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Corpo Week2
Corpo Week2
Corpo Week2
Week 2
Sta. Monica Industrial & Development Corporation
vs
DAR Regional Director for Region 3
Topic: Application of the Piercing Doctrine
Facts:
Trinidad is the owner of five parcels of land with a total area of 4.69 hectares in Iba
Este, Calumpit, Bulacan. Private respondent Basilio De Guzman is the agricultural
leasehold tenant of Trinidad. De Guzman wanted to be emancipated in accordance with
the Agrarian Reform program, so he filed for an emancipation patent over the land
which he actually tilled.
Subsequently, the DAR approved De Guzmans petition, directing the MARO of
Calumpit, Bulacan and the PARO of Baliuag, Bulacan to effect the issuance of the
emancipation patent.
A year later, petitioner corporation Sta. Monica filed a petition for certiorari and
prohibition with the CA, assailing the said order. In its petition, Sta. Monica claimed that
while it is true that Asuncion Trinidad was the former registered owner of a parcel of
land with an area of 83,689 square meters, the said landholding was sold on January
27, 1986. Petitioner further asserted that he was denied due process, as it was not
furnished a notice of coverage under the CARP law.
Issue:
Whether or not there was valid sale and notice to petitioner
Ruling:
The sale is not valid, but there was constructive notice to Sta. Monica. On the first point,
the sale is prohibited by P.D. No. 27 (emancipation patent rule) which forbids the
transfer or alienation of covered agricultural lands except to the tenant-beneficiary.
On the second point, the Supreme Court notes that buyer Sta. Monica is owned and
controlled by Trinidad and her family. Records show that Trinidad, her husband and two
sons own more than 98% of the outstanding capital stock of Sta. Monica. They are all
officers of the corporation. There are only two non-related incorporators who own less
than one percent of the outstanding capital stock of Sta. Monica and who are not
officers of the corporation. To be sure, Trinidad and her family exercise absolute control
of the corporate affairs of Sta. Monica. As owners of 98% of the outstanding capital
stock, they are the beneficial owners of all the assets of the company, including the
agricultural land sold by Trinidad to Sta. Monica.
The dubious use of seemingly legal means to sidestep the CARP law persists.
Corporate law is resorted to by way of circling around the agrarian law. As this case
illustrates, agricultural lands are being transferred, simulated or otherwise, to
corporations which are fully or at least predominantly controlled by former landowners,
now called stockholders. Through this strategy, it is anticipated that the corporation, by
virtue of its corporate fiction, will shield the landowners from agricultural claims of
tenant-farmers.
2. Such control must have been used by the defendant to commit fraud or wrong, to
perpetuate the violation of a statutory or other positive legal duty, or dishonest
and unjust act in contravention of plaintiffs legal rights; and
3. The aforesaid control and breach of duty must proximately cause the injury or
unjust loss complained of.
The absence of any one of these elements prevents piercing the corporate veil. In
applying the instrumentality or alter ego doctrine, the courts are concerned with reality
and not form, with how the corporation operated and the individual defendants
relationship to that operation.
In this case, the respondent failed to adduce the quantum of evidence necessary to
prove any valid ground for the piercing of the veil of corporate entity of Mar Tierra
Corporation, or of RJL for that matter, and render the petitioner liable for the
respondents claim, jointly and severally, with Wilfrido Martinez and Lacson. The mere
fact that the majority stockholder of Mar Tierra Corporation is the RJL, and that the
petitioner, along with Jose and Luis Martinez, owned about 42% of the capital stock of
RJL, do not constitute sufficient evidence that the latter corporation, and/or the
petitioner and his brothers, had complete domination of Mar Tierra Corporation. It does
not automatically follow that the said corporation was used by the petitioner for the
purpose of committing fraud or wrong, or to perpetrate an injustice on the respondent.