1. NARRA NICKEL MINING v.

REDMONT CONSOLIDATED MINES, 2014

- The petitioners are DCs who applied for mining permits from DENR.
- However, Redmont opposed the applications alleging that at least 60% of their capital stock are owned
by MBMI, a 100% Canadian corporation.
- According to Redmont, this meant that petitioners' capital stocks are mostly owned by MBMI, and
therefore they are disqualified in mining activities.

- The petitioners countered that, applying the control test, they are DCs since 60% of their capital stock
are owned by Filipinos.

Issue - whether the petitioners are DCs? NO

Ruling

there are two tests in determining the nationality of a Corporation. The first is the control test or the 'liberal rule
which states, '(s)hares belonging to corporations at least 60% of the capital of which is owned by Filipinos shall
be considered as of Philippine nationality.'

The second case is the Strict Rule or the Grandfather Rule (((which states, "if the percentage of Filipino
ownership in the corporation is less than 60%, only the number of shares corresponding to such percentage
shall be counted as of Philippine nationality."))) Under this rule, the combined totals in the Investing Corporation
and the Investee Corporation must be traced (i.e., "grandfathered") to determine the total percentage of Filipino
ownership.

this Grandfather Rule applies only when the 60-40 Filipino-foreign equity ownership is in doubt.

In this case, doubt is present in the 60-40 Filipino ownership of the petitioners since their common investor, the
100% Canadian corporation MBMI, funded them.

2. PIONEER INSURANCE v. MORNING STAR TRAVEL, 2015

- Pioneer insurance is the insurer of Morning Star.

- Morning Star obtained a loan despite its financial distress.
- Later, it defaulted and so Pioneer paid the loan.
- However, Morning Star also failed to pay Pioneer, thus the latter filed a case and it included the directors
and shareholders of Morning Star as defendants.
- Pioneer argues that the individuals should be solidarily liable since they were grossly negligent or in bad
faith by knowingly contracting huge debts to despite its financial distress liable.

Issue

Does the doctrine apply? NO

Ruling

Pioneer was not able to clearly and convincingly establish bad faith since its only evidence is the testimony of a
lawyer who is not even related with Morning Star.

Moreover, the business judgement of the directors in contracting the loan should be respected since it is in the
nature of businesses to take risks.
3. SHRIMP SPECIALISTS v. FUJI-TRIUMPH AGRI-INDUSTRIAL, 2009

- Fuji filed a case for collection of sum of money against Shrimp Specialists and its President Eugene Lim.
- The RTC ruled in favor of Fuji and made Lim solidarily liable since he signed on behalf of Shrimp
Specialists as President.

Issue

Does the doctrine apply? NO

Ruling

Solidary liability may be incurred, under the following exceptional circumstances:

(((1. When directors or officers: (a) vote for or assent to patently unlawful acts of the corporation; (b) act in bad
faith or with gross negligence in directing the corporate affairs; (c) are guilty of conflict of interest to the prejudice
of the corporation, its stockholders , and other persons;

When a director or officer has consented to the issuance of watered stocks or who, having knowledge thereof,
did not forthwith file with the corporate secretary his written objection thereto;

When a director or officer has agreed to hold himself personally and solidarily liable with the corporation; or

When a director or officer is made, by specific provision of law, personally liable for his corporate action.))))

In this case, none of these exceptional circumstances is present. The RTC merely stated that Lim signed on
behalf of the Shrimp Specialists as President, without explaining the need to disregard the separate corporate
personality. However, such act of signing should not make Lim liable since it isnormal for him do that so that
corporation wil be able to act.

4. EDSA SHANGRI-LA HOTEL v. BF CORPORATION, 2008

- EDSA SHANG and BF entered into a construction contract for the construction of a hotel.
- When BF sought to collect payment from the hotel, it was not paid.
- Thus, BF sued Edsa Shang for collection sum of money and damages.
- The RTC ruled in favor of BF and made the BoD Cynthia Roxas-Del Castillo solidarily liable.

