Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 182729 September 29, 2010
KUKAN INTERNATIONAL CORPORATION, Petitioner,
vs.
ON. AMOR RE!ES, "# $er %&p&%"t' &( Pre(")"#* +,)*e o- t$e Re*"o#&. Tr"&.
Co,rt o- M&#".&, /r&#%$ 21, &#) ROMEO M. MORALES, )o"#* b,("#e((
,#)er t$e #&me &#) (t'.e 0RM Mor&.e( Trop$"e( &#) P.&1,e(,0 Respondents.
D ! I S I O N
2ELASCO, +R., J.:
The !ase
This Petition for Revie" on !ertiorari under Rule #$ see%s to nullif& and reverse the
'anuar& (), (**+ Decision
,
and the -pril ,., (**+ Resolution
(
rendered b& the !ourt
of -ppeals /!-0 in !-12.R. SP No. ,**,$(.
The assailed !- decision a3r4ed the March ,(, (**5
)
and 'une 5, (**5
#
Orders of
the Re6ional Trial !ourt /RT!0 of Manila, 7ranch (,, in !ivil !ase No. 8818),5),
entitled Romeo M. Morales, doing business under the name and style RM Morales
Trophies and Plaques v. Kukan, Inc. In the said orders, the RT! disre6arded the
separate corporate identities of 9u%an, Inc. and 9u%an International !orporation and
declared the4 to be one and the sa4e entit&. -ccordin6l&, the RT! held 9u%an
International !orporation, albeit not i4pleaded in the underl&in6 co4plaint of
Ro4eo M. Morales, liable for the :ud64ent a"ard decreed in a Decision dated
Nove4ber (+, (**(
$
in favor of Morales and a6ainst 9u%an, Inc.
The Facts
So4eti4e in March ,88+, 9u%an, Inc. conducted a biddin6 for the suppl& and
installation of si6na6es in a buildin6 bein6 constructed in Ma%ati !it&. Morales
tendered the "innin6 bid and "as a"arded the PhP $ 4illion contract. So4e of the
ite4s in the pro:ect a"ard "ere later e;cluded resultin6 in the correspondin6
reduction of the contract price to PhP ),)++,$*(. Despite his co4pliance "ith his
contractual underta%in6s, Morales "as onl& paid the a4ount of PhP ,,85.,)5,.*5,
leavin6 a balance of PhP ,,#,(,,)*.8), "hich 9u%an, Inc. refused to pa& despite
de4ands. Shortchan6ed, Morales <led a !o4plaint
.
"ith the RT! a6ainst 9u%an, Inc.
for a su4 of 4one&, the case doc%eted as !ivil !ase No. 8818),5) and eventuall&
ra=ed to 7ranch ,5 of the court.
Follo"in6 the :oinder of issues after 9u%an, Inc. <led an ans"er "ith counterclai4,
trial ensued. >o"ever, startin6 Nove4ber (***, 9u%an, Inc. no lon6er appeared and
participated in the proceedin6s before the trial court, pro4ptin6 the RT! to declare
9u%an, Inc. in default and pavin6 the "a& for Morales to present his evidence e;
parte.
On Nove4ber (+, (**(, the RT! rendered a Decision <ndin6 for Morales and a6ainst
9u%an, Inc., disposin6 as follo"s?
@>RFOR, consistent "ith Section $, Rule ,+ of the ,885 Rules of !ivil Procedure,
and b& preponderance of evidence, :ud64ent is hereb& rendered in favor of the
plaintiA, orderin6 9u%an, Inc.?
,. to pa& the su4 of ON MIBBION T@O >CNDRD ON T>OCS-ND SVN
>CNDRD T@NTD FOCR PSOS /P,,(*,,5(#.**0 "ith le6al interest at ,(E
per annu4 fro4 Februar& ,5, ,888 until full pa&4entF
(. to pa& the su4 of FIFTD T>OCS-ND PSOS /P$*,***.**0 as 4oral
da4a6esF
). to pa& the su4 of T@NTD T>OCS-ND PSOS, /P(*,***.**0 as
reasonable attorne&Gs feesF and
#. to pa& the su4 of SVN T>OCS-ND NIN >CNDRD SIHTD PSOS and
SIH !NT-VOS /P5,8.*.*.0 as liti6ation e;penses.
For lac% of factual foundation, the counterclai4 is DISMISSD.
IT IS SO ORDRD.
5
-fter the above decision beca4e <nal and e;ecutor&, Morales 4oved for and
secured a "rit of e;ecution
+
a6ainst 9u%an, Inc. The sheriA then levied upon various
personal properties found at "hat "as supposed to be 9u%an, Inc.Gs o3ce at Cnit
((*$, ++ !orporate !enter, Salcedo Villa6e, Ma%ati !it&. -lle6in6 that it o"ned the
properties thus levied and that it "as a diAerent corporation fro4 9u%an, Inc., 9u%an
International !orporation /9I!0 <led an -3davit of Third1Part& !lai4. Notabl&, 9I!
"as incorporated in -u6ust (***, or shortl& after 9u%an, Inc. had stopped
participatin6 in !ivil !ase No. 8818),5).
In reaction to the third part& clai4, Morales interposed an O4nibus Motion dated
-pril )*, (**). In it, Morales pra&ed, appl&in6 the principle of piercin6 the veil of
corporate <ction, that an order be issued for the satisfaction of the :ud64ent debt of
9u%an, Inc. "ith the properties under the na4e or in the possession of 9I!, it bein6
alle6ed that both corporations are but one and the sa4e entit&. 9I! opposed
MoralesG 4otion. 7& Order of Ma& (8, (**)
8
as reiterated in a subseIuent order, the
court denied the o4nibus 4otion.
In a bid to establish the lin% bet"een 9I! and 9u%an, Inc., and thus deter4ine the
true relationship bet"een the t"o, Morales <led a Motion for ;a4ination of
'ud64ent Debtors dated Ma& #, (**$. In this 4otion Morales sou6ht that subponae
be issued a6ainst the pri4ar& stoc%holders of 9u%an, Inc., a4on6 the4 Michael
!han, a.%.a. !han 9ai 9it. This too "as denied b& the trial court in an Order dated
Ma& (#, (**$.
,*
Morales then sou6ht the inhibition of the presidin6 :ud6e, duardo 7. Peralta, 'r., "ho
eventuall& 6ranted the 4otion. The case "as re1ra=ed to 7ranch (,, presided b&
public respondent 'ud6e -4or Re&es.
