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---------------------------------------------------Jardine Davies, Inc. vs. JRB Realty, Inc., 463 SCRA 555(2005)
Corporation Law; Doctrine of Piercing the Veil of Corporate Fiction;
A corporation is an artificial being invested by law with a personality
separate and distinct from its stockholders and from other
corporations to which it may be connected; The doctrine applies
only when such corporate fiction is used to defeat public
CORPORATION - CASES
surety agreement referred to at the outset is not reason enough to
conclude that the spouses are themselves debtors of petitioner
bank. We have already passed upon the simple reason for this
proposition. We refer to the basic precept in this jurisdiction that a
corporation, upon coming into existence, is invested by law with a
personality separate and distinct from those of the persons
composing it. Mere ownership by a single or small group of
stockholders of nearly all of the capital stock of the corporation is
not, without more, sufficient to disregard the fiction of separate
corporate personality.
Notarial Law; A notarized conveying deed carries with it the
presumption of validity and regularity.In the present case,
respondent spouses Ong, as the CA had determined, had sufficiently
established the validity and legitimacy of the sale in question. The
conveying deed, a duly notarized document, carries with it the
presumption of validity and regularity. Too, the sale was duly
recorded and annotated on the title of the property owners, the
spouses Ong. As the transferee of said property, respondent Lee
caused the transfer of title to his name.
The existence of fraud or the intent to defraud creditors cannot
plausibly be presumed from the fact that the price paid for a piece
of real estate is perceived to be slightly lower than its market
value.The existence of fraud or the intent to defraud creditors
cannot plausibly be presumed from the fact that the price paid for a
piece of real estate is perceived to be slightly lower, if that really be
the case, than its market value. To be sure, it is logical, even
expected, for contracting minds, each having an interest to protect,
to negotiate on the price and other conditions before closing a sale
of a valuable piece of land. The negotiating areas could cover various
items. The purchase price, while undeniably an important
consideration, is doubtless only one of them. Thus, a scenario where
the price actually stipulated may, as a matter of fact, be lower than
the original asking price of the vendor or the fair market value of the
property, as what perhaps happened in the instant case, is not out
of the ordinary, let alone indicative of fraudulent intention. That the
spouses Ong acquiesced to the price of P12,500,000.00, which may
be lower than the market value of the house and lot at the time of
alienation, is certainly not an unusual business phenomenon.
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Lafarge Cement Philippines, Inc. vs. Continental Cement
Corporation, 443 SCRA 522(2004)
Corporation Law; Piercing the Veil Corporate Fiction; Allegations of
fraud and bad faith on the part of certain corporate officers or
stockholders may warrant the piercing of the veil of corporate
fiction so that the said individual may not seek refuge therein, but
may be held individually and personally liable for his or her
actions.The inclusion of a corporate officer or stockholder
Cardenas in Sapugay or Lim and Mariano in the instant caseis not
premised on the assumption that the plaintiff corporation does not
have the financial ability to answer for damages, such that it has to
share its liability with individual defendants. Rather, such inclusion is
based on the allegations of fraud and bad faith on the part of the
corporate officer or stockholder. These allegations may warrant the
piercing of the veil of corporate fiction, so that the said individual
may not seek refuge therein, but may be held individually and
personally liable for his or her actions. In Tramat Mercantile v. Court
of Appeals, the Court held that generally, it should only be the
corporation that could properly be held liable. However,
circumstances may warrant the inclusion of the personal liability of a
corporate director, trustee, or officer, if the said individual is found
guilty of bad faith or gross negligence in directing corporate affairs.
Remo Jr. v. IAC has stressed that while a corporation is an entity
separate and distinct from its stockholders, the corporate fiction
CORPORATION - CASES
In order to disregard the separate juridical personality of a
corporation, the wrongdoing must be clearly and convincingly
established; In the absence of any malice or bad faith, a stockholder
or an officer of a corporation cannot be made personally liable for
corporate liabilities.The burden is on petitioner to prove that the
corporation and its stockholders are, in fact, using the personality of
the corporation as a means to perpetrate fraud and/or escape a
liability and responsibility demanded by law. In order to disregard
the separate juridical personality of a corporation, the wrongdoing
must be clearly and convincingly established. In the absence of any
malice or bad faith, a stockholder or an officer of a corporation
cannot be made personally liable for corporate liabilities.
