SECOND DIVISION

[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.

Antonio F. Navarrete for petitioner.

Paul Bernard T. Irao for private respondent.

SYNOPSIS

The properties of private respondent corporations were included in the

inventory of the estate of the late Pastor Lim on the allegation that Pastor personally
owned the respondent corporations. Hence, the probate court denied the motion for
exclusion of respondent corporations.

The issue is: May a corporation, in its universality, be the proper subject of and
be included in the inventory of the estate of a deceased person?

The Court ruled that inasmuch as the real properties included in the inventory
of the estate of the late Pastor are in the possession of and are registered in the name
of private respondent corporations, which under the law possess a personality separate
and distinct from their stockholders, and in the absence of any cogency to shred the
veil of corporate fiction, the presumption of conclusiveness of said titles in favor of
private respondents should stand undisturbed. Accordingly, the probate court was
remiss in denying the motion for exclusion. TIAEac

SYLLABUS

1. REMEDIAL LAW; JURISDICTION ON MATTERS OF PROBATE

DEPENDS ON GROSS VALUE OF ESTATE. — The determination of which court
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 exercises jurisdiction over matters of probate depends upon the gross value of the
estate of the decedent.

2. ID.; SPECIAL PROCEEDINGS; SETTLEMENT OF ESTATE OF

DECEASED PERSONS; WHERE PARCELS OF LAND REGISTERED IN THE
NAME OF CORPORATIONS. — Where the parcels of land are registered in the
name of private respondent corporations, the jurisprudence pronounced in BOLISAY
vs. ALCID is of great essence and finds applicability, thus: "It does not matter that
respondent administratrix has evidence purporting to support her claim of ownership,
for, on the other hand, petitioners have a Torrens Title in their favor, which under the
law is endowed with incontestability until after it has been set aside in the manner
indicated in the law itself, which, of course, does not include, bringing up the matter
as a mere incident in special proceedings for the settlement of the estate of deceased
persons. . . . . In regard to such incident of inclusion or exclusion, We hold that if a
property covered by Torrens Title is involved, the presumptive conclusiveness of such
title should be given due weight, and in the absence of strong compelling evidence to
the contrary, the holder thereof should be considered as the owner of the property in
controversy until his title is nullified or modified in an appropriate ordinary action,
particularly, when as in the case at bar, possession of the property itself is in the
persons named in the title. . . ." A perusal of the records would reveal that no strong
compelling evidence was ever presented by petitioner to bolster her bare assertions as
to the title of the deceased Pastor Y. Lim over the properties.

3. CIVIL LAW; LAND TITLES; PROPERTY REGISTRATION DECREE;

PROSCRIBES COLLATERAL ATTACK ON TORRENS TITLE. — P.D. 1529,
otherwise known as, "The Property Registration Decree", proscribes collateral attack
on Torrens Title, hence: ". . . Section 48. Certificate not subject to collateral attack. A
certificate of title shall not be subject to collateral attack. It cannot be altered,
modified or canceled except in a direct proceeding in accordance with law." Inasmuch
as the real properties included in the inventory of the estate of the late Pastor Y. Lim
are in the possession of and are registered in the name of private respondent
corporations, which under the law possess a personality separate and distinct from
their stockholders, and in the absence of any cogency to shred the veil of corporate
fiction, the presumption of conclusiveness of said titles in favor of private
respondents should stand undisturbed.

4. COMMERCIAL LAW; CORPORATION; SEPARATE AND

DISTINCT PERSONALITY. — It is settled that a corporation is clothed with
personality separate and distinct from that of the persons composing it. It may not
generally be held liable for that of the persons composing it. It may not be held liable
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 for the personal indebtedness of its stockholders or those of the entities connected
with it.

5. ID.; ID.; ID.; PIERCING THE VEIL OF CORPORATE ENTITY;

DISCUSSED. — Piercing the veil of corporate entity requires the court to see through
the protective shroud which exempts its stockholders from liabilities that ordinarily,
they could be subject to, or distinguishes one corporation from a seemingly separate
one, were it not for the existing corporate fiction. The corporate mask may be lifted
and the corporate veil may be pierced when a corporation is just but the alter ego of a
person or of another corporation. Where badges of fraud exist, where public
convenience is defeated; where a wrong is sought to be justified thereby, the
corporate fiction or the notion of legal entity should come to naught. Further, the test
in determining the applicability of the doctrine of piercing the veil of corporate fiction
is as follows: 1) Control, not mere majority or complete stock control, but complete
domination, not only of finances but of policy and business practice in respect to the
transaction attacked so that the corporate entity as to this transaction had at the time
no separate mind, will or existence of its own; (2) Such control must have been used
by the defendant to commit fraud or wrong, to perpetuate the violation of a statutory
or other positive legal duty, or dishonest and unjust act in contravention of plaintiff's
legal right; and (3) The aforesaid control and breach of duty must proximately cause
the injury or unjust loss complained of. The absence of any of these elements prevent
"piercing the corporate veil". Mere ownership by a single stockholder or by another
corporation of all or nearly all of the capital stock of a corporation is not of itself a
sufficient reason for disregarding the fiction of separate corporate personalities.
Moreover, to disregard the separate juridical personality of a corporation, the
wrong-doing must be clearly and convincingly established. It cannot be presumed.
SDHTEC

6. REMEDIAL LAW; EVIDENCE; RULES ON ADMISSIBILITY;

AFFIDAVITS; CONSIDERED HEARSAY IN CASE AT BAR. — The reliance
reposed by petitioner on the affidavits executed by certain witnesses is unavailing
considering that said documents possess no weighty probative value pursuant to the
hearsay rule. Besides it is imperative for us to stress that such affidavits are
inadmissible in evidence inasmuch as the affiants were not at all presented during the
course of the proceedings in the lower court. To put it differently, for this Court to
uphold the admissibility of said documents would be to relegate from Our duty to
apply such basic rule of evidence in a manner consistent with the law and
jurisprudence. Our pronouncement in PEOPLE BANK AND TRUST COMPANY vs.
LEONIDAS finds pertinence: "Affidavits are classified as hearsay evidence since they
are not generally prepared by the affiant but by another who uses his own language in
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 writing the affiant's statements, which may thus be either omitted or misunderstood
by the one writing them. Moreover, the adverse party is deprived of the opportunity to
cross-examine the affiants. For this reason, affidavits are generally rejected for being
hearsay, unless the affiants themselves are placed on the witness stand to testify
thereon."

DECISION

BUENA, J : p

May a corporation, in its universality, be the proper subject of and be included

in the inventory of the estate of a deceased person? LibLex

Petitioner disputes before us through the instant petition for review on

certiorari, the decision 1 of the Court of Appeals promulgated on 18 April 1996, in
CA-GR SP No. 38617, which nullified and set aside the orders dated 04 July 1995 2,
12 September 1995 3 and 15 September 1995 4 of the Regional Trial Court of Quezon
City, Branch 93, sitting as a probate court.

Petitioner Rufina Luy Lim is the surviving spouse of the late Pastor Y. Lim
whose estate is the subject of probate proceedings in Special Proceedings
Q-95-23334, entitled, "In Re: Intestate Estate of Pastor Y. Lim Rufina Luy Lim,
represented by George Luy, Petitioner".

Private respondents Auto Truck Corporation, Alliance Marketing Corporation,

Speed Distributing, Inc., Active Distributing, Inc. and Action Company are
corporations formed, organized and existing under Philippine laws and which owned
real properties covered under the Torrens system.

On 11 June 1994, Pastor Y. Lim died intestate. Herein petitioner, as surviving

spouse and duly represented by her nephew George Luy, filed on 17 March 1995, a
joint petition 5 for the administration of the estate of Pastor Y. Lim before the
Regional Trial Court of Quezon City.

Private respondent corporations, whose properties were included in the

inventory of the estate of Pastor Y. Lim, then filed a motion 6 for the lifting of lis
pendens and motion 7 for exclusion of certain properties from the estate of the
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 decedent.

