Bank of Commerce vs. Marilyn Nite, G.R. No. 211535, July 22, 2015
CORPO
REQUISITES TO PIERCE THE VEIL OF CORPORATE FICTION
: Tohold a director or officer personally liable for corporate obligations,two requisites must concur: (1) complainant must allege in thecomplaint that the director or officer assented to patently unlawful actsof the corporation, or that the officer was guilty of gross negligenceor bad faith; and (2) complainant must clearly and convincingly prove such unlawful acts, negligence or bad faith To hold a director personally liable for debts of the corporation, and thus pierce the veil of corporate fiction, the bad faith or wrongdoing of the director must be established clearly and convincingly !t is settled that thetransaction between "ancom and "ancap is an ordinary sale
ULTRAVIRES ACTS ARE NOT ALWAYS UNLAWFUL:
!n addition, weconsider the testimony of #agrimas $uqui, the #egal %fficer in &hargeof the 'overnment ecurities epartment of the "ang*o entral ng +ilipinas from 1- to 1., who e/plained that primary issues of treasury bills are supposed to be issued only to accredited dealers but these accredited ban*s can sell to anyone who need not beaccredited, and such buyers, who may be corporations or individuals,are classified as the secondary mar*et The trial court and the &ourt of 0ppeals found that "ancap sold the treasury bills as a secondary dealer 0s such, "ancaps act of selling securities to "ancom is at most ultra vires and not patently unlawful
FACTS:
Reson!ent "as c#ar$e!, to$et#er "it# one Bra!ley an! %scalam&re,"it# violation of 'ection 1( of Batas )am&ansa Bilan$ 1*+. Nite "asalso c#ar$e!, to$et#er "it# Bra!ley, %scalam&re, an! an$, "it#%stafa. -#e t"o cases "ere trie! ointly. -#e rosecution/s ar$ument "as t#at Nite, as )resi!ent of Bancaitaleveloment Cororation Banca, violate! 'ection 1( of B) Bl$. 1*+"#en Banca sol! )250 million "ort# of treasury &ills to Bank of Commerce Bancom "it#out &ein$ re$istere! as &roker, !ealer, or salesman of securities. -#e rosecution also alle$e! t#at Nite!efrau!e! Bancom &y falsely reten!in$ to ossess an! o"n )250million "ort# of treasury &ills t#at Banca suose!ly sol! to Bancom"#en none of t#e treasury &ills !escri&e! in t#e Confirmation of 'alean! etter of 4n!ertakin$ issue! &y Banca "ere ever !elivere! toBancom. n -rial, t#e court rule! t#at t#e rosecution "as not a&le toesta&lis# t#at Banca acte! as a rimary !ealer t#at nee!e! to &eaccre!ite!. 6ccor!in$ to t#e trial court, Banca acte! as a secon!ary!ealer an! !i! not &uy t#e treasury &ills !irectly from t#e Central Bank.-#e trial court rule! t#at t#e element of !eceit "as non7e8istent an!t#at at t#e time of t#e transaction, Bancom "as a"are t#at Banca"as not in #ysical ossession of t#e treasury &ills su&ect of t#e sale.9ence, Nite "as 6C:4;--% of &ot# c#ar$es ma!e. 9o"ever, s#e"as or!ere! to ay B6N< = CMM%RC% reresentin$ t#e civilo&li$ation of B6NC6);-6. Nite file! a artial motion for reconsi!eration "#ic# "as later $rante!. >#en it "as t#e rosecution/s turn to file a motion for reconsi!eration,it alle$es t#at t#e trial court erre! in a&solvin$ Nite of #er civil lia&ility toBancom. -#e rosecution alle$e! t#at t#e trial court erre! in notiercin$ t#e cororate veil of Banca "#en it "as a!e?uately s#o"nt#at Nite use! t#e comany to eretuate frau! an! to eva!e ane8istin$ o&li$ation. Nevert#eless, t#e sai! motion "as !enie! for lackof merit.n 6eal, it affirme! t#e -C@s ecision. 9ence, Bancom file! aetition for revie" &efore t#is Court.