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Philippine National Bank vs. Ritratto Group, Inc., 362 SCRA
216(2001)
Corporation Law; Doctrine of Piercing the Veil of Corporate Fiction;
The mere fact that a corporation owns all of the stocks of another
corporation, taken alone is NOT sufficient to justify their being
treated as one entity.The general rule is that as a legal entity, a
corporation has a personality distinct and separate from its
individual stockholders or members, and is not affected by the
personal rights, obligations and transactions of the latter. The mere
fact that a corporation owns all of the stocks of another corporation,
taken alone is not sufficient to justify their being treated as one
entity. If used to perform legitimate functions, a subsidiarys
separate existence may be respected, and the liability of the parent
corporation as well as the subsidiary will be confined to those arising
in their respective business. The courts may in the exercise of
judicial discretion step in to prevent the abuses of separate entity
privilege and pierce the veil of corporate entity.
The doctrine of piercing the corporate veil of corporate fiction is an
equitable doctrine developed to address situations where the
separate corporate personality of a corporation is abused or used for
wrongful purposes.In this jurisdiction, we have held that the
doctrine of piercing the corporate veil is an equitable doctrine
developed to address situations where the separate corporate
personality of a corporation is abused or used for wrongful
purposes. The doctrine applies when the corporate fiction is used to
defeat public convenience, justify wrong, protect fraud or defend
crime, or when it is made as a shield to confuse the legitimate
issues, or where a corporation is the mere alter ego or business
conduit of a person, or where the corporation is so organized and
controlled and its affairs are so conducted as to make it merely an
instrumentality, agency, conduit or adjunct of another corporation.
Test in Determining Applicability of the Doctrine of Piercing the
Veil of Corporate Fiction.In Concept Builders, Inc. v. NLRC, we
have laid the test in determining the applicability of the doctrine of
piercing the veil of corporate fiction, to wit: 1. Control, not mere
majority or complete control, but complete domination, not only of
finances but of policy and business practice in respect to the
transaction attacked so that the corporate entity as to this
transaction had at the time no separate mind, will or existence of its
own. 2. Such control must have been used by the defendant to
commit fraud or wrong, to perpetuate the violation of a statutory or
other positive legal duty, or dishonest and, unjust act in
contravention of plaintiffs legal rights; and, 3. The aforesaid control
and breach of duty must proximately cause the injury or unjust loss
complained of. The absence of any one of these elements prevents
piercing the corporate veil. In applying the instrumentality or
alter ego doctrine, the courts are concerned with reality and not
form, with how the corporation operated and the individual
defendants relationship to the operation.
CORPORATION - CASES
two principles in corporation law. The first pertains to transactions
between corporations with interlocking directors resulting in the
prejudice to one of the corporations. This rule does not apply in this
case, however, since the corporation allegedly prejudiced
(Remington) is a third party, not one of the corporations with
interlocking directors
No bad faith could be discerned in the creation by DBP of three
corporations where the same was necessary to manage and operate
assets acquired in the foreclosure sale lest they deteriorate from
non-use and lose their value.Neither do we discern any bad faith
on the part of DBP by its creation of Nonoc Mining, Maricalum and
Island Cement. As Remington itself concedes, DBP is not authorized
by its charter to engage in the mining business. The creation of the
three corporations was necessary to manage and operate the assets
acquired in the foreclosure sale lest they deteriorate from non-use
and lose their value. In the absence of any entity willing to purchase
these assets from the bank, what else would it do with these
properties in the meantime? Sound business practice required that
they be utilized for the purposes for which they were intended.
anteed by a chattel mortgage, upon the things pledged or
mortgaged, up to the value thereof. x x x
The doctrine of piercing the veil of corporate fiction applies only
when such corporate fiction is used to defeat public convenience,
justify wrong, protect fraud or defend crimeto disregard juridical
personality of a corporation, the wrongdoing must be clearly and
convincingly established.
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Woodchild Holdings, Inc. vs. Roxas Electric and Construction
Company, Inc., 436 SCRA 235(2004)
Corporations; Corporate Officers; Apparent Authority; Agency; The
property of the corporation is not the property of its stockholders
or members and may not be sold by the stockholders or members
without express authorization from the corporations board of
directors.A corporation is a juridical person separate and distinct
from its stockholders or members. Accordingly, the property of the
corporation is not the property of its stockholders or members and
may not be sold by the stockholders or members without express
authorization from the corporations board of direc-tors. Section 23
of BP 68, otherwise known as the Corporation Code of the
Philippines, provides: SEC. 23. The Board of Directors or Trustees.
