Alter EGO Cases - cORPO PDF

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B. ALTER EGO CASESo ARNOLD V. WILLETS AND PATTERSON LTD., 44 PHIL 634 (1923) o LA CAMPANA COFFEE V. KAISAHAN, 93 PHIL 160 (1953) o YULTIVO SONS HARDWARE V. CTA, 1 SCRA 1960 (1961) o LIDDEL & CO. V. COLLECTOR, 2 SCRA 632 (1961) o RAMIREZ TELEPHONE V. BANK OF AMERICA 29 SCRA 191 o GUATSON INTE...

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B. AL TEREGOCASES o o o o o o o

ARNOLDV. WI LLETSANDPA TT ERSONL TD. , 4 4PHI L6 3 4( 1 9 2 3 ) L ACAMPANACOF FEEV . KAI SAHAN, 9 3PHI L1 6 0( 1 9 5 3 ) YUL T I VOSONSHARDWAREV . CT A, 1SCRA1 9 6 0( 1 9 6 1 ) L I DDEL&CO. V . COL LECTOR, 2SCRA6 3 2( 1 9 6 1 ) RAMI REZT EL EPHONEV. BANKOFAMERI CA2 9SCRA1 9 1 GUA TSONI NT ERNATI ONALV. NLRC, G. R. NO. 1 0 0 3 2 2( 1 9 9 4 ) CONCEPTBUI LDERS, I NC. V. NLRC, G. R. N0 . 1 0 8 7 3 4( 1 9 9 6 )

C. EQUI TYCASES o o

T ESCOV. WCC, 1 0 4SCRA3 5 4( 1 9 8 1 ) ADSANT OSV. VASQUEZ , 2 2SCRA1 1 5 8( 1 9 6 8 )

2 . I MPLI EDPOWERS( SEC. 3 6( 1 1 )OFTHECORPORATI ONCODE) 3 . I NCI DENT ALPOWERS( SEC. 2OFTHECORPORATI ONCODE) B. SPECI FI EDPOWERS 1 . POWERTOSUEANDBESUED( SEC. 3 6( 1 )OFTHECORPORATI ON CODE) o

2 . POWERTOEXTENDORSHORTENCORPORAT ETERM( SEC. 3 7AND8 1 ( 1 )OFTHECORPORATI ONCODE) 3 . POWERTOI NCREASEORDECREASECAPI T ALSTOCK( SEC. 3 8AND 1 6OFT HECORPORAT I ONCODE) o

4 . DUEPROCESS o o o o o o

BSSAVI NGSBANKV. SI A, G. R. NO. 1 3 1 2 1 4 , 2 0 0 0

MADRI GAL&CO. V . Z AMORA, 1 5 1SCRA3 5 5( 1 9 8 7 )

MCCONNELV . CA, 1SCRA7 2 3( 1 9 6 1 ) EMI L I OCANOENTERPRI SESV . CI R, 1 3SCRA2 9 1( 1 9 6 5 ) NAMARCOV . ASSOCI AT EDFI NANCECO. I NC. , 1 9SCRA9 6 2 J ACI NT OV. CA, 1 9 8SCRA2 1 1( 1 9 9 2 ) ARCI L LAV. CA, SCRA1 2 0( 1 9 8 9 ) DEGUZMANV. NL RC, 2 1 1SCRA7 2 3( 1 9 9 2 )

5 . ANT I T RUSTI SSUES o o

GARCI AV . EXEC. SEC. ( GRNO. 1 3 2 4 5 1 , 1 9 9 9 ) ST ANDARDOI LCO. V . US, 2 2 1U. S. 1( 1 9 1 0 )

D. CORPORAT EPOWERS 1 . SOURCESOFCORPORAT EPOWERS A. CORPORAT EPOWESANDCAPACI TY( ART . 4 2OFTHECI VI LCODE) 1 . EXPRESSPOWERS( SEC. 3 6OFTHECORPORAT I ONCODE)

