Sunday, May 22, 2005

Reviewer 10 - The Corporate Veil (using legal maneuvers to escape responsibility)

In all of the commotion of the last five weeks, it was a major challenge to try and understand the motivation behind the legal shenanigans that YGC and its legal henchmen were up to. Now that the SEC report is out, we can see the following timeline.

Pre Aug 2004 - PPI is a subsidiary of Grepalife Assurance;

12 Aug 2004 - PPI creates Lifetime under the pretext that PPI will be the holding company; non-trad businesses are sold by PPI to Lifetime on a "with recourse basis"

20 Aug 2004 - GPL purchases Lifetime

9 Sep 2004 - GPL creates Exemplar

25 Jan 2005 - Exemplar buys PPI

If we were then to diagram all of these actuations, we come up with the diagram below:

Firewalling Grepalife Posted by Hello


By all accounts and using YGC's own promotional material, PPI was a 30+ year pioneer of the preneed industry and a much admired jewel within the YGC's collection of financial services companies. One could almost analogize the diagram above as no different from rich parents dishinheriting their child and having them classified as "illegitimate" to boot.

How else does one understand the carefully chosen statements of Amb. Yuchengco that he has no outright corporate obligations to PPI?

Is it because the legal team wanted to make sure that rowdy but otherwise insignificant planholders could not demand that the rich parent meet up with its obligations once the rehabilitation plan was sprung on them?

As noted in the previous posting, in doing so, the minority sharholders of Grepalife must have had to take a beating so that the series of separations could be executed. The "good businesses" are now in the hands of GPL Holdings and Exemplar and have likewise spirited away from Grepalife.

Is the diagram an unfortunate coincidence or a true reflection of what really went on behind closed doors at YGC seniors' meetings? It is the government's duty to find out.




7 Comments:

At Monday, May 23, 2005 12:10:00 PM, Anonymous Anonymous said...

what time is the court hearing on wedneday?

 
At Monday, May 23, 2005 12:47:00 PM, Anonymous Anonymous said...

Attention: All Availing Planholders
If you were able to get your 1st and 2nd check, have the two checks totalled, the sum of which should be the amount of the availment you got last year, IF NOT, call 816-0000 and complain, you can still have your THIRD CHECK.

FYI, PPI is now issuing check starting today till May 31, 2005 at Rm.11 3RD flr., PICC, Roxas Blvd.

 
At Monday, May 23, 2005 4:15:00 PM, Anonymous Anonymous said...

“Where one corporation is so organized and controlled and its affairs are conducted so that it is, in fact, a mere instrumentality or adjunct of the other, the fiction of the corporate entity of the ‘instrumentality’ may be disregarded. The control necessary to invoke the rule is not majority or even complete stock control but such domination of finances, policies and practices that the controlled corporation has, so to speak, no separate mind, will or existence of its own, and is but a conduit for its principal. It must be kept in mind that the control must be shown to have been exercised at the time the acts complained of took place. Moreover, the control and breach of duty must proximately cause the injury or unjust loss for which the complaint is made.”

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 rights; and

3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.

The absence of any one of these elements prevents ‘piercing the corporate veil. ‘ in applying the ‘instrumentality’ or ‘alter ego’ doctrine, the courts are concerned with reality and not form, with how the corporation operated and the individual defendant’s relationship to that operation. “


"A court should be mindful of the milieu where it is to be applied.It must be certain that the corporate fiction was misused to such an extent that injustice, fraud, or crime was committed against another, in disregard of its rights.The wrongdoing must be clearly and convincingly"

Looking at all supreme court rulings on piercing the corporate veil, PPI will most probably win.

 
At Monday, May 23, 2005 5:08:00 PM, Anonymous Anonymous said...

To the third commentator.

For the reasons you mentioned, Exemplar and GPL Holdings are obvious clones and controlled entities by YGC and have caused serious injurty (as per the SEC report).

You shouldn't be so pessimistic. Not only will PPI lose, it's a good bet that YGC owners and officers will go to jail for willfully reckless and grossly negligent conduct.

And that will be good day for this country and our children when the law of the land prevails and even the mighty are taken down.

 
At Monday, May 23, 2005 10:44:00 PM, Blogger SunTzu said...

The court hearing is somewhere between 10 and 11am.

Yuchengcos have really big balls considering they know that their actions have been sniffed out by a government regulator. Yet they continue to act like they have done nothing wrong.

They are SO COCKSURE about what will happen during the court hearings - well I guess we just have to make the public realize we will not allow YGC to get away with fraud.....

 
At Tuesday, May 24, 2005 2:02:00 AM, Anonymous Anonymous said...

Aside from the Yuchengcos, we should not allow the legal "masterminds" to get away with fraud. I have a feeling that the "shrewd" legal team of the Yuchengcos was the root of all this evil. They are used to these schemes and maneuverings. This should be put to stop.

TAMA NA! SOBRA NA!

 
At Tuesday, May 24, 2005 12:29:00 PM, Anonymous Anonymous said...

why dont you all check how much the Yuchengcos are spending for judges etc.
To all the planholders attending the peaceful march, a word of caution, Yuchengco has a history of hiring goons who are out to create trouble and then blame it on the planholders.
These Yuchengcos should all be put in jail and justice if not bought yet, be given to hardworking and honest Filipinos.

 

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