1.

Johnson Lee (one of the petitioners);

2. Lok Chun Suen (one of the respondents);
[G.R. No. 112941. February 18, 1999] 3. Charles O. Sy (one of the respondents);
4. Eugenio Flores, Jr. (husband of respondent Ban
Hua U. Flores)
NEUGENE MARKETING INC., LEONCIO TAN, 5. Arsenio Yang, Jr. (one of the respondents)
NICANOR MARTIN, SONNY MORENO,
JOHNSON LEE and SECURITIES AND The authorized capital stock of NEUGENE is THREE
EXCHANGE COMMISSION, petitioners, MILLION PESOS (P3,000,000.00) divided into THIRTY
vs.COURT OF APPEALS, ARSENIO THOUSAND (30,000) shares with a par value of ONE
YANG, JR., CHARLES O. SY, LOK CHUN HUNDRED PESOS (P100.00) each. Out of this
SUEN, BAN HUA U. FLORES, BAN HA U. authorized capital stock, SIX HUNDRED THOUSAND
CHUA and ROGER REYES, respondents. PESOS (P600,000.00) had been subscribed by the
following subscribers, namely:
DECISION
NAME NO. OF AMOUNT
PURISIMA, J.:
SHARES SUBSCRIBED
At bar is a petition for review of the decision[1] of the Special
Fifth Division of the Court of Appeals which reversed the
Johnson Lee 600 P 60,000.00
decision of the Securities and Exchange Commission (SEC)
annulling the dissolution of Neugene Marketing, Inc. Lok Chun Suen 1,200 120,000.00
(NEUGENE, for short).
Charles O. Sy 1,800 180,000.00
The SEC Hearing Panel gathered the fact, as follows:
Eugenio Flores, Jr. 2,100 210,000.00
"On January 27, 1978, NEUGENE was duly registered
with this Commission to engage in trading business for Arsenio Yang, Jr. 300 30,000.00
a term of fifty (50) years with the following as
incorporators/directors, namely: TOTAL 6,000 P600,000.00
==== =========
Out of the aforesaid subscription, ONE HUNDRED
FIFTY THOUSAND PESOS (P150,000.00) had been
paid by the following subscribers as follows:
NAME AMOUNT PAID UP
Johnson Lee P15,000.00
Lok Chun Suen 30,000.00
Charles O. Sy 45,000.00
Eugenio Flores, Jr. 52,500.00
Arsenio Yang, Jr. 7,500.00
TOTAL P150,000.00
==========
The original shareholdings of the
incorporators/stockholders of NEUGENE were
increased by ten percent (10%) each by virtue of stock
dividend declaration in the amount of SIXTY
THOUSAND PESOS (P60,000.00) made by its board of
directors in a special meeting held on June 7, 1980. x x
x shareholdings of Eugenio Flores, Jr. to petitioner Sonny
Again, on May 2, 1981, the Board of directors of
NEUGENE declared a stock dividend in the amount of
FORTY THOUSAND PESOS (P40,000.00) in
proportion to the shareholdings of the stockholders of
record of NEUGENE as of April 30, 1981. x x x
xxxxxxxxx
The outstanding capital stock of NEUGENE became
SEVEN HUNDRED THOUSAND PESOS
(P700,000.00) represented by SEVEN THOUSAND
(7,000) shares.
On May 15, 1986, Eugenio Flores, Jr. assigned,
transferred and conveyed his entire shareholdings of
TWO THOUSAND FOUR HUNDRED FIFTY (2,450)
shares in NEUGENE to the following, to wit:
Pet. Sonny Moreno 1,050 shares (Exh. B)
Resp. Arsenio Yang, Jr.. 700 shares (Exh. C)
Resp. Charles O. Sy 700 shares (Exh. D)
TOTAL 2,450
====
Thus, immediately after the assignment of the entire
Moreno and respondents Arsenio Yang, Jr., and Charles
O. Sy, the stockholders of record of NEUGENE, as
appearing in the Stock and Transfer Book (Exhibit A),
particularly Exhibits A-8 to A-12 thereof, were as
follows:
NAME NO. OF SHARES
Johnson Lee 700
Lok Chun Suen 1,400
Sonny Moreno 1,050
Charles O. Sy 2,800
Arsenio Yang, Jr. 1,050 __
TOTAL 7,000[2]
=====
On October 24, 1987, the private respondents, Charles O.
Sy, Arsenio Yang, Jr. and Lok Chun Suen, holders of 5,250
shares of NEUGENE (representing at least two-thirds (2/3) of
the outstanding capital stock of 7,000 shares)sent notice to the
directors of NEUGENE for a board meeting to be held on
November 30, 1987. They also sent notice for a special
stockholders meeting on the same day, November 30, 1987, to
consider the dissolution of NEUGENE.
At the said meetings held on November 30, 1987, the
private respondents, Charles O. Sy, Arsenio Yang, Jr. and Lok
Chun Suen, the directors and stockholders then present, voted
for and approved a resolution dissolving NEUGENE.
On March 1, 1988, acting upon private respondentss
Petition for Dissolution, SEC issued a Certificate of Dissolution
of NEUGENE.
On March 22, 1988, the petitioners brought an action to
annul or set aside the said SEC Certification on the Dissolution
of Neugene. In their Amended Petition, petitioners stated,
among others, that they are the majority stockholders of
NEUGENE, owning eighty percent (80%) of its outstanding
capital stock, at the time of the adoption and approval of the
Resolution for the Dissolution of NEUGENE, on November 30,
1987; that prior thereto or on July 1, 1987, to be precise, the
private respondents had divested themselves of their
stockholdings when they endorsed their stock certificates in
blank and delivered the same to the Uy Family, the beneficial
owners of NEUGENE; that at the meetings held on February 11,
12 and 13, 1987, in order to settle family squabbles, the Uy
family agreed to award NEUGENEs stock certificates to Johnny
K. H. Uy, who, in turn, authorized Johnson Lee to dispose of the
same; and that Johnson Lee sold the said shares of stock to the
petitioners, Leoncio Tan and Nicanor Martin, such that, as
reflected in the Stock and Transfer Book of NEUGENE,
respondent Lok Chun Suen had assigned all of his 1,400 shares
of stock to petitioner Nicanor Martin, respondents Charles O. Sy
assigned 2,100 shares out of his 2,800 shares of stock to
petitioner Leoncio Tan, and respondent Arsenio Yang, Jr.
assigned 350 shares of his 1,050 shares of stock to petitioner
Leoncio Tan; that in view of the said transfers of shares of stock,
private respondents Arsenio Yang, Jr., and Charles O. Sy (each
the holder of only 700 shares or 10% each of the outstanding
capital stock of NEUGENE) and Lok Chun Suen (who had
ceased to be a stockholder as of July 1, 1987) could no longer
validly vote for the dissolution of NEUGENE on November 30,
1987, under Section 118 of the Corporation Code, and all the
proceedings of the meetings held on November 30, 1987, which
were improperly called and held without a quorum, are null and
void.[3]
On the other hand, the private respondents, Charles O. Sy,
Arsenio Yang, Jr. and Lok Chun Suen, theorized that the alleged
assignments of shares of stock in favor of petitioners were
simulated and fraudulently effected, as there never was any
agreement entered into by the Uy family to award NEUGENES
stock certificates to Johnny K.H. Uy, because subject stock
certificates of the private respondents covering their shares of
stock were endorsed in blank by them and delivered to the Uy
family, who were the beneficial owners of NEUGENE, for safe
keeping and the said certificates of stock were kept inside the
confidential vault of the Uy family at 225 D. Tuazon St., Quezon
City, but the same were stolen by the spouses, Johnny K. H. Uy
and Magdalena Go-Uy, without the knowledge and authority of
the Uy family; that petitioner Sonny Moreno, a co-conspirator
in such fraudulent transfer of stocks in question, recorded the
simulated and fraudulent assignments in the Stock and Transfer
Book of the corporation, which book he obtained from Johnny
K.H. Uy and Magdalena Go-Uy, together with other corporate
records of NEUGENE, including the stock certificates endorsed
in blank by petitioner Johnson Lee and respondents Arsenio
Yang, Jr., Charles O. Sy and Lok Chun Suen; that the petitioners,
Nicanor Martin and Leoncio Tan, are co-conspirators of Johnson
Lee and Sonny Moreno in effecting the said simulated and
fraudulent transfer of sharesof stock; that the private respondents
never sold their shares of stock in NEUGENE to any of the
petitioners or other stockholders of record, prior to the
dissolution of the corporation, so that they (private respondents)
represented at least two-thirds (2/3) of the outstanding capital
stock of NEUGENE when they voted to dissolve NEUGENE,
on November 30, 1987.[4]
In its decision of June 19, 1990, the SEC Panel of Hearing
Officers nullified the Certification on the Dissolution of
NEUGENE issued by SEC, holding that the private respondents
were no longer holders of at least two-thirds (2/3) of the
outstanding capital stock of NEUGENE at the time they
presented the petition for dissolution, as required under Section
118 of the Corporation Code. (Annex O) The said decision of the
SEC Panel of Hearing Officers was affirmed in toto by the SEC
En Banc in a Decision promulgated on January 14,
1993.[5] Portions of the decision of the SEC Hearing Panel read:
The resolution to dissolve NEUGENE was adopted by
only two (2) of its incumbent directors, namely:
respondents Charles O. Sy and Arsenio Yang, Jr.
Respondent Lok Chun Suen had already ceased to be a
stockholder of NEUGENE as of July 1, 1987, by
the endorsement and delivery and cancellation of his
stock certificates (Exhs. E, F, and G) and the entries in
the Stock and Transfer Book (Exhs. A, A-1, to A-
24). Hence, there was no quorum at said board of
directors meeting on November 30, 1987. There was no
quorum also at the November 30, 1987 meeting of the
stockholders of NEUGENE since only the following
stockholders, namely: respondents Charles O. Sy and
Arsenio Yang, Jr., who own 10% each of the
stockholding of NEUGENE, could be considered
officially present at said meeting. On this score alone,
the case for the petitioners should be upheld.
xxxxxxxxx
xxxxxxxxx
WHEREFORE, judgment is hereby rendered:
1. Declaring as null and void the Certificate of Filing of
Resolution of Voluntary Dissolution of NEUGENE
MARKETING, INC. issued by this Commission on
March 1, 1988 for violation of Section 118 of the
Corporation Code of the Philippines;
 2. Ordering the respondents, particularly respondent Roger
Z. Reyes or any other persons acting as trustees of
NEUGENE from representing himself/themselves from
acting as such;
3. Directing the respondents, particularly respondents Ban
Ha U. Chua, Ban Hua U. Flores, Charles O. Sy and
Arsenio Yang, Jr., or whoever is in possession of the
corporate books and records of NEUGENE, to turn over
the same to its Secretary, petitioner Sonny Moreno,
within ten (10) days from the finality of this Decision;
and to revert back to NEUGENE the Cash on Hand
appearing in the Balance Sheet as of November 30, 1987
in the amount of P860,591.98;
4. Ordering the respondents to pay attorneys fees to the
petitioners in the amount of FOUR HUNDRED
THOUSAND PESOS (P400,000.00).[6]
xxxxxxxxx
On June 10, 1993, the aforesaid judgment of SEC was
reversed by the Court of Appeals. Upholding the validity of
NEUGENEs dissolution, the Court of Appeals found that at the
time of dissolution of NEUGENE on November 30, 1987, the
private respondents owned at least two-thirds (2/3) of
NEUGENEs stocks, it appearing that the certificates of stock of
private respondents, which were endorsed in blank, as earlier
mentioned, were not validly transferred to petitioners herein.
The Court of Appeals ratiocinated and concluded:
xxxxxxxxx
To constitute a valid transfer, a stock certificate must be
delivered and its delivery must be coupled with an
intention of constituting the person to whom the stock is
delivered the transferred (sic) thereof. (Fetcher Cyc
Corp., Sec. 5484)
Furthermore, in order that there is a valid transfer, the
person to whom the stock certificates are endrosed (sic)
must be a bona fide transferee and for value.
In the case at bar, Nicanor Martin and Leoncio Tan
were not bona fide transferees for value and in good
faith. Private respondents alleged that petitioners Sy,
Lok and Yang, Jr. indorsed and delivered their stock
certificates to Nicanor Martin and Leoncio
Tan. However, private respondents Johnson Lee
testified that he acquired his shares of stock from
Johnny Uy, who in turn sold them to Nicanor Martin
and Leoncio Tan (tsn, pp., 49-50, July 18,
1989).Likewise, evidence shows that no consideration
was paid by Leoncio Tan and Nicanor Martin when they
allegedly acquired the stock certificates from the Uy
Family. Johnson Lee failed to produce any document
evidencing the transaction or a receipt showing his
payment for the stocks. Therefore, it is clear that they
were not bona fide transferees for value and in good
faith. Consequently, they cannot be considered
stockholders for the purpose of determining the 2/3
votes of the outstanding capital stock required to
dissolve Neugene, in accordance with Sec. 118 of the
Corporate Code.
xxx xxx xxx
After a careful examination of the documentary
evidence, We find that the supposed document
evidencing the partition and division of the properties of
the Uy Family (Exh. A), is a mere xerox copy whose
original copy was never produced before the hearing
panel. Moreover, it contained erasures and/or
insertions, and it is written in the Chinese language,
with no official translation submitted. Consequently, We
find no basis for the respondent Commissions finding
that Neugene belongs to Johnny K. H. Uy.
Considering the above findings, there is likewise no
basis for the Commissions ruling that the amount
of P860,591.98 should be returned by the petitioners to
Neugene. Lastly, the award of attorneys fees has no
basis, considering Our findings that private respondents
have no cause of action against the petitioners, hence,
they are not entitled to attorneys fees.
WHEREFORE, the decision dated January 14, 1992 of
the respondent Commission is hereby REVERSED and
SET ASIDE. No costs.[7]
In its Resolution dated December 9, 1993, the Court of
Appeals denied petitioners motion for reconsideration, and
further ruled that the transfers of stock in question could not be
valid and effective for the simple reason that there is a complete
absence of proof that the alleged transfers were recorded in the
books of the corporation. It relied on Section 63 of the
Corporation Code of the Philippines which provides that no
transfers shall be valid except as between the parties, until the
transfer is recorded in the books of the corporation.[8]
In the Petition under scrutiny, petitioners contend that the
Court of Appeals: "(1) misapprehended the facts of the case
and (2) failed to consider the evidence on record showing that
the private respondents were no longer holders of the necessary
number of shares of stock at the time of the dissolution of
NEUGENE.[9]
The pivot of inquiry here is whether or not the private
respondents lacked the requisite number of shares of stock or
had divested themselves of their stockholdings as of November
30, 1987 when they voted for the resolution dissolving
NEUGENE.