7efore the Manila RT!, 7ranch (,, Morales <led a Motion to Pierce the Veil of
!orporate Fiction to declare 9I! as havin6 no e;istence separate fro4 9u%an, Inc.
This ti4e around, the RT!, b& Order dated March ,(, (**5, 6ranted the 4otion, the
dispositive portion of "hich reads?
@>RFOR, pre4ises considered, the 4otion is hereb& 2R-NTD. The !ourt
hereb& declares as follo"s?
,. defendant 9u%an, Inc. and ne"l& created 9u%an International !orp. as
one and the sa4e corporationF
(. the lev& 4ade on the properties of 9u%an International !orp. is hereb&
validF
). 9u%an International !orp. and Michael !han are :ointl& and severall&
liable to pa& the a4ount a"arded to plaintiA pursuant to the decision of
Nove4ber J(+K, (**( "hich has lon6 been <nal and e;ecutor&.
SO ORDRD.
Fro4 the above order, 9I! 4oved but "as denied reconsideration in another Order
dated 'une 5, (**5.
9I! "ent to the !- on a petition for certiorari to nullif& the aforesaid March ,( and
'une 5, (**5 RT! Orders.
On 'anuar& (), (**+, the !- rendered the assailed decision, the dispositive portion
of "hich states?
@>RFOR, pre4ises considered, the petition is hereb& DNID and the assailed
Orders dated March ,(, (**5 and 'une 5, (**5 of the court a Iuo are both
-FFIRMD. No costs.
SO ORDRD.
,,
The !- later denied 9I!Gs 4otion for reconsideration in the assailed resolution.
>ence, the instant petition for revie", "ith the follo"in6 issues 9I! raises for the
!ourtGs consideration?
,. There is no le6al basis for the J!-K to resolve and declare that
petitionerGs !onstitutional Ri6ht to Due Process "as not violated b& the
public respondent in renderin6 the Orders dated March ,(, (**5 and 'une
5, (**5 and in declarin6 petitioner to be liable for the :ud64ent obli6ations
of the corporation L9u%an, Inc.L to private respondent M as petitioner is a
stran6er to the case and "as never 4ade a part& in the case before the
trial court nor "as it ever served a su44ons and a cop& of the co4plaint.
(. There is no le6al basis for the J!-K to resolve and declare that the Orders
dated March ,(, (**5 and 'une 5, (**5 rendered b& public respondent
declarin6 the petitioner liable to the :ud64ent obli6ations of the
corporation L9u%an, Inc.L to private respondent are valid as said orders of
the public respondent 4odif& andNor a4end the trial courtGs <nal and
e;ecutor& decision rendered on Nove4ber (+, (**(.
). There is no le6al basis for the J!-K to resolve and declare that the Orders
dated March ,(, (**5 and 'une 5, (**5 rendered b& public respondent
declarin6 the petitioner J9I!K and the corporation L9u%an, Inc.L as one and
the sa4e, and, therefore, the Veil of !orporate Fiction bet"een the4 be
pierced M as the procedure underta%en b& public respondent "hich the J!-K
upheld is not sanctioned b& the Rules of !ourt andNor established
:urisprudence enunciated b& this >onorable Supre4e !ourt.
,(
In 6ist, the issues to be resolved boil do"n to the Iuestion of, <rst, "hether the trial
court can, after the :ud64ent a6ainst 9u%an, Inc. has attained <nalit&, e;ecute it
a6ainst the propert& of 9I!F second, "hether the trial court acIuired :urisdiction over
9I!F and third, "hether the trial and appellate courts correctl& applied, under the
pre4ises, the principle of piercin6 the veil of corporate <ction.
The Rulin6 of the !ourt
The petition is 4eritorious.
3"r(t I((,e4 A*&"#(t 5$om C&# & 3"#&. &#)
E6e%,tor' +,)*me#t /e E6e%,te)
The preli4inar& Iuestion that 4ust be ans"ered is "hether or not the trial court
can, after ad:ud6in6 9u%an, Inc. liable for a su4 of 4one& in a <nal and e;ecutor&
:ud64ent, e;ecute such :ud64ent debt a6ainst the propert& of 9I!.
The poser 4ust be ans"ered in the ne6ative.
In !arpio v. Doro:a,
,)
the !ourt ruled that the decidin6 court has supervisor& control
over the e;ecution of its :ud64ent?
- case in "hich an e;ecution has been issued is re6arded as still pendin6 so that all
proceedin6s on the e;ecution are proceedin6s in the suit. There is no Iuestion that
the court "hich rendered the :ud64ent has a 6eneral supervisor& control over its
process of e;ecution, and this po"er carries "ith it the ri6ht to deter4ine ever&
Iuestion of fact and la" "hich 4a& be involved in the e;ecution.
@e reiterated the above holdin6 in 'avier v. !ourt of -ppeals
,#
in this "ise? LThe said
branch has a 6eneral supervisor& control over its processes in the e;ecution of its
:ud64ent "ith a ri6ht to deter4ine ever& Iuestion of fact and la" "hich 4a& be
involved in the e;ecution.L
The courtGs supervisor& control does not, ho"ever, e;tend as to authoriOe the
alteration or a4end4ent of a <nal and e;ecutor& decision, save for certain
reco6niOed e;ceptions, a4on6 "hich is the correction of clerical errors. lse, the
court violates the principle of <nalit& of :ud64ent and its i44utabilit&, concepts
"hich the !ourt, in Tan v. Ti4bal,
,$
de<ned?
-s "e held in Industrial Mana6e4ent International Develop4ent !orporation vs.
NBR!?
It is an ele4entar& principle of procedure that the resolution of the court in a 6iven
issue as e4bodied in the dispositive part of a decision or order is the controllin6
factor as to settle4ent of ri6hts of the parties. Once a decision or order beco4es
<nal and e;ecutor&, it is re4oved fro4 the po"er or :urisdiction of the court "hich
rendered it to further alter or a4end it. It thereb& beco4es i44utable and
unalterable and an& a4end4ent or alteration "hich substantiall& aAects a <nal and
e;ecutor& :ud64ent is null and void for lac% of :urisdiction, includin6 the entire
proceedin6s held for that purpose. -n order of e;ecution "hich varies the tenor of
the :ud64ent or e;ceeds the ter4s thereof is a nullit&. /4phasis supplied.0
Republic v. Tan6o
,.
e;pounded on the sa4e principle and its e;ceptions?