ISSUE:
>AN t#e Court of 6eals erre! in not iercin$ t#e cororateveil of Banca even t#ou$# t#e same "as &ein$ use! to eretuatefrau!.
RULING:
>e !eny t#e etition.-#e $eneral rule is t#at a cororation is investe! &y la" "it# aersonality searate an! !istinct from t#at of t#e ersons comosin$ it,or from any ot#er le$al entity t#at it may &e relate! to.
12
-#e o&li$ationsof a cororation, actin$ t#rou$# its !irectors, officers, an! emloyees,are its o"n sole lia&ilities.
13
-#erefore, t#e cororation/s !irectors,officers, or emloyees are $enerally not ersonally lia&le for t#eo&li$ations of t#e cororation.
1
c#anro&lesla"-o #ol! a !irector or officer ersonally lia&le for cororate o&li$ations,t"o re?uisites must concur 1 comlainant must alle$e in t#ecomlaint t#at t#e !irector or officer assente! to atently unla"ful actsof t#e cororation, or t#at t#e officer "as $uilty of $ross ne$li$ence or &a! fait#D an! 2 comlainant must clearly an! convincin$ly rovesuc# unla"ful acts, ne$li$ence or &a! fait#.
15
-o #ol! a !irector ersonally lia&le for !e&ts of t#e cororation, an! t#us ierce t#e veil of cororate fiction, t#e &a! fait# or "ron$!oin$ of t#e !irector must &eesta&lis#e! clearly an! convincin$ly.
1E
c#anro&lesla"-#e court consi!ere! t#e testimony of a$rimas Nu?ui, t#e e$alfficer in C#ar$e of t#e Government 'ecurities eartment of t#eBan$ko 'entral n$ )iliinas from 1(( to 1((+, "#o e8laine! t#atrimary issues of treasury &ills are suose! to &e issue! only toaccre!ite! !ealers &ut t#ese accre!ite! &anks can sell to anyone "#onee! not &e accre!ite!, an! suc# &uyers, "#o may &e cororations or in!ivi!uals, are classifie! as t#e secon!ary market. -#e trial court an!t#e Court of 6eals foun! t#at Banca sol! t#e treasury &ills as asecon!ary !ealer.
1*
6s suc#, Banca/s act of sellin$ securities toBancom is at most ultra vires an! not atently unla"ful.Base! on t#e fore$oin$, "e cannot #ol! Nite ersonally lia&le for Banca/s cororate lia&ility.
WHEREFORE,
"e
DENY
t#e etition.
JAMES YU and WILSON YOUNG, petitione!, "! THE NATIONALLA#OR RELATIONS COMMISSION, LA#OR AR#ITER DANIEL C$CUETO, TANDUAY DISTILLERY INC$, FERNANDO DURAN,EDUARDO PALIWAN, RO%UE ESTOCE AND RODRIGO SANTOS,e!pondent!$G$R$ No!$ &&&'&()&&J*ne &+, &-FACTS:
)rivate reson!ents7emloyees =ernan!o uran, %!uar!o)ali"an, Ro?ue %stoce, an! Ro!ri$o 'antos "ere emloyees of reson!ent cororation -an!uay istillery, ;nc, -; "#o "ere amon$t#e 22 emloyees "#o receive! a memoran!um from -; terminatin$t#eir services. for reasons of retrenc#ment, effective 30 !ays fromreceit t#ereof or not later t#an t#e close of &usiness #ours on 6ril 2+,1(++.-#e 22 emloyees file! a -R #o"ever, !ue to t#e 207!ay lifetime of t#e temorary restrainin$ or!er, an! &ecause of t#e on7$oin$ne$otiations for t#e sale of -; t#e retrenc#ment us#e! t#rou$#. utof t#e 22 emloyees "#o "ere retrenc#e!, t#e instant etition involvesonly t#e in!ivi!ual reson!ents #erein.n June 1, 1(++, or after reson!ents7emloyees #a! cease! as suc#emloyees, a ne" &uyer of -;/s assets, -"in 6ce 9ol!in$s, ;nc. tookover t#e &usiness. -"in 6ce assume! t#e &usiness name -an!uayistillers..n 6u$ust +, 1(++, t#e emloyees file! a motion to imlea! #ereinetitioners James u an! >ilson oun$, !oin$ &usiness un!er t#ename an! style of -an!uay istillers, as arty reson!ents in sai!cases. )etitioners file! an oosition t#ereto, assertin$ t#at t#ey arereresentatives of -an!uay istillers an entity !istinct an! searatefrom -;, t#e revious o"ner, an! t#at t#ere is no emloyer7emloyeerelations#i &et"een -an!uay istillers an! rivate reson!ents.Reson!ents7emloyees file! a rely to t#e oosition statin$ t#atetitioner James u as officer7in7c#ar$e of -an!uay istillers #a!informe! t#e resi!ent of -; la&or union of -an!uay istillers/!ecision to #ire every&o!y "it# a clean slate on a ro&ation &asis.
