Lex Rex Ph

Lim vs. CA Digest

January 24, 2000

Facts

In 1994, Pastor Y. Lim died intestate. Surviving spouse Rufina filed a petition for administration of his estate. The properties of respondent corporations (Auto Truck et. al.) were included in the inventory, which then filed a motion for the lifting of the lis pendens and exclusion of certain properties from the estate.

RTC QC sitting as probate court, ruled against Rufina and granted the corporations’ motion. Rufina avered that her late husband personally owned the 5 businesses because all their capital, assets, and equity are owned by him. The alleged officers and stockholders are mere dummies for purposes of SEC Registration. RTC allowed provisional inclusion of private respondents as part of the estate of her husband.

CA nullified the orders of RTC QC.

Rufina appealed to SC

Issue

May a corporation, in its universality, be the proper subject of and be included in the inventory of the estate of a deceased person because such person owns all the capital stock? 

Ruling

No.

Probate court turned a blind eye to the indefeasibility of the torrens title.

Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself a sufficient reason for disregarding the fiction of separate corporate personalities.

Corporations are clothed with separate personality distinct from persons composing it. Corporate veil is pierced when corp is used as alter ego of a person or another corp to commit fraud or inconvenience the public.

Test in determining the applicability of the doctrine of piercing the veil: Control test.

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