RYUICHI YAMAMOTO v. NISHINO LEATHER INDUSTRIES, INC.

and
IKUO NISHINO 551 SCRA 447 (2008)

To disregard the separate juridical personality of a corporation, the wrongdoing or

unjust act in contravention of a plaintiff’s legal rights must be clearly and convincingly
established. Also, without acceptance, a mere offer produces no obligation.
Ryuichi Yamamoto and Ikuo Nishino agreed to enter into a joint venture wherein Nishino
would acquire such number of shares of stock equivalent to 70% of the authorized capital
stock of the corporation. However, Nishino and his brother Yoshinobu Nishino acquired
more than 70% of the authorized capital stock. Negotiations subsequently ensued in light
of a planned takeover by Nishino who would buy-out the shares of stock of Yamamoto
who was advised through a letter that he may take all the equipment/ machinery he had
contributed to the company (for his own use and sale) provided that the value of such
machines is deducted from the capital contributions which will be paid to him. However,
the letter requested that he give his “comments on all the above, soonest”. On the basis of
the said letter, Yamamoto attempted to recover the machineries but Nishino hindered
him to do so, drawing him to file a Writ of Replevin. The Trial Court issued the writ.
However, on appeal, Nishino claimed that the properties being recovered were owned by
the corporation and the above-said letter was a mere proposal which was not yet
authorized by the Board of Directors. Thus, the Court of Appeals reversed the trial court’s
decision despite Yamamoto’s contention that the company is merely an instrumentality
of the Nishinos.

ISSUE:

Whether or not Yamamoto can recover the properties he contributed to the company in
view of the Doctrine of Piercing the Veil of Corporate Fiction and Doctrine of Promissory
Estoppel.

HELD:

One of the elements determinative of the applicability of the doctrine of piercing the veil
of corporate fiction is that 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 the plaintiff’s legal rights.
To disregard the separate juridical personality of a corporation, the wrongdoing or unjust
act in contravention of a plaintiff’s legal rights must be clearly and convincingly
established; it cannot be presumed. Without a demonstration that any of the evils sought
to be prevented by the doctrine is present, it does not apply. Estoppel may arise from the
making of a promise. However, it bears noting that the letter was followed by a request
for Yamamoto to give his “comments on all the above, soonest.” What was thus proffered
to Yamamoto was not a promise, but a mere offer, subject to his acceptance. Without
acceptance, a mere offer produces no obligation. Thus, the machineries and equipment,
which comprised Yamamoto’s investment, remained part of the capital property of the
corporation.