Legal library › Case digests › Commercial Law
Case digest · Piercing the corporate veil
Livesey vs. Binswanger Philippines, Inc.
A company closed right after promising it wouldn’t. A new one opened on the same floor, with the same president.
Facts
December 2001
Livesey, managing director of CBB, a real estate brokerage, resigned over unpaid salary and won an illegal dismissal case.
The settlement
CBB agreed to pay US$31,000 in three installments and promised not to cease operations until it paid in full. It paid the first US$13,000, then closed.
July 2003
Binswanger Philippines opened next to CBB’s old office, on the same floor of the same Makati building. Keith Elliot, who had signed the settlement for CBB, became its President and CEO.
The same business
The new company used CBB’s receiving stamp, took over a CBB bid for a PNB project, and its web editor described the firm as “CBB.”
The plan
A former CBB director swore that Elliot told her of the plan to close CBB and organize another company to escape CBB’s liabilities.
Issue
Can Binswanger Philippines and Keith Elliot be made to pay CBB’s unpaid settlement by piercing the corporate veil?
Ruling
Yes. The veil was pierced. Binswanger and Elliot were held jointly and severally liable for the two unpaid installments.
The timing and the continuity proved a plan to evade a binding obligation. CBB closed right after its no-closure promise, and the same president ran the same business from the same floor. Elliot personally orchestrated it, which is why he was held liable too.
“In the present case, we see an indubitable link between CBB's closure and Binswanger's incorporation. CBB ceased to exist only in name; it re-emerged in the person of Binswanger for an urgent purpose…”
Doctrine
A corporation’s separate personality is “merely a fiction created by law for convenience and to promote justice” (Concept Builders, Inc. vs. NLRC, G.R. No. 108734, May 29, 1996). When it is used to evade an obligation, the courts may disregard it.
Compare: not pierced
In Kukan International Corporation vs. Reyes, G.R. No. 182729, September 29, 2010: “Mere ownership by a single stockholder or by another corporation of a substantial block of shares of a corporation does not, standing alone, provide sufficient justification for disregarding the separate corporate personality.”
Bar tip
Same owners or the same officers are not enough. What pierced the veil here was the purpose: the old company was closed to escape a settlement, and its business went on under a new name.
Hear it explained
Piercing the Corporate Veil, Podcast Ep. 1, at 2:36
This digest is general legal information for education, not legal advice, and it is not a substitute for reading the decision. Quoted passages are taken word for word from the full text.