After a careful study, a finding in favor of private
respondents is indicated. In short, the Petition is barren of merit.
Entries in the Stock and Transfer Book of NEUGENE,
particularly on the right hand portion of Exhibits A-9, A-10 and
A-12, support the disquisition and conclusion arrived at by the
Court of Appeals that at the time of dissolution of NEUGENE
on November 30, 1987, the private respondents, Lok Chun Suen,
Charles O. Sy and Arsenio Yang, Jr., owned at least two-thirds
(2/3) of NEUGENEs outstanding capital stock, in sufficient
compliance with the germane provision of Section 118 of the
Corporation Code of the Philippines.
As shown in the Stock and Transfer Book of NEUGENE,
the right hand portion of Exhibit A-9, under the column
Certificates Issued, private respondents Lok Chun Suen is the
holder of a total of 1,400 shares of stock, issued on February 23,
1979, October 1, 1980 and May 2, 1981, respectively. (Records,
p. 662) Exhibit A-10, on its right hand portion and under the
column Certificates Issued reflects private respondents Charles
O. Sy as the holder of a total of 2,800 shares of stock, issued on
the abovementioned dates except those acquired from Eugenio
Flores, Jr. which were issued on May 15, 1986. (Records, p.
663) While the right hand portion of Exhibit A-12, under the
column Certificates Issued, shows that private respondent
Arsenio Yang, Jr. is the holder of 1,050 shares, issued on the
abovementioned dates, except those acquired from Eugenio
Flores, Jr. which were issued on May 15, 1986.(Records, p. 665)
Therefore, the entries on the right hand portion of
NEUGENES Stock and Transfer Book, under the column
Certificates Issued, indubitably record the private respondents as
the holders of 5,250 shares, constituting at least two-thirds (2/3)
of NEUGENEs outstanding capital stock of 7,000 shares.
Petitioners introduced in evidence the very same exhibits
pertaining to the Stock and Transfer Book of NEUGENE (more
specifically Exhibits A-9, A-10, and A-12) to prove that the
private respondents were no longer the majority stockholders at
the time of the dissolution of NEUGENE. It should be noted,
however, that on the left hand portion of the said exhibits, under
the column Certificates Cancelled, entries on July 1, 1987
disclose that all of Lok Chun Suens 1,400 certificates of stock
were cancelled, Charles O. Sys 2, 100 shares out of 2, 800 shares
were cancelled, and Arsenio Yang, Jr.s 350 shares out of his 1,
050 shares were likewise cancelled, thereby leaving Arsenio
Yang, Jr. and Charles O. Sy the holders of only 700 shares each
or 10 % of the outstanding capital stock of NEUGENE when its
dissolution was approved and voted for.
In light of the foregoing and after a careful examination of
the evidence on record, and a judicious study of the provisions
of law and jurisprudence in point, we are with the Court of
Appeals on the finding and conclusion that the certificates of
stock of the private respondents were stolen and therefore not
validly transferred, and the transfers of stock relied upon by
petitioners were fraudulently recorded in the Stock and Transfer
Book of NEUGENE under the column Certificates Cancelled.
Although well-established is the rule that the appellate court
will not generally disturb the factual findings by the trial court
for the reason that the trial court heard the testimonies of the
witnesses and observed their deportment and manner of
testifying during the trial and was afforded the singular chance
to assess the probative value of the evidence. The rule does not
apply where, as in this case, the SEC overlooked certain facts of
substance and value which if considered would affect the result
of the case. (Tomas vs. CA, 185 SCRA 627 [1990]; People vs.
Alforte, 219 SCRA 458 [1993])
In the case under consideration, records reveal that the SEC
En Banc and its Panel Of Hearing Officers misappreciated the
true nature of the relationship between the stockholders of
NEUGENE and the Uy family, who had the understanding that
the beneficial ownership of NEUGENE would remain with the
Uy family, such that subject shares of stock were, immediately
upon issuance, endorsed in blank by the shareholders and
entrusted to the Uy family, through Ban Ha Chua, for
safekeeping. Such beneficial ownership of the Uy family is
admitted not only in the testimonies of private respondents but
also of the petitioners, Sonny Moreno and Johnson Lee.[10]
Both the petitioners Johnson Lee (a member of the Uy
family himself), and Sonny Moreno, the corporate secretary,
were aware of the real import or significance of the indorsements
in blank on the stock certificates of the private
respondents. Obviously, then, they (Lee and Moreno) acted in
bad faith in assigning subject certificates of stock to the
petitioners, Nicanor Martin and Leoncio Tan, and in recording
the said transfers in dispute in the Stock and Transfer Book of SO ORDERED.
NEUGENE.
Romero, (Chairman), Vitug, and Panganiban, JJ., concur.
