Recently, the Judiciary reported in a press release a judgment on the merits issued on September 6, 2023, by the Specialized Court of Alimony Appeals (Juzgado Especializado en Apelaciones de Pensiones Alimentarias). In this ruling, the court applied the doctrine of piercing the corporate veil (levantamiento del velo societario) for the first time within an alimony proceeding. According to the aforementioned press release, this mechanism had never before been applied in an alimony lawsuit, the focus of which is very different from that of family law proceedings where piercing the veil is already applicable—namely, for the purpose of determining or ruling out the marital/community status of assets (ganancialidad de bienes).

Indeed, for years, Family Courts have applied this mechanism in proceedings such as divorces and judicial separations, among others. Although there is currently no express statutory rule on the matter, our legal system does explicitly prohibit the abuse of rights (abuso del derecho) and the evasion of law (fraude de ley), pursuant to Articles 20 and 22 of the Civil Code (Código Civil). Furthermore, Article 21 of the Civil Code establishes that rights must be exercised in accordance with the requirements of good faith.

Based on these provisions contained in the Civil Code, Family Courts have applied the piercing of the corporate veil of commercial entities when it is proven in the proceedings that one of the spouses used one or several entities—abusively—as a vehicle or tool to violate the community property rights (derechos gananciales) of the other spouse. This is because, while the use of commercial corporations by natural persons to conduct business of various kinds through them is legal in our country, it is not legal to use said entities in bad faith, abusively (abuse of rights), or to achieve a prohibited purpose (evasion of law).

In those cases, Family Courts have considered that the actions of the spouse who executed such acts were illegal—either abusive or in evasion of law—by utilizing one or several corporations to divert assets that should in reality be deemed community property, and in relation to which the other spouse held a right. Consequently, regardless of whether the assets are registered under the name of corporations (sociedades anónimas), the courts have recognized the community property right of the affected spouse.

The recent judgment by the Specialized Court of Alimony Appeals is highly positive and is, in my view, a significant advancement along the jurisprudential line that the Family Courts have been developing.