Deepl& in6rained in our :urisprudence is the principle that & )e%"("o# t$&t $&(
&%1,"re) 7#&."t' be%ome( "mm,t&b.e &#) ,#&.ter&b.e. -s such, "t m&' #o
.o#*er be mo)"7e) in an& respect even if the 4odi<cation is 4eant to correct
erroneous conclusions of fact or la" and "hether it "ill be 4ade b& the court that
rendered it or b& the hi6hest court of the land. ; ; ;
The doctrine of <nalit& of :ud64ent is 6rounded on the funda4ental principle of
public polic& and sound practice that, at the ris% of occasional error, the :ud64ent of
courts and the a"ard of Iuasi1:udicial a6encies 4ust beco4e <nal on so4e de<nite
date <;ed b& la". T$e o#.' e6%ept"o#s to the 6eneral rule are the correction of
clerical errors, the so1called nunc pro tunc entries "hich cause no pre:udice to an&
part&, void :ud64ents, and "henever circu4stances transpire after the <nalit& of the
decision "hich render its e;ecution un:ust and ineIuitable. None of the e;ceptions
obtains here to 4erit the revie" sou6ht. /4phasis added.0
So, did the RT!, in breach of the doctrine of i44utabilit& and inalterabilit& of
:ud64ent, order the e;ecution of its <nal decision in a 4anner as "ould a4ount to
its prohibited alteration or 4odi<cationP
@e repair to the dispositive portion of the <nal and e;ecutor& RT! decision.
Pertinentl&, it provides?
@>RFOR, consistent "ith Section $, Rule ,+ of the ,885 Rules of !ivil Procedure,
and b& preponderance of evidence, :ud64ent is hereb& rendered in favor of the
plaintiA, orderin6 9u%an, Inc.?
,. to pa& the su4 of ON MIBBION T@O >CNDRD ON T>OCS-ND SVN
>CNDRD T@NTD FOCR PSOS /P,,(*,,5(#.**0 "ith le6al interest at ,(E
per annu4 fro4 Februar& ,5, ,888 until full pa&4entF
(. to pa& the su4 of FIFTD T>OCS-ND PSOS /P$*,***.**0 as 4oral
da4a6esF
). to pa& the su4 of T@NTD T>OCS-ND PSOS /P(*,***.**0 as
reasonable attorne&Gs feesF and
#. to pa& the su4 of SVN T>OCS-ND NIN >CNDRD SIHTD PSOS and
SIH !NT-VOS /P5,8.*.*.0 as liti6ation e;penses.
; ; ; ; /4phasis supplied.0
-s 4a& be noted, the above decision, in uneIuivocal ter4s, directed 9u%an, Inc. to
pa& the afore4entioned a"ards to Morales. Thus, 4a%in6 9I!, thru the 4ediu4 of a
"rit of e;ecution, ans"erable for the above :ud64ent liabilit& is a clear case of
alterin6 a decision, an instance of 6rantin6 relief not conte4plated in the decision
sou6ht to be e;ecuted. -nd the chan6e does not fall under an& of the reco6niOed
e;ceptions to the doctrine of <nalit& and i44utabilit& of :ud64ent. It is a settled
rule that a "rit of e;ecution 4ust confor4 to the fallo of the :ud64entF as an
inevitable corollar&, a "rit be&ond the ter4s of the :ud64ent is a nullit&.
,5
Thus, on this 6round alone, the instant petition can alread& be 6ranted. Nonetheless,
an e;a4ination of the other issues raised b& 9I! "ould be proper.
Se%o#) I((,e4 Propr"et' o- t$e RTC
A((,m"#* +,r"()"%t"o# o8er KIC
The ne;t issue turns on the validit& of the e;ecution the trial court authoriOed
a6ainst 9I! and its propert&, 6iven that it "as neither 4ade a part& nor i4pleaded in
!ivil !ase No. 8818),5), let alone served "ith su44ons. In other "ords, did the trial
court acIuire :urisdiction over 9I!P
In the assailed decision, the appellate court dee4ed 9I! to have voluntaril&
sub4itted itself to the :urisdiction of the trial court o"in6 to its <lin6 of four /#0
pleadin6s adverted to earlier, na4el&? /a0 the -3davit of Third1Part& !lai4F
,+
/b0 the
!o44ent and Opposition to PlaintiAGs O4nibus MotionF
,8
/c0 the Motion for
Reconsideration of the RT! Order dated March ,(, (**5F
(*
and /d0 the Motion for
Beave to -d4it Repl&.
(,
The !-, citin6 Section (*, Rule ,# of the Rules of !ourt,
stated that Lthe procedural rule on service of su44ons can be "aived b& voluntar&
sub4ission to the courtGs :urisdiction throu6h an& for4 of appearance b& the part&
or its counsel.L
((
@e cannot 6ive i4pri4atur to the appellate courtGs appreciation of the thrust of Sec.
(*, Rule ,# of the Rules in concludin6 that the trial court acIuired :urisdiction over
9I!.
Orion Securit& !orporation v. 9alfa4 nterprises, Inc.
()
e;plains ho" courts acIuire
:urisdiction over the parties in a civil case?
!ourts acIuire :urisdiction over the plaintiAs upon the <lin6 of the co4plaint. On the
other hand, :urisdiction over the defendants in a civil case is acIuired either throu6h
the service of su44ons upon the4 or throu6h their voluntar& appearance in court
and their sub4ission to its authorit&. /4phasis supplied.0
In the fairl& recent Pal4a v. 2alveO,
(#
the !ourt reiterated its holdin6 in rion
!ecurity "orporation, statin6? LJIKn civil cases, the trial court acIuires :urisdiction
over the person of the defendant either b& the service of su44ons or b& the latterGs
voluntar& appearance and sub4ission to the authorit& of the for4er.L
The courtGs :urisdiction over a part&1defendant resultin6 fro4 his voluntar&
sub4ission to its authorit& is provided under Sec. (*, Rule ,# of the Rules, "hich
states?
Section (*. Voluntar& appearance. M The defendantGs voluntar& appearance in the
actions shall be eIuivalent to service of su44ons. The inclusion in a 4otion to
dis4iss of other 6rounds aside fro4 lac% of :urisdiction over the person of the
defendant shall not be dee4ed a voluntar& appearance.
To be sure, the !-Gs rulin6 that an& for4 of appearance b& the part& or its counsel is
dee4ed as voluntar& appearance <nds support in the %indred Republic v. 9er Q !o.,
Btd.
