Manuel R. Dulay Enterprises v. The Honorable Court of Appeals

Summary

This case involves a dispute over real property ownership and corporate authority in a close family corporation. Manuel R. Dulay Enterprises, Inc. owned an apartment property which its president Manuel Dulay sold to the Veloso spouses, who subsequently mortgaged it to Torres. After foreclosure, Torres acquired ownership but faced resistance from the corporation and Virgilio Dulay, who claimed the sale was unauthorized. The Supreme Court applied the doctrine of piercing the corporate veil, finding that in a close family corporation, the president's actions bound the corporation, especially when other directors had knowledge and failed to object promptly in writing as required by Corporation Code Section 101. The Court affirmed Torres' valid ownership and right to possession, emphasizing that corporate personality cannot be used to defeat legitimate transactions or protect fraud in family corporations where directors have adequate knowledge of corporate acts.