G.R. No. 167434, 19 February 2007
Before the merger of the PCIB and Equitable Bank, petitioner Natividad Nische has a dollar deposit account with PCIB amounting to U$ 20,500.00. Later, Natividad Nische requested PCIB to transfer U$ 20,000.00 of her account to PCI Capital. Meanwhile, PCIB and Equitable Bank were Petitioners Ramon and Natividad Nische (Spouses) executed a Real Estate Mortgage Contract in flavor of Equitable PCI Bank to secure their obligations with the respondent bank.
PCI Bank, before it merged to equitable bank owns almost all of the stocks of PCI-Capital Asia Ltd. For failure to pay their obligations despite several demands, respondent Equitable PCI Bank as creditor-mortgagee filed a petition for extrajudicial foreclosure of the properties subject to Real Estate Mortgage, before the Office of the Clerk of Court, as Ex-officio Sheriff of RTC Makati City.
The spouses opposed the foreclosure, filed a motion for nullity of surety ship agreement with prayer for injunctive relief against the bank and the Ex-officio Sheriff, alleging that their obligation should have been offset by legal compensation to the Extent of their account to the bank, since both parties are Creditors and Debtors with respect to each other by the virtue of the fact that PCI Capital Asia (now PCI Express padala) is a subsidiary of Equitable PCI Bank.
Whether PCI Capital Asia, a subsidiary corporation, has a separate and district personality from its parent company.
YES. PCI Capital is a subsidiary of respondent Bank. Even then, PCI Capital [PCI Express Padala (HK) Ltd.] has an independent and separate juridical personality from that of the respondent Bank, its parent company; hence, any claim against the subsidiary is not a claim against the parent company and vice versa. The evidence on record shows that PCIB, which had been merged with Equitable Bank, owns almost all of the stocks of PCI Capital.
The fact that a corporation owns all of the stocks of another corporation is not sufficient to justify their being treated as one entity. A corporation has a separate personality distinct from its stockholder and other corporations to which it may be connected. The veil of corporate entity maybe lifted when the corporation is merely an adjunct, a business conduit or an alter ego of another corporation, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency conduit or adjunct of another corporation; or when the corporation is used as cloak or cover for fraud or illegality, or to work injustice or where necessary to achieve equity or for the protection of creditors.
Petitioners failed to adduce sufficient evidence to justify the piercing of the veil of corporate entity and render respondent Bank liable for the US$20,000.00 deposit of petitioner Natividad Nisce as debtor.
*Case digest by Earl M. Acoymo, Refresher, Andres Bonifacio Law School, SY 2019-2020