On Ma. /0, &', t1e La2o a2ite endeed a de3i!ion de34ain5t1e eten316ent i44e5a4 and odein5 t1e e!pondent Tand*a.Di!ti44e., In3$, to ein!tate t1e 3o6p4ainant! to t1ei 7o6e po!ition 8t1 2a398a5e! *p to t1e ti6e o7 31an5e o7 o8ne!1ip, i7 one 1a! ta9en p4a3e$ And T1at in t1e e"ent o7 31an5e in6ana5e6ent it ;Tand*a. Di!ti44e., In3$,< i! 1ee2. odeed to pa.t1e 3o6p4ainant! t1ei e!pe3ti"e !epaation 2ene7it! 3o6p*tedat t1e ate o7 one ;&< 6ont1 7o e"e. .ea o7 !e"i3e$ T1i! i!8it1o*t pe=*di3e to t1e 4ette o7 M$ Ja6e! Y* a! o77i3e)in)31a5eo7 Tand*a. Di!ti44e! dated J*ne &>, &'' to t1e Pe!ident o7 t1eTand*a. Di!ti44e., In3$, La2o Union$
-#ereuon, rivate reson!ents7emloyees on 'etem&er 1E, 1((1file! a motion for e8ecution rayin$ t#at NRC t#rou$# t#e la&or ar&iter, FiHssue t#e necessary "rit for t#e e8ecution of t#e entire!ecision !ate! May 2, 1(+(, inclu!in$ t#e actual reinstatement of t#ecomlainants to t#eir former osition "it#out loss of seniority an!
&enefits a$ainst -an!uay istillery, ;nc., an!Aor -an!uay istillers,James u an! >ilson oun$.F -#is "as oose! &y t#e etitioners ont#e $roun! t#at
?t1e Motion 7o E@e3*tion i! 8it1o*t an. 2a!i! in!o 7a a! it pa.! 7o t1e i!!*an3e o7 a 8it o7 e@e3*tion a5ain!te!pondent Tand*a. Di!ti44e!, 81i31 i! an entit. !epaate anddi!tin3t 7o6 e!pondent Tand*a. Di!ti44e., In3$, and e!pondent!Ja6e! Y* and Wi4!on Yo*n5$?
;''4% >#et#er or not t#e reson!ent NRC committe! $rave a&useof !iscretion in #ol!in$ etitioners u an! oun$ lia&le un!er t#e!ecision !ate! May 2, 1(+(.9% es.
Petitioners, for a nu!er of reasons "#i$# "e s#a%% &is$uss !e%o", a' not !e #e%& ans"era!%e an& %ia!%e un&er t#efina% (u&)ent of La!or Ar!iter Cauton*+ar$e%ona
1.
