G.R. No. 124715. January 24, 2000.
RUFINA LUY LIM, petitioner, vs. COURT OF APPEALS, AUTO TRUCK TBA CORPORATION, SPEED DISTRIBUTING, INC., ACTIVE DISTRIBUTORS, ALLIANCE MARKETING CORPORATION, ACTION COMPANY, INC., respondents.

FACTS

Petitioner Rufina Luy Lim, the surviving spouse of the late Pastor Y. Lim, initiated intestate proceedings for his estate. In her amended petition, she alleged that several corporations—Auto Truck TBA Corporation, Speed Distributing, Inc., Active Distributors, Inc., Alliance Marketing Corporation, and Action Company—though registered as separate entities, were actually owned solely by the decedent. She claimed the corporations’ assets and real properties, though registered in their corporate names, were personally acquired by Pastor Y. Lim during their marriage, making them conjugal properties. She asserted the listed stockholders and officers were mere dummies, and thus, the corporate veil should be pierced to include these assets in the estate inventory. The Regional Trial Court, acting as a probate court, issued orders setting aside its prior exclusion of these properties, denied the corporations’ motion for exclusion, and even directed the production of the corporations’ bank records.

ISSUE

May the assets of a corporation, as a separate juridical entity, be included in the inventory of a deceased person’s estate on the claim that the corporation is merely the alter ego of the decedent?

RULING

No. The Supreme Court affirmed the Court of Appeals’ decision nullifying the probate court’s orders. The Court held that a corporation has a legal personality separate and distinct from its stockholders, including a sole or controlling stockholder. The mere allegation that the decedent owned the corporations and that other stockholders were dummies is insufficient to justify piercing the corporate veil. Such a claim requires a full-blown trial with substantial evidence to prove that the corporation is a mere alter ego, used to perpetrate fraud or evade legal obligations. The probate court, in a summary proceeding for estate settlement, lacks jurisdiction to adjudicate this complex issue of corporate identity and ownership. That question is a contentious matter that must be resolved in an ordinary action before the proper court. Furthermore, the probate court acted without jurisdiction in ordering the production of the corporations’ bank accounts, as these are corporate assets, not personal assets of the decedent. The assets of a corporation cannot be summarily included in a decedent’s estate inventory based solely on unproven allegations.