($
and De Mid6el& v. Ferandos.
(.
Republic and De Mid6el&, ho"ever, have alread& been 4odi<ed if not alto6ether
superseded
(5
b& Ba Naval Dru6 !orporation v. !ourt of -ppeals,
(+
"herein the !ourt
essentiall& ruled and elucidated on the current vie" in our :urisdiction, to "it? LJ-K
special appearance before the courtMMchallen6in6 its :urisdiction over the person
throu6h a 4otion to dis4iss even if the 4ovant invo%es other 6roundsMMis not
tanta4ount to estoppel or a "aiver b& the 4ovant of his ob:ection to :urisdiction
over his personF and such is not constitutive of a voluntar& sub4ission to the
:urisdiction of the court.L
(8
In the instant case, 9I! "as not 4ade a part&1defendant in !ivil !ase No. 8818),5).
ven if it is conceded that it raised a3r4ative defenses throu6h its afore4entioned
pleadin6s, 9I! never abandoned its challen6e, ho"ever i4plicit, to the RT!Gs
:urisdiction over its person. The challen6e "as subsu4ed in 9I!Gs pri4ar& assertion
that it "as not the sa4e entit& as 9u%an, Inc. Pertinentl&, in its !o44ent and
Opposition to PlaintiAGs O4nibus Motion dated Ma& (*, (**), 9I! entered its
L(pe%"&. b,t #ot 8o.,#t&r' &ppe&r&#%eL alle6in6 therein that it "as a diAerent
entit& and has a separate le6al personalit& fro4 9u%an, Inc. -nd 9I! "ould
consistentl& reiterate this assertion in all its pleadin6s, thus eAectivel& resistin6 all
alon6 the RT!Gs :urisdiction of its person. It cannot be overe4phasiOed that 9I! could
not <le before the RT! a 4otion to dis4iss and its attach4ents in !ivil !ase No. 881
8),5), precisel& because 9I! "as neither i4pleaded nor served "ith su44ons.
!onseIuentl&, 9I! could onl& assert and clai4 throu6h its a3davits, co44ents, and
4otions <led b& special appearance before the RT! that it is separate and distinct
fro4 9u%an, Inc.
Follo"in6 #a $aval %rug "orporation,
)*
9I! cannot be dee4ed to have "aived its
ob:ection to the courtGs lac% of :urisdiction over its person. It "ould def& lo6ic to sa&
that 9I! uneIuivocall& sub4itted itself to the :urisdiction of the RT! "hen it stron6l&
asserted that it and 9u%an, Inc. are diAerent entities. In the sche4e of thin6s
obtainin6, 9I! had no other option but to insist on its separate identit& and plead for
relief consistent "ith that position.
T$"r) I((,e4 P"er%"#* t$e
2e". o- Corpor&te 3"%t"o#
The third and 4ain issue in this case is "hether or not the trial and appellate courts
correctl& applied the principle of piercin6 the veil of corporate entit&MMcalled also as
disre6ardin6 the <ction of a separate :uridical personalit& of a corporationMMto
support a conclusion that 9u%an, Inc. and 9I! are but one and the sa4e corporation
"ith respect to the contract a"ard referred to at the outset. This principle <nds its
conte;t on the postulate that a corporation is an arti<cial bein6 invested "ith a
personalit& separate and distinct fro4 those of the stoc%holders and fro4 other
corporations to "hich it 4a& be connected or related.
),
In Pantranco 4plo&ees -ssociation /P-1PT2@O0 v. National Babor Relations
!o44ission,
)(
the !ourt revisited the sub:ect principle of piercin6 the veil of
corporate <ction and "rote?
Cnder the doctrine of Lpiercin6 the veil of corporate <ction,L the court loo%s at the
corporation as a 4ere collection of individuals or an a66re6ation of persons
underta%in6 business as a 6roup, disre6ardin6 the separate :uridical personalit& of
the corporation unif&in6 the 6roup. -nother for4ulation of this doctrine is that "hen
t"o business enterprises are o"ned, conducted and controlled b& the sa4e parties,
both la" and eIuit& "ill, "hen necessar& to protect the ri6hts of third parties,
disre6ard the le6al <ction that t"o corporations are distinct entities and treat the4
as identical or as one and the sa4e.
@hether the (ep&r&te per(o#&."t' o- t$e %orpor&t"o# ($o,.) be p"er%e)
$"#*e( o# obt&"#"#* -&%t( &ppropr"&te.' p.e&)e) or pro8e). >o"ever, an&
piercin6 of the corporate veil has to be done "ith caution, albeit the !ourt "ill not
hesitate to disre6ard the corporate veil "hen it is 4isused or "hen necessar& in the
interest of :ustice. ; ; ; /4phasis supplied.0
The sa4e principle "as the sub:ect and discussed in Rivera v. Cnited Baboratories,
Inc.?
@hile a corporation 4a& e;ist for an& la"ful purpose, the la" "ill re6ard it as an
association of persons or, in case of t"o corporations, 4er6e the4 into one, "hen its
corporate le6al entit& is used as a cloa% for fraud or ille6alit&. This is the doctrine of
piercin6 the veil of corporate <ction. The doctrine applies onl& "hen such corporate
<ction is used to defeat public convenience, :ustif& "ron6, protect fraud, or defend
cri4e, or "hen it is 4ade as a shield to confuse the le6iti4ate issues, or "here a
corporation is the 4ere alter e6o or business conduit of a person, or "here the
corporation is so or6aniOed and controlled and its aAairs are so conducted as to
4a%e it 4erel& an instru4entalit&, a6enc&, conduit or ad:unct of another
corporation.
To disre6ard the separate :uridical personalit& of a corporation, the "ron6doin6 4ust
be established clearl& and convincin6l&. It cannot be presu4ed.
))
/4phasis
supplied.0
No", as before the appellate court, petitioner 9I! 4aintains that the RT! violated its
ri6ht to due process "hen, in the e;ecution of its Nove4ber (+, (**( Decision, the
court authoriOed the issuance of the "rit a6ainst 9I! for 9u%an, Inc.Gs :ud64ent debt,
albeit 9I! has never been a part& to the underl&in6 suit. -s a counterpoint, Morales
ar6ues that 9I!Gs speci<c concern on due process and on the validit& of the "rit to
e;ecute the RT!Gs Nove4ber (+, (**( Decision "ould be 4ooted if it "ere
established that 9I! and 9u%an, Inc. are indeed one and the sa4e corporation.
MoralesG contention is untenable.
The principle of piercin6 the veil of corporate <ction, and the resultin6 treat4ent of
t"o related corporations as one and the sa4e :uridical person "ith respect to a
6iven transaction, is basicall& applied onl& to deter4ine established liabilit&F
)#
it is
not available to confer on the court a :urisdiction it has not acIuired, in the <rst
place, over a part& not i4pleaded in a case. lse"ise put, a corporation not
i4pleaded in a suit cannot be sub:ect to the courtGs process of piercin6 the veil of its
corporate <ction. In that situation, the court has not acIuired :urisdiction over the
corporation and, hence, an& proceedin6s ta%en a6ainst that corporation and its
propert& "ould infrin6e on its ri6ht to due process. -6uedo -6ba&ani, a reco6niOed
authorit& on !o44ercial Ba", stated as 4uch?
(). Piercin6 the veil of corporate entit& applies to deter4ination of liabilit& not of
:urisdiction. ; ; ;
This is so because the doctrine of piercin6 the veil of corporate <ction co4es to pla&
onl& durin6 the trial of the case after the court has alread& acIuired :urisdiction over
the corporation. >ence, before this doctrine can be applied, based on the evidence
presented, it is i4perative that the court 4ust <rst have :urisdiction over the
corporation.
)$
; ; ; /4phasis supplied.0
The i4plication of the above co44ent is t"ofold? /,0 the court 4ust <rst acIuire
:urisdiction over the corporation or corporations involved before its or their separate
personalities are disre6ardedF and /(0 the doctrine of piercin6 the veil of corporate
entit& can onl& be raised durin6 a full1blo"n trial over a cause of action dul&
co44enced involvin6 parties dul& brou6ht under the authorit& of the court b& "a&
of service of su44ons or "hat passes as such service.
The issue of :urisdiction or the lac% of it over 9I! has alread& been discussed. -nent
the 4atter of the ti4e and 4anner of raisin6 the principle in Iuestion, it is
undisputed that no full1blo"n trial involvin6 9I! "as had "hen the RT! disre6arded
the corporate veil of 9I!. The reason for this actualit& is si4ple and undisputed? 9I!
"as not i4pleaded in !ivil !ase No. 8818),5) and that the RT! did not acIuire
:urisdiction over it. It "as dra66ed to the case after it reacted to the i4proper
e;ecution of its properties and veritabl& hauled to court, not thru the usual process
of service of su44ons, but b& 4ere 4otion of a part& "ith "ho4 it has no privit& of
contract and after the decision in the 4ain case had alread& beco4e <nal and
e;ecutor&. -s to the propriet& of a plea for the application of the principle b& 4ere
4otion, the follo"in6 e;cerpts are instructive?
2enerall&, a 4otion is appropriate onl& in the absence of re4edies b& re6ular
pleadin6s, and is not available to settle i4portant Iuestions of la", or to dispose of
the 4erits of the case. - 4otion is usuall& a proceedin6 incidental to an action, but
it 4a& be a "holl& distinct or independent proceedin6. - 4otion in this sense is not
"ithin this discussion even thou6h the relief de4anded is deno4inated an Lorder.L
- 4otion 6enerall& relates to procedure and is often resorted to in order to correct
errors "hich have crept in alon6 the line of the principal actionGs pro6ress. 2enerall&,
"here there is a procedural defect in a proceedin6 and no 4ethod under statute or
rule of court b& "hich it 4a& be called to the attention of the court, a 4otion is an
appropriate re4ed&. In 4an& :urisdictions, the 4otion has replaced the co44on1la"
pleas testin6 the su3cienc& of the pleadin6s, and various co44on1la" "rits, such
as "rit of error cora4 nobis and audita Iuerela. In so4e cases, a 4otion 4a& be one
of several re4edies available. For e;a4ple, in so4e :urisdictions, a 4otion to vacate
an order is a re4ed& alternative to an appeal therefro4.
Statutes 6overnin6 4otions are 6iven a liberal construction.
).
/4phasis supplied.0
The botto4 line issue of "hether Morales can proceed a6ainst 9I! for the :ud64ent
debt of 9u%an, Inc.MMassu4in6 h&potheticall& that he can, appl&in6 the piercin6 the
corporate veil principleMMresolves itself into the Iuestion of "hether a 4ere 4otion
is the appropriate vehicle for such purpose.
Veril&, Morales espouses the application of the principle of piercin6 the corporate
veil to hold 9I! liable on theor& that 9u%an, Inc. "as out to defraud hi4 throu6h the
use of the separate and distinct personalit& of another corporation, 9I!. In net eAect,
MoralesG adverted 4otion to pierce the veil of corporate <ction dated 'anuar& ),
(**5 stated a ne" cause of action, i.e., for the liabilit& of :ud64ent debtor 9u%an,
Inc. to be borne b& 9I! on the alle6ed identit& of the t"o corporations. This ne"
cause of action should be properl& ventilated in another co4plaint and subseIuent
trial "here the doctrine of piercin6 the corporate veil can, if appropriate, be applied,
based on the evidence adduced. stablishin6 the clai4 of Morales and the
correspondin6 liabilit& of 9I! for 9u%an Inc.Gs indebtedness could hardl& be the
sub:ect, under the pre4ises, of a 4ere 4otion interposed after the principal action
a6ainst 9u%an, Inc. alone had pere4ptoril& been ter4inated. -fter all, a co4plaint is
one "here the plaintiA alle6es causes of action.
In an& event, the principle of piercin6 the veil of corporate <ction <nds no
application to the instant case.
-s a 6eneral rule, courts should be "ar& of liftin6 the corporate veil bet"een
corporations, ho"ever related. Philippine National 7an% v. -ndrada lectric
n6ineerin6 !o4pan&
)5
e;plains "h&?
- corporation is an arti<cial bein6 created b& operation of la". ; ; ; It has a
personalit& separate and distinct fro4 the persons co4posin6 it, as "ell as fro4 an&
other le6al entit& to "hich it 4a& be related. This is basic.
Iuall& "ell1settled is the principle that the corporate 4as% 4a& be re4oved or the
corporate veil pierced "hen the corporation is :ust an alter e6o of a person or of
another corporation. For reasons of public polic& and in the interest of :ustice, the
corporate veil "ill :usti<abl& be i4paled onl& "hen it beco4es a shield for fraud,
ille6alit& or ineIuit& co44itted a6ainst third persons.
>ence, an& application of the doctrine of piercin6 the corporate veil should be done
"ith caution. - court should be 4indful of the 4ilieu "here it is to be applied. It
4ust be certain that the corporate <ction "as 4isused to such an e;tent that
in:ustice, fraud, or cri4e "as co44itted a6ainst another, in disre6ard of its
ri6hts. The "ron6doin6 4ust be clearl& and convincin6l& establishedF it cannot be
presu4ed. Other"ise, an in:ustice that "as never unintended 4a& result fro4 an
erroneous application.
This !ourt has pierced the corporate veil to "ard oA a :ud64ent credit, to avoid
inclusion of corporate assets as part of the estate of the decedent, to escape liabilit&
arisin6 fro4 a debt, or to perpetuate fraud andNor confuse le6iti4ate issues either to
pro4ote or to shield unfair ob:ectives or to cover up an other"ise blatant violation of
the prohibition a6ainst foru41shoppin6. O#.' "# t$e(e &#) ("m".&r "#(t&#%e( m&'
t$e 8e". be p"er%e) &#) )"(re*&r)e). /4phasis supplied.0
In <ne, to :ustif& the piercin6 of the veil of corporate <ction, it 4ust be sho"n b&
clear and convincin6 proof that the separate and distinct personalit& of the
corporation "as purposefull& e4plo&ed to evade a le6iti4ate and bindin6
co44it4ent and perpetuate a fraud or li%e "ron6doin6s. To be sure, the !ourt has,
on nu4erous occasions,
)+
applied the principle "here a corporation is dissolved and
its assets are transferred to another to avoid a <nancial liabilit& of the <rst
corporation "ith the result that the second corporation should be considered a
continuation and successor of the <rst entit&.
In those instances "hen the !ourt pierced the veil of corporate <ction of t"o
corporations, there "as a conRuence of the follo"in6 factors?
,. - <rst corporation is dissolvedF
(. The assets of the <rst corporation is transferred to a second corporation
to avoid a <nancial liabilit& of the <rst corporationF and
). 7oth corporations are o"ned and controlled b& the sa4e persons such
that the second corporation should be considered as a continuation and
successor of the <rst corporation.
In the instant case, ho"ever, the second and third factors are conspicuousl& absent.
There is, therefore, no co4pellin6 :usti<cation for disre6ardin6 the <ction of
corporate entit& separatin6 9u%an, Inc. fro4 9I!. In appl&in6 the principle, both the
RT! and the !- 4iserabl& failed to identif& the presence of the above4entioned
factors. !onsider?
The RT! disre6arded the separate corporate personalities of 9u%an, Inc. and 9I!
based on the follo"in6 pre4ises and ar6u4ents?
@hile it is true that a corporation has a separate and distinct personalit& fro4 its
stoc%holder, director and o3cers, the la" e;pressl& provides for an e;ception. @hen
Michael !han, the Mana6in6 Director of defendant 9u%an, Inc. /4a:orit& stoc%holder
of the ne"l& for4ed corporation J9I!K0 con<r4ed the a"ard to plaintiA to suppl& and
install interior si6na6es in the nterprise !enter he /Michael !han, Mana6in6
Director of defendant 9u%an, Inc.0 %ne" that there "as no su3cient corporate funds
to pa& its obli6ationNaccount, thus i4pl&in6 bad faith on his part and fraud in
contractin6 the obli6ation. Michael !han neither returned the interior si6na6es nor
tendered pa&4ent to the plaintiA. This circu4stance 4a& "arrant the piercin6 of the
veil of corporation <ction. >avin6 been 6uilt& of bad faith in the 4ana6e4ent of
corporate 4atters the corporate trustee, director or o3cer 4a& be held personall&
liable. ; ; ;
Since fraud is a state of 4ind, it need not be proved b& direct evidence but 4a& be
inferred fro4 the circu4stances of the case. ; ; ; J-Knd the circu4stances are? the
si6nature of Michael !han, Mana6in6 Director of 9u%an, Inc. appearin6 in the
con<r4ation of the a"ard sent to the plaintiAF si6nature of !han 9ai 9it, a 7ritish
National appearin6 in the -rticles of Incorporation and si6nature of Michael !han
also a 7ritish National appearin6 in the -rticles of Incorporation JofK 9u%an
International !orp. 6ive the i4pression that the& are one and the sa4e person, that
Michael !han and !han 9ai 9it are both 4a:orit& stoc%holders of 9u%an International
!orp. and 9u%an, Inc. holdin6 #*E of the stoc%sF that 9u%an International !orp. is
practicall& doin6 the sa4e %ind of business as that of 9u%an, Inc.
)8
/4phasis
supplied.0
-s is apparent fro4 its disIuisition, the RT! brushed aside the separate corporate
e;istence of 9u%an, Inc. and 9I! on the 4ain ar6u4ent that Michael !han o"ns #*E
of the co44on shares of both corporations, obviousl& oblivious that overlappin6
stoc% o"nership is a co44on business pheno4enon. It 4ust be re4e4bered,
ho"ever, that 9I!Gs properties "ere the ones seiOed upon lev& on e;ecution and not
that of 9u%an, Inc. or of Michael !han for that 4atter. Mere o"nership b& a sin6le
stoc%holder or b& another corporation of a substantial bloc% of shares of a
corporation does not, standin6 alone, provide su3cient :usti<cation for disre6ardin6
the separate corporate personalit&.
#*
For this 6round to hold s"a& in this case, there
4ust be proof that !han had control or co4plete do4inion of 9u%an and 9I!Gs
<nances, policies, and business practicesF he used such control to co44it fraudF and
the control "as the pro;i4ate cause of the <nancial loss co4plained of b& Morales.
The absence of an& of the ele4ents prevents the piercin6 of the corporate
veil.
#,
-nd indeed, the records do not sho" the presence of these ele4ents.
On the other hand, the !- held?
