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    Siain Enterpresis Vs Cupertino Realty Corp and Edwin R Catacutan

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    karl
    The Supreme Court of the Philippines upheld the lower courts' application of the doctrine of piercing the corporate veil. SIAIN Enterprises took out loans totaling PHP 197 million from Cupertino Realty Corporation, secured by real estate mortgages. However, SIAIN later claimed it did not receive the loan proceeds. The courts found overwhelming evidence that SIAIN and its affiliate companies, which were alter egos of SIAIN's president, had in fact received the money through various checks, debit memos, and pledged assets. Applying the corporate veil doctrine, the courts ruled that SIAIN could not avoid its valid debt obligations by claiming a separate corporate identity, as this would result in injustice. The Supreme Court

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    Siain Enterpresis Vs Cupertino Realty Corp and Edwin R Catacutan

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    karl
    162 views3 pages
    The Supreme Court of the Philippines upheld the lower courts' application of the doctrine of piercing the corporate veil. SIAIN Enterprises took out loans totaling PHP 197 million from Cupertino Realty Corporation, secured by real estate mortgages. However, SIAIN later claimed it did not receive the loan proceeds. The courts found overwhelming evidence that SIAIN and its affiliate companies, which were alter egos of SIAIN's president, had in fact received the money through various checks, debit memos, and pledged assets. Applying the corporate veil doctrine, the courts ruled that SIAIN could not avoid its valid debt obligations by claiming a separate corporate identity, as this would result in injustice. The Supreme Court

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    Siain Enterpresis vs Cupertino Realty Corp and Edwin r Catacutan

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    The Supreme Court of the Philippines upheld the lower courts' application of the doctrine of piercing the corporate veil. SIAIN Enterprises took out loans totaling PHP 197 million from Cupertino Realty Corporation, secured by real estate mortgages. However, SIAIN later claimed it did not receive the loan proceeds. The courts found overwhelming evidence that SIAIN and its affiliate companies, which were alter egos of SIAIN's president, had in fact received the money through various checks, debit memos, and pledged assets. Applying the corporate veil doctrine, the courts ruled that SIAIN could not avoid its valid debt obligations by claiming a separate corporate identity, as this would result in injustice. The Supreme Court

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    162 views3 pages

    Siain Enterpresis Vs Cupertino Realty Corp and Edwin R Catacutan

    Uploaded by

    karl
    The Supreme Court of the Philippines upheld the lower courts' application of the doctrine of piercing the corporate veil. SIAIN Enterprises took out loans totaling PHP 197 million from Cupertino Realty Corporation, secured by real estate mortgages. However, SIAIN later claimed it did not receive the loan proceeds. The courts found overwhelming evidence that SIAIN and its affiliate companies, which were alter egos of SIAIN's president, had in fact received the money through various checks, debit memos, and pledged assets. Applying the corporate veil doctrine, the courts ruled that SIAIN could not avoid its valid debt obligations by claiming a separate corporate identity, as this would result in injustice. The Supreme Court

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    © All Rights Reserved
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    of 3

    Karl Anthony T.

    Dionisio
    corporate veil

    Piercing the

    G.R. No. 170782 June 22, 2009


    SIAIN ENTERPRESIS
    VS
    CUPERTINO REALTY CORP AND EDWIN R CATACUTAN

    Facts:
    SIAIN executed 2 PNs and REMs in favor of respondent (Cupertino). All were
    signed by their respective presidents Cua Le Leng for Siain and Wilfredo Lua
    for Cupertino. The first set of PN and REM were dated April 10, 1995 wherein
    the PN authorizes Cupertino to place in escrow loan proceeds of P37million
    with MBTC to pay off petitioners obligation to DBP. This was secured by the
    REM. 2 days later the PN was amended to include the interest of 17% p.a.
    The second set of PN and REM (amended from the first REM) was dated Aug.
    16, 1995 for the amount of P160million, on this second PN the Cua Le Leng
    signed as a co-maker. The amended REM reflected the updated total
    obligation of P197million of Siain to Cupertino. However, on Mar. 11, 1996
    petitioner demanded from Cupertino the release of the loan proceeds of
    P160million. Cupertino denied this and maintained that the proceeds had
    long been obtained by petitioner. Cupertino instituted an extra judicial
    foreclosure over the properties subject of the amended REM; auction sale
    was scheduled on Oct. 11, 1996 with respondent Notary Public Edwin
    Catacutan. Petitioner filed a complaint with TRO to enjoin Notary Public
    Edwin Catacutan from proceeding with the public auction. RTC initially
    declared the auction sale as null and void. Subsequently after Cupertino filed
    its answer the RTC recalled and set aside the order of declaring the auction
    sale as null and void and ruled in favor of the respondent; which was
    affirmed by the CA. Records show that various debit memos, checks, pledges
    of jewelries, condominium units, trucks and other components were issued to
    petitioner and its affiliate corporations as well to its president Cua Le Leng
    and her common law spouse Alberto Lim by respondent and its president
    Wilfredo Lua and his wife Vicky Lua. Thus the lower courts applied the
    doctrine of piercing the veil of the corporate entity in ruling in favor of the
    respondents.
    Issue:
    WON the RTC and CA erred in applying the doctrine of piercing the veil
    of corporate entity

    Held:
    No.
    While it is true that the stockholders have a distinct and separate
    personality as to that of the corporation; this is not an absolute rule. The
    distinct personality of the corporation may be disregarded and the veil of
    corporate fiction pierced when the notion of legal entity is used to defeat
    public convience, justify wrong, protect fraud, or defend crime.
    Cupertino presented overwhelming evidence that petitioner and its
    affiliate corporations had received the proceeds of the P160million loan.
    Checks, debit memos, pledges of jewelries, condo units and trucks
    were constituted not exclusively in the name Siain but also either in the
    name of Yuyek Manufacturing Corporation, Siain Transport Inc., Cua Le Leng
    and Alberto Lim is of no moment. The fact remains that these companies are
    alter ego of its president Cua Le Leng, it is established in the court that:
    -

    Siain and Yuyek have a common set of incorporators


    Have the same internal bookkeeper and accountant
    Same office address
    Same majority stockholder and president (in the person of Cua Le
    Leng)
    In Siain Transport, Cua Le Leng has the unlimited authority by and on
    herself, without authority from the Board of Directors, to use the fund
    In the case of Alberto Lim as Cua Le Lengs common law spouse all the
    debit memos and check issued in his name were was actually for the
    account of Cua Le Leng.

    If the general rule of the corporation has a distinct and separate


    personality from its stockholders were applied to this case it will result to
    injustice and evasion of a valid obligation. The obligation incurred and/or the
    transactions entered into either by Yuyek, or by Siain Trucking, or by Cua Le
    Leng or by Alberto Lim with Cupertino are deemed to be that of the
    petitioner itself.
    The same principle applies to Cupertino, while it can be seen that the debit
    memos and checks were issued on the same date as the incorporation of
    Cupertino. It does not affect the validity of the subject transactions entered
    into by Cupertino Realty Corporation, it being a mere alter ego of its
    president Wilfredo Lua, are deemed to be the latters personal transaction
    and vice versa.
    WHEREFORE, premises considered, the petition is DENIED. The Decision of
    the Court of Appeals in CA-G.R. CV No. 71424 is AFFIRMED. Costs against
    the petitioner.

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