Unless otherwise provided in this Code, the corporate powers of all
corporations formed under this Code shall be exercised, all business
conducted and all property of such corporations controlled and held
by the board of directors or trustees to be elected from among the
holders of stocks, or where there is no stock, from among the
members of the corporation, who shall hold office for one (1) year
and until their successors are elected and qualified. Indubitably, a
corporation may act only through its board of directors or, when
authorized either by its by-laws or by its board resolution, through
its officers or agents in the normal course of business. The general
principles of agency govern the relation between the corporation
and its officers or agents, subject to the articles of incorporation, bylaws, or relevant provisions of law. . .
Elements; For the principle of apparent authority to apply, the
petitioner was burdened to prove the following.For the principle
of apparent authority to apply, the petitioner was burdened to
prove the following: (a) the acts of the respondent justifying belief in
the agency by the petitioner; (b) knowledge thereof by the
respondent which is sought to be held; and, (c) reliance thereon by
the petitioner consistent with ordinary care and prudence.
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CORPORATION - CASES
Francisco Motors Corporation, to offset the unpaid balance of the
purchase and repair of a jeep body could only result from an obvious
misapprehension that petitioners corporate assets could be used to
answer for the liabilities of its individual directors, officers, and
incorporators. Such result if permitted could easily prejudice the
corporation, its own creditors, and even other stockholders; hence,
clearly inequitous to petitioner.
When directors and officers of a corporation are unable to
compensate a party for a personal obligation, it is farfetched to
allege that the corporation is perpetuating fraud or promoting
injustice, and be thereby held liable therefor by piercing its
corporate veil.Considering the nature of the legal services
involved, whatever obligation said incorporators, directors and
officers of the corporation had incurred, it was incurred in their
personal capacity. When directors and officers of a corporation are
unable to compensate a party for a personal obligation, it is farfetched to allege that the corporation is perpetuating fraud or
promoting injustice, and be thereby held liable therefor by piercing
its corporate veil. While there are no hard-and-fast rules on
disregarding separate corporate identity, we must always be mindful
of its function and purpose. A court should be careful in assessing
the milieu where the doctrine of piercing the corporate veil may be
applied. Otherwise an injustice, although unintended, may result
from its erroneous application.
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R & E Transport, Inc. vs. Latag, 422 SCRA 698(2004)
Corporations; Doctrine of Piercing the Corporate Veil; Any
application of the doctrine of piercing the corporate veil should be
done with caution.x x x [A]ny application of the doctrine of
piercing the corporate veil should be done with caution. A court
should be mindful of the milieu where it is to be applied. It must be
certain that the corporate fiction was misused to such an extent that
injustice, fraud, or crime was committed against another, in
disregard of its rights. The wrongdoing must be clearly and
convincingly established; it cannot be presumed. Otherwise, an
injustice that was never unintended may result from an erroneous
application.
The failure to perfect an appeal has the effect of rendering the
judgment final and executory.That the perfection of an appeal in
the manner and within the period prescribed by law is not only
mandatory but jurisdictional, and the failure to perfect an appeal
has the effect of rendering the judgment final and executory.
Nonetheless, procedural lapses may be disregarded because of
fundamental considerations of substantial justice; or because of the
special circumstances of the case combined with its legal merits or
the amount and the issue involved.
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Secosa vs. Heirs of Erwin Suarez Francisco, 433 SCRA 273(2004)
Corporation Law; Veil of Corporate Fiction; Petitioner El Buenasenso
Sy cannot be held solidarily liable with his co-petitioners; A
corporation is invested by law with a personality separate from that
of its stockholders or members; Mere ownership by a single
stockholder or by another corporation of all or nearly all of the
capital stock of a corporation is not in itself sufficient ground for
disregarding the separate corporate personality.
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McLeod vs. National Labor Relations Commission, 512 SCRA
222(2007)
CORPORATION - CASES
The rule is still that the doctrine of piercing the corporate veil
applies only when the corporate fiction is used to defeat public
convenience, justify wrong, protect fraud, or defend crime.