Then, too, as nominees of the Uy family, the approval by
the private respondents, Charles O. Sy, Lok Chun Suen and
Arsenio Yang, Jr., Jr., was necessary for the validity and
effectivity of the transfer of the stock certificates registered
under their (private respondents) names. In the case under
consideration, not only did the transfers of stock in question lack
the requisite approval, the private respondents categorically
declared under oath that subject certificates of stock of theirs
were stolen from the confidential vault of the Uy family and
illegally transferred to the names of petitioners in the Stock and
Transfer Book of NEUGENE.
As stressed by the Court of Appeals, there is no reliable
showing of any valuable consideration for the supposed transfer
of subject stocks to petitioners. Fundamental and crucial is the
rule that if a contract has no cause, it does not produce any effect
whatsoever and is inexistent or void from the beginning. The
complete absence of a cause or consideration renders the
contract absolutely void and inexistent. (Robleza vs. Court of
Appeals, 174 SCRA 362 [1989]), citing Arts. 1352 and 1409 of
the New Civil Code)
All things studiedly evaluated in proper perspective, we are
of the irresistible conclusion that the private respondents herein
are the legitimate holders and owners of at least two-thirds (2/3)
of the outstanding capital stock of NEUGENE, with the
corresponding right to vote for its dissolution, in accordance
with Section 118 of the Corporation Code of the Philippines.
WHEREFORE,the Petition is DISMISSED for lack of
merit and the Decision of the Court of Appeals AFFIRMED, in
its entirety. No pronouncement as to costs.
 [G.R. No. 137934. August 10, 2001] POTENCIANO, REYNALDO MAGTIBAY,
LORNA NAVARRO and RESTITUTO
BAYLON, petitioners, vs. THE COURT OF
BATANGAS LAGUNA TAYABAS BUS APPEALS, BATANGAS LAGUNA
COMPANY, INC., DOLORES A. TAYABAS BUS COMPANY, INC.,
POTENCIANO, MAX JOSEPH A. BENJAMIN M. BITANGA, RENATO L.
POTENCIANO, MERCEDELIN A. LEVERIZA, LAUREANO A. SIY, JAMES
POTENCIANO, and DELFIN C. A. OLAYVAR, EDUARDO A. AZUCENA,
YORRO, petitioners, vs. BENJAMIN M. MONINA GRACE S. LIM, and GEMMA M.
BITANGA, RENATO L. LEVERIZA, SANTOS, respondents.
LAUREANO A. SIY, JAMES A. OLAYVAR,
EDUARDO A. AZUCENA, MONINA DECISION
GRACE S. LIM, and GEMMA M. YNARES-SANTIAGO, J.:
SANTOS, respondents.
These cases involve the Batangas Laguna Tayabas Bus
Company, Inc., which has been owned by four generations of
the Potenciano family. Immediately prior to the events leading
[G.R. No. 137936. August 10, 2001] to this controversy, the Potencianos owned 87.5% of the
outstanding capital stock of BLTB.[1]
On October 28, 1997, Dolores A. Potenciano, Max Joseph
DANILO L. CONCEPCION, FE ELOISA A. Potenciano, Mercedelin A. Potenciano, Delfin C. Yorro, and
GLORIA and EDIJER A. MARTINEZ, in Maya Industries, Inc., entered into a Sale and Purchase
their capacities as ASSOCIATE Agreement,[2] whereby they sold to BMB Property Holdings,
Inc., represented by its President, Benjamin Bitanga, their
COMMISSIONERS OF THE SECURITIES 21,071,114 shares of stock in BLTB. The said shares
AND EXCHANGE COMMISSION, represented 47.98% of the total outstanding capital stock of
BATANGAS LAGUNA TAYABAS BUS BLTB.
COMPANY, INC., MICHAEL A. The purchase price for the shares of stock was
POTENCIANO, CANDIDIO A. P72,076,425.00, the downpayment of which, in the sum of
POTENCIANO, HENRY JOHN A. P44,354,723.00, was made payable upon signing of Agreement,
while the balance of P27,721,702.00 was payable on November
26, 1997. The contracting parties stipulated that the
downpayment was conditioned upon receipt by the buyer of
certain documents upon signing of the Agreement, namely, the
Secretarys Certificate stating that the Board of Directors of
Maya Industries, Inc. authorized the sale of its shares in BLTB
and the execution of the Agreement, and designating Dolores A.
Potenciano as its Attorney-in-Fact; the Special Power of
Attorney executed by each of the sellers in favor of Dolores A.
