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Corpo Case - Jardine Davies Inc. v. JRB Realty: 463 SCRA 555

Topic: Piercing the veil of corporate fiction

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Nilfpe Salcedo
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6 views2 pages

Corpo Case - Jardine Davies Inc. v. JRB Realty: 463 SCRA 555

Topic: Piercing the veil of corporate fiction

Uploaded by

Nilfpe Salcedo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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JARDINE DAVIES, INC.

, petitioners
vs.
JRB REALTY, INC., respondents
G.R No. 151438, July 15, 2005

SECOND DIVISION

CALLEJO, SR., J.:

FACTS

JRB Realty, Inc. constructed a nine-storey building, Blanco Center, in Makati City. The Blanco Law
Firm, located on the second floor, required an air conditioning system. JRB Realty accepted a
contract quotation from Aircon and Refrigeration Industries, Inc. for two Fedders air
conditioning units.

Two air conditioning units with rotary compressors were installed but failed to deliver the
desired cooling temperature. Despite adjustments, the technology for rotary compressors in
large-capacity units was deemed imperfect. The parties agreed to replace the units with
reciprocating/semi-hermetic compressors. Aircon committed to replacing the units but could
not specify a delivery date.

Maxim refused to honor Aircon's obligations. JRB Realty filed a complaint for specific
performance with damages against Aircon, Fedders USA, Maxim, and Jardine Davies, Inc.
(Aircon's parent company).

The trial court ruled in favor of JRB Realty that led Jardine Davies to file an appeal before the CA
arguing that Aircon had a separate corporate entity.

ISSUE

Whether or not the doctrine of piercing the veil of corporate fiction is applicable in this case.

RULING

The Court upheld the doctrine of separate corporate identity, ruling that Jardine Davies and
Aircon are distinct entities. In Velarde v. Lopez, Inc., the Court categorically held that a
subsidiary has an independent and separate juridical personality, distinct from that of its parent
company.

The mere fact that Aircon was a subsidiary of Jardine Davies does not justify piercing the
corporate veil absent evidence of fraud or illegality.

The doctrine of piercing the corporate veil applies only when the corporate entity is used to
commit fraud, evade obligations, or justify wrong. In this case, there was no evidence that
Aircon was used as a tool for fraud or that Jardine Davies controlled Aircon to the extent of
disregarding its separate identity.

The Supreme Court emphasized that corporate separateness must be respected unless there is
clear and convincing evidence of fraud or wrongdoing. Absent such evidence, the parent
company cannot be held liable for the obligations of its subsidiary.

The rationale behind piercing a corporation’s identity is to remove the barrier between the
corporation from the persons comprising it to thwart the fraudulent and illegal schemes of

Digest by: Nilfpe Criss Salcedo


those who use the corporate personality as a shield for undertaking certain proscribed
activities.

Digest by: Nilfpe Criss Salcedo

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