SAN JUAN STRUCTURAL vs CA

FACTS:

 San Juan and Motorich, represented by its corporate treasurer respondents Mrs.
Nenita Gruenberg

 entred into an agreement for the transfer of the latter’s parcel of land located
in QC to San Juan.

 San Juan paid the downpayment amounting to 100K

 When the reps of San Juan and Motorich were supposed to meet for the
consummation of sale

 the latter’s rep did not show up

 It was later found out that Motorich sold the parcel of land to ACL Development
Corp., and the TCT transferred to its name

 Motorich interposed the defense that:

 its agreement to transfer with San Juan lacks the signature of the President
and Chairman of Motorich

 that this fact was known by San Juan

 that Mrs. Gruenberg accepted the 100K as earnest money

 that San Juan failed to pay in legal tender within the stipulated time

 that they agreed that if the payment be in check, they will meet at a bank
designated by San Juan, encash the check and sign the Transfer of
Rights/Deed, but San Juan informed Mrs. Gruenberg only through phone
and after banking hours
 QC RTC: Dismissed the complaint for lack of merit

 San Juan has no right to compel Motorich to execute the deed of absolute
sale in accordance with the earlier agreement because

o Mrs. Gruenberg was not authorized by the board of directors to

enter into the transfer agreement. Under Sec. 40 of the Corporation
Code, a corporation may sell, lease, exchange, mortgage, pledge or
otherwise dispose of all or substantially all of its property and assets
including its goodwill if authorized by majority of the Board and by
vote of stockholders representing 2/3 of authorized capital stock

o No damage should be awarded because Mrs. Gruenberg did not

misrepresent herself to be authorized

 CA: Affirmed RTC with modification to the effect that Mrs. Gruenberg shall return
the 100K downpayment

ISSUES

1. Was there a valid contract of sale between San Juan and Motorich?

2. Is the doctrine piercing the veil applicable?

HELD

 Was there a valid contract of sale between San Juan and Motorich?

 None. Motorich cannot be bound by the agreement between its corporate

treasurer and San Juan.

o A corporation has a separate and distinct personality from that of its

stockholders and members. The Corporation Code says a corporation
acts and conducts businesses through its board of directors when
authorized either by its bylaws or board resolution

o Motorich categorically denies that it ever authorized Mrs. Gruenberg

to sell the subject parcel of land. San Juan had the burden of proving
that she was in fact authorized to represent and bind Motorich in the
transaction. Petitioner failed to discharge this burden.
 o According to the Civil Code, in a sale of parcel of land through an
agent, there must be a written authorization from the principal.
Otherwise, the sale is void.

 Is the doctrine piercing the veil applicable?

 No. Although it was argued by San Juan that Mrs. Gruenberg does not need
authorization from the Board to bind the corporation for contracts entered
to by her because Motorich is a closed corporation owned by Mr and Mrs
Gruenberg, the Court says:

o From its articles, it is clear that Motorich is not a close corporation. It

does not become one either, just because Spouses Reynaldo and
Nenita Gruenberg owned 99.866% of its subscribed capital stock.
The "mere ownership by a single stockholder or by another
corporation of all or capital stock of a corporation is not of itself
sufficient ground for disregarding the separate corporate
personalities."

o Granting arguendo that the corporate veil of Motorich is to be

disregarded, the subject parcel of land would then be treated as
conjugal property of Spouses Gruenberg, because the same was
acquired during their marriage. As a consequence, Nenita
Gruenberg could not have effected a sale of the subject lot because
in conjugal partnership of gains, neither spouse can alienate in favor
of another his or interest in the partnership or in any property
belonging to it; neither spouse can ask for a partition of the
properties before the partnership has been legally dissolved."