In an order 8 dated 08 June 1995, the Regional Trial Court of Quezon City,
Branch 93, sitting as a probate court, granted the private respondents' twin motions, in
this wise:

"Wherefore, the Register of Deeds of Quezon City is hereby ordered to

lift, expunge or delete the annotation of lis pendens on Transfer Certificates of
Title Nos. 116716, 116717, 116718, 116719 and 5182 and it is hereby further
ordered that the properties covered by the same titles as well as those properties
by (sic) Transfer Certificate of Title Nos. 613494, 363123, 236236 and 263236
are excluded from these proceedings.

SO ORDERED."

Subsequently, Rufina Luy Lim filed a verified amended petition 9 which contained the
following averments:

"3. The late Pastor Y. Lim personally owned during his lifetime the
following business entities, to wit:

Business Entity Address:

xxx xxx xxx

Alliance Marketing, Inc. Block 3, Lot 6, Dacca

BF Homes,
Parañaque,
Metro Manila.

xxx xxx xxx

Speed Distributing Inc. 910 Barrio Niog,

Aguinaldo Highway,
Bacoor, Cavite.

xxx xxx xxx

Auto Truck TBA Corp. 2251 Roosevelt Avenue,

Quezon City.

xxx xxx xxx

Active Distributors, Inc. Block 3, Lot 6, Dacca BF

Homes, Parañaque,
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 Metro Manila.

xxx xxx xxx

Action Company 100 20th Avenue

Murphy, Quezon City
or
92-D Mc-Arthur Highway
Valenzuela Bulacan.

"3.1 Although the above business entities dealt and engaged in business
with the public as corporations, all their capital, assets and equity were however,
personally owned by the late Pastor Y Lim. Hence the alleged stockholders and
officers appearing in the respective articles of incorporation of the above
business entities were mere dummies of Pastor Y. Lim, and they were listed
therein only for purposes of registration with the Securities and Exchange
Commission.

"4. Pastor Lim, likewise, had Time, Savings and Current Deposits with
the following banks: (a) Metrobank, Grace Park, Caloocan City and Quezon
Avenue, Quezon City Branches and (b) First Intestate Bank (formerly Producers
Bank), Rizal Commercial Banking Corporation and in other banks whose
identities are yet to be determined.

"5. That the following real properties, although registered in the name
of the above entities, were actually acquired by Pastor Y. Lim during his
marriage with petitioner, to wit:

Corporation Title Location

xxx xxx xxx

k. Auto Truck TCT No. 617726 Sto. Domingo

TBA Corporation Cainta, Rizal
q. Alliance Marketing TCT No. 27896 Prance,
Metro Manila

Copies of the above-mentioned Transfer Certificate of Title and/or Tax

Declarations are hereto attached as Annexes "C" to "W".

xxx xxx xxx

"7. The aforementioned properties and/or real interests left by the late
Pastor Y. Lim, are all conjugal in nature, having been acquired by him during

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 the existence of his marriage with petitioner. cda

"8. There are other real and personal properties owned by Pastor Y.
Lim which petitioner could not as yet identify. Petitioner, however will submit
to this Honorable Court the identities thereof and the necessary documents
covering the same as soon as possible."

On 04 July 1995, the Regional Trial Court acting on petitioner's motion issued
an order 10, thus:

"Wherefore, the order dated 08 June 1995 is hereby set aside and the
Registry of Deeds of Quezon City is hereby directed to reinstate the annotation
of lis pendens in case said annotation had already been deleted and/or cancelled
said TCT Nos. 116716, 116717, 116718, 116719 and 51282.

Further more (sic), said properties covered by TCT Nos. 613494,

365123, 236256 and 236237 by virtue of the petitioner are included in the
instant petition.

SO ORDERED."

On 04 September 1995, the probate court appointed Rufina Lim as special

administrator 11 and Miguel Lim and Lawyer Donald Lee, as co-special
administrators of the estate of Pastor Y. Lim, after which letters of administration
were accordingly issued.