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Cl a s s i fi c a t i o no fPi e r c i n gCa s e s : Ru n d o wno nP i e r c i n gAp p l i c a t i o n :T h i sCo u r tp i e r c e dt h ec o r p o r a t e ffaj u d g me n tc r e d i t ,t oa v o i di n c l u s i o no fc o r p o r a t ea s s e t sa s v e i lt owa r do p a r t o f t h ee s t a t eo f t h ed e c e d e n t ,t oe s c a p el i a b i l i t ya r i s i n gf o rad e b t ,o rt o e g i t i ma t ei s s u e se i t h e rt op r o mo t eo rt o p e r p e t u a t ef r a u da n d / o rc o n f u s el t h e r wi s eb l a t a n tv i o l a t i o no f t h e s h i e l du n f a i ro b j e c t i v e st oc o v e ru pa no i mi l a ri n s t a n c e sma y p r o h i b i t i o na g a i n s tf o r u ms h o p p i n g .On l yi st h e s ea n ds n g i n e e r i n g t h ev e i l b ep i e r c e da n dd i s r e g a r d e d .P NBv .A n d r a d aE l e c t r i c& E C o . , 3 8 1S CRA2 4 4( 2 0 0 2 ) . r a u dP i e r c i n g : Wh e nc o r p o r a t ee n t i t yu s e dt oc o mmi t f r a u do r d oa ( i )F wr o n g ( i i ) Al t e r e g oP i e r c i n g :Wh e nc o r p o r a t ee n t i t yme r e l yaf a r c es i n c et h e c o r p o r a t i o ni sme r e l yt h ea l t e re g o ,b u s i n e s s e r s o no r c o n d u i t ,o ri n s t r u me n t a l i t yo f ap a n o t h e r e n t i t y ( i i i )E q u i t yCa s e s : Wh e np i e r c i n gt h ec o r p o r a t ef i c t i o ni sn e c e s s a r yt o r e q u i t y . a c h i e v ej u s t i c eo T h et h r e ec a s e sma ya p p e a r t o g e t h e r i no n ea p p l i c a t i o n . S e eR. F . S u g a y &Co . , v . Re y e s , 1 2S CRA7 0 0( 1 9 6 4 ) .

B. AL T EREGOCASES 1 . Al t e rEg oCa s e s( orCon dui t Ca s e s )  Fr a u di sn o ta ne l e me n ti nt h e s ec a s e sb u tt h a tt h es t o c k h o l d e r so r t h o s ewh oc o mp o s e t h ec o r p o r a t i o nd i dn o tt r e a tt h ec o r p o r a t i o na sas e p a r a t ee n t i t yb u to n l ya sp a r to ft h e p r o p e r t yo rb u s i n e s so fa ni n d i v i d u a lo rg r o u po f i n d i v i d u a l so ra n o t h e rc o r p o r a t i o n . Pr o ba t i v ef a c t or s a . St o c ko wn e r s h i pb yo n eo rc o mmo no wn e r s h i po fb o t hc o r p o r a t i o n s ; b .I d e n t i t yo f d i r e c t o r sa n do ffic e r s ; c . Th ema n n e ro fk e e p i n gc o r p o r a t eb o o k sa n dr e c o r d s ; a n d d . Me t h o d so fc o n d u c t i n gt h eb u s i n e s s( Co n c e p tBu i l d e r s , I n c . v . NL RC, 2 5 7SCRA1 4 9 [ 1 9 9 6 ] ) .

Four Policy Bases in Piercing: a .Even when the controlling stockholder or managing officer intends c o n s c i o u s l yt od on oe v i l ,t h eu s eo ft h ec o r p o r a t i o na sa na l t e re g oi si nd i r e c tv i o l a t i o n o fac e n t r a lc o r p o r a t el a wp r i n c i p l eo ft r e a t i n gt h ec o r p o r a t i o na sas e p a r a t ej u r i d i c a l e n t i t yf r o mi t sme mb e r sa n ds t o c k h o l d e r s ; b .I ft h es t o c k h o l d e r sd on o tr e s p e c t t h es e p a r a t ee n t i t y , o t h e r sc a n n o ta l s ob ee x p e c t e dt o b eb o u n db yt h es e p a r a t ej u r i d i c a l e n t i t y ; c . Appl i e se v e nwh e nt h e r ea r en omo n e t a r yc l a i mss o u g h tt ob ee n f o r c e da g a i n s tt h e s t o c k h o l d e r so ro ffic e r so f t h ec o r p o r a t i o n ; e a l l yc h a n g ea n do n l yt h e d .When t h eu n d e r l y i n gb u s i n e s se n t e r p r i s ed o e sn o tr me d i u mb ywh i c ht h a tb u s i n e s se n t e r p r i s ei sc h a n g e d .

