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G.R. No.

L-10510

March 17, 1961

M. MC CONNEL vs. THE COURT OF APPEALS

#18

FACTS: Park Rite Co., Inc., a Philippine corporation, leased from Rafael Perez Rosales y Samanillo
a vacant lot on Juan Luna street (Manila) which it used for parking motor vehicles for a
consideration.It turned out that in operating its parking business, the corporation occupied and used
not only the Samanillo lot it had leased but also an adjacent lot belonging to the respondentsappellees Padilla, without the owners' knowledge and consent. When the latter discovered the truth,
they demanded payment for the use and occupation of the lot.
The corporation (then controlled by petitioners Cirilo Parades and Ursula Tolentino, who had
purchased and held 1,496 of its 1,500 shares) disclaimed liability, blaming the original incorporators,
McConnel, Rodriguez and Cochrane. Whereupon, the lot owners filed against it a complaint for
forcible entry in the Municipal Court of Manila on 7 October 1947 (Civil Case No. 4031).
Judgment was rendered ordering the Park Rite Co., Inc. to pay P7,410.00 plus legal interest as
damages from April 15, 1947 until return of the lot. Upon execution, the corporation was found
without any assets other than P550.00 deposited in Court and there remained a balance of
P11,182.50 outstanding and unsatisfied.
The judgment creditors then filed suit against the corporation and its past and present stockholders,
to recover from them, jointly and severally, the unsatisfied balance of the judgment,
ISSUE: whether the individual stockholders maybe held liable for obligations contracted by the
corporation,
RULING: this Court has already answered the question in the affirmative wherever circumstances
have shown that the corporate entity is being used as an alter ego or business conduit for the sole
benefit of the stockholders, or else to defeat public convenience, justify wrong, protect fraud, or
defend crime \.
There is also no doubt in our mind that the corporationwas a mere alter ego or business conduit of
the defendants Cirilo Pared es and Ursula Tolentino, and before them the defendants M.
McConnel, W. P. Cochrane, and Ricardo Rodriguez. The evidence clearly shows that these persons
completely dominated and controlled the corporation and that the functions of the corporation were
solely for their benefits.
The facts thus found can not be varied by us, and conclusively show that the corporation is a mere
instrumentality of the individual stockholder's, hence the latter must individually answer for the
corporate obligations.