Corpo Case Digest

LIM VS. COURT OF APPEALS

G.R. No. 124715

FACTS OF THE CASE

Private respondents Auto Truck Corporation, Alliance Marketing Corporation, Speed Distributing, Inc., Active Distributing, Inc. and Action Company are corporations formed, organized and existing under Philippine laws and which owned real properties covered under the Torrens system.

On 11 June 1994, Pastor Y. Lim died intestate. Herein petitioner Rufina Lim, as surviving spouse and duly represented by her nephew George Luy, filed a joint petition for the administration of the estate of Pastor Y. Lim before the Regional Trial Court of Quezon City.

Private respondent corporations, whose properties were included in the inventory of the estate of Pastor Y. Lim, then filed a motion for the lifting of lis pendens and motion for exclusion of certain properties from the estate of the decedent.

Rufina alleged that the assets of these corporations were owned wholly by Pastor; that these corporations themselves are owned by Pastor and they are mere dummies of Pastor. The corporations filed a motion for exclusion from the estate. They presented proof (Torrens Titles) showing that the assets of the corporations are in their respective names and titles. The probate court denied their motion. The Court of Appeals reversed the decision of the probate court.

ISSUE

Whether the corporations and/or their assets should be included in the inventory of the estate.

RULING

No.

As regards the assets, the corporations were able to present their respective Torrens Titles over the disputed assets. It is true that a probate court may pass upon the question ownership albeit in a provisional manner but still, a Torrens Title cannot be attacked collaterally in a probate proceeding, it must be attacked directly in a separate proceeding.

As regards the corporations, to include them in the inventory is tantamount to the piercing of the veil of corporate fiction because the probate court effectively adopted the theory of Rufina. This cannot be done. Firstly, the probate court is sitting in a limited capacity. Secondly, Rufina was not able to present sufficient evidence that indeed the corporations are mere conduits of Pastor. 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. The veil can’t be pierced without any showing that indeed the corporation is being used merely as a dummy. To disregard the separate juridical personality of a corporation, the wrong-doing must be clearly and convincingly established. It cannot be presumed.