In the present case, the facts disclose that 9u%an, Inc. entered into a contractual
obli6ation ; ; ; "orth 4ore than three 4illion pesos althou6h it had onl&
Php$,***.** paid1up capitalF J9I!K "as incorporated shortl& before 9u%an, Inc.
suddenl& ceased to appear and participate in the trialF J9I!GsK purpose is related and
so4e"hat a%in to that of 9u%an, Inc.F and in J9I!K Michael !han, a.%.a., !han 9ai 9it,
holds fort& percent of the outstandin6 stoc%s, "hile he for4erl& held the sa4e
a4ount of stoc%s in 9u%an Inc. These "ould lead to the inescapable conclusion that
9u%an, Inc. co44itted fraudulent representation b& a"ardin6 to the private
respondent the contract "ith full %no"led6e that it "as not in a position to co4pl&
"ith the obli6ation it had assu4ed because of inadeIuate paid1up capital. It bears
stressin6 that shareholders should in 6ood faith put at the ris% of the business,
unencu4bered capital reasonabl& adeIuate for its prospective liabilities. The capital
should not be illusor& or triRin6 co4pared "ith the business to be done and the ris%
of loss.
Further, it is clear that J9I!K is a continuation and successor of 9u%an, Inc. Michael
!han, a.%.a. !han 9ai 9it has the lar6est bloc% of shares in both business
enterprises. The e4er6ence of the for4er "as cleverl& ti4ed "ith the hast&
"ithdra"al of the latter durin6 the trial to avoid the <nancial liabilit& that "as
eventuall& suAered b& the latter. The t"o co4panies have a related business
purpose. !onsiderin6 these circu4stances, the obvious conclusion is that the
creation of 9u%an International !orporation served as a device to evade the
obli6ation incurred b& 9u%an, Inc. and &et pro<t fro4 the 6ood"ill attained b& the
na4e L9u%anL b& continuin6 to en6a6e in the sa4e line of business "ith the sa4e
list of clients.
#(
/4phasis supplied.0
videntl&, the !- found the 4ea6er paid1up capitaliOation of 9u%an, Inc. and the
si4ilarit& of the business activities in "hich both corporations are en6a6ed as a
:u4pin6 board to its conclusion that the creation of 9I! Lserved as a device to evade
the obli6ation incurred b& 9u%an, Inc.L The appellate court, ho"ever, left a 6apin6
hole b& failin6 to de4onstrate that 9u%an, Inc. and its stoc%holders defrauded
Morales. In <ne, there is no sho"in6 that the incorporation, and the separate and
distinct personalit&, of 9I! "as used to defeat MoralesG ri6ht to recover fro4 9u%an,
Inc. 'ud6in6 fro4 the records, no serious atte4pt "as 4ade to lev& on the properties
of 9u%an, Inc. Morales could not, thus, validl& ar6ue that 9u%an, Inc. tried to avoid
liabilit& or had no propert& a6ainst "hich to proceed.
Morales further contends that 9u%an, Inc.Gs closure is evidenced b& its failure to <le
its (**, 2eneral Infor4ation Sheet /2IS0 "ith the Securities and ;chan6e
!o44ission. >o"ever, such fact does not necessaril& 4ean that 9u%an, Inc. had
alto6ether ceased operations, as Morales "ould have this !ourt believe, for it is
stated on the face of the 2IS that it is onl& upon a failure to <le the corporate 2IS for
<ve /$0 consecutive &ears that non1operation shall be presu4ed.
The fact that 9u%an, Inc. entered into a PhP ).) 4illion contract "hen it onl& had a
paid1up capital of PhP $,*** is not an indication of the intent on the part of its
4ana6e4ent to defraud creditors. Paid1up capital is 4erel& seed 4one& to start a
corporation or a business entit&. -s in this case, it 4erel& represented the
capitaliOation upon incorporation in ,885 of 9u%an, Inc. Paid1up capitaliOation of PhP
$,*** is not and should not be ta%en as a reRection of the <r4Gs capacit& to 4eet its
recurrent and lon61ter4 obli6ations. It 4ust be borne in 4ind that the eIuit& portion
cannot be eIuated to the viabilit& of a business concern, for the best test is the
"or%in6 capital "hich consists of the liIuid assets of a 6iven business relatin6 to the
nature of the business concern.la&phil
Neither should the level of paid1up capital of 9u%an, Inc. upon its incorporation be
vie"ed as a bad6e of fraud, for it is in co4pliance "ith Sec. ,) of the !orporation
!ode,
#)
"hich onl& reIuires a 4ini4u4 paid1up capital of PhP $,***.'avvphi'
The su66estion that 9I! is but a continuation and successor of 9u%an, Inc., o"ned
and controlled as the& are b& the sa4e stoc%holders, stands "ithout factual basis. It
is true that Michael !han, a.%.a. !han 9ai 9it, o"ns #*E of the outstandin6 capital
stoc% of both corporations. 7ut such circu4stance, standin6 alone, is insu3cient to
establish identit&. There 4ust be at least a substantial identit& of stoc%holders for
both corporations in order to consider this factor to be constitutive of corporate
identit&.
It "ould not avail Morales an& to rel&
##
on 2eneral !redit !orporation v. -lsons
Develop4ent and Invest4ent !orporation.
#$
2eneral !redit !orporation is factuall&
not on all fours "ith the instant case. There, the co44on stoc%holders of the
corporations represented 8*E of the outstandin6 capital stoc% of the co4panies,
unli%e here "here Michael !han 4erel& represents #*E of the outstandin6 capital
stoc% of both 9I! and 9u%an, Inc., not even a 4a:orit& of it. In that case, 4oreover,
evidence "as adduced to support the <ndin6 that the funds of the second
corporation ca4e fro4 the <rst. Finall&, there "as proof in 2eneral !redit
!orporation of co4plete control, such that one corporation "as a 4ere du44& or
alter e6o of the other, "hich is absent in the instant case.
videntl&, the afore4entioned case relied upon b& Morales cannot :ustif& the
application of the principle of piercin6 the veil of corporate <ction to the instant
case. -s sho"n b& the records, the na4e Michael !han, the si4ilarit& of business
activities en6a6ed in, and incidentall& the "ord L9u%anL appearin6 in the corporate
na4es provide the ne;us bet"een 9u%an, Inc. and 9I!. -s illustrated, these
circu4stances are insu3cient to establish the identit& of 9I! as the alter e6o or
successor of 9u%an, Inc.
It bears reiteratin6 that piercin6 the veil of corporate <ction is fro"ned upon.
-ccordin6l&, those "ho see% to pierce the veil 4ust clearl& establish that the
separate and distinct personalities of the corporations are set up to :ustif& a "ron6,
protect fraud, or perpetrate a deception. In the concrete and on the assu4ption that
the RT! has validl& acIuired :urisdiction over the part& concerned, Morales ou6ht to
have proved b& convincin6 evidence that 9u%an, Inc. "as collapsed and thereafter
9I! purposel& for4ed and operated to defraud hi4. Morales has not to us
dischar6ed his burden.
