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13_Marvel Building Corporation et. al. vs David, 94 Phil.



Marvel Building Corporation was incorporated in February 12, 1947 wherein it’s articles of
incorporation contained a capital stock of P 2,000,000.00 of which majority of its stockholders are Maria
B. Castro(President), Amado A. Yatco, Segundo Esguerra and Maximo Cristobal(Secretary-Treasurer) from
the total of eleven(11) stockholders. During the existence of the corporation, it acquired assets
including buildings, namely, Aguinaldo Building, Wise Building and Dewey Boulevard-Padre Faura
Mansion. Towards the end of year 1948, internal revenue examiners discovered that from the 11 stock
certificates, all of it were endorsed in the bank by the subscribers, except the one subscribed by Maria
B. Castro. They also discovered that there were no business meeting held by the board of directors, no
by-laws and that the corporation never had any reports of their transactions or affairs. As a result,
Secretary of Finance recommended the collection of war profit taxes assessed against Maria B. Castro in
the amount of P3,593,950.78 and seize the three(3) buildings named above.

Plaintiff(Marvel Building Corporation) filed a complaint for the release of the seized property
contending that said property are owned by the corporation and not solely by Maria Castro. The trial
court ruled in favor of plantiff and enjoin Collector of Internal Revenue from selling the same. Collector
of Internal Revenue appealed, and CA ruled that trial court failed to show that Maria B. Castro is not the
true owner of all the stock certificates of the corporation, therefore confiscation of the property against
the corporation is justified. Hence this petition arise.

Issue: Whether or not Maria B. Castro is the sole owner of all the stocks of Marvel Corporation and the
other stockholders are mere dummies?


Yes. Maria B. Castro is the sole and exclusive owner of all the shares of stock of the Marvel
Building Corporation and that the other partners are her dummies. Section 89, Rule 123 of the Rules of
Court and section 42 of the Provisional law for the application of the Penal Code, applies in this case
pursuant to circumstantial evidence as the basis of judgment.

In general the evidence offered by the plaintiffs is testimonial and direct evidence, easy of
fabrication; that offered by defendant, documentary and circumstantial, not only difficult of fabrication
but in most cases found in the possession of plaintiffs. The circumstantial evidence is not only
convincing; it is conclusive. The existence of endorsed certificates, discovered by the internal revenue
agents between 1948 and 1949 in the possession of the Secretary-Treasurer, the fact that twenty-five
certificates were signed by the president of the corporation, for no justifiable reason, the fact that two
sets of certificates were issued, the undisputed fact that Maria B. Castro had made enormous profits
and, therefore, had a motive to hide them to evade the payment of taxes, the fact that the other
subscribers had no incomes of sufficient magnitude to justify their big subscriptions, the fact that the
subscriptions were not receipted for and deposited by the treasurer in the name of the corporation but
were kept by Maria B. Castro herself, the fact that the stockholders or the directors never appeared to
have ever met to discuss the business of the corporation, the fact that Maria B. Castro advanced big
sums of money to the corporation without any previous arrangement or accounting, and the fact that
the books of accounts were kept as if they belonged to Maria B. Castro alone — these facts are of patent
and potent significance. This implied that Maria B. Castro would not have asked them to endorse their
stock certificates, or be keeping these in her possession, if they were really the owners. They never
would have consented that Maria B. Castro keep the funds without receipts or accounting, nor that she
manages the business without their knowledge or concurrence, were they owners of the stocks in their
own rights. Each and every one of the facts all set forth above, in the same manner, is inconsistent with
the claim that the stockholders, other than Maria B. Castro, own their shares in their own right.

On the other hand, each and every one of them, and all of them, can point to no other
conclusion than that Maria B. Castro was the sole and exclusive owner of the shares and that they were
only her dummies.