CA
March 24, 2014 | Reyes | Piercing the Corporate Veil
SUMMARY: Judgment was rendered against EIB Securities. This case reached the SC which ruled in favor of the petitioners, for
the return of the DMCI shares of stock to them. The writ of execution went unsatisfied, so they filed an alias writ, which was
sought to be enforced against Export Bank, the alleged parent corporation of EIB. The SC did not allow this, saying the court did
not acquire jurisdiction over Export Bank, and that the alter ego doctrine did not apply.
DOCTRINE: There must be a perpetuation of fraud or at least a fraudulent or illegal purpose behind the control to justify
piercing the veil of corporate fiction.
FACTS: inapplicable NO
EIB Securities sold 32,180,000 shares of DMCI belonging to RATIO: Export Bank argues that it was never impleaded in
respondents. The lower court rendered judgment, ordering EIB the earlier case between E-Securities and Pacific Rehouse.
to return the shares to the respondents. This ruling reached the
SC and attained finality. Writ of execution issued, but was
unsatisfiied.
However, the SC held that in the case of Kukan International
v. Reyes, compliance with the recognized modes of acquiring
jurisdiction cannot be dispensed with even in piercing the veil
Respondents then filed for issuance of an alias writ to hold of corporate fiction:
Export and Industry Bank liable because EIB Securities is a
wholly-owned controlled and dominated subsidiary of Export Piercing the veil is applied only to determine liability.
snd Industry Bank, and is thus a mere alter ego and business It is not available to confer jurisdiction it has not
conduit. acquired over a party not impleaded in the case.
In other words, a corporation not impleaded in a suit
cannot be subject to the courts process of piercing
the veil of its corporate fiction.
EIB Securities opposed, saying it has a separate corporate
personality, distinct from Export Bank.
Court must first acquire jurisdiction over the parties before
piercing its corporate veil; otherwise, it cannot pierce because
such action offends the corporations right to due process.
RTC ruled that E-securities is a mere business conduit of
Jurisdiction is acquire by service of summons. Without
Export Bank and pierced the veil of corporate fiction.
summons or voluntary submission, any judgment over such
person is null and void.