Case Digest: RYUICHI YAMAMOTO v. NISHINO LEATHER INDUSTRIES, INC. and IKUO NISHINO 551 SCRA 447 (2008)

RYUICHI YAMAMOTO v. NISHINO LEATHER INDUSTRIES, INC. and IKUO NISHINO 551 SCRA 447 (2008)

To disregard the separate juridical personality of a corporation, the wrongdoing or unjust act in contravention of a plaintiff’s legal rights must be clearly and convincingly established. Also, without acceptance, a mere offer produces no obligation.
Ryuichi Yamamoto and Ikuo Nishino agreed to enter into a joint venture wherein Nishino would acquire such number of shares of stock equivalent to 70% of the authorized capital stock of the corporation. However, Nishino and his brother Yoshinobu Nishino acquired more than 70% of the authorized capital stock. Negotiations subsequently ensued in light of a planned takeover by Nishino who would buy-out the shares of stock of Yamamoto who was advised through a letter that he may take all the equipment/ machinery he had contributed to the company (for his own use and sale) provided that the value of such machines is deducted from the capital contributions which will be paid to him. However, the letter requested that he give his “comments on all the above, soonest”. On the basis of the said letter, Yamamoto attempted to recover the machineries but Nishino hindered him to do so, drawing him to file a Writ of Replevin. The Trial Court issued the writ. However, on appeal, Nishino claimed that the properties being recovered were owned by the corporation and the above-said letter was a mere proposal which was not yet authorized by the Board of Directors. Thus, the Court of Appeals reversed the trial court’s decision despite Yamamoto’s contention that the company is merely an instrumentality of the Nishinos.

ISSUE:

Whether or not Yamamoto can recover the properties he contributed to the company in view of the Doctrine of Piercing the Veil of Corporate Fiction and Doctrine of Promissory Estoppel.

HELD:

One of the elements determinative of the applicability of the doctrine of piercing the veil of corporate fiction is that 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 the plaintiff’s legal rights. To disregard the separate juridical personality of a corporation, the wrongdoing or unjust act in contravention of a plaintiff’s legal rights must be clearly and convincingly established; it cannot be presumed. Without a demonstration that any of the evils sought to be prevented by the doctrine is present, it does not apply. Estoppel may arise from the making of a promise. However, it bears noting that the letter was followed by a request for Yamamoto to give his “comments on all the above, soonest.” What was thus proffered to Yamamoto was not a promise, but a mere offer, subject to his acceptance. Without acceptance, a mere offer produces no obligation. Thus, the machineries and equipment, which comprised Yamamoto’s investment, remained part of the capital property of the corporation.