An e@a6ination o7 t1e a7oe*oted di!po!iti"e potion o7 t1ede3i!ion !1o8! t1at t1e !a6e doe! not in an. 6anne o24i5ateTand*a. Di!ti44e!, o e"en petitione! Y* and Yo*n5 7o t1at6atte, to ein!tate e!pondent!$ On4. TDI 8a! 1e4d 4ia24e toein!tate e!pondent! *p to t1e ti6e o7 31an5e o7 o8ne!1ip, and7o !epaation 2ene7it!$
9o"ever, a&or 6r&iter Cueto "ent &eyon! "#at "as !isose! &y t#e!ecision an! issue! an or!er !ate! Novem&er 1*, 1((2 "#ic#re?uire!F. . . -an!uay istillers, ;nc., >ilson oun$ an! James u toimme!iately reinstate comlainants =ernan!o uran, Ro!ri$o 'antos,Ro?ue %stoce an! %!uar!o ali"an to #eir resective ositions.F -#eor!er of e8ecution !ate! Novem&er 1*, 1((2 in effect amen!e! t#e!ecision !ate! May 2, 1(+( for t#e former or!ers etitioners an!-an!uay istillers to reinstate rivate reson!ents emloyees "#ereast#e !ecision !ate! May 2, 1(+(, as "e #ave !iscusse! a&ove, !oesnot so !ecree, -#is cannot &e !one. ;t is &eyon! t#e o"er an!cometence of a&or 6r&iter Cueto to amen! a final !ecision, -#e "ritof e8ecution must not $o &eyon! t#e scoe of t#e u!$ment.2.
Neit1e 6a. 2e !aid t1at petitione! and Tand*a. Di!ti44e! aeone and t1e !a6e a! TDI, a! !ee6! to 2e t1e i6pe!!ion o7 e!pondent! 81en t1e. i6p4eaded petitione! a! pat.e!pondent! in t1ei 3o6p4iant 7o *n7ai 4a2o pa3ti3e, i44e5a4 4a.o77, and !epaation 2ene7it!$
'uc# a stance is not suorte! &y t#e facts. -#e name of t#e comanyfor "#om t#e etitioners are "orkin$ is -"in 6ce 9ol!in$s Cororation, 6s state! &y t#e 'olicitor General, -"in 6ce is art of t#e 6llie! BankGrou alt#ou$# it con!ucts t#e rum &usiness un!er t#e name of -an!uay istillers. -#e use of a similar soun!in$ or almost i!enticalname is an o&vious !evice to caitaliIe on t#e $oo!"ill "#ic# -an!uayRum #as &uilt over t#e years. -"in 6ce or -an!uay istillers, on one#an!, an! -an!uay istillery ;nc. -;, on t#e ot#er, are !istinct an!searate cororations. -#ere is not#in$ to su$$est t#at t#e o"ners of -;, #ave any common relations#i as to i!entify it "it# 6llie! BankGrou "#ic# runs -an!uay istillers.;t is &asic t#at a cororation is investe! &y la" "it# a ersonalitysearate an! !istinct from t#ose of t#e ersons comosin$ it as "ell asfrom t#at of any ot#er le$al entity to "#ic# it may &e relate! )alay, ;nc.et al. vs. Clave, et al., 12 'CR6 E1 1(+3H.-#e $enuine nature of t#e sale to -"in 6ce is evi!ence! &y t#e factt#at -"in 6ce "as only a su&se?uent intereste! &uyer. 6t t#e time"#en termination notices "ere sent to its emloyees, -; "asne$otiatin$ "it# t#e =irst )acific Metro Cororation for t#e sale of itsassets. nly after =irst )acific $ave u its efforts to ac?uire t#e assets!i! -"in 6ce or -an!uay istillers come into t#e icture. Reson!ents7emloyees #ave not resente! any roof as to communality of o"ners#i an! mana$ement to suort t#eir contention t#at t#e t"ocomanies are one firm or closely relate!. -#e !octrine of iercin$ t#eveil of cororate entity alies "#en t#e cororate fiction is use! to!efeat u&lic convenience, ustify "ron$, rotect frau!, or !efen! crimeor "#ere a cororation is t#e mere alter e$o or &usiness con!uit of aerson ;n!o#il -e8tile Mill >orkers 4nion vs. Calica, 205 'CR6 E(*,*03 1((2H. -o !isre$ar! t#e searate uri!ical ersonality of acororation, t#e "ron$7!oin$ must &e clearly an! convincin$lyesta&lis#e!. ;t cannot &e resume! el Rosario vs. NRC, 1+* 'CR6***, *+0( 1((0H. 6not#er factor to consi!er is t#at