In an order 12 dated 12 September 1995, the probate court denied anew private
respondents' motion for exclusion, in this wise:

"The issue precisely raised by the petitioner in her petition is whether the
corporations are the mere alter egos or instrumentalities of Pastor Lim,
Otherwise (sic) stated, the issue involves the piercing of the corporate veil, a
matter that is clearly within the jurisdiction of this Honorable Court and not the
Securities and Exchange Commission. Thus, in the case of Cease vs. Court of
Appeals, 93 SCRA 483, the crucial issue decided by the regular court was
whether the corporation involved therein was the mere extension of the
decedent. After finding in the affirmative, the Court ruled that the assets of the
corporation are also assets of the estate.

A reading of P.D. 902, the law relied upon by oppositors, shows that the
SEC's exclusive (sic) applies only to intra-corporate controversy. It is simply a
suit to settle the intestate estate of a deceased person who, during his lifetime,
acquired several properties and put up corporations as his instrumentalities.

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 SO ORDERED."

On 15 September 1995, the probate court acting on an ex parte motion filed by

petitioner, issued an order 13 the dispositive portion of which reads:

"Wherefore, the parties and the following banks concerned herein under
enumerated are hereby ordered to comply strictly with this order and to produce
and submit to the special administrators, through this Honorable Court within
(5) five days from receipt of this order their respective records of the
savings/current accounts/time deposits and other deposits in the names of Pastor
Lim and/or corporations above-mentioned, showing all the transactions made or
done concerning savings/current accounts from January 1994 up to their receipt
of this court order.

xxx xxx xxx

SO ORDERED."

Private respondent filed a special civil action for certiorari 14 , with an urgent
prayer for a restraining order or writ of preliminary injunction, before the Court of
Appeals questioning the orders of the Regional Trial Court, sitting as a probate court.

On 18 April 1996, the Court of Appeals, finding in favor of herein private

respondents, rendered the assailed decision 15 , the decretal portion of which
declares:

"Wherefore, premises considered, the instant special civil action for

certiorari is hereby granted, The impugned orders issued by respondent court
on July 4, 1995 and September 12, 1995 are hereby nullified and set aside. The
impugned order issued by respondent on September 15, 1995 is nullified insofar
as petitioner corporations" bank accounts and records are concerned.

SO ORDERED."

Through the expediency of Rule 45 of the Rules of Court, herein petitioner

Rufina Luy Lim now comes before us with a lone assignment of error: 16

"The respondent Court of Appeals erred in reversing the orders of the

lower court which merely allowed the preliminary or provisional inclusion of
the private respondents as part of the estate of the late deceased (sic) Pastor Y.
Lim with the respondent Court of Appeals arrogating unto itself the power to
repeal, to disobey or to ignore the clear and explicit provisions of Rules 81, 83,
84 and 87 of the Rules of Court and thereby preventing the petitioner, from
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 performing her duty as special administrator of the estate as expressly provided
in the said Rules."

Petitioner's contentions tread on perilous grounds.

In the instant petition for review, petitioner prays that we affirm the orders
issued by the probate court which were subsequently set aside by the Court of
Appeals.

Yet, before we delve into the merits of the case, a review of the rules on
jurisdiction over probate proceedings is indeed in order.

The provisions of Republic Act 7691 17 , which introduced amendments to

Batas Pambansa Blg. 129, are pertinent:

"SECTION 1. Section 19 of Batas Pambansa Blg. 129, otherwise

known as the "Judiciary Reorganization Act of 1980", is hereby amended to
read as follows:

SECTION 19. Jurisdiction in civil cases. Regional Trial Courts

shall exercise exclusive jurisdiction:

xxx xxx xxx

(4) In all matters of probate, both testate and intestate, where the gross value
of the estate exceeds One Hundred Thousand Pesos (P100,000) or, in probate
matters in Metro Manila, where such gross value exceeds Two Hundred
Thousand Pesos (P200,000);

xxx xxx xxx

SECTION 3. Section 33 of the same law is hereby amended to

read as follows: cdll

SECTION 33. Jurisdiction of Metropolitan Trial Courts,

Municipal Trial Courts and Municipal Circuit Trial Courts in Civil
Cases. — Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts shall exercise:

1. Exclusive original jurisdiction over civil actions and

probate proceedings, testate and intestate, including the grant of
provisional remedies in proper cases, where the value of the personal
property, estate or amount of the demand does not exceed One Hundred
Thousand Pesos (P100,000) or, in Metro Manila where such personal

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 property, estate or amount of the demand does not exceed Two Hundred
Thousand Pesos (P200,000), exclusive of interest, damages of whatever
kind, attorney's fees, litigation expenses and costs, the amount of which
must be specifically alleged, Provided, that interest, damages of
whatever kind, attorney's litigation expenses and costs shall be included
in the determination of the filing fees, Provided further, that where there
are several claims or causes of actions between the same or different
parties, embodied in the same complaint, the amount of the demand shall
be the totality of the claims in all the causes of action, irrespective of
whether the causes of action arose out of the same or different
transactions;

xxx xxx xxx

Simply put, the determination of which court exercises jurisdiction over

matters of probate depends upon the gross value of the estate of the decedent.

As to the power and authority of the probate court, petitioner relies heavily on
the principle that a probate court may pass upon title to certain properties, albeit
provisionally, for the purpose of determining whether a certain property should or
should not be included in the inventory.

In a litany of cases, We defined the parameters by which the court may extend
its probing arms in the determination of the question of title in probate proceedings.

This Court, in PASTOR, JR. vs. COURT OF APPEALS, 18 held:

". . . As a rule, the question of ownership is an extraneous matter which

the probate court cannot resolve with finality. Thus, for the purpose of
determining whether a certain property should or should not be included in the
inventory of estate properties, the Probate Court may pass upon the title thereto,
but such determination is provisional, not conclusive, and is subject to the final
decision in a separate action to resolve title."

We reiterated the rule in PEREIRA vs. COURT OF APPEALS: 19

". . . The function of resolving whether or not a certain property should

be included in the inventory or list of properties to be administered by the
administrator is one clearly within the competence of the probate court.
However, the court's determination is only provisional in character, not
conclusive, and is subject to the final decision in a separate action which may be
instituted by the parties."

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 Further, in MORALES vs. CFI OF CAVITE 20 citing CUIZON vs.
RAMOLETE, 21 We made an exposition on the probate court's limited jurisdiction:

"It is a well-settled rule that a probate court or one in charge of

proceedings whether testate or intestate cannot adjudicate or determine title to
properties claimed to be a part of the estate and which are equally claimed to
belong to outside parties. All that the said court could do as regards said
properties is to determine whether they should or should not be included in the
inventory or list of properties to be administered by the administrator. If there is
no dispute, well and good; but if there is, then the parties, the administrator and
the opposing parties have to resort to an ordinary action for a final
determination of the conflicting claims of title because the probate court cannot
do so."

Again, in VALERA vs. INSERTO, 22 We had occasion to elucidate, through

Mr. Justice Andres Narvasa: 23

"Settled is the rule that a Court of First Instance (now Regional Trial
Court), acting as a probate court, exercises but limited jurisdiction, and thus has
no power to take cognizance of and determine the issue of title to property
claimed by a third person adversely to the decedent, unless the claimant and all
other parties having legal interest in the property consent, expressly or
impliedly, to the submission of the question to the probate court for adjudgment,
or the interests of third persons are not thereby prejudiced, the reason for the
exception being that the question of whether or not a particular matter should be
resolved by the court in the exercise of its general jurisdiction or of its limited
jurisdiction as a special court (e.g. probate, land registration, etc.), is in reality
not a jurisdictional but in essence of procedural one, involving a mode of
practice which may be waived. . . .

. . . . These considerations assume greater cogency where, as here, the

Torrens title is not in the decedent's name but in others, a situation on which
this Court has already had occasion to rule. . .."(italics Ours)

Petitioner, in the present case, argues that the parcels of land covered under the
Torrens system and registered in the name of private respondent corporations should
be included in the inventory of the estate of the decedent Pastor Y. Lim, alleging that
after all the determination by the probate court of whether these properties should be
included or not is merely provisional in nature, thus, not conclusive and subject to a
final determination in a separate action brought for the purpose of adjudging once and
for all the issue of title.