I ns t r ume nt a l i t yorAl t e rEg oRul e Wh e no n ec o r p o r a t i o ni ss oo r g a n i z e da n dc o n t r o l l e da n di t sa ff a i r sa r ec o n d u c t e ds ot h a ti ti s i nf a c tame r ei n s t r u me n t a l i t yo ra d j u n c to ft h eo t h e r ,t h efi c t i o no ft h ec o r p o r a t ee n t i t yt ot h e i n s t r u me n t a l i t yma yb ed i s r e g a r d e d( Co n c e p tBu i l d e r sI n c .v s .NL RC,2 5 7SCRA1 4 9[ 1 9 9 6 ] ) . T e s t : 1 . Co n t r o l ,n o tme r e ma j o r i t yo rc o mp l e t es t o c kc o n t r o l ,b u tc o mp l e t ed o mi n i o n ,n o t o n l yo ffi n a n c e sb u to fp o l i c ya n db u s i n e s si nr e s p e c tt ot h et r a n s a c t i o na t t a c k e ds o t h a tt h ec o r p o r a t ee n t i t ya st ot h i st r a n s a c t i o nh a da tt h et i men os e p a r a t emi n d ,wi l l , o re x i s t e n c eo f i t so wn ; Su c hc o n t r o l mu s th a v eb e e nu s e db yt h ed e f e n d a n tt o c o mmi tf r a u d o r wr o n g i nc o n t r a v e n t i o no f p l a i n t i ff ’ sl e g a l r i g h t s ; a n d 2 . Th ea f o r e s a i dc o n t r o la n db r e a c ho fd u t ymu s tp r o x i ma t e l yc a u s et h ei n j u r yo ru n j u s t l o s sc o mp l a i n e do f( Co n c e p tBu i l d e r sI n c .v s .NL RC,2 5 7SCRA1 4 9[ 1 9 9 6 ] ) .

( d) Gu i d i n gP r i n c i p l e si nF r a u dC a s e s : 4Wh yi st h e r ei n o r d i n a t es h o wi n go f a l t e r e g oe l e me n t s ? 3 

T h e r emu s th a v eb e e nf r a u do ra ne v i lmo t i v e i nt h ea ff e c t e d t r a n s a c t i o n , a n dt h eme r ep r o o f o f t s e l fwo u l dn o t c o n t r o lo ft h ec o r p o r a t i o nb yi

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a u t h o r i z ep i e r c i n g ; a n d 

T h e ma i n a c t i o n s h o u l d s e e k f o r t h e e n f o r c e me n to fp e c u n i a r yc l a i msp e r t a i n i n gt ot h e c o r p o r a t i o n a g a i n s t c o r p o r a t e o ff i c e r s o r s t o c k h o l d e r s .

