GOOD EARTH

A corporation has a personality distinct and separate from its individual stockholders or members. Bein an officer or stockholder of a corporation does not make one!s property also of the corporation" and vice#versa" for they are separate entities. As a conse$uence of the separate %uridical personality of a corporation" the corporate debt or credit is not the debt or credit of the stockholder" nor is the stockholder!s debt or credit that of the corporation &R'( )* DA+,*A-

Respondent" ho.ever" chose to /pierce the veil of corporate entity/ usurpin a po.er belon in to the court and assumed improvidently that since the complainant is the o.ner0president of 1ualitrans +imousine *ervice" ,nc." they are one and the same. ,t is a .ell#settled doctrine both in la. and in e$uity that as a le al entity" a corporation has a personality distinct and separate from its individual stockholders or members. The mere fact that one is president of a corporation does not render the property he o.ns or possesses the property of the corporation" since the president" as individual" and the corporation are separate entities BA23 O4 A5ER,&A )* &A +,2TO26'A 7hether a suit is to be dismissed on the round of 42& depends lar ely upon the facts of the case and is addressed to the sound discretion of the courts A)O2 DA+E )* 2+R& Thus" conformably .ith established %urisprudence" the t.o entities cannot be deemed as separate and distinct .here there is a sho.in that one is merely the continuation of the other. 7 ,n fact" even a chan e in the corporate name does not make a ne. corporation" .hether effected by a special act or under a eneral la." it has no effect on the identity of the corporation" or on its property" ri hts" or liabilities. The mere filin of the Articles of Dissolution .ith the *ecurities and E8chan e &ommission" .ithout more" is not enou h to support the conclusion that actual dissolution of an entity in fact took place. &O2&E9T B',+DER* )* 2+R&
The corporate mask may be lifted and the corporate veil may be pierced .hen a corporation is %ust but the alter e o of a person or of another corporation. 7here bad es of fraud e8ist: .here public convenience is defeated: .here a .ron is sou ht to be %ustified thereby" the corporate fiction or the notion of le al entity should come to nau ht. The la. in these instances .ill re ard the corporation as a mere association of persons and" in case of t.o corporations" mer e them into one. Thus" .here a sister corporation is used as a shield to evade a corporation!s subsidiary liability for dama es" the corporation may not be heard to say that it has a personality separate and distinct from the other corporation. The piercin of the corporate veil comes into play.

4,R*T 9H,+ ,2TER2AT,O2A+ BA23 ;9ROD'&ER*< A2D R,)ERA )*. &A 'ltimately" .hat is truly important to consider in determinin .hether forum#shoppin e8ists or not is the ve8ation caused the courts and parties#liti ant by a party .ho asks different courts and0or administrative a encies to rule on the same or related causes and0or to rant the same or substantially the same reliefs" in the process creatin the possibility of conflictin decisions bein rendered by the different fora upon the same issue. 4RA2&,*&O 5OTOR* )* &A The rationale behind piercin a corporation=s identity in a iven case is to remove the barrier bet.een the corporation from the persons comprisin it to th.art the fraudulent and ille al schemes of those .ho use the corporate personality as a shield for undertakin certain proscribed activities. Ho.ever" in the case at bar" instead of holdin certain individuals or persons responsible for an alle ed corporate act" the situation has been reversed. RE-2O*O )* &A 7hen the mother corporation and its subsidiary cease to act in ood faith and honest business %ud ment" .hen the corporate device is used by the parent to avoid its liability for le itimate obli ations of the subsidiary" and .hen the corporate fiction is used to perpetrate fraud or promote in%ustice" the la. steps in to remedy the problem. 7hen that happens" the corporate character is not necessarily abro ated. ,t continues for le itimate ob%ectives. Ho.ever" it is pierced in order to remedy in%ustice" such as that inflicted in this case. There are other indications in the record .hich attest to the applicability of the identity rule in this case" namely> the unity of interests" mana ement" and control: the transfer of funds to suit their individual corporate conveniences: and the dominance of policy and practice by the mother corporation insure that &&&#1& .as an instrumentality or a ency of &&&. 92B ? 2A*'DE&O )* A2DRADA
Basic is the rule that a corporation has a le al personality distinct and separate from the persons and entities o.nin it. The corporate veil may be lifted only if it has been used to shield fraud" defend crime" %ustify a .ron " defeat public convenience" insulate bad faith or perpetuate in%ustice. Thus" the mere fact that the 9hilippine 2ational Bank ;92B< ac$uired o.nership or mana ement of some assets of the 9ampan a *u ar 5ill ;9A*'5,+<" .hich had earlier been

foreclosed and purchased at the resultin public auction by the Development Bank of the 9hilippines ;DB9<" .ill not make 92B liable for the 9A*'5,+=s contractual debts to respondent. +,9AT )* 9A&,4,& BA23,2G 7hen the corporation is the mere alter e o or business conduit of a person" the separate personality of the corporation may be disre arded. This is commonly referred to as the /instrumentality rule/ or the alter e o doctrine" .hich the courts have applied in disre ardin the separate %uridical personality of corporations. As held in one case" .here one corporation is so or ani@ed and controlled and its affairs are conducted so that it is" in fact" a mere instrumentality or ad%unct of the other" the fiction of the corporate entity of the !instrumentality! may be disre arded. The control necessary to invoke the rule is not ma%ority or even complete stock control but such domination of finances" policies and practices that the controlled corporation has" so to speak" no separate mind" .ill or e8istence of its o.n" and is but a conduit for its principal

DE +EO2 )* 2+R&

It is a fundamental principle in corporation law that a corporation is an entity separate and distinct from its stockholders and from other corporations to which it is connected. However, when the concept of separate legal entity is used to defeat public convenience, justify wrong, protect fraud or defend crime, the law will regard the corporation as an association of persons, or in case of two corporations, merge them into one. The separate juridical personality of a corporation may also be disregarded when such corporation is a mere alter ego or business conduit of another person
GRA&E &HR,*T,A2 )* &A The &orporation &ode is clear .hen it provides that members of the board of a corporation must be elected by the stockholders ;stock corporation< or the members ;non#stock corporation<. Admittedly" there are corporations .ho allo. some of their directors to sit in the board .ithout bein elected ? but such practice cannot prevail over provisions of la.. 9ractice" no matter ho. lon continued" cannot ive rise to any vested ri ht if it is contrary to la.. 4