@>RFOR, the petition is hereb& 2R-NTD. The !-Gs 'anuar& (), (**+ Decision
and -pril ,., (**+ Resolution in !-12.R. SP No. ,**,$( are hereb& RVRSD and
ST -SID. The lev& placed upon the personal properties of 9u%an International
!orporation is hereb& ordered lifted and the personal properties ordered returned to
9u%an International !orporation. The RT! of Manila, 7ranch (, is hereb& directed to
e;ecute the RT! Decision dated Nove4ber (+, (**( a6ainst 9u%an, Inc. "ith
reasonable dispatch.
No costs.
SO ORDRD.
KUKAN INTERNATIONAL CORPORATION 8(. RE!ES
G.R. No. 182729 September 29, 2010
3ACTS4 So4eti4e in March ,88+, 9u%an, Inc. conducted biddin6 for the suppl& and
installation of si6na6es in a buildin6 bein6 constructed in Ma%ati !it&. Ro4eo
Morales tendered the "innin6 bid and "as a"arded the PhP $ 4illion contract. Short
chan6ed, Morales <led a !o4plaint "ith the RT! a6ainst 9u%an, Inc. for a su4 of
4one&. The RT! rendered a Decision in favor of Morales and a6ainst 9u%an, Inc. -fter
the decision beca4e <nal and e;ecutor&, Morales 4oved for and secured a "rit of
e;ecution a6ainst 9u%an, Inc. The sheriA then levied upon various personal
properties of 9u%an International !orporation /9I!0. 9I! then <led an -3davit of
Third1Part& !lai4. Notabl&, 9I! "as incorporated in -u6ust (***, or shortl& after
9u%an, Inc. had stopped participatin6 in !ivil !ase. In reaction to the third part&
clai4, Morales interposed an O4nibus Motion dated -pril )*, (**). In it, Morales
pra&ed, appl&in6 the principle of piercin6 the veil of corporate <ction, that an order
be issued for the satisfaction of the :ud64ent debt of 9u%an, Inc. "ith the properties
under the na4e or in the possession of 9I!, it bein6 alle6ed that both corporations
are but one and the sa4e entit&. 7& Order of Ma& (8, (**) as reiterated in a
subseIuent order, the court denied the o4nibus 4otion. In a bid to establish the lin%
bet"een 9I! and 9u%an, Inc., and thus deter4ine the true relationship bet"een the
t"o, Morales <led a Motion for ;a4ination of 'ud64ent Debtors dated Ma& #, (**$.
In this 4otion Morales sou6ht that subpoena be issued a6ainst the pri4ar&
stoc%holders of 9u%an, Inc., a4on6 the4 Michael !han, a.%.a. !han 9ai 9it. This too
"as denied b& the trial court in an Order dated Ma& (#, (**$. Morales then sou6ht
the inhibition of the presidin6 :ud6e, duardo 7. Peralta, 'r., "ho eventuall& 6ranted
the 4otion. The case "as re1ra=ed to 7ranch (,, presided b& public respondent
'ud6e -4or Re&es. 7efore the Manila RT!, 7ranch (,, Morales <led a Motion to
Pierce the Veil of !orporate Fiction to declare 9I! as havin6 no e;istence separate
fro4 9u%an, Inc. This ti4e around, the RT!, b& Order dated March ,(, (**5, 6ranted
the 4otion. 9I! 4oved but "as denied reconsideration in another Order dated 'une
5, (**5. On petition for certiorari before !-, the sa4e "as denied. The !- later
denied 9I!Gs 4otion for reconsideration in the assailed resolution. >ence, the instant
petition for revie".
ISSUE4 @hether the trial and appellate courts correctl& applied, under the pre4ises,
the principle of piercin6 the veil of corporate <ction.
RULING4 Piercin6 the veil of corporate entit& apllies onl&? /,0 the court 4ust <rst
acIuire :urisdiction over the corporation or corporations involved before its or their
separate personalities are disre6ardedF and /(0 the doctrine of piercin6 the veil of
corporate entit& can onl& be raised durin6 a full1blo"n trial over a cause of action
dul& co44enced involvin6 parties dul& brou6ht under the authorit& of the court b&
"a& of service of su44ons or "hat passes as such service.
Mere o"nership b& a sin6le stoc%holder or b& another corporation of a substantial
bloc% of shares of a corporation does not, standin6 alone, provide su3cient
:usti<cation for disre6ardin6 the separate corporate personalit&. For this 6round to
hold s"a& in this case, there 4ust be proof that !han had control or co4plete
do4inion of 9u%an and 9I!Gs <nances, policies, and business practicesF he used such
control to co44it fraudF and the control "as the pro;i4ate cause of the <nancial
loss co4plained of b& Morales. The absence of an& of the ele4ents prevents the
piercin6 of the corporate veil. -nd indeed, the records do not sho" the presence of
these ele4ents.
In <ne, there is no sho"in6 that the incorporation, and the separate and distinct
personalit&, of 9I! "as used to defeat MoralesG ri6ht to recover fro4 9u%an, Inc.
'ud6in6 fro4 the records, no serious atte4pt "as 4ade to lev& on the properties of
9u%an, Inc. Morales could not, thus, validl& ar6ue that 9u%an, Inc. tried to avoid
liabilit& or had no propert& a6ainst "hich to proceed.
The su66estion that 9I! is but a continuation and successor of 9u%an, Inc., o"ned
and controlled as the& are b& the sa4e stoc%holders, stands "ithout factual basis. It
is true that Michael !han, a.%.a. !han 9ai 9it, o"ns #*E of the outstandin6 capital
stoc% of both corporations. 7ut such circu4stance, standin6 alone, is insu3cient to
establish identit&. There 4ust be at least a substantial identit& of stoc%holders for
both corporations in order to consider this factor to be constitutive of corporate
identit&.
videntl&, the afore4entioned case relied upon b& Morales cannot :ustif& the
application of the principle of piercin6 the veil of corporate <ction to the instant
case. -s sho"n b& the records, the na4e Michael !han, the si4ilarit& of business
activities en6a6ed in, and incidentall& the "ord L9u%anL appearin6 in the corporate
na4es provide the ne;us bet"een 9u%an, Inc. and 9I!. -s illustrated, these
circu4stances are insu3cient to establish the identit& of 9I! as the alter e6o or
successor of 9u%an, Inc.