Palacio vs. Fely Transportation

GREGORIO PALACIO vs. FELY TRANSPORTATION COMPANY  Palacio’s argument: Fely Corp.
should be made subsidiarily liable for

The Corporate Entity | August 31, 1962 | Regala, J. damages in the criminal case because the sale to it of the jeep in
question, after the conviction of Alfredo Carillo in the criminal case
Nature of the Case: Appeal from CFI of Manila before the CFI of Quezon City, was merely an attempt on the part of
Isabelo Calingasan, its president and general manager, to evade his
SUMMARY: In a 1952 criminal case, Alfredo, who was employed by subsidiary civil liability.
Isabelo, was convicted for running over the son of Gregorio, causing the
child to suffer simple fracture and was ordered to pay indemnity in the ISSUE: W/N Fely Transpo can be held subsidiarily liable – YES.
amount of P500. In 1955, the same jeep was sold and transferred by a) Isabelo and Fely Transportation may be regarded as one and the
Isabelo to Fely Transportation composed of him, his wife, his son, and same person since Isabelo’s main purpose in forming the corporation
two daughters. Since Alfredo was insolvent, Gregorio brought this was to evade his subsidiary civil liability resulting from the conviction
present action to enforce subsidiary liability against Fely Transpo. Fely of his driver, Alfredo.
Transpo moved to dismiss on the ground of lack of cause of action since i. The incorporators of the Fely Transportation are Isabelo, his
the sale and transfer of the jeep by Isabelo to Fely Transpo. was made wife, his son, and his two daughters. This is one case where the
on December 24, 1955, long after the driver Alfredo of said jeep had defendant corporation should not be heard to say that it has a
been convicted and had served his sentence. Lower Court granted the personality separate and distinct from its members when to
motion but SC reversed and ruled for Palacio, holding that allow it to do so would be to sanction the use of the fiction of
DOCTRINE: A corporation should not be heard to say that it has a corporate entity as a shield to further an end subversive of
personality separate and distinct from its members when to allow it to justice.
do so would be to sanction the use of the fiction of corporate entity as a ii. The failure of the defendant corporation to prove that it has
shield to further an end subversive of justice. other property than the jeep strengthens the conviction that its
FACTS: formation was for the purpose above indicated.
 Sometime in December 1952, Alfredo Carillo was hired by Isabelo iii. While Isabelo is not a party in this case, yet the Court can
Calingasan as driver of his jeep. substitute him in place of the defendant corporation as to the
 On Dec. 24 that same year, said jeep driven by Alfredo ran over real party in interest [Alonso v. Villamor]. This is so in order to
Gregorio’s son, resulting to the latter’s injuries. avoid multiplicity of suits and thereby save the parties
 A criminal case was filed against Alfredo wherein he was found guilty unnecessary expenses and delay.
as charged and ordered to pay the Palacios P500, with subsidiary iv. Accordingly, defendants Fely Transportation and Isabelo should
imprisonment in case of insolvency. be held subsidiarily liable for P500 which Alfredo was ordered
 On December 24, 1955, Isabelo sold and transferred the subject heep to pay in the criminal case but could not on account of
to the Fely Transportation. insolvency.
 The Palacios then filed this case against Fely Transporation to enforce b) Action, not barred by prior judgment in the criminal case.
subsidiary liability on account of Alfredo’s insolvency. i. The offended parties in the criminal party were only insisting on
 Fely Corp. moved to dismiss on the ground of lack of cause of action the subsidiary liability of the of the defendant and presented the
and bar by prior judgment since the sale and transfer of the jeepney TSN in the criminal case in support of their claim. This rules out
took place “long after the driver Alfredo of said jeep had been the defense of res judicata because such liability proceeds
convicted and had served his sentence”. precisely from the judgment in the criminal action, where the
 CFI ruled that the action is barred by the judgment in the criminal case accused was found guilty.
and, that under Article 103 RPC, the person subsidiarily liable to pay
damages is Isabel Calingasan, the employer, and not the defendant RULING: Decision of lower court is reversed.
corporation.

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GREGORIO PALACIO vs. FELY TRANSPORTATION COMPANY  Palacio’s argument: Fely Corp.

should be made subsidiarily liable for

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