Potenciano for purposes of the Agreement; the undated written
resignation letters of the Directors of BLTB, except Henry John
A. Potenciano, Michael A. Potenciano and Candido A.
Potenciano); a revocable proxy to vote the subject shares made
by the sellers in favor of the buyer; a Declaration of Trust made
by the sellers in favor of the buyer acknowledging that the
subject shares shall be held in trust by the sellers for the buyer
pending their transfer to the latters name; and the duly executed
capital gains tax return forms covering the sale, indicating no
taxable gain on the same.[3]
Furthermore, the buyer guaranteed that it shall take over the
management and operations of BLTB but shall immediately
surrender the same to the sellers in case it fails to pay the balance
of the purchase price on November 26, 1997.[4]
Barely a month after the Agreement was executed, on
November 21, 1997, at a meeting of the stockholders of BLTB,
Benjamin Bitanga and Monina Grace Lim were elected as
directors of the corporation, replacing Dolores and Max Joseph
Potenciano. Subsequently, on November 28, 1997, another
stockholders meeting was held, wherein Laureano A. Siy and
Renato L. Leveriza were elected as directors, replacing Candido
Potenciano and Delfin Yorro who had both resigned as such. At
the same meeting, the Board of Directors of BLTB elected the
following officers: Benjamin Bitanga as Chairman of the Board,
President and Chief Executive Officer; Monina Grace Lim as
Vice President for Finance and Supply and Treasurer; James
Olayvar as Vice President for Operations and Maintenance;
Eduardo Azucena as Vice President for Administration; Evelio
Custodia as Corporate Secretary; and Gemma Santos as
Assistant Corporate Secretary.[5]
During a meeting of the Board of Directors on April 14,
1998, the newly elected directors of BLTB scheduled the annual
stockholders meeting on May 19, 1998, to be held at the
principal office of BLTB in San Pablo, Laguna.Before the
scheduled meeting, on May 16, 1998, Michael Potenciano wrote
Benjamin Bitanga, requesting for a postponement of the
stockholders meeting due to the absence of a thirty-day advance
notice. However, there was no response from Bitanga on
whether or not the request for postponement was favorably acted
upon.
On the scheduled date of the meeting, May 19, 1998, a
notice of postponement of the stockholders meeting was
published in the Manila Bulletin. Inasmuch as there was no
notice of postponement prior to that, a total of two hundred
eighty six stockholders, representing 87% of the shares of stock
of BLTB, arrived and attended the meeting. The majority of the
stockholders present rejected the postponement and voted to
proceed with the meeting. The Potenciano group was re-elected
to the Board of Directors,[6] and a new set of officers was
thereafter elected.[7]
However, the Bitanga group refused to relinquish their
positions and continued to act as directors and officers of
BLTB. The conflict between the Potencianos and the Bitanga
group escalated to levels of unrest and even violence among
laborers and employees of the bus company.
 On May 21, 1998, the Bitanga group filed with the
Securities and Exchange Commission a Complaint for Damages
and Injunction, docketed as SEC Case No. 05-98-5973.[8] Their
prayer for the issuance of a temporary restraining order was,
however, denied at the ex-parte summary hearing conducted by
SEC Chairman Perfecto Yasay, Jr.
Likewise, the Potenciano group filed on May 25, 1998, a
Complaint for Injunction and Damages with Preliminary
Injunction and Temporary Restraining Order with the SEC,
docketed as SEC Case No. 05-98-5978.[9] SEC Chairman
Perfecto Yasay, Jr. issued a temporary restraining order
enjoining the Bitanga group from acting as officers and directors
of BLTB.
On June 8, 1998, the Bitanga group filed another complaint
with application for a writ of preliminary injunction and prayer
for temporary restraining order, seeking to annul the May 19,
1998 stockholders meeting. The complaint was docketed as SEC
Case No. 06-98-5994.
A Hearing Panel of the SEC conducted joint hearings of
SEC Cases Nos. 05-98-5973 and 05-98-5978. On June 17, 1998,
the SEC Hearing Panel granted the Bitanga groups application
for a writ of preliminary injunction upon the posting of a bond
in the amount of P20,000,000.00.[10] It declared that the May 19,
1998 stockholders meeting was void on the grounds that, first,
Michael Potenciano had himself asked for its postponement due
to improper notice; and, second, there was no quorum, since
BMB Holdings, Inc., represented by the Bitanga group, which
then owned 50.26% of BLTBs shares having purchased the same
from the Potenciano group, was not present at the said
meeting. The Hearing Panel further held that the Bitanga Board
remains the legitimate Board in a hold-over capacity.
The Potenciano group filed a petition for certiorari[11] with
the SEC En Banc on June 29, 1998, seeking a writ of preliminary
injunction to restrain the implementation of the Hearing Panels
assailed Order.
On July 21, 1998, the SEC En Banc set aside the June 17,
1998 Order of the Hearing Panel and issued the writ of
preliminary injunction prayed for.[12]
The Bitanga group immediately filed a petition for
certiorari[13] with the Court of Appeals on July 22, 1998, followed
by a Supplemental Petition on August 10, 1998. The petition
was docketed as CA-G.R. SP No. 48374.