2 . Al t e r Eg oCa s e s : ( a )F a c t u a lBa s i s :T h eq u e s t i o no f wh e t h e rac o r p o r a t i o ni same r ea l t e re g o i sap u r e l yo n eo f f a c t , a n dt h eb u r d e ni so nt h ep a r t ywh oa l l e g e si t . P NBv . n g i n e e r i n g Co . ,3 8 1S CRA 2 4 4( 2 0 0 2 ) ; MR A n d r a d aE l e c t r i c& E 2 0 0 2 ) ; He i r so f Ra mo nDu r a n o , S r . Ho l d i n g s , L t d .V . B a j a r ,3 8 0S CRA6 1 7( v .Uy ,3 4 4S CRA2 3 8( 2 0 0 0 ) ;Co n c e p tB u i l d e r s ,I n c .v .NL RC ,2 5 7S CRA 1 4 9( 1 9 9 6 ) . ( b )U s i n gC o r p o r a t i o na sC o n d u i t o rA l t e rE g o : Wh e r et h ec a p i t a l s t o c ki so wn e db yo n ep e r s o na n di t f u n c t i o n so n l yf o r fs u c hi n d i v i d u a lo wn e r ,t h ec o r p o r a t i o na n dt h ei n d i v i d u a l t h eb e n e f i to s h o u l db ed e e me dt h es a me .aA r n o l dv .Wi l l e t sa n dP a t t e r s o n ,L t d . ,4 4 P h i l . 6 3 4( 1 9 2 3 ) . Wh e nc o r p o r a t i o ni sme r e l ya na d j u n c t ,b u s i n e s sc o n d u i to ra l t e re g o o fa n o t h e rc o r p o r a t i o n ,t h ef i c t i o no fs e p a r a t ea n dd i s t i n c tc o r p o r a t i o n e n t i t i e ss h o u l db ed i s r e g a r d e d . T a nB o o nB e e&Co . v . J a r e n c i o , 1 6 3S CRA 2 0 5( 1 9 8 8 ) . Wh e r e ad e b t o rr e g i s t e r sh i sr e s i d e n c et oaf a mi l yc o r p o r a t i o ni n h a r e so fs t o c ka n dc o n t i n u e st ol i v et h e r e i n ,t h e nt h e e x c h a n g eo fs s e p a r a t ej u r i d i c a lp e r s o n a l i t y ma yb ed i s r e g a r d e d .P B Co mv .C A ,1 9 5 S CRA5 6 7( 1 9 9 1 ) . Ne i t h e r h a si t b e e na l l e g e do r p r o v e nt h a t Me r r y l a n di ss oo r g a n i z e da n d c o n t r o l l e da n di t sa ff a i r sa r es oc o n d u c t e da st oma k ei tme r e l ya n o n d u i to ra d j u n c to fCa r d a l e .E v e na s s u mi n g i n s t r u me n t a l i t y ,a g e n c yc r r y l a n da r ei n t e r r e l a t e d , t h i sa l o n e t h a tt h eb u s i n e s s e so fC a r d a l ea n dMe i sn o t j u s t i f i c a t i o nf o rd i s r e g a r d i n gt h e i rs e p a r a t ep e r s o n a l i t i e s ,a b s e n ta n y e f r a u d s h o wi n gt h a tMe r r y l a n d wa sp u r p o s e l yu s e da sas h i e l dt od c r e d i t o r sa n dt h i r dp e r s o n so f t h e i r r i g h t s .F r a n c i s c ov . Me j i a , 3 6 2S CRA7 3 8 ( 2 0 0 1 ) . Us eo fn o mi n e e st o ma nt h ec o r p o r a t i o nf o rt h eb e n e f i to ft h e . c o n t r o l l i n gs t o c k h o l d e r . Ma r v e l B u i l d i n gv . Da v i d , 9P h i l . 3 7 6( 1 9 5 1 )

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u n d e rt h ec o n d i t i o n si n wh i c hi t wa ss i g n e d , a n dt h r o u g ht h es u b s e q u e n t a c t sa n dc o n d u c t o f t h e p a r t i e s , wa sr a t i fi e da n d , i nl e g a l e ff e c t , b e c a me a n di sn o wb i n d i n gu p o nt h ed e f e n d a n t . De f e n d a n tc o n t e n d e dt h a tt h es e c o n dc o n t r a c twa ss i g n e db u twi t h o u ta u t h o r i t y .I ta l s oa l l e g e d t h a tAr n o l do we dt h e ms o memo n e y . Th eCo u r to fFi r s tI n s t a n c er e n d e r e dad e c i s i o no r d e r i n gAr n o l dt or e t u r nt h emo n e yt ot h e c o r p o r a t i o n .

o ARNOLDV . WI L LETSANDP ATTERSONL TD. , 4 4PHI L6 3 4 ( 1 9 2 3 ) ARNOLDVS. WI L LI TSANDPAT T ERSONG. R. No. L2 0 2 1 4Ma r c h1 7 , 1 9 2 3

