Practice question
A parent owns all shares of a subsidiary and appoints its directors. The subsidiary contracts in its own name and defaults. The creditor proves no guarantee, fraudulent use, complete transactional domination used to cause the loss, or other liability basis. Which is best?
- Total ownership alone conclusively establishes liability
- The parent automatically becomes the contracting party
- The subsidiary’s separate personality ordinarily remains; ownership and common directors alone do not establish alter-ego liability
- Every subsidiary is legally fictitious
- Only foreign parents enjoy separate personality
Legal references
- https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/2/86463 — Republic Act No. 11232, sections 2 and 35
- https://lawphil.net/judjuris/juri2013/mar2013/gr_167530_2013.html — PNB v. Hydro Resources Contractors Corporation, G.R. Nos. 167530, 167561 and 167603, March 13, 2013, main opinion
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