Meanwhile, on July 29, 1998, the SEC En Banc issued a
writ of preliminary injunction against the Bitanga group, after
the Potencianos posted the required bond of P20,000,000.00.[14]
On November 23, 1998, the Court of Appeals rendered the
now assailed Decision, reversing the assailed Orders of the SEC
En Banc and reinstating the Order of the Hearing Panel ordered
dated June 17, 1998.[15] The Court of Appeals denied the Motions
for Reconsideration in a Resolution dated March 25, 1999.[16]
Petitioners Batangas Laguna Tayabas Bus Company, Inc.,
Dolores A. Potenciano, Max Joseph A. Potenciano, Mercedelin
A. Potenciano and Delfin C. Yorro filed the instant petition for
review, docketed as G.R. No. 137934, against respondents
Benjamin M. Bitanga, Renato L. Leveriza, Laureano A. Siy,
James A. Olayvar, Eduardo A. Azucena, Monina Grace S. Lim
and Gemma M. Santos. Petitioners contend that ---
I
WITH ALL DUE RESPECT, THE HONORABLE
COURT OF APPEALS GRAVELY ERRED WHEN IT
DISREGARDED, CONTRARY TO WELL-
ESTABLISHED JURISPRUDENCE, THE FACTUAL
FINDINGS OF THE SEC WHICH IS A
SPECIALIZED QUASI-JUDICIAL AGENCY, AND
INVALIDATED THE PRELIMINARY INJUNCTION
ISSUED BY THE LATTER. THE COURT OF
APPEALS COMMITTED REVERSIBLE ERROR
BECAUSE THERE IS NO SHOWING THAT THE
SEC MADE ANY ERROR IN EITHER
JURISDICTION OR JUDGMENT.
II
WITH ALL DUE RESPECT, THE HONORABLE
COURT OF APPEALS GRAVELY ERRED IN
RULING THAT RESPONDENTS WERE DEPRIVED
OF THEIR RIGHT TO DUE PROCESS
BECAUSE: (1) A FULL-BLOWN HEARING WAS
CONDUCTED ON 6 JULY 1998 WHERE THE
PARTIES FULLY ARGUED THEIR POSITIONS
AND WERE HEARD BY THE SEC EN BANC; (2)
THE LAW DOES NOT REQUIRE A SEPARATE
HEARING FOR THE FIXING OF THE AMOUNT OF
THE INJUNCTION BOND; AND (3) IN ANY CASE,
THE ALLEGED FAILURE OF THE SEC TO FIX
THE AMOUNT OF THE INJUNCTION BOND IN ITS
21 JULY 1998 ORDER AND SUBSEQUENT FIXING
THEREOF IN ITS 26 JULY 1998 ORDER IS NOT A
FATAL ERROR.
III
WITH ALL DUE RESPECT, THE HONORABLE
COURT OF APPEALS GRAVELY ERRED IN
RULING THAT THE 21 JULY 1998 ORDER OF THE
SEC RESOLVED THE MAIN CASE. THE SEC,
ACTING WITHIN THE BOUNDS OF ITS
JURISDICTION, MERELY MADE A PRELIMINARY
EVALUATION TO RESOLVE THE PRAYER FOR
PRELIMINARY INJUNCTION, WHICH, BY ITS
VERY NATURE, IS AN ANCILLARY
REMEDY. THE MAIN PETITION REMAINS
PENDING BEFORE THE SEC FOR THE
RESOLUTION OF ITS MERITS. [17]
Another petition for review, docketed as G.R. No. 137936,
was filed by petitioners Danilo L. Concepcion, Fe Eloisa Gloria
and Edijer A. Martinez, in their capacities as Associate
Commissioners of the Securities and Exchange Commission,
Batangas Laguna Tayabas Bus Company, Inc., Dolores A.
Potenciano, Max Joseph A. Potenciano, Michael A. Potenciano,
Mercedelin A. Potenciano, Candido A. Potenciano, Henry John
A. Potenciano, Delfin C. Yorro, Reynaldo Magtibay, Lorna
Navarro and Restituto Baylon based on the following grounds:
I
THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN HOLDING
THAT THE JULY 21, 1998 ORDER OF THE SEC
IN SEC EN BANC CASE NO. 611 RESOLVED
THE MAIN CASE.
 II
THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN HOLDING
THAT THE PRIVATE RESPONDENTS WERE
DENIED THEIR RIGHT TO DUE PROCESS.
III
THE COURT OF APPEALS GRAVELY ERRED
IN NOT HOLDING THAT THE SEC ORDER OF
JULY 21, 1998 IS VALID AND IN
DISREGARDING THE FACTUAL FINDINGS
OF THE SEC. [18]
The two petitions for review were consolidated.
We find that the petitions are impressed with
merit. Contrary to the findings of the Court of Appeals, the
Bitanga group was not deprived of due process when the SEC
En Banc issued its Order dated July 21, 1998.
Due process, in essence, is simply an opportunity to be
heard.[19] It cannot be denied that in the case at bar, a hearing on
the prayer for injunction was held on July 9, 1998. Both parties
were represented at the said hearing, and the Bitanga group
presented its arguments in opposition to the injunctive
relief. This alone negates any proposition that the Bitanga group
was denied due process.