TDI a! a 3opoation o it! !1ae!o7 !to39 8ee not p*31a!ed 2. T8in A3e$
-#e &uyer limite! itself tourc#asin$ most of t#e assets, e?uiment, an! mac#inery of -;.-#us, -"in 6ce or -an!uay istillers !i! not take over t#e cororateersonality of -; alt#ou$# t#ey manufacture t#e same ro!uct at t#esame lant "it# t#e same e?uiment an! mac#inery. &viously, t#etra!e name F-an!uayF "ent "it# t#e sale &ecause t#e ne" firm !oes&usiness as -an!uay istillers an! its main ro!uct of rum is sol! as-an!uay Rum. -#ere is no s#o"in$, #o"ever, t#at -; itself "asa&sor&e! &y -"in 6ce or t#at it cease! to e8ist as a searatecororation, ;n oint of fact -; is no" #erein a arty reson!entreresente! &y its o"n counsel.7 t#e fiction of searate an! !istinct cororate entities cannot, in t#einstant case, &e !isre$ar!e! an! &rus#e! asi!e, t#ere &ein$ not t#eleast in!ication t#at t#e secon! cororation is a !ummy or serves as aclient of t#e first cororate entity.3
$ No 3o*4d t1e ode and 8it to ein!tate 2e an31oed on t1e"a5*e and !ee6in54. *n3a44ed 7o a4tenati"e di!po!ition in t1e#a3e4ona de3i!ion t1at
F. . . -#is is "it#out reu!ice to t#e letter of Mr. James u as officer7in7c#ar$e of -an!uay istillers !ate! June 1E, 1(++ to t#e )resi!ent of t#e -an!uay istillery, ;nc. la&or 4nion.F-#e letter of James u !oes not mention any reinstatement. ;t assurest#e resi!ent of t#e la&or union t#at -an!uay istillers stoo! firm on its!ecision to #ire emloyees "it# a clean slate on a ro&ationary &asis.-#e fact t#at t#e emloyees of t#e former emloyer -; "oul! &e#ire! on a ro&ationary &asis s#o"s t#at t#ere "as no emloyer7emloyee relations#i &et"een in!ivi!ual reson!ents an! -"in 6ce
0nyone who oins the buyer corporation comes in as an outsider whois newly hired and who starts on a probationary basis until he proveshe deserves to be on a permanent status 3is application can bereected in the e/ercise of the hiring authoritys discretion
. .
Anot1e 7a3to 81i31 6i4itate! a5ain!t t1e 34ai6 7o ein!tate6ent o7 t1e indi"id*a4 e!pondent! i! t1ei 1a"in5e3ei"ed !epaation pa. a! pat o7 a 3o6po6i!e a5ee6ent int1e 3o*!e o7 t1ei 4iti5ation 8it1 TDI$ PAMATIANCEASE BS CAFACTS
=orrest Cease an! five 5 ot#er 6merican citiIens forme!
Tiaon5Mi44in5 and P4antation Co6pan.
. %ventually, t#e s#ares of t#e ot#er ori$inal incororators "ere &ou$#t out &y
Cea!e
"it# #is c#il!ren. -#ecomany@s c#arter lase! in June 1(5+.
Foe!t Cea!e died inA*5*!t &-
. -#ere "as no mention "#et#er t#ere "ere stes toli?ui!ate t#e comany. 'ome of #is c#il!ren "ante! an actual !ivision"#ile ot#ers "ante! a reincororation.
T8o o7 1i! 31i4den, #en=a6inand F4oen3e
, initiate! 'ecial )rocee!in$ No. 3+(3 "it# C=; -aya&as
a!9in5 t1at t1e Tiaon5 Mi44in5 and P4antation Copoation 2ede34aed identi3a4 to Foe!t Cea!e and t1at it! popetie! 2edi"ided a6on5 1i! 31i4den a! inte!tate 1ei!
