G.R. No.

89561 September 13, 1990
BUENAFLOR C. UMALI, MAURICIA M. VDA. DE CASTILLO, VICTORIA M. CASTILLO,
BERTILLA C. RADA, MARIETTA C. ABAÑEZ, LEOVINA C. JALBUENA and SANTIAGO M.
RIVERA, petitioners, vs.
Bormaheco’s machinations, Mauricia was fooled into entering into a surety
agreement with ICP; that Bormaheco even made the premium payments to ICP for
said surety bond; that the president of Bormaheco is a director of PMPMC.
RULING:

COURT OF APPEALS, BORMAHECO, INC. and PHILIPPINE MACHINERY PARTS No. Piercing the veil of corporate fiction is not the proper remedy in order that the
MANUFACTURING CO., INC., respondents. foreclosure conducted by ICP be declared a nullity. The nullity may be attacked
directly without disregarding the separate identity of the corporations involved.
ISSUE:
Further still, Umali et al are not enforcing a claim against the individual members of
Whether or not the veil of corporate fiction should be pierced. the corporations. They are not claiming said members to be liable. Umali et al are
merely questioning the validity of the foreclosure.
FACTS:
The veil of corporate fiction can’t be pierced also by the simple reason that the
Mauricia Castillo was the administratrix of a parcel of land that was mortgaged to businesses of two or more corporations are interrelated, absent sufficient showing
the Development Bank of the Philippines and was about to be foreclosed but then that the corporate entity was purposely used as a shield to defraud creditors and
Santiago Rivera proposed that they convert the land into 4 subdivisions so that they third persons of their rights. In this case, there is no justification for disregarding
can raise the necessary money to avoid foreclosure. Rivera sought to develop said their separate personalities.
land through his company, Slobec Realty Corporation (SRC). SRC then contracted
with Bormaheco, Inc. for the purchase of one tractor. At the same time, SRC
mortgaged said tractor to Bormaheco as security just in case SRC will default. As
additional security, Mauricia and other family members executed a surety
agreement whereby in case of default in paying said tractor, the Insurance
Corporation of the Philippines (ICP) shall pay the balance. The surety bond
agreement between Mauricia and ICP was secured by Mauricia’s parcel of land.

SRC defaulted in paying said tractor, thus, Bormaheco foreclosed the tractor but it
wasn’t enough hence ICP paid the deficiency. ICP then foreclosed the property of
Mauricia and later sold said property to Philippine Machinery Parts Manufacturing
Corporation (PMPMC).

While all this was going on, Mauricia died. Her successor-administratrix, Buenaflor
Umali, questioned the foreclosure made by ICP. Umali alleged that all the
transactions are void and simulated hence they were defrauded; that through