

case. Where there was something *shy and suspicious about the actuations of

the former counsel of petitioners in the case at bar, in that he did not give any

signi*cance at all to the processes of the court, which has proven pre&udicial

to the rights of said clients, under a lame and Limsy explanation that the

courtGs processes &ust escaped his attention, it is held that said lawyer

deprived his clients of their day in court, thus entitling said clients to petition

for relief from &udgment despite the lapse of the reglementary period for *ling

said period for *ling said petition.In Escudero v. Judge 6ulay +:> (%R# FD P+D>>QB, this %ourt, in holding that the counselGs

blunder in procedure is an exception to the rule that the client is bound by the mista!es of

counsel, made the following dis)uisitionetitioners contend, through their new counsel, that the &udgment rendered

against them by the respondent court was null and void, because they were

therein deprived of their day in court and divested of their property without

due process of law, through the gross ignorance, mista!e and negligence of

their previous counsel. $hey ac!nowledge that, while as a rule, clients are

bound by the mista!e of their counsel, the rule should not be applied

automatically to their case, as their trial counselGs blunder in procedure and

gross ignorance of existing &urisprudence changed their cause of action and

violated their substantial rights.We are impressed with petitionerGs contentions.

xxx xxx xxxWhile this %ourt is cogniant of the rule that, generally, a client will suAer

conse)uences of the negligence, mista!e or lac! of competence of hiscounsel, in the interest of Justice and e)uity, exceptions may be made to such

rule, in accordance with the facts and circumstances of each case. #dherence

to the general rule would, in the instant case, result in the outright deprivation

of their property through a technicality.In its )uestioned decision dated 1ovember +D, +D>D the %ourt of #ppeals found, in no

uncertain terms, the negligence of the then counsel for petitioners when he failed to *le the

proper motion to dismiss or to draw a compromise agreement if it was true that they agreed

on a settlement of the caseC or in simply *ling an answerC and that after having been

furnished a copy of the decision by the court he failed to appeal therefrom or to *le a

petition for relief from the order declaring petitioners in default. In all these instances the

appellate court found said counsel negligent but his acts were held to bind his client,

petitioners herein, nevertheless. $he %ourt disagrees and *nds that the negligence of counsel in this case appears to be so

gross and inexcusable. $his was compounded by the fact, that after petitioner gave said

counsel another chance to ma!e up for his omissions by as!ing him to *le a petition for

annulment of the &udgment in the appellate court, again counsel abandoned the case of

petitioner in that after he received a copy of the adverse &udgment of the appellate court, he

did not do anything to save the situation or inform his client of the &udgment. He allowed the

&udgment to lapse and become *nal. (uch rec!less and gross negligence should not be

allowed to bind the petitioner. etitioner was thereby eAectively deprived of her day in court.

at pp. 9-F79-=B $he herein petitioners, however, are not similarly situated as the parties mentioned in the abovecited

cases. We cannot rule that they, too, were victims of the gross negligence of their counsel.



$he petitioners are to be blamed for the 0ctober --, +D>F order issued by the lower court submitting the

cases for decision. $hey received notices of the scheduled hearings and yet they did not do anything. 5ore

speci*cally, the parties received notice of the 0rder dated (eptember -D, +D>F with the warning that if

they fail to attend the 0ctober --, +D>F hearing, the cases would be submitted for decision based on the

evidence on record. Earlier, at the scheduled hearing on (eptember -D, +D>F, the counsel for the

respondent corporation moved that the cases be submitted for decision for failure of the petitioners and

their counsel to attend despite notice. $he lower court denied the motion and gave the petitioners and

their counsel another chance by rescheduling the 0ctober --, +D>F hearing.Indeed, the petitioners !new all along that their counsel was not attending the scheduled hearings. $hey

did not ta!e steps to change their counsel or ma!e him attend to their cases until it was too late. 0n thecontrary, they continued to retain the services of #tty. 5anicad !nowing fully well his lapses vis#a#vis their

cases. $hey, therefore, cannot raise the alleged gross negligence of their counsel resulting in their denial

of due process to warrant the reversal of the lower courtGs decision. In a similar case, Aguila v. )ourt of

*irst +nstance of atangas, ranch - supraB, we ruledIn the instant case, the petitioner should have noticed the succession of errors committed by

his counsel and ta!en appropriate steps for his replacement before it was altogether too

late. He did not. 0n the contrary, he continued to retain his counsel through the series of

proceedings that all resulted in the re&ection of his cause, obviously through such counselGs

?ineptitude? and, let it be added, the clientsG forbearance. $he petitionerGs reverses should

have cautioned him that his lawyer was mishandling his case and moved him to see! the

help of other counsel, which he did in the end but rather tardily.

1ow petitioner wants us to nullify all of the antecedent proceedings and recognie his earlierclaims to the disputed property on the &usti*cation that his counsel was grossly inept. (uch a

reason is hardly plausible as the petitionerGs new counsel should !now. 0therwise, all a

defeated party would have to do to salvage his case is claim neglect or mista!e on the part

of his counsel as a ground for reversing the adverse &udgment. $here would be no end to

litigation if these were allowed as every shortcoming of counsel could be the sub&ect of

challenge by his client through another counsel who, if he is also found wanting, would

li!ewise be disowned by the same client through another counsel, and so on ad innitum.