s t F a c t s :Ar n o l d ,t h ep l a i n t i ffa n dt h efi r m,Wi l l i t s&Pa t t e r s o ni nSa nF r a n c i s c oe n t e r e di n t o a ) ( 1 wr i t t e nc o n t r a c tb ywh i c ht h ep l a i n t i ffwa se mp l o y e da st h ea g e n to ft h efi r mi nt h ePh i l i p p i n e v ey e a r sa tami n i mu ms a l a r yo f$ 2 0 0 I s l a n d sf o rt h eo p e r a t i o no fa no i lmi l l f o rt h ep e r i o do ffi p e rmo n t ha n dt r a v e l l i n ge x p e n s e s . As i d ef r o mh i smi n i mu ms a l a r y ,i twa sa l s os t a t e di nt h ec o n t r a c t t h a t h ewi l l r e c e i v eab r o k e r a g e f e ef r o ma l l h i ss a l e sa n do t h e rp r o fi t s .Al s o ,i ft h eb u s i n e s swa sa ta l o s s ,Ar n o l dwo u l dr e c e i v e $ 4 0 0p e r mo n t h . Wh e nPa t t e r s o nr e t i r e d ,Wi l l i t sb e c a met h es o l eo wn e ro fi t sa s s e t s .Wi l l i t so r g a n i z e dan e w c o r p o r a t i o nb yt h es a me n a mei nSa nF r a n c i s c o .T h en e wfi r ma c q u i r e da l lt h ea s s e t so ft h e f o r me rfi r m.Hec a met oMa n i l aa n do r g a n i z e da c o r p o r a t i o nh e r ek n o wna sWi l l i t s&P a t t e r s o n , L t d . ,i na n dt owh i c hh ea g a i ns u b s c r i b e df o ra l l o ft h ec a p i t a ls t o c ke x c e p tt h en o mi n a ls h a r e s n e c e s s a r yt oq u a l i f yt h ed i r e c t o r s .

I s s ue :WONt h ec o r p o r a t i o ni sb o u n db yt h ec o n t r a c t s .

He l d:YES.

Ra t i o:“ Wh e r et h es t o c ko fac o r p o r a t i o ni so wn e db yo n ep e r s o nwh e r e b yt h ec o r p o r a t i o n f u n c t i o n so n l yf o rt h eb e n e fi to f s u c hi n d i v i d u a l o wn e r ,t h ec o r p o r a t i o na n dt h ei n d i v i d u a l s h o u l d b ed e e me dt ob et h es a me . ” I nt h ec a s ea tb a r ,t h ec o r p o r a t i o n sa r eu n d e rWi l l i t s .Wh e nt h es e c o n dc o n t r a c twa s n o l d ’ ss e r v i c e swe r et ob ep e r f o r me db yi t st e r ms .Wh e nt h e s i g n e d ,Wi l l i t sr e c o g n i z e dt h a t Ar n e wc o r p o r a t i o nwa so r g a n i z e da n dc r e a t e d , i ts t i l l t r e a t e d Ar n o l da si t sa g e n t i nt h es a mema n n e r a st h efi r s t o n e . He n c e , t h en e wc o r p o r a t i o nwa sb o u n db yt h ec o n t r a c t ma d eu n d e rt h ep r e v i o u sfi r m.

Di s pos i t i v e:Th ej u d g me n t o f t h el o we rc o u r t i sr e v e r s e d .

I nl e g a le ff e c t ,t h eSa nF r a n c i s c oc o r p o r a t i o nt o o ko v e ra n da c q u i r e da l l o ft h ea s s e t sa n d l i a b i l i t i e so f t h eMa n i l ac o r p o r a t i o n . n d Wi l l i t ss i g n e da( 2 )n e wc o n t r a c ti nt h ef o r mo fal e t t e r .T h ep u r p o s eo fwh i c hwa st omo r e c l e a r l yd e fi n ea n ds p e c i f yt h ec o mp e n s a t i o nwh i c ht h ep l a i n t i ffwa st or e c e i v ef o r h i ss e r v i c e s . Ana c c o u n t i n gwa sd o n ea n di ts h o we dt h a tt h ec o r p o r a t i o nwa sd u ea n do wi n gt h ep l a i n t i ff u n d e rEx h i b i tBt h es u mo fP1 0 6 ,2 7 7 . 5 0 .T h eSa nF r a n c i s c oc o r p o r a t i o nb e c a mei n v o l v e di n fi n a n c i a l t r o u b l e ,a n da l l o f i t sa s s e t swe r et u r n e do v e rt oa" c r e d i t o r s ' c o mmi t t e e . " Ar n o l dfi l e dac o mp l a i n ta n dc o n t e n d e dt h a tt h es i g n i n go ft h es e c o n dc o n t r a c ti nt h ema n n e ra n d