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Suldao vs. Cimech System Construction, Inc., 506 SCRA 256(2006)
Corporation Law; A corporation is invested by law with a
personality separate from that of its stockholders or members.A
corporation is invested by law with a personality separate from that
of its stockholders or members. It has a personality separate and
distinct from those of the persons composing it as well as from that
of any other entity to which it may be related. Mere ownership by a
single stockholder or by another corporation of all or nearly all of
the capital stock of a corporation is not in itself sufficient ground for
disregarding the separate corporate personality. A corporations
authority to act and its liability for its actions are separate and apart
from the individuals who own it. As a general rule, a corporation will
be looked upon as a legal entity, unless and until sufficient reason to
the contrary appears.The veil of corporate fiction treats as
separate and distinct the affairs of a corporation and its officers and
stockholders. As a general rule, a corporation will be looked upon as
a legal entity, unless and until sufficient reason to the contrary
appears. When the notion of 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. Also, the
corporate entity may be disregarded in the interest of justice in such
cases as fraud that may work inequities among members of the
corporation internally, involving no rights of the public or third
persons. In both instances, there must have been fraud and proof of
it. For the separate juridical personality of a corporation to be
disregarded, the wrongdoing must be clearly and convincingly
established. It cannot be presumed.
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General Credit Corporation vs. Alsons Development and Investment
Corporation, 513 SCRA 225(2007)
Corporation Law; Doctrine of Piercing the Veil of Corporate Fiction;
The first consequence of the doctrine of legal entity of the separate
personality of the corporation is that a corporation may not be
made to answer for acts and liabilities of its stockholders or those of
legal entities to which it may be connected or vice versa.A
corporation is an artificial being vested by law with a personality
distinct and separate from those of the persons composing it as well
as from that of any other entity to which it may be related. The first
consequence of the doctrine of legal entity of the separate
personality of the corporation is that a corporation may not be
made to answer for acts and liabilities of its stockholders or those of
legal entities to which it may be connected or vice versa. The notion
of separate personality, however, may be disregarded under the
doctrinepiercing the veil of corporate fictionas in fact the
court will often look at the corporation as a mere collection of
individuals or an aggregation of persons undertaking business as a
group, disregarding the separate juridical personality of the
corporation unifying the group. Another formulation of this doctrine
is that when two (2) business enterprises are owned, conducted and
controlled by the same parties, both law and equity will, when
necessary to protect the rights of third parties, disregard the legal
fiction that two corporations are distinct entities and treat them as
identical or one and the same.
Whether the separate personality of the corporation should be
pierced hinges on obtaining facts, appropriately pleaded or
proved.Whether the separate personality of the corporation
should be pierced hinges on obtaining facts, appropriately pleaded
CORPORATION - CASES
Roman Cath. Apostolic Adm. of Davao, Inc. vs. Land Reg. Com., et al.,
102 Phil. 596(1957)
CORPORATION - CASES
share in the profits and losses of the enterprise. Under the doctrine
of equality of sharesall stocks issued by the corporation are
presumed equal with the same privileges and liabilities, provided
that the Articles of Incorporation is silent on such differences.
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DAVID LU, [Lu vs. Lu Ym, Sr., 643 SCRA 23(2011)
Corporation Law; The latest amendments to Rule 141 of the Rules of
Court seem to imply that there can be no case of intra-corporate
controversy where the value of the subject matter cannot be
estimatedeven one for a mere inspection of corporate books.
The new Section 21(k) of Rule 141 of the Rules of Court, as amended
by A.M. No. 04-2-04-SC (July 20, 2004), expressly provides that *f+or
petitions for insolvency or other cases involving intra-corporate
controversies, the fees prescribed under Section 7(a) shall apply.
Notatu dignum is that paragraph (b) 1 & 3 of Section 7 thereof was
omitted from the reference. Said paragraph refers to docket fees for
filing *a+ctions where the value of the subject matter cannot be
estimated and all other actions not involving property. By
referring the computation of such docket fees to paragraph (a) only,
it denotes that an intra-corporate controversy always involves a
property in litigation, the value of which is always the basis for
computing the applicable filing fees. The latest amendments seem
to imply that there can be no case of intra-corporate controversy
where the value of the subject matter cannot be estimated. Even
one for a mere inspection of corporate books. If the complaint were
filed today, one could safely find refuge in the express phraseology
of Section 21 (k) of Rule 141 that paragraph (a) alone applies.