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 Yet, under the peculiar circumstances, where the parcels of land are registered
in the name of private respondent corporations, the jurisprudence pronounced in
BOLISAY vs. ALCID 24 is of great essence and finds applicability, thus:

"It does not matter that respondent-administratrix has evidence

purporting to support her claim of ownership, for, on the other hand, petitioners
have a Torrens title in their favor, which under the law is endowed with
incontestability until after it has been set aside in the manner indicated in the
law itself, which, of course, does not include, bringing up the matter as a mere
incident in special proceedings for the settlement of the estate of deceased
persons. . . . "

". . . . In regard to such incident of inclusion or exclusion, We hold that

if a property covered by Torrens title is involved, the presumptive
conclusiveness of such title should be given due weight, and in the absence of
strong compelling evidence to the contrary, the holder thereof should be
considered as the owner of the property in controversy until his title is nullified
or modified in an appropriate ordinary action, particularly, when as in the case
at bar, possession of the property itself is in the persons named in the title. . . . "

A perusal of the records would reveal that no strong compelling evidence was
ever presented by petitioner to bolster her bare assertions as to the title of the
deceased Pastor Y. Lim over the properties. Even so, P.D. 1529, otherwise known as,
"The Property Registration Decree", proscribes collateral attack on Torrens Title,
hence:

xxx xxx xxx

SECTION 48. Certificate not subject to collateral attack. — A

certificate of title shall not be subject to collateral attack. It cannot be altered,
modified or cancelled except in a direct proceeding in accordance with law."

In CUIZON vs. RAMOLETE, where similarly as in the case at bar, the property
subject of the controversy was duly registered under the Torrens system, We
categorically stated:

". . . Having been apprised of the fact that the property in question was
in the possession of third parties and more important, covered by a transfer
certificate of title issued in the name of such third parties, the respondent court
should have denied the motion of the respondent administrator and excluded the
property in question from the inventory of the property of the estate. It had no
authority to deprive such third persons of their possession and ownership of the

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 property. . . . " cdtai

Inasmuch as the real properties included in the inventory of the estate of the
late Pastor Y. Lim are in the possession of and are registered in the name of private
respondent corporations, which under the law possess a personality separate and
distinct from their stockholders, and in the absence of any cogency to shred the veil of
corporate fiction, the presumption of conclusiveness of said titles in favor of private
respondents should stand undisturbed.

Accordingly, the probate court was remiss in denying private respondents'

motion for exclusion. While it may be true that the Regional Trial Court, acting in a
restricted capacity and exercising limited jurisdiction as a probate court, is competent
to issue orders involving inclusion or exclusion of certain properties in the inventory
of the estate of the decedent, and to adjudge, albeit, provisionally the question of title
over properties, it is no less true that such authority conferred upon by law and
reinforced by jurisprudence, should be exercised judiciously, with due regard and
caution to the peculiar circumstances of each individual case.

Notwithstanding that the real properties were duly registered under the Torrens
system in the name of private respondents, and as such were to be afforded the
presumptive conclusiveness of title, the probate court obviously opted to shut its eyes
to this gleamy fact and still proceeded to issue the impugned orders.

By its denial of the motion for exclusion, the probate court in effect acted in
utter disregard of the presumption of conclusiveness of title in favor of private
respondents. Certainly, the probate court through such brazen act transgressed the
clear provisions of law and infringed settled jurisprudence on this matter.

