Doctrine of Piercing The Veil of Corporation Fiction (Digests)
Doctrine of Piercing The Veil of Corporation Fiction (Digests)
Doctrine of Piercing The Veil of Corporation Fiction (Digests)
FACTS:
RULING:
As a general rule, a corporation may not be No; Soriano et. al may not be held liable for such
made to answer for acts or liabilities of its payment, notwithstanding the fact that they
stockholders or those of the legal entities to comprise the majority of the board of directors
which it may be connected and vice versa. who signed under the receipt, since they have a
However, the veil of corporate fiction may be distinct and separate personality from the
pierced when it is used as a shield to further an corporation they represent. In the absence of
end subversive of justice; or for purposes that any showing that they are using said
could not have been intended by the law that corporation in furtherance to and as a conduit to
created it; or to defeat public convenience, any fraudulent, subversive, and illegal motives,
justify wrong, protect fraud, or defend crime. ; or piercing the corporate vein cannot be applied int
to perpetuate fraud or confuse legitimate issues; their case.
or to circumvent the law or perpetuate
deception; or as an alter ego, adjunct or In the light of the foregoing, it is clear that the
business conduit for the sole benefit of the liability of the petitioners under the document
stockholders. subject of the instant case, is not personal but
corporate, and therefore attached to the Bacarra
(I.N.) FaCoMa, Inc. which, being a corporation,
3. SORIANO VS. CA has a personality distinct and separate from that
of the petitioners who are only its officers. It is
FACTS: the general rule that the protective mantle of a
corporation's separate and distinct personality
Soriano, Esperanza, and Macadangdang could only be pierced and liability attached
(hereinafter as Soriano et.al) comprise the directly to its officers and/or
majority of the board of directors of Bacarra members-stockholders, when the same is used
FaComa Inc., which is a farmer cooperative. A for fraudulent, unfair or illegal purpose. 13 In
transaction was made between Bacarra and the case at bar, there is no showing that the
private respondent Gervacio Cu over 160 bales Association entered into the transaction with the
(of fifty kilos each) bales of tobacco. A receipt private respondent for the purpose of defrauding
was executed in favor of Cu, which states that the latter of his goods or the payment thereof.
the corporation received said bales and that Cu More importantly, there is no proof whatsoever
shall be paid according to the tobacco grading by that the majority of the directors used the
the redrying plant. Conflict arose when Cu was distinct and separate personality of Bacarra
not paid for the tobacco he delivered, which (I.N.) FaCoMa, Inc. as a protective shield for any
prompted him to file a case for the collection of wrongdoing. Therefore, the general rule on
sum of money against Soriano et. al. The trial corporate liability, not the exception, should be
court ruled in favor of Cu and ordered that applied in resolving this case. Consequently, the
Soriano et.al, jointly and severally, pay the private respondent's cause of action lies against
former the amount of the tobacco bales. The trial the Bacarra (I.N.) FaCoMa, Inc., and not against
court's decision, when Soriano et.al appealed the petitioners.
against it, was merely affirmed by the CA. It
rationated that Soriano et. al were not
authorized to enter into the transaction and that
their act of signing their positions in the receipt
is not a showing that they were indeed
authorized by the corporation to act for it.
Aggrieved, Soriano et.al elevated the case to the
Supreme Court.
ISSUE:
RULING:
2. MARVEL BLDG. VS. DAVID
Yes; Fely Transportation may be compelled to
pay such damages even though the involved FACTS:
party in the criminal case is Isabelo Calingasan.
This is because, there is a clear showing that In the conduct of her business, Maria D. Castro
Isabelo Calingasan and Fely Transportation are had been found to have made enormous gains or
one and the same and that the latter was profits in her business. This prompted
incoporated merely to evade the former's civil Saturnino David, BIR collector to arrive at a tax
liability. assessment amounting to P3,000,000. As a
consequence, he proceeded against three parcels
The Court agrees with this contention of the of land namely on which certain buildings have
plaintiffs. Isabelo Calingasan and defendant Fely already been erected. However, Maria D. Castro
Transportation may be regarded as one and the avers that such properties are owned solely by
same person. It is evident that Isabelo petitioner Marvel Bldg. Corporation. Marvel
Calingasan's main purpose in forming the Bldg. Corporation, in which Maria D. Castro is
corporation was to evade his subsidiary civil amongst the stockholders, seeks to enjoin
defendant David from selling at a public auction or concurrence, were they owners of the stocks
the disputed properties. For his part, David in their own rights. Each and every one of the
alleges that said properties are owned solely by facts all set forth above, in the same manner, is
Castro. His assumptions are premised on the inconsistent with the claim that the
facts culled from the assessment done by stockholders, other than Maria B. Castro, own
various internal revenue agents on Marvel Bldg. their shares in their own right. On the other
Corporation. They are: 1) the existence of hand, each and every one of them, and all of
twenty-five certificates signed by the president of them, can point to no other conclusion than that
the corporation, for no justifiable reason; 2) two Maria B. Castro was the sole and exclusive
sets of certificates were issued; 3) the owner of the shares and that they were only her
undisputed fact that Maria B. Castro had dummies.
made enormous profits and, therefore, had a
motive to hide them to evade the payment of In our opinion, the facts and circumstances duly
taxes; 4) the fact that the other subscribers had set forth above, all of which have been proved to
no incomes of sufficient magnitude to justify our satisfaction, prove conclusively and beyond
their big subscriptions; 5) were not receipted reasonable doubt (section 89, Rule 123 of the
for and deposited by the treasurer in the Rules of Court and section 42 of the Provisional
name of the corporation but were kept by law for the application of the Penal Code) that
Maria B. Castro herself; 6) the stockholders Maria B. Castro is the sole and exclusive owner
or the directors never appeared to have ever of all the shares of stock of the Marvel Building
met to discuss the business of the Corporation and that the other partners are her
corporation; 7) Maria B. Castro advanced big dummies.
sums of money to the corporation without
any previous arrangement or accounting; 8)
and the fact that the books of accounts were 3. YUTIVO AND SONS VS. CTA
kept as if they belonged to Maria B. Castro
alone FACTS: