July 9,
2014
Ponente: Leonen, J.
SUMMARY:
In 1996, Aboitiz Shipping Corporation
(ASC), Carlos A. Gothong Lines, Inc. (CAGLI), and William Lines, Inc. (WLI)
entered into an agreement (Agreement) whereby ASC and CAGLI would transfer
their shipping assets to WLI in exchange for WLI’s shares of stock. WLI, in
turn, would run their merged shipping businesses and, henceforth, be known as
WG&A, Inc. Attached to the Agreement was Annex SL-V, which confirmed WLI’s
commitment to acquire certain inventories of CAGLI in the amount of P400M.
Pursuant to said Annex, inventories worth P558M were transferred from CAGLI to
WLI. CAGLI was paid P400M plus WG&A shares with a book value of P38.5M.
Since there was still balance, CAGLI
sent WG&A (formerly WIL) demand letters in 2001 for the return of or the
payment for the excess inventories. Aboitiz Equity Ventures (AEV) alleged that
to satisfy CAGLI’s demand, WLI/WG&A returned inventories amounting to
P120.04M.
In 2002, the Chiongbian family (of
WLI) and the Gothong family (of CAGLI) decided to leave the WG&A enterprise
and sell their interest in WG&A to the Aboitiz family. As such, a share
purchase agreement (SPA) was entered into by AEV and the respective
shareholders groups of the Chiongbians and Gothongs, where AEV agreed to purchase
the latter's shares. AEV became a stockholder of WG&A. Subsequently,
WG&A was renamed Aboitiz Transport Shipping Corporation (ATSC).
In 2008, CAGLI resumed making demands
despite having already received P120.04M worth of excess inventories. These
demand letters were addressed to AEV and another company affiliated with the
Chiongbian family. CAGLI threatened to pursue arbitration against AEV unless
receipts for the purported deliveries were made available.
Its claims left unsatisfied, CAGLI
filed two applications for arbitration against AEV before the Cebu City RTC
Branches 20 and 10. The first application was dismissed. CAGLI obtained a
favorable ruling in the second application.
The SC held that the favorable ruling
CAGLI obtained from Cebu City RTC Branch 10 was void on the ground of forum
shopping, res judicata, and litis pendentia.
Similarly, the SC held that AEV
cannot be sued against because it was merely a stockholder of ATSC. A
corporation has a personality separate and distinct from that of its individual
stockholders. Thus, a stockholder does not automatically assume the liabilities
of the corporation of which he is a stockholder.
DOCTRINE:
A corporation is an artificial entity created by operation of law. It possesses the right of succession and such powers, attributes, and properties expressly authorized by law or incident to its existence. It has a personality separate and distinct from that of its stockholders and from that of other corporations to which it may be connected.
As a consequence of its status as a distinct legal entityand as a result of a conscious policy decision to promote capital formation, a corporation incurs its own liabilities and is legally responsible for payment of its obligations. In other words, by virtue of the separate juridical personality of a corporation, the corporate debt or credit is not the debt or credit of the stockholder. This protection from liability for shareholders is the principle of limited liability
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