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corporation, it does not vest the owner thereof with any legal right or title to any of the
property, his interest in the corporate property being equitable or beneficial in nature.
Shareholders are in no legal sense the owners of corporate property, which is owned by
the corporation as a distinct legal person.
Ruling:
1. No.
The Provisional or "Freedom" Constitution recognizes the power and duty of
the President to enact "measures to achieve the mandate of the people to
recover ill- gotten properties amassed by the leaders and supporters of the
Marcos regime and protect the interest of the people through orders of
sequestration or freezing of assets or accounts. And as also already adverted
to, Section 26, Article XVIII of the 1987 Constitution treats of, and
ratifies the authority to issue sequestration or freeze orders under
Proclamation No. 3. The institution of these provisional remedies is also
premised upon the State's inherent police power, regarded, as t lie power of
promoting the public welfare by restraining and regulating the use of liberty
and property, and as the most essential, insistent and illimitable of powers
in the promotion of general welfare and the public interest, and said to be
co-extensive with self-protection and not inaptly termed also the law of
overruling necessity.
2. No, PCGGs general function is to conduct investigations in order to
collect
evidence
establishing
instances
of
ill-gotten
wealth,
issue
sequestration, and such orders as may be warranted by the evidence thus
collected and as may be necessary to preserve and conserve the assets of
which it takes custody and control and prevent their disappearance, loss or
dissipation; and eventually file and prosecute in the proper court of
competent jurisdiction all cases investigated by it as may be warranted by
its findings. It does not try and decide, or hear and determine, or
adjudicate with any character of finality or compulsion, cases involving the
essential issue of whether or not property should be forfeited and
transferred to the State because ill-gotten within the meaning of the
Constitution and the executive orders.
HELD:
PETITIONER DENIED.
1. The Sister Company has NO separate and distinct personality from the Concept Builders 2.
HPPI is used to Evade Corporations liability.
3. NLRC did not commit a grave abuse of discretion when it issued a break-open order against
HHPI.
RATIONALE:
1. It is a fundamental principle of corporation law that a corporation is an entity separate and
distinct from its stockholders and from other corporations to which it may be connected.8 But,
this separate and distinct personality of a corporation is merely a fiction created by law for
convenience and to promote justice.9 So, when the notion of separate juridical personality is
used to defeat public convenience, justify wrong, protect fraud or defend crime, or is used as a
device to defeat the labor laws,10 this separate personality of the corporation may be disregarded
or the veil of corporate fiction pierced.11 This is true likewise when the corporation is merely an
adjunct, a business conduit or an alter ego of another corporation
2. The conditions under which the juridical entity may be disregarded vary according to the
peculiar facts and circumstances of each case. No hard and fast rule can be accurately laid down,
but certainly, there are some probative factors of identity that will justify the application of the
doctrine of piercing the corporate veil, to wit:
1. Stock ownership by one or common ownership of both corporations.
2. Identity of directors and officers.
3. The manner of keeping corporate books and records.
4. Methods of conducting the business.13
3. 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 rights; and
3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss
complained of.
The absence of any one of these elements prevents piercing the corporate veil. in applying the
instrumentality or alter ego doctrine, the courts are concerned with reality and not form, with
how the corporation operated and the individual defendants relationship to that operation.