Beruflich Dokumente
Kultur Dokumente
*
G.R. No. 154975. January 29, 2007.
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* FIRST DIVISION.
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GARCIA, J.:
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11 Supra note 1.
12 Supra note 2.
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15 Union Bank v. Court of Appeals, G.R. No. 134068, June 25, 2001, 359
SCRA 480; Villaranda v. Villaranda, G.R. No. 153447, February 23, 2004,
423 SCRA 571.
16 Del Rosario v. Bonga, G.R. No. 136308, January 23, 2001, 350 SCRA
101.
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17 Republic v. Court of Appeals, G.R. No. 116372, January 18, 2001, 349
SCRA 45.
18 Floro v. Llenado, G.R. No. 75723, June 2, 1995, 244 SCRA 713, citing
Remalante v. Tibe, 158 SCRA 145 (1988) Benguet Exploration, Inc. v.
Court of Appeals, G.R. 117434, February 9, 2001, 351 SCRA 445.
19 PT& T v. Court of Appeals, G.R. No. 152057, September 29, 2003,
412 SCRA 263.
20 Lim v. Court of Appeals, G.R. 124715, January 24, 2000, 323 SCRA
102.
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21
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 those22 of
legal entities to which it may be connected or vice versa.
The notion of separate personality, however, may be
disregarded under the doctrine—“piercing the veil of
corporate fiction”—as 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
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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. However, any piercing of the corporate
veil has to be done with caution, albeit the Court will not
hesitate to disregard the corporate veil when 24
it is misused
or when necessary in the interest of justice. After all, the
concept of corporate entity was not meant to promote
unfair objectives.
Authorities are agreed on at least three (3) basic areas
where piercing the veil, with which the law covers and
isolates the corporation from any other legal entity to
which it
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may be related,
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is allowed. These are: 1) defeat of public
convenience, as when the corporate fiction is27 used as
vehicle for the evasion of an existing obligation; 2) fraud
cases or when the corporate entity is used 28
to justify a
wrong, protect fraud, or defend a crime; or 3) alter ego
cases, where a corporation is merely a farce since it is a
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,
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agency, conduit or adjunct of another corporation.
The CA found valid grounds to pierce the corporate veil
of petitioner GCC, there being justifiable basis for such
action. When the appellate court spoke of a justifying
factor, the reference was to what the trial court said in its
decision, namely: the existence of “certain circumstances
[which], taken together, gave rise to the ineluctable
conclusion that … [respondent] EQUITY is but an
instrumentality or adjunct of [petitioner] GCC.”
The Court agrees with the disposition of the appellate
court on the application of the piercing doctrine to the
transaction subject of this case. Per the Court’s count, the
trial court enumerated no less than 20 documented
circumstances and transactions, which, taken as a package,
indeed strongly supported the conclusion that respondent
EQUITY was but an adjunct, an instrumentality or
business conduit of petitioner GCC. This relation, in turn,
provides a justifying ground to pierce petitioner’s corporate
existence as to ALSONS’ claim in question. Foremost of
what the trial court
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… EQUITY, but, the latter had grossly inadequate capital for the
pursuit of its line of business to the extent that its business
affairs were considered as GCC’s own business endeavors. x x x.
x x x x x x x x x
ALSONS has likewise shown … that the bonuses of the officers
and directors of … EQUITY was based on its total financial
performance together with all its affiliates… both firms were
sharing one and the same office when both were still operational
… and that the directors and executives of … EQUITY never
acted independently … but took their orders from …
GCC….
The evidence has also indubitably established that …
EQUITY was organized by … GCC for the purpose of
circumventing [CB] rules and regulations and the Anti-
Usury Law. Thus, as disclosed by the Advance Report … on the
result of Central Bank’s Operations Examination conducted on …
GCC as of March 31, 1977 (EXHIBITS “FFF” etc.), the latter
violated [CB] rules and regulations by: (a) using as a conduit its
non-quasi bank affiliates …. (b) issuing without recourse facilities
to enable GCC to extend credit to affiliates like … EQUITY which
go beyond the single borrower’s limit without the need of showing
outstanding balance in the book of accounts.” (Emphasis over
words in brackets added.)
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