$his would render court proceedings inde*nite, tentative and sub&ect to reopening at any

time by the mere subterfuge of replacing counsel. at pp. ;:=7;:>BWe now discuss the merits of the cases.In the *rst assignment of error, the petitioners maintain that their possession of the )uestioned properties

must be respected in view of their ownership of an ali)uot portion of all the properties of the respondent

corporation being stoc!holders thereof. $hey propose that the veil of corporate *ction be pierced,considering the circumstances under which the respondent corporation was formed.0riginally, the )uestioned properties belonged to Eugenia V. Roxas. #fter her death, the heirs of Eugenia V.

Roxas, among them the petitioners herein, decided to form a corporation O Heirs of Eugenia V. Roxas,

Incorporated private respondent hereinB with the inherited properties as capital of the corporation. $he

corporation was incorporated on 6ecember 9, +DF- with the primary purpose of engaging in agriculture to

develop the inherited properties. $he #rticles of Incorporation of the respondent corporation were

amended in +D=+ to allow it to engage in the resort business. #ccordingly, the corporation put up a resort

!nown as Hidden Valley (prings Resort where the )uestioned properties are located. $hese facts, however, do not &ustify the position ta!en by the petitioners. $he respondent is a bona de corporation. #s such, it has a &uridical personality of its own separate from

the members composing it. Western #gro Industrial %orporation v. %ourt of #ppeals, +>> (%R# =<D P+DD<QC

$an "oon "ee %o., Inc. v. Jarencio, +F; (%R# -<: P+D>>QC 3utivo (ons Hardware %ompany v. %ourt of $ax#ppeals, + (%R# +F< P+DF+QC Emilio %ano Enterprises, Inc. v. %ourt of Industrial Relations, +; (%R# -D<

P+DF:QB $here is no dispute that title over the )uestioned land where the Hidden Valley (prings Resort is

located is registered in the name of the corporation. $he records also show that the staA house being

occupied by petitioner Rebecca "oyer7Roxas and the recreation hall which was later on converted into a

residential house occupied by petitioner 8uillermo Roxas are owned by the respondent corporation.

Regarding properties owned by a corporation, we stated in the case of tockholders of *. /uan0on and

ons, +nc. v. %egister of 1eeds of 2anila, F (%R# ;=; P+DF-QBxxx xxx xxx

. . . roperties registered in the name of the corporation are owned by it as an entity

separate and distinct from its members. While shares of stoc! constitute personal property,

they do not represent property of the corporation. $he corporation has property of its own



which consists chieLy of real estate 1elson v. 0wen, ++; #la., ;=-, -+ (o. =:C 5orrow v.

8ould, +9: Iowa +, +-; 1.W. =9;B. # share of stoc! only typi*es an ali)uot part of the

corporationGs property, or the right to share in its proceeds to that extent when distributed

according to law and e)uity Hall @aley v. #labama $erminal, +=; #la., ;D>, :F (o. -;:B,

but its holder is not the owner of any part of the capital of the corporation "radley v.

"auder, ;F 0hio (t., ->B. 1or is he entitled to the possession of any de*nite portion of its

property or assets 8ottfried V. 5iller, +<9 .(., :-+C Jones v. 6avis, ;: 0hio (t., 9=9B. $he

stoc!holder is not a co7owner or tenant in common of the corporate property Harton v.

Johnston, +FF #la., ;+=, :+ (o. DD-B. at pp. ;=:7;=FB

$he petitioners point out that their occupancy of the staA house which was later used as the residence ofEriberto Roxas, husband of petitioner Rebecca "oyer7Roxas and the recreation hall which was converted

into a residential house were with the blessings of Eufrocino Roxas, the deceased husband of Eugenia V.

Roxas, who was the ma&ority and controlling stoc!holder of the corporation. In his lifetime, Eufrocino Roxas

together with Eriberto Roxas, the husband of petitioner Rebecca "oyer7Roxas, and the father of petitioner

8uillermo Roxas managed the corporation. $he "oard of 6irectors did not ob&ect to such an arrangement.

$he petitioners argue that . . . the authority thus given by Eufrocino Roxas for the conversion of the

recreation hall into a residential house can no longer be )uestioned by the stoc!holders of the private

respondent andMor its board of directors for they impliedly but no leas explicitly delegated such authority to

said Eufrocino Roxas. %ollo, p. +-B#gain, we must emphasie that the respondent corporation has a distinct personality separate from its

members. $he corporation transacts its business only through its o'cers or agents. Western #gro