. efen!ants oose!t#e same &ut t#e C=; rule! in favor of t#e laintiffs. efen!ants file! anotice of aeal from t#e C=;@s !ecision &ut t#e same "as !ismisse!for &ein$ remature. -#e case "as elevate! to t#e 'C "#ic#reman!e! it to t#e Court of 6eals. -#e C6 !ismisse! t#e etition.
ISSUE
>#et#er or not t#e Court of 6eals erre! in affirmin$ t#elo"er court@s !ecision t#at t#e su&ect roerties o"ne! &y t#ecororation are also roerties of t#e estate of =orrest Cease
HELD
N. -#e trial court in!ee! foun! stron$ suort, one t#at is&ase! on a "ell7entrenc#e! rincile of la" "#ic# is t#e t#eory of Fmer$er of =orrest . Cease an! -#e -iaon$ Millin$ as oneersonalityF, or t#at Ft#e comany is only t#e &usiness con!uit an!alter e$o of t#e !ecease! =orrest . Cease an! t#e re$istere!roerties of -iaon$ Millin$ are actually roerties of =orrest . Ceasean! s#oul! &e !ivi!e! e?ually, s#are an! s#are alike amon$ #is si8c#il!ren, ... F, t#e trial court atly alie! t#e familiar e8cetion to t#e$eneral rule &y !isre$ar!in$ t#e le$al fiction of !istinct an! searatecororate ersonality an! re$ar!in$ t#e cororation an! t#e in!ivi!ualmem&er one an! t#e same. ;n s#re!!in$ t#e fictitious cororate veil,t#e trial u!$e narrate! t#e un!isute! factual remise, t#us >#ile t#e recor!s s#o"e! t#at ori$inally its incororators "ere aliens,frien!s or t#ir!7arties in relation to anot#er, in t#e course of itse8istence, it !eveloe! into a close family cororation. -#e Boar! of irectors an! stock#ol!ers &elon$ to one family t#e #ea! of "#ic#=orrest . Cease al"ays retaine! t#e maority stocks an! #ence t#econtrol an! mana$ement of its affairs. ;t must &e note! t#at as #isc#il!ren increase or &ecome of a$e, #e continue! !istri&utin$ #iss#ares amon$ t#em a!!in$ =lorence, -eresa an! Marion until at t#etime of #is !eat# only 1(0 "ere left to #is name. efinitely, only t#emem&ers of #is family &enefite! from t#e Cororation.
-#e cororation /never/ #a! any account "it# any &ankin$ institution or if any account "as carrie! in a &ank on its &e#alf, it "as in t#e name of Mr. =orrest . Cease. -#ere is trut# in laintiff/s alle$ation t#at t#ecororation is only a &usiness con!uit of #is fat#er an! an e8tension of #is ersonality, t#ey are one an! t#e same t#in$. -#us, t#e assets of t#e cororation are also t#e estate of =orrest . Cease, t#e fat#er of t#e arties #erein "#o are all le$itimate c#il!ren of full &loo!. 6 ric# store of urisru!ence #as esta&lis#e! t#e rule kno"n as t#e!octrine of !isre$ar!in$ or iercin$ t#e veil of cororate fiction. G%N%R6 R4% a cororation is veste! &y la" "it# a ersonalitysearate an! !istinct from t#e ersons comosin$ it as "ell as anyot#er le$al entity to "#ic# it may &e relate!. By virtue of t#is attri&ute, acororation may not, $enerally, &e ma!e to ans"er for acts or lia&ilitiesof its stock#ol!ers or t#ose of t#e le$al entities to "#ic# it may &econnecte!, an! vice versa. -#is searate an! !istinct ersonality is,#o"ever, merely a fiction create! &y la" for convenience an! toromote t#e en!s of ustice %KC%)-;N' 'uc# rule may not &e use! or invoke! for en!ssu&versive of t#e olicy an! urose &e#in! its creation or "#ic# coul!not #ave &een inten!e! &y la" to "#ic# it o"es its &ein$. -#is isarticularly true "#ere t#e fiction is use! to !efeat u&lic convenience, ustify "ron$, rotect frau!, !efen! crime, confuse le$itimate le$al or u!icial issues, eretrate !ecetion or ot#er"ise circumvent t#e la" -#is is like"ise true "#ere t#e cororate entity is &ein$ use! as analter e$o, a!unct, or &usiness