02/03/2026
PIERCING V. REVERSE-PIERCING
Notes on Commercial Law #1
Piercing and reverse-piercing are both exceptions to the rule that since a corporation possesses a separate and distinct juridical personality, one cannot go beyond that personality and reach for assets other than those belonging to the corporation itself.
In both these piercing actions, the doctrine of separate and juridical personality is disregarded and assets other than those belonging to the corporation or the corporate insider are allowed to satisfy claims against the corporation or the corporate insider.
Nevertheless, to disregard the separate and distinct personality doctrine, certain conditions must be present. Courts do not usually disturb the separate personality of the corporation unless the same is used to defeat public convenience, or the same is used to perpetuate fraud or when the corporation is a mere alter ego of the corporate insider or another corporate entity.
In piercing, the plaintiff seeks to reach for the assets of the corporate insider to satisfy claims against the corporation. In reverse piercing, the plaintiff seeks to reach for the assets of the corporation to satisfy claims against the corporate insider.
ATTY. DANILO DELA BAJAN
“In the conduct of every ordinary human affair,
there is almost always a law that governs it.”