03 Rufina Lim Vs Ca

03 RUFINA LUY LIM vs CA (2000)
Digest By: MJVBrigola
Case Summary: this involves estate of the late Pastor Lim. In the probate proceedings, petitioner Rufina Lim,
the spouse of Pastor, tried to include certain properties which are allegedly owned by private respondents-
corporations in the inventory of the estate.
Private respondents are Auto Truck Corporation, Alliance Marketing Corporation, Speed Distributing, Inc.,
Active Distributing, Inc. and Action Company. These corporations were formed, organized and existing under
Philippine laws and which owned real properties covered under the Torrens system.
Private respondents filed a motion for the exclusion of their properties before the probate court.
Petitioner Rufina Lim on the other hand alleged that the private respondents corporations are mere alter-
egos of the late Pastor Lim such that all the properties named after the said corporations are in fact owned by
her deceased spouse. Allegedly, the incorporators of these corps are mere dummies since they have not
actually contributed any amount to the capital stock of the corporation and have been merely asked by the
late Pastor Y. Lim to affix their respective signatures thereon.
Doctrine: Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital
stock of a corporation is not of itself a sufficient reason for disregarding the fiction of separate corporate
personalities.
FACTS: Petitioner Rufina Luy Lim is the surviving spouse of the late Pastor Y. Lim whose estate is the subject
of probate proceedings.
Private respondents Auto Truck Corporation, Alliance Marketing Corporation, Speed Distributing, Inc., Active
Distributing, Inc. and Action Company are corporations formed, organized and existing under Philippine laws
and which owned real properties covered under the Torrens system.
On 11 June 1994, Pastor Y. Lim died intestate. petitioner, as surviving spouse and duly represented by her
nephew George Luy, filed a joint petition for the administration of the estate of Pastor Y. Lim before RTC QC.
Private respondent corporations, whose properties were included in the inventory of the estate of Pastor Y.
Lim, then filed a motion for the lifting of lis pendens and motion for exclusion of certain properties from the
estate of the decedent.
RTC (probate court): granted the motions of private respondent corporations and ordered the Register of
Deeds to lift the annotations on the titles of the subject properties.
Petitioner Rufina Lim filed an amended verified petition alleging that decedent in fact owned all the
corporations and the incorporators thereof are mere dummies listed for the purpose of securing registration
from the SEC, but they have contributed nothing in the capital. She presented Affidavits of Witnesses of
Teresa Lim and Lani Wenceslao proving this contention but she failed to present them on stand. Petitioner
also invoked the doctrine of piercing the corporate veil.
As a result, the RTC, favoring petitioner, set aside the earlier ruling directing the lifting of annotations on
titles.
Court of Appeals: revived the old order of RTC in favor of the respondents-corporations.
Hence, petitioner files this instant petition.

ISSUE: May a corporation, in its universality, be the proper subject of and be included in the inventory of the
estate of a deceased person? (Note that petitioner was alleging that not only did the decedent own the
properties of the corporation but also that the corporation themselves are owned wholly by him.)
HELD: NO.
RATIO: A corporation is invested by law with a personality distinct and separate from its stockholders or
members. In the same vein, a corporation by legal fiction and convenience is an entity shielded by a
protective mantle and imbued by law with a character alien to the persons comprising it.
The test in determining the applicability of the doctrine of piercing the veil of corporate fiction is as follows:
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 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 plaintiffs legal right;
and
(3) The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.
The absence of any of these elements prevent "piercing the corporate veil".
Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital
stock of a corporation is not of itself a sufficient reason for disregarding the fiction of separate
corporate personalities.
Moreover, to disregard the separate juridical personality of a corporation, the wrong-doing must be clearly
and convincingly established. It cannot be presumed.
The reliance reposed by petitioner on the affidavits executed by Teresa Lim and Lani Wenceslao is unavailing
considering that the aforementioned documents possess no weighty probative value pursuant to the hearsay
rule. Besides it is imperative for us to stress that such affidavits are inadmissible in evidence inasmuch as the
affiants were not at all presented during the course of the proceedings in the lower court. To put it differently,
for this Court to uphold the admissibility of said documents would be to relegate from Our duty to apply such
basic rule of evidence in a manner consistent with the law and jurisprudence.

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03 RUFINA LUY LIM vs CA (2000)

Digest By: MJVBrigola

Hence, petitioner files this instant petition.

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