con!uit for t#e sole &enefit of t#estock#ol!ers or of anot#er cororate. ;n any of t#ese cases, t#e notionof cororate entity "ill &e ierce! or !isre$ar!e!, an! t#e cororation"ill &e treate! merely as an association of ersons or, "#ere t#ere aret"o cororations, t#ey "ill &e mer$e! as one, t#e one &ein$ merelyre$ar!e! as art or t#e instrumentality of t#e ot#er. 6n in!u&ita&le !e!uction from t#e fin!in$s of t#e trial court cannot &utlea! to t#e conclusion t#at t#e &usiness of t#e cororation is lar$ely, if not "#olly, t#e ersonal venture of =orrest . Cease. -#ere is not evena s#a!o" of a s#o"in$ t#at #is c#il!ren "ere su&scri&ers or urc#asers of t#e stocks t#ey o"n. -#eir articiation as nominals#are#ol!ers emanate! solely from =orrest . Cease/s $ratuitous !oleout of #is o"n s#ares to t#e &enefit of #is c#il!ren an! ultimately #isfamily. ;f t#e Court sustaine! t#e t#eory of etitioners t#at t#e trial court acte!in e8cess of uris!iction or a&use of !iscretion amountin$ to lack of uris!iction in !eci!in$ t#e civil case as a case for artition, -iaon$Millin$ an! )lantation Comany "oul! #ave &een a&le to e8ten! itscororate e8istence &eyon! t#e erio! of its c#arter "#ic# lase! inJune, 1(5+ un!er t#e $uise an! cover of =. , Cease )lantationComany, ;nc. as -rustee "#ic# "oul! &e a$ainst t#e la", an! as-rustee s#all #ave &een a&le to use t#e assets an! roerties for t#e&enefit of t#e etitioners, to t#e $reat reu!ice an! !efrau!ation. of rivate reson!ents. 9ence, it &ecomes necessary an! imerative toierce t#at cororate veil. -#e u!$ment aeale! from is 6==;RM%.
DELPHER TRADES CORPORATION BS$ IAC
elfin )ac#eco an! sister )ela$ia "ere t#e o"ners of a arcel of lan!in )olo no" LalenIuela. 'u&se?uently, t#ey lease! to ConstructionComonents ;nternational ;nc. t#e roerty an! rovi!in$ for a ri$#t of first refusal s#oul! it !eci!e to sell t#e sai! roerty.Construction Comonents ;nternational, ;nc. assi$ne! its ri$#ts an!o&li$ations un!er t#e contract of lease in favor of 9y!ro )ies)#iliines, ;nc. "it# t#e si$ne! conformity an! consent of elfin an!)ela$ia. ;n 1(*E, a !ee! of e8c#an$e "as e8ecute! &et"een lessorselfin an! )ela$ia )ac#eco an! !efen!ant el#er -ra!esCororation "#ere&y t#e )ac#ecos conveye! to t#e latter t#e lease!roerty to$et#er "it# anot#er arcel of lan! also locate!.n t#e $roun! t#at it "as not $iven t#e first otion to &uy t#e lease!roerty ursuant to t#e lease a$reement, reson!ent 9y!ro )ies)#iliines file! an amen!e! comlaint for reconveyance of t#e lotun!er t#e con!itions similar to t#ose of el#er. -#e court rule! infavor of 9y!ro !eclarin$ t#e e8istence of its referential ri$#t to ac?uiret#e su&ect roerty. ;6C affirme!. )etitioner el#er conten! t#at t#ere "as actually no transfer of o"ners#i, t#e )ac#ecos #avin$ remaine! in control of t#e roerty.-#ey alle$e! t#at etitioner el#er is a family cororation , or$aniIe!&y t#e c#il!ren of )ela$ia, "#o o"ne! t#e arcel of lan! lease! torivate reson!ent 9y!ro to eretuate t#eir control over t#e roertyt#rou$# t#e cororation an! to avoi! ta8es. ;t also alle$e! t#at toaccomlis# t#is, t#e lease! roerty "as transferre! to etitioner el#er &y virtue of a !ee! of e8c#an$e, an! in e8c#an$e for t#eroerties t#ey ac?uire! maority s#ares of etitioner el#er cororation. ;n s#ort, etitioners conten! t#at t#e )ac#ecos !i! not sellt#e lease! roerty since t#ey e8c#an$e! t#e lan! for s#ares in t#eir o"n cororation. )rivate reson!ent, #o"ever, conten! t#at etitioner el#er -ra!es is a cororation searate an! !istinct from t#e)ac#ecos.