Issue - Does the doctrine apply? NO

Ruling

In this case, there was no allegation of bad faith on the part of Roxas-del Castillo as to warrant the lifting of the
corporate veil.

Moreover, she was no longer the director at the time the breach of contract was committed.

5. PANTRANCO EMPLOYEES ASSOCIATION v. NLRC, 2009

- The Employees of Pantranco North Express, Inc. (PNEI) filed a case with the LA to collect their unpaid
salaries against PNEI and PNB which is the owner of PNEI.
 - They also applied for a writ of attachment against the Pantranco properties of PNB.
- PNB claimed that it is not liable since it has a separate personality with PNEI.
- PNB also claimed that the properties may not be attached since they are in the name of its subsidiary
(PNB-Madecor)
- But the employees argued that PNB-Madecor is a mere instrumentality of PNB.

Does the doctrine apply? No

Ruling

1. The employees failed to discharge the burden of proving an exception to the doctrine of piercing the corporate
veil. The mere fact that PNB is an owner of PNEI does not call for the application of the doctrine.

2. Moreover, assuming, that PNB may be held liable, the Pantranco properties may not be attached since they
are owned by PNB-Madecor. PNB-Madecor has a personality separate and distinct from PNB even though it is
a subsidiary. And the mere fact that a corporation owns all of the stock of another corporation, is not sufficient to
justify their being treated as one entity.

6. MANUEL C. ESPIRITU v. PETRON, 2009

- KPE is the exclusive distributor of Gasul tanks.

- KPE filed criminal complaints against employees of Bicol Gas for unlawfully filling up a tank that belonged
to KPE (RA 623).
- Later, the stockholders of Bicol were included in the charge since the CA reasoned that the employees
acted under their orders and that "they have control of the operations of the business."

Issue - whether the stockholders of Bicol Gas should be charged for the crime? NO.

Rulingg

The CA is incorrect. In a corporation, the management of its business is vested in its board of directors, not its
stockholders. Stockholders are the investors in a corporation. They do not have a hand in running the day-to-
day business operations.

Therefore, before a stockholder may be criminally liable for acts of the corporation, it must be shown that he had
knowledge of the criminal act committed in the name of the corporation and that he took part in the same or gave
his consent to its commission, whether by action or inaction.

7. QUEENSLAND-TOKYO COMMODITIES v. THOMAS GEORGE, 2010

- Thomas George was encouraged by Mendoza and Lontoc to invest in QTCI which is a broker engaged
in the trading of commodity futures.
- Subsequently, the (SEC) issued a (CDO) against QTCI.
- As a result, George demanded from QTCI the return of his investment, but it was not heeded.
- He then discovered that Mendoza and Lontoc were not licensed commodity futures salesmen.
- Thus, he filed a complaint for Recovery of Investment with Damages with the SEC against QTCI, Lau,
and Collado (petitioners).
- The SEC ruled in favor of George and made the president(Lau) and officer(Collado)of QTCI solidarily
liable.

Issue - Does the doctrine apply? YES

Ruling

As to Collado, he committed an unlawful act since he violated the Rules and Regulations on Commodity Futures
Trading.

As to Lau, there is gross negligence on his part since, being the COO, he should have detected and prevented
the unlawful acts of Collado, Mendoza and Lontoc.

8. ERIC LIVESEY v. BINSWANGER PH, 2014

- Livesey filed a complaint for illegal dismissal with money claims against CBB (a domestic corporation
engaged in real estate brokerage).
- The parties entered into a compromise and later, a writ of execution was issued against CBB.
- Before the writ was enforced, CBB ceased operations and suddenly, Binswanger was incorporated.
- Livesey claimed that Binswanger has no separate personality.

Does the doctrine apply? Yes

Ruling

There is an indubitable link between CBB's closure and Binswanger's incorporation. CBB ceased to exist only in
name; it re-emerged in the person of Binswanger for an urgent purpose to avoid payment by CBB of the last two
installments of its monetary obligation to Livesey, as well as its other financial liabilities.

Moreover, the business operations of CBB was merely continued by Binswanger. And, the President of CBB
also became the President of Binswanger.

9. PACIFIC REHOUSE CORP v. CA, 2014

- Pacific Rehouse et al filed their complaints against E-securities for unauthorized sale of stocks and later,
the RTC ruled in their favor.
- When the Writ of Execution was returned unsatisfied, Pacific Rehouse et al moved for the issuance of a
writ of execution to hold Export and Industry Bank liable.
- They argued that E-Securities is a mere alter ego of the Bank since it is a wholly-owned and controlled
subsidiary of Export and Industry Bank

Ruling

The Alter Ego Doctrine will not apply

test to establish when the alter ego doctrine should be operative: all three elements should concur

(1) Control, not mere majority or complete stock 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 to commit fraud or wrong, to perpetuate the violation of a statutory or
other positive legal duty, or a dishonest and unjust act in contravention of plaintiff's legal right; and

(3) The control and breach of duty must [have] proximately caused the injury or unjust loss complained of.

Ownership by Export Bank of majority or the stocks of E-Securities and the existence of interlocking
directorates are insufficient grounds for disregarding the separate corporate personality. Control must be not
merely majority or complete stock control, but complete domination, not only of finances but of policy and
business practice in respect to the transaction attacked so that the corporation had no separate mind, will or
existence of its own

10. PNB v. HYDRO RESOURCES CONTRACTORS, 2013

- Nonoc Mining and Industrial Corporation (NMIC) is owned by DBP for 57% and the remaining 43% is
owned by PNB. Moreover, the BoDs of NMIC were either from DBP or PNB.
- NMIC is indebted to Hydro in connection with a construction contract.
- Hydro sued NMIC, DBP and PNB for collection of sum of money. Hydroo argued that the doctrine of
"piercing the veil of corporate fiction" applies since NMIC is an alter ego of DBP and PNB considering
that: they own all of the stocks of NMIC and that they have interlocking directors.

Does the doctrine apply? No

Ruling

While ownership a corporation of all or a majority of stocks of another corporation and their interlocking
directorates may serve as indicia of control, these circumstances are insufficient to establish an alter ego
relationship. Control must be not merely majority or complete stock control, but complete domination, not only of
finances but of policy and business practice in respect to the transaction attacked so that the corporation had no
separate mind, will or existence of its own.

11. KUKAN INTERNATIONAL v. AMOR REYES, 2010

- Romeo Morales sued Kukan Inc., for a sum of money. Kukan Inc was declared in default, and Morales
later won the case.
- During execution, the sheriff levied personal properties in the office of Kukan Inc. However, Kukan Int’l
(KIC) told the sheriff that it is the owner of the properties, thus it filed an affidavit of third party claim.
- Morales countered by filing a motion praying for the application of the doctrine of piercing the veil. This
motion was granted by the RTC.

Does the doctrine apply? No

Ruling

(1) the court must first acquire jurisdiction over the corporations involved before applying the doctrine; and
(2) the doctrine can only be raised during a full-blown trial ((((over a cause of action duly commenced involving
parties duly brought under the authority of the court by way of service of summons or what passes as such
service))).

No jurisdiction over the person of KIC since;

-it was not made a defendant
-it only made a special but not voluntary appearance
-and it was not served with summons

No full blown trial for the simple reason that KIC was not impleaded as a defendant and that the RTC did
not acquire jurisdiction over it.

whether the motion is appropriate to hold KIC’s properties liable? NO.

 THe motion raised a new cause of action which is the alleged liability of KIC. But this new cause of action
should be ventilated in another complaint and subsequent trial.

In any event, the principle of piercing the veil of corporate fiction finds no application to the instant case.

The RTC applied the doctrine merely because the same stockholder owns 40% of the shares of both
corporations. However, this fact standing alone, is insufficient justification for disregarding the separate
corporate personality.