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037 Marvel Building Corp. vs.

David
G.R. NO. L-5081
Feb. 12, 1954

Topic: One-man Corporation
Facts:
 Action was brought by plaintifffs to prevent CIR from selling at public auction
the three parcels of land with buildings known as the Aguinaldo Building, the
Wise Building and the Dewey-Boulevard-Padre Faura Mansion, registered in the
name of the corporation.
 Said properties were seized and distrained by CIR to collect war profit taxes
assessed against Maria B. Castro. Plaintiff allege that said properties belong to
Marvel Building Corp. and not to Maria while defendant claims that Maria is the
true and sole owner of all the subscribed stock of Marvel Corp. and of the
properties seized.
 On Sept. 15 1950, Sec. of Finance recommended the collection of 3,953,,950.78
as war profit taxes of Maria Castro and the President on 1953 instructed the
Collector to collect the same. Pursuant thereto, CIR seized the three properties
and a complaint was filed with CFI.
 CFI rendered judgment ordering the release of the properties and enjoined CIR
from sellling the same. It is from this decision that CIR appealed to the SC.
 The Art. of Incorporation (Feb. 12,1947) has a capital stock of 2 million of which
1,025,000 was subscribed and paid by the follwing:
 Maria Castro was the President and Maximo Cristobal as Secretary-Treasurer
 The Wise Building was purchased under the name of Dolores Trinidad, wife of Amado
Yatco and Aguinaldo Building in the name of Segundo Esguerra Sr. Both building were
purchased for 1,800,000 but as corporation only has 1,025,000, the balance was taken
as loans from Insular Life Assurance Co.
 Of the incorporators, Manila Cristobal is Maria Castro’ half-sister. Maximo and Antonio
were Maria’s half-broter while Segundo Esguerra Is her brother-in-law.
Incorporators Income War profits tax Year filed Year that did not file Income
tax return
Return
Maximo C. ✓ Did not file any 1939-1940 Did not file any before 1946-
return (exempted)-income 1946-income tax 19,759.10
tax 1947-
9,773.47
Antonio C. , Did not file any Did not file any prior to Antonio1946-

32 Jose-1946- 20. Nicaso Yatco.160  In 1945.916. with a capital stock of 100k. . was made.620. Castro the owner of all the shares of stock of the Marvel Building Corporation and the other stockholders mere dummies of hers? Held: judgment appealed from is reversed  Yes.Segundo Esguerra return 1946(income tax 15.000 and others at 1.79 Ramon Sangalang ✓ Did not file any 1936-1940 Did not file prior to 1945-55— return 1945 except the years 1946-18300 that he filed-income tax Santiago Tan ✓ Did not file any 1938-1940 and Did not file prior to 1945-456 return 1942 (exempted) 1945 except the years 1947- that he filed-income tax 9167. Maxima Cristobal Esguerra.500 1947- 7.600 was subscribed by Maria and the the others for 100 each.960 that he filed-income tax 1947-11.  No proof was shown that Marvel ever held a meeting as no books or minutes of the meeting were mentioned by officers nor was the by-laws presented.000 in 1950 and maria Castro subscribed for 76. No report of the affairs of the corp.450 Segundo- 1946-5.77 Maria Cristobal ✓ 1929-1942 (exempted) Benita Lamagna ✓ Did not file any 1942 (exempted) Did not file prior to 1945-1.559 return 1945-income tax 1946- 6463.11 Amado Yatco ✓ Did not file any 1937-1939.96 Issue: W/N Maria B.000 each.785 1947- 14302. 99.95 and 7.910.754.630 and Jose Lopez 1947-4. Maria is th owner of all the shares through the circumstances presented. 1941 Did not file prior to 1945-12600 return and 1942 1945 except the years 1946-23.36 1947- 6189. It was increased to 500.  Advances were made by Maria Castro to Marvel: -1948-102.05 -1949-160. Maria Castro. Maria Cristobal Lopez and Maximo Cristobal organized Maria Castro Inc.

Maria and Llamado were close friends from 1947-1949 but when trial ensued.  It is also common practice for merchants to keep two set of books. This were half-heartedly denied by plaintiffs and reasoned that llmados’ enmity against Castro was acted in a doubtful conduct divulging the existence of certificates.  Evidence presented by CIR: endorsement in blank of shares of stock issued in the name of other incorporators and the possesion thereof of Maria Castro testified by Felipe Aquino. The younger Llamado even made advances for the hand of Castro’s daughter at the time he was a bookkeeper and was entrusted with the certificates of stock.  Moreover. they saw an envelope containing eleven stock certificates that all the certificates except that named under Maria Castro were endorsed in blank by subscribers. Antonio Mariano. bookkepper of Marvel testified that he prepared the certificates and recognized the photostats. P23. All the facts show that Llamados hasve personal knowledge of the facts they testified to. That they were trusted friend before which explains Llamado’s knowledge of the secret transactions. and in this year an income of only P9.000 in 1945 and 1946? Santiago Tan who also contributed P100.000 had no appreciable income before 1946.  Another evidence was that other stockholders did not have incomes during the organization of the corp. in 1945 he had P12.167. their friendship had been marred by misunderstanding. While examining books of Marvel. it is not of such magnitude to induce Llamado to lie or fabricate evidence against her. one for themselves and the other to be shown to tax collectors.600 and in 1946.000. internal revenue examiner.  Plaintiff also argues that the endorsement could have been super-imposed. under-secretary of finance. Before 1945 his returns were exempt from the tax.  Julio Llamado. How could he have paid P100. Jose T. Maria admitted signing 25 certificates but only 11 were issued. He has four children. Yatco as an example. examiner and Crispin Llamado. Lopez .95. This matches Llamado’s testimony that wo sets of ertificates were prepared. – There is no indication that the line is covered by a super imposed paper. in 1947 as to enable them to pay their subscriptions: Amado A. Llamado suggested that photostatic copies be taken and was placed in his office safe. that signatures were pasted and photographed after.  Suppose that there was an enmity.

000. Castro. Castro had furnished all the money that the Marvel Building Corporation had. If this were true.also did not file any income tax returns before 1940 and in 1946 he had an income of only P20. a prima facie case made out by the defendant collector that Maria B. Castro had been found to have made enormous gains or profits in her business such that the taxes thereon were assessed at around P3.550 and in 1946.785. There was.463.  Maria on the other habd said she deposited subscriptions in the National City Bank of new York but a study of her account failed to shoe the alleged deposit. which was exempt. there should have been a written contract regarding that matter considering the amount(80. In the same situation are all the others. . brothers and sisters and brother-in. Benita Lamagna had no returns either up to 1945. that the other stockholders paid in full. As Secretary-Treasurer. and besides.  Maximo Cristobal .S. there is no evidence to suppot it.000. he would have been able to tell specificaally the dates and in fixed amounts as to when they were paid. General assertion without concrete days and amounts are positive indications of untruthfulness. A party’s silemde is equivalent to an admission of its truth. and in 1945 she had an income of P1.  As to the testimony of C. P6. only among the three that testified. except in 1942. therefore.law of Maria B. whereas he is supposed to have subscribed P90.  Plaintiffs should have asserted that they are not dummies did not do so. Gonzales that Maria advanced his subscription. On the other hand.000) is quite big.36.000 worth of stock early in 1947. Maria B. if indeed that subscriptions were paid.