Moreover, petitioner urges that not only the properties of private respondent
corporations are properly part of the decedent's estate but also the private respondent
corporations themselves. To rivet such flimsy contention, petitioner cited that the late
Pastor Y. Lim during his lifetime, organized and wholly-owned the five corporations,
which are the private respondents in the instant case. 25 Petitioner thus attached as
Annexes "F" 26 and "G" 27 of the petition for review affidavits executed by Teresa
Lim and Lani Wenceslao which among others, contained averments that the
incorporators of Uniwide Distributing, Inc. included on the list had no actual
participation in the organization and incorporation of the said corporation. The
affiants added that the persons whose names appeared on the articles of incorporation
of Uniwide Distributing, Inc., as incorporators thereof, are mere dummies since they
have not actually contributed any amount to the capital stock of the corporation and
have been merely asked by the late Pastor Y. Lim to affix their respective signatures
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 thereon.

It is settled that a corporation is clothed with personality separate and distinct

from that of the persons composing it. It may not generally be held liable for that of
the persons composing it. It may not be held liable for the personal indebtedness of its
stockholders or those of the entities connected with it. 28

Rudimentary is the rule that a corporation is invested by law with a personality

distinct and separate from its stockholders or members. In the same vein, a
corporation by legal fiction and convenience is an entity shielded by a protective
mantle and imbued by law with a character alien to the persons comprising it.

Nonetheless, the shield is not at all times invincible. Thus, in FIRST

PHILIPPINE INTERNATIONAL BANK vs. COURT OF APPEALS 29 , We
enunciated:

". . . When the fiction is urged as a means of perpetrating a fraud or an

illegal act or as a vehicle for the evasion of an existing obligation, the
circumvention of statutes, the achievement or perfection of a monopoly or
generally the perpetration of knavery or crime, the veil with which the law
covers and isolates the corporation from the members or stockholders who
compose it will be lifted to allow for its consideration merely as an aggregation
of individuals. . . . "

Piercing the veil of corporate entity requires the court to see through the
protective shroud which exempts its stockholders from liabilities that ordinarily, they
could be subject to, or distinguishes one corporation from a seemingly separate one,
were it not for the existing corporate fiction. 30

The corporate mask may be lifted and the corporate veil may be pierced when
a corporation is just but the alter ego of a person or of another corporation. Where
badges of fraud exist, where public convenience is defeated; where a wrong is sought
to be justified thereby, the corporate fiction or the notion of legal entity should come
to naught. 31

Further, the test in determining the applicability of the doctrine of piercing the
veil of corporate fiction is as follows: 1) Control, not mere majority or complete stock
control, but complete domination, not only of finances but of policy and business
practice in respect to the transaction attacked so that the corporate entity as to this
transaction had at the time no separate mind, will or existence of its own; (2) Such
control must have been used by the defendant to commit fraud or wrong, to
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 perpetuate the violation of a statutory or other positive legal duty, or dishonest and
unjust act in contravention of plaintiffs legal right; and (3) The aforesaid control and
breach of duty must proximately cause the injury or unjust loss complained of. The
absence of any of these elements prevent "piercing the corporate veil." 32

Mere ownership by a single stockholder or by another corporation of all or

nearly all of the capital stock of a corporation is not of itself a sufficient reason for
disregarding the fiction of separate corporate personalities. 33

Moreover, to disregard the separate juridical personality of a corporation, the

wrong-doing must be clearly and convincingly established. It cannot be presumed. 34

Granting arguendo that the Regional Trial Court in this case was not merely
acting in a limited capacity as a probate court, petitioner nonetheless failed to adduce
competent evidence that would have justified the court to impale the veil of corporate
fiction. Truly, the reliance reposed by petitioner on the affidavits executed by Teresa
Lim and Lani Wenceslao is unavailing considering that the aforementioned
documents possess no weighty probative value pursuant to the hearsay rule. Besides it
is imperative for us to stress that such affidavits are inadmissible in evidence
inasmuch as the affiants were not at all presented during the course of the proceedings
in the lower court. To put it differently, for this Court to uphold the admissibility of
said documents would be to relegate from Our duty to apply such basic rule of
evidence in a manner consistent with the law and jurisprudence.

Our pronouncement in PEOPLE BANK AND TRUST COMPANY vs.

