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G.R. No. L-48627 June 30, 1987

FERMIN Z. CARAM, JR. and ROSA O. DE CARAM , petitionersvs.THE HONORABLE COURT OF APPEALS and ALBERTO V.

ARELLANO, respondents.

Doctrine:A bona fide corporation is liable for its corporate acts as dulyauthorized by its officers and directors.

Facts:Respondent Alberto Arellano was contracted by Barretto andGarcia(Walang binigay na first names sa case, damn you JusticeCruz!) to do a project study and other technical services in forming a

corporation, which was later on named Filipinas Orient Airways. Theproject study was presented by Barretto and Garcia to the Carams.

After seeing the project study, the Carams were convinced to investand become stockholders of the said company.

The case involves the collection of the unpaid compensation forArellanos services. The CA decided that the Carams were jointly andseverally liable to Arellano stating that:

It was on the basis of this study that defendant corporation wasactually organized and rendered operational. Defendants Garcia andCaram, and Barretto became members of the Board and/or officers ofdefendant corporation. Thus, not only the defendant corporation butall the other defendants who were involved in the preparatory stagesof the incorporation, who caused the preparation and/or benefitedfrom the project study and the technical services of plaintiff must beliable.

Hence this petition.

Issue/s:WON the CA was correct in holding the Carams liable?

Held:

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The Court held that the Carams were not liable.

The petitioners were not involved in the initial stages of theorganization of the airline, which were being directed by Barretto asthe main promoter. It was he who was putting all the pieces together,so to speak. The petitioners were merely among the financiers whoseinterest was to be invited and who were in fact persuaded, on thestrength of the project study, to invest in the proposed airline.

Significantly, there was no showing that the Filipinas Orient Airwayswas a fictitious corporation and did not have a separate juridicalpersonality, to justify making the petitioners, as principal stockholdersthereof, responsible for its obligations. As a bona fide corporation, theFilipinas Orient Airways should alone be liable for its corporate acts

as duly authorized by its officers and directors.

In the light of these circumstances, we hold that the petitionerscannot be held personally liable for the compensation claimed by theprivate respondent for the services performed by him in theorganization of the corporation. To repeat, the petitioners did notcontract such services. It was only the results of such services thatBarretto and Garcia presented to them and which persuaded them toinvest in the proposed airline. The most that can be said is that they

benefited from such services, but that surely is no justification to holdthem personally liable therefor. Otherwise, all the other stockholdersof the corporation, including those who came in later, and regardlessof the amount of their share holdings, would be equally andpersonally liable also with the petitioners for the claims of the privaterespondent.

Dispositive Portion:WHEREFORE, the petition is granted. The petitioners are declarednot liable under the challenged decision, which is hereby modified

accordingly. It is so ordered.