I!!*e:
>#et#er or not t#e Fee! of %8c#an$eF of t#e roertiese8ecute! &y t#e )ac#ecos on t#e one #an! an! t#e el#er -ra!esCororation on t#e ot#er "as meant to &e a contract of sale "#ic#, ineffect, reu!ice! t#e rivate reson!ent/s ri$#t of first refusal over t#elease! roerty inclu!e! in t#e !ee! of e8c#an$e
R*4in5:
-#e Court rule! in favor of t#e etitioner. -#e Fee! of %8c#an$eF of roerty &et"een t#e )ac#ecos an! el#er -ra!es Cororationcannot &e consi!ere! a contract of sale. -#ere "as no transfer of actual o"ners#i interests &y t#e )ac#ecos to a t#ir! arty. -#e)ac#eco family merely c#an$e! t#eir o"ners#i from one form toanot#er. -#e o"ners#i remaine! in t#e same #an!s. 9ence, t#erivate reson!ent #as no &asis for its claim of a li$#t of first refusalun!er t#e lease contract.By t#eir o"ners#i of a caital e?ual to 55 of t#e s#ares, t#e)ac#ecos #ave t#e control of t#e etitioner cororation. ;n effect, t#eetitioner cororation is a &usiness con!uit of t#e )ac#ecos. >#at t#eyreally !i! "as to invest t#eir roerties an! c#an$e t#e nature of t#eir o"ners#i from unincororate! to incororate! form &y or$aniIin$el#er -ra!es Cororation to take control of t#eir roerties an! att#e same time save on in#eritance ta8es-#e e8ecution of t#e !ee! of e8c#an$e on t#e roerties for no ar value s#ares, t#e )ac#ecos "ere a&le to rovi!e for a ta8 freee8c#an$e of roerty, suc# t#at t#ey "ere a&le to e8ecute t#e !ee! of e8c#an$e free from income ta8 an! ac?uire a cororation. 'ec. 35 of t#e N;RC rovi!es t#at No $ain or loss s#all also &e reco$niIe! if aerson e8c#an$es #is roerty for stock in a cororation of "#ic# as aresult of suc# e8c#an$e sai! erson alone or to$et#er "it# ot#ers note8cee!in$ four ersons $ains control of sai! cororation.F-#e Court &elieves t#at t#ere is not#in$ "rin$ a&out t#e estatelannin$O sc#eme resorte! to &y t#e )ac#ecos.
T1e 4e5a4 i51t o7 ata@pa.e to de3ea!e t1e a6o*nt o7 81at ot1e8i!e 3o*4d 2e 1i!ta@e! o a4to5et1e a"oid t1e6, 2. 6ean! 81i31 t1e 4a8 pe6it!,3annot 2e do*2ted$OPPEL PHILIPPINES, INC$ BS ALFREDO YATCO ;COLLECTOR OF INTERNAL REBENUE<GR L0>+>, >> P1i4 0+, O3to2e &(, &0+FACTS:
<oel ;n!ustrial Car an! %?uiment comany <;C%, a forei$ncomany not !oin$ &usiness in t#e )#iliines, o"ne! ((5 s#ares outof t#e 1000 s#ares t#at comrise t#e caital stock of <);, a !omesticcororation license! as commercial &roker in t#e )#iliines. -#eremainin$ 5 s#ares "ere o"ne! &y eac# of t#e officers of <);. <;C% isin t#e &usiness of sellin$ rail"ay materials, mac#ineries an! sulies. Buyers in t#e )#iliines, "#en intereste!, aske! for rice ?uotations
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