LEONIDAS 35 finds pertinence:

"Affidavits are classified as hearsay evidence since they are not

generally prepared by the affiant but by another who uses his own language in
writing the affiant's statements, which may thus be either omitted or
misunderstood by the one writing them. Moreover, the adverse party is deprived
of the opportunity to cross-examine the affiants. For this reason, affidavits are
generally rejected for being hearsay, unless the affiant themselves are placed on
the witness stand to testify thereon." prLL

As to the order 36 of the lower court, dated 15 September 1995, the Court of
Appeals correctly observed that the Regional Trial Court, Branch 93 acted without
jurisdiction in issuing said order; The probate court had no authority to demand the
production of bank accounts in the name of the private respondent corporations.

WHEREFORE, in view of the foregoing disquisitions, the instant petition is

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 hereby DISMISSED for lack of merit and the decision of the Court of Appeals which
nullified and set aside the orders issued by the Regional Trial Court, Branch 93,
acting as a probate court, dated 04 July 1995 and 12 September 1995 is AFFIRMED.

SO ORDERED.

Bellosillo, Mendoza, Quisumbing and De Leon, Jr., JJ., concur.

Footnotes
1. In CA GR SP No. 38617, promulgated on 18 April 1996, penned by Justice Ramon
A. Barcelona and concurred in by Justice Artemon D. Luna and Justice Portia
Alino-Hormachuelos, Thirteenth Division.
2. Rollo, p. 83.
3. Rollo, pp. 92-94.
4. Ibid, 95-97.
5. Docketed as Special Proceeding No. Q-95-23334; Rollo, pp. 76-82.
6. Rollo, p. 32.
7. Rollo, pp. 84-87.
8. Rollo, p. 33.
9. Ibid.
10. Ibid, p. 35.
11. Order dated 04 September 1995, issued by RTC-Quezon City Branch 93, Presiding
Judge Amado M. Costales, in SP Proc. No. Q-95-23334; Rollo, pp. 88-91.
12. Order dated 12 September 1995, issued by RTC-Quezon City, Branch 93, Presiding
Judge Amado M. Costales, in SP Proc. No. Q-95-23334; Rollo, pp. 92-94.
13. Order dated 15 September, issued by RTC-Quezon City, Branch 93, Presiding Judge
Amado M. Costales, in SP Proc. No. Q-95-23334; Rollo, pp. 95-97.
14. Rollo, p. 32.
15. Ibid, pp. 32-40.
16. Petition for Review in GR No. 124715; Rollo, pp. 20-21.
17. Republic Act 7691, otherwise known as "An Act Expanding the Jurisdiction of the
Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts, Amending for the Purpose Batas Pambansa Blg. 129, Otherwise Known as
the Judiciary Reorganization Act of 1980", approved on 25 March 1994.
18. GR No. L-56340, 24 June 1983; 122 SCRA 885.
19. GR No. L-81147, 20 June 1989; 174 SCRA 154.
20. GR No. L-47125, 29 December 1986; 146 SCRA 373.
21. 129 SCRA 495.
22. GR No. L-56504, May 7, 1987; 149 SCRA 533.
23. Later Chief Justice of the Supreme Court.
24. GR No. L-45494, August 31, 1978; 85 SCRA 213.
25. Rollo, p. 17.
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 26. Affidavit executed by Teresa T. Lim, dated 13 January 1995; Rollo, p. 74.
27. Affidavit executed by Lani G. Wenceslao; Rollo, p. 75.
28. Mataguina Integrated Wood Products, Inc. vs. Court of Appeals, 263 SCRA 490.
29. 252 SCRA 259.
30. Traders Royal Bank vs. Court of Appeals, 269 SCRA 15.
31. Concept Builders, Inc. vs. NLRC, 257 SCRA 149.
32. 257 SCRA 149.
33. Traders Royal Bank vs. Court of Appeals, 269 SCRA 15.
34. Mataguina Integrated Wood Products Inc. vs. Court of Appeals, 263 SCRA 491,
citing Del Rosario vs. NLRC, G.R. No. 85416, 24 July 1990, 187 SCRA 777.
35. 207 SCRA 164.
36. Rollo, pp. 95-97.

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