3.

Traders Rural Bank vs CA

GR No. 93397 March 3, 1997 TORRES, JR., J.:
FACTS:
FILRITER is the registered owner of Central Bank Certificate of Indebtedness No. 1891 (CBCI)
where CBCI was then transferred to PHILFINANCE. Philfinance then transferred the same
CBCI to Traders Royal Bank (TRB) under a repurchase agreement.
Philfinance failed to buy back the note and so, TRB tried to transfer and register the CBCI under
its name. The Central Bank did not want to recognize this transfer. Hence, this petition.

ISSUE:
Whether or not the Doctrine of piercing the veil of corporate fiction is applicable

HELD:
No, The Doctrine of piercing the veil of corporate entity is an equitable remedy, and may be
awarded only in cases when the corporate fiction is used to defeat public convenience, justify
wrong, protect fraud or defend crime or where a corporation is a mere alter ego or business
conduit of a person. The fact that Philfinance owns majority shares in Filriters is not by itself a
ground to disregard the independent corporate status of Filriters. There are not enough evidences
to show that TRB was defrauded when it acquired the subject certificate of indebtedness from
Philfinance and on its face, the subject certificates states that it is registered in the name of
Filriters. TRB knew that Philfinance is not the registered owner of CBCI No. 1891.ji. and there
was no showing that it made inquiries as to the ownership of the certificate. Lastly, TRB, being a
commercial bank, cannot claim ignorance of Central Bank Circular 769, and its requirement