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Th ec o ff e ef a c t o r yi sac o r p o r a t i o na n db yl e g a l fi c t i o n , a ne n t i t ys e p a r a t ea n da p a r t f r o mt h ep e r s o n s c o mp o s i n gi t n a me l y , T a nTo n ga n dh i sf a mi l y . Ho we v e r , t h ec o n c e p t o f s e p a r a t ec o r p o r a t ep e r s o n a l i t yc a n n o t b ee x t e n d e dt oap o i n t b e y o n dr e a s o n a n dp o l i c ywh e ni n v o k e di ns u p p o r t o f a ne n ds u b v e r s i v eo f t h i sp o l i c ya n dwi l l b ed i s r e g a r d e db yt h e c o u r t s .

o LACAMP ANACOF FEEV. KAI SAHAN, 9 3PHI L1 6 0( 1 9 5 3 )

As u b s i d i a r yc o mp a n ywh i c hi sc r e a t e dme r e l ya sa na g e n t f o rt h el a t t e rma ys o me t i me sb er e g a r d e d a si d e n t i c a l wi t ht h ep a r e n t c o r p o r a t i o ne s p e c i a l l yi f t h es t o c k h o l d e r so r o ffic e r so f t h et woc o r p o r a t i o n s a r es u b s t a n t i a l l yt h es a meo rt h e i rs y s t e mso f o p e r a t i o nu n i fi e d .

LACAMP ANACOF F EEFACT ORYvKAI SAHANNGMANGGAGAWAG. R. L 5 6 7 7 , Ma y2 5 , 1 9 5 3

F a c t s : T a nTo n gs i n c e1 9 3 2h a sb e e ne n g a g e di nt h eb u y i n ga n ds e l l i n gg a wg a wu n d e rt h et r a d en a me L aCa mp a n aGa wg a w Pa c k i n g .I n1 9 5 0 ,Ta nT o n ga n dme mb e r so fh i sf a mi l yo r g a n i z e dt h e f a mi l yc o r p o r a t i o n . L aCa mp a n aCo ff e eFa c t o r ywi t hi t sp r i n c i p a lo ffic el o c a t e di nGa wg a wPa c k i n g .Pr i o rt os a i d i n f o r ma t i o n ,Ta nTo n ge n t e r e di n t oaCBAwi t ht h el a b o ru n i o no fL aCa mp a n aGa wg a w.L a t e r o n , h i se mp l o y e e sf o r me dKa i s a h a nn gmg aMa n g g a g a wan gL aCa mp a n awi t ha na u t h o r i z a t i o n f r o mt h eDOL Et ob e c o mea na ffil i a t eo f t h el a r g e ru n i o n .

Th ef a c t ss h o we dt h a tt h e yh a do n ema n a g e me n t ,o n ep a y r o l lp r e p a r e db yt h es a mep e r s o n , l a b o r e r swe r ei n t e r c h a n g e a b l e ,t h e r ei so n l yo n ee n t i t ya ss h o wnb yt h es i g n b o a r da di nt r u c k s , p a c k a g e sa n dd e l i v e r yf o r msa n dt h es a mep l a c eo f b u s i n e s s . Th ea t t e mp t t oma k et h et wof a c t o r i e sa p p e a ra st wos e p a r a t eb u s i n e s s e swh e ni nr e a l i t yt h e ya r eb u t o n e ,i sb u tad e v i c et od e f e a tt h ee n d so ft h el a wa n ds h o u l dn o tb ep e r mi t t e dt op r e v a i l .WHY PI ERCE?Sot h a t L aCa mp a n ac a n n o t e v a d et h ej u r i s d i c t i o no f CI Rs i n c eL aCa mp a n a Ga wg a wh a s o n l y1 4e mp l o y e e sa n do n l y5a r eme mb e r so f Ka i s a h a n .

Ka i s a h a nwi t h6 6me mb e r sp r e s e n t e dad e ma n df o rh i g h e rwa g e sa n dmo r ep r i v i l e g e st oL a Ca mp a n aSt a r c ha n dCo ff e eF a c t o r y .T h ed e ma n dwa sn o t g r a n t e da n dt h e DOL Ec e r t i fi e dt h e i s s u et ot h eCI R.L aCa mp a n afi l e damo t i o nt od i s mi s sa l l e g i n gt h a tt h ea c t i o nwa sd i r e c t e d wod i ff e r e n t e n t i t i e swi t hd i s t i n c t p e r s o n a l i t i e s . a g a i n s tt T h i swa sd e n i e d , h e n c et h i sp e t i t i o n .

