FACTS: 1. San Juan and Motorich, represented by its corporate treasurer resp Mrs.

Nenita Gruenberg, entred into an agreement for the transfer of the latters parcel of land located in QC to San Juan. 2. San Juan paid the downpayment amounting to 100K 3. When the reps of San Juan and Motorich were supposed to meet for the consummation of sale, the latters rep did not show up 4. It was later found out that Motorich sold the parcel of land to ACL Development Corp., and the TCT transferred to its name 5. Motorich interposed the defense that a. its agreement to transfer with San Juan lacks the signature of the President and Chairman of Motorich b. that this fact was known by San Juan c. that Mrs. Gruenberg accepted the 100K as earnest money d. that San Juan failed to pay in legal tender within the stipulated time e. 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 6. 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 a. Mrs. Gruenberg was not authorized by the board of directors to enter into the transfer agreement. Under Sec. 40 of the Corpo 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 b. No damage should be awarded because Mrs. Gruenberg did not misrepresent herself to be authorized 7. 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? RULING: 1. None. Motorich cannot be bound by the agreement between its corporate treasurer and San Juan. a. 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 reso. b. 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. c. 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. 2. 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 corpo owned by Mr and Mrs Gruenberg, the Court says:

a.

b.

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." 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."