Industrial %orporation v. %ourt of #ppeals, supraB. Whatever authority these o'cers or agents may have isderived from the board of directors or other governing body unless conferred by the charter of the

corporation. #n o'cerGs power as an agent of the corporation must be sought from the statute, charter,

the by7laws or in a delegation of authority to such o'cer, from the acts of the board of directors, formally

expressed or implied from a habit or custom of doing business. Vicente v. 8eralde, :- (%R# -+< P+D=;QBIn the present case, the record shows that Eufrocino V. Roxas who then controlled the management of the

corporation, being the ma&ority stoc!holder, consented to the petitionersG stay within the )uestioned

properties. (peci*cally, Eufrocino Roxas gave his consent to the conversion of the recreation hall to a

residential house, now occupied by petitioner 8uillermo Roxas. $he "oard of 6irectors did not ob&ect to the

actions of Eufrocino Roxas. $he petitioners were allowed to stay within the )uestioned properties until

#ugust -=, +D>;, when the "oard of 6irectors approved a Resolution e&ecting the petitioners, to witR E ( 0 2 $ I 0 1 1o. >;7+-

RE(02VE6, $hat Rebecca ". Roxas and 8uillermo Roxas, and all persons claiming under

them, be e&ected from their occupancy of the Hidden Valley (prings compound on whichtheir houses have been constructed andMor are being constructed only on tolerance of the

%orporation and without any contract therefor, in order to give way to the %orporationGs

expansion and improvement program and obviate pre&udice to the operation of the Hidden

Valley (prings Resort by their continued interference.RE(02VE6, @urther that the services of #tty. "enito . @abie be engaged and that he be

authoried as he is hereby authoried to eAect the e&ectment, including the *ling of the

corresponding suits, if necessary to do so. 0riginal Records, p. ;-=BWe *nd nothing irregular in the adoption of the Resolution by the "oard of 6irectors. $he petitionersG stay

within the )uestioned properties was merely by tolerance of the respondent corporation in deference to

the wishes of Eufrocino Roxas, who during his lifetime, controlled and managed the corporation. Eufrocino

RoxasG actions could not have bound the corporation forever. $he petitioners have not cited any provision

of the corporation by7laws or any resolution or act of the "oard of 6irectors which authoried EufrocinoRoxas to allow them to stay within the company premises forever. We rule that in the absence of any

existing contract between the petitioners and the respondent corporation, the corporation may elect to

e&ect the petitioners at any time it wishes for the bene*t and interest of the respondent corporation. $he petitionersG suggestion that the veil of the corporate *ction should be pierced is untenable. $he

separate personality of the corporation may be disregarded only when the corporation is used ?as a cloa!

or cover for fraud or illegality, or to wor! in&ustice, or where necessary to achieve e)uity or when

necessary for the protection of the creditors.? (ulong "ayan, Inc. v. #raneta, Inc., =- (%R# ;9= P+D=FQ

cited in $an "oon "ee %o., Inc., v. Jarencio,supra and Western #gro Industrial %orporation v. %ourt of

#ppeals, supraB $he circumstances in the present cases do not fall under any of the enumerated

categories.



In the third assignment of error, the petitioners insist that as regards the un*nished building, Rebecca

"oyer7Roxas is a builder in good faith. $he construction of the un*nished building started when Eriberto Roxas, husband of Rebecca "oyer7Roxas,

was still alive and was the general manager of the respondent corporation. $he couple used their own

funds to *nance the construction of the building. $he "oard of 6irectors of the corporation, however, did

not ob&ect to the construction. $hey allowed the construction to continue despite the fact that it was within

the property of the corporation. nder these circumstances, we agree with the petitioners that the

provision of #rticle 9:; of the %ivil %ode should have been applied by the lower courts.#rticle 9:; of the %ivil %ode provides

If there was bad faith, not only on the part of the person who built, planted or sown on theland of another but also on the part of the owner of such land, the rights of one and the

other shall be the same as though both had acted in good faith.In such a case, the provisions of #rticle 99> of the %ivil %ode govern the relationship between petitioner

Rebecca7"oyer7Roxas and the respondent corporation, to wit#rt. 99> O $he owner of the land on which anything has been built, sown or planted in good

faith, shall have the right to appropriate as his own the wor!s, sowing or planting after

payment of the indemnity provided for in articles :9F and :9>, or to oblige the one who built

or planted to pay the price of the land, and the one who sowed, the proper rent. However,

the builder or planter cannot be obliged to buy the land if its value is considerably more than

that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the

land does not choose to appropriate the buildings or trees after proper indemnity. $he

parties shall agree upon the terms of the lease and in case of disagreement, the court shall

*x the terms thereof.WHERE@0RE, the present petition is partly 8R#1$E6. $he )uestioned decision of the %ourt of #ppeals

a'rming the decision of the Regional $rial %ourt of 2aguna, "ranch ;=, in R$% %ivil %ase 1o. ><-7>97% is

506I@IE6 in that subparagraphs cB and dB of aragraph + of the dispositive portion of the decision are

deleted. In their stead, the petitioner Rebecca "oyer7Roxas and the respondent corporation are ordered to

follow the provisions of #rticle 99> of the %ivil %ode as regards the )uestioned un*nished building in R$%

%ivil %ase 1o. ><-7>97%. $he )uestioned decision is a'rmed in all other respects.(0 0R6ERE6.

Documents

Boyer Roxas vs CA