I s s ue: W/ Nt h eCI Rh a sj u r i s d i c t i o no v e rt h ec a s e .

He l d:YE S. L aCo mp a n aGa wg a wa n dL aCa mp a n aFa c t o r ya r eo p e r a t i n gu n d e ro n es i n g l ema n a g e me n to ra s o n eb u s i n e s st h o u g hwi t ht wot r a d en a me s .

5

o YUL TI VOSONSHARDWAREV. CT A, 1SCRA1 9 6 0( 1 9 6 1 ) Y ut i v oSonsHa r dwa r eCov sCT A Y u t i v oi sad o me s t i cc o r p o r a t i o ne n g a g e di ni mp o r t a t i o na n ds a l eo fh a r d wa r es u p p l i e sa n d e q u i p me n t .Af t e rt h el i b e r a t i o ni n1 9 4 6 ,r e s u me di t sb u s i n e s sa n du n t i l 1 9 4 6b o u tan u mb e ro fc a r s a n dt r u c k sf r o mGe n e r a l Mo t o r s( GM) , a nAme r i c a nc o r p o r a t i o nd o i n gb u s i n e s si nt h ePh i l i p p i n e s . As i mp o r t e r ,GMp a i ds a l e st a xp r e s c r i b e db yt h eT a xCo d eo nt h eb a s i so fi t ss e l l i n gp r i c et oYu t i v o . Y u t i v op a i dn of u r t h e rs a l e st a xo ni t ss a l e st ot h ep u b l i c . I nJ u n e1 9 4 6 , So u t h e r nMo t o r s( SM)o r g a n i z e dt oe n g a g ei nt h eb u s i n e s so fs e l l i n gc a r s , t r u c k sa n d s p a r ep a r t s . On eo f i t sma j o rs u b s c r i b e r si sYuTi o n gY e e , af o u n d e ro f Y u t i v o . Af t e rt h ei n c o r p o r a t i o n o fSMa n du n t i l t h ewi t h d r a wa l o fGMf r o mPh i l ,t h ec a r sa n dt r u c k swe r ep u r c h a s e db yYu t i v of r o m GMt h e ns o l db yYu t i v ot oSma n dt h e nSMs o l dt h e s et ot h ep u b l i c . T h es a mewa yt h a t GMu s e dt op a yt a x e so nt h eb a s i so f i t ss a l e st oYu t i v o , Y u t i v op a i dt a x e so nt h e b a s i so f i t ss a l e st oSM. SMp a i dn ot ax e so ni t ss a l e st ot h ep u b l i c . CI Rma d ea na s s e s s me n ta n dc h a r g e dY u t i v o1 . 8 Ma sd e fi c i e n c yt axp l u ss u r c h a r g e .Pe t i t i o n e r c o n t e s t e db e f o r eCT A. CT Ar u l e dt h a t SMi same r es u b s i d i a r yo ri n s t r u me n t a l i t yo f Yu t i v o , h e n c e , i t s s e p a r a t ec o r p o r a t ee x i s t e n c emu s t b ed i s r e g a r d e d . I s s u e: WONY u t i v oa n dSMa r et wos e p a r a t ee n t i t i e s . He l d : No . I ti sa ne l e me n t a r ya n df u n d a me n t a lp r i n c i p l eo fc o r p o r a t i o nl a wt h a tac o r p o r a t i o ni sa ne n t i t y s e p a r a t ea n dd i s t i n c tf r o mi t ss t o c k h o l d e r sa n df r o mo t h e rc o r p o r a t i o np e t i t i o n st owh i c hi tma yb e c o n n e c t e d .Ho we v e r ," wh e nt h en o t i o no fl e g a le n t i t yi su s e dt od e f e a tp u b l i cc o n v e n i e n c e ,j u s t i f y wr o n g ,p r o t e c tf r a u d ,o rd e f e n dc r i me , "t h el a wwi l lr e g a r dt h...