In applications for preliminary injunction, the requirement
of hearing and prior notice before injunction may issue has been
relaxed to the point that not all petitions for preliminary
injunction must undergo a trial-type hearing, it being hornbook
doctrine that a formal or trial-type is not at all times and in all
instances essential to due process. Due process simply means
giving every contending party the opportunity to be heard and
the court to consider every piece of evidence presented in their
favor. Accordingly, this Court has recently rejected a claim of
denial of due process where such claimant was given the
opportunity to be heard, having submitted his counter-affidavit
and memorandum in support of his position.[20]
Much ado has been made over the fact that the injunction
order was issued with deliberate speed even before the Bitanga
group filed its Comment to the Potenciano groups
Petition. However, the said Comment is rather directed to the
petition of the Potenciano group; it is not essential to the
resolution of the prayer for injunction. The Rules of Court do
not require that issues be joined before preliminary injunction
may issue. Preliminary injunction may be granted at any stage
of an action or proceeding prior to the judgment or final order,
ordering a party or a court, agency or a person to refrain from a
particular act or acts. For as long as the requisites for its issuance
are present in the case, the injunctive writ was properly issued.[21]
Respondents argue that the SEC En Bancs July 21, 1998
Order amounted to a ruling on the main case. We disagree.
A reading of the said Order readily reveals that it merely
delved on the propriety of granting a writ of preliminary
injunction against the Bitanga group. The main case is far from
being disposed of as there are several issues still awaiting
resolution, including, whether or not the Bitanga group has taken
funds and assets of BLTB and if so, in what amount and
consisting of what assets; and whether or not the Potenciano
group is entitled to the payment of exemplary damages,
attorneys fees and costs of suit. There is no merit, therefore, in
the statement that the SEC En Bancs ruling is a prejudgment of
the main case, as several matters need yet to be addressed.
The fact that the aforesaid Order was merely provisional in
character may be gleaned from the very nature of the injunctive
writ granted. Generally, injunction is a preservative remedy for
the protection of one's substantive right or interest. It is not a
cause of action in itself but merely a provisional remedy, an
adjunct to a main suit.[22] Thus, it has been held that an order
granting a writ of preliminary injunction is an interlocutory
order.[23] As distinguished from a final order which disposes of
the subject matter in its entirety or terminates a particular
proceeding or action, leaving nothing else to be done but to
enforce by execution what has been determined by the court, an
interlocutory order does not dispose of a case completely, but
leaves something more to be adjudicated upon.[24]
In the case at bar, it cannot be said that the July 21, 1998
Order of the SEC En Banc terminated the Potenciano groups
petition in its entirety. As mentioned above, there remain several
issues which have yet to be resolved and adjudicated upon by
the SEC.
The next issue --- whether or not the SEC En Banc
committed error in jurisdiction as to entitle the Bitanga group to
the extraordinary remedy of certiorari --- should likewise be
resolved in the negative.
In the July 21, 1998 Order of the SEC En Banc, the validity
of the BLTB stockholders meeting held on May 19, 1998 was
sustained, in light of the time-honored doctrine in corporation
law that a transfer of shares is not valid unless recorded in the
books of the corporation. The SEC En Banc went on to rule that
It is not disputed that the transfer of the shares of the
group of Dolores Potenciano to the Bitanga group has
not yet been recorded in the books of the
corporation. Hence, the group of Dolores Potenciano, in
whose names those shares still stand, were the ones
entitled to attend and vote at the stockholders meeting
of the BLTB on 19 May 1998. This being the case, the
Hearing Panel committed grave abuse of discretion in
holding otherwise and in concluding that there was no
quorum in said meeting. [25]
Based on the foregoing premises, the SEC En Banc issued
a writ of preliminary injunction against the Bitanga group. In so
ruling, the SEC En Banc merely exercised its wisdom and
competence as a specialized administrative agency specifically
tasked to deal with corporate law issues. We are in full accord
with the SEC En Banc on this matter. Indeed, until registration
is accomplished, the transfer, though valid between the parties,
cannot be effective as against the corporation. Thus, the
unrecorded transferee, the Bitanga group in this case, cannot
vote nor be voted for. The purpose of registration, therefore, is
two-fold: to enable the transferee to exercise all the rights of a
stockholder, including the right to vote and to be voted for, and
to inform the corporation of any change in share ownership so
that it can ascertain the persons entitled to the rights and subject
to the liabilities of a stockholder.[26]Until challenged in a proper
proceeding, a stockholder of record has a right to participate in
any meeting;[27] his vote can be properly counted to determine
whether a stockholders resolution was approved, despite the
claim of the alleged transferee.[28] On the other hand, a person
who has purchased stock, and who desires to be recognized as a
stockholder for the purpose of voting, must secure such a
standing by having the transfer recorded on the corporate
books.[29] Until the transfer is registered, the transferee is not a
stockholder but an outsider.[30]
We find no error either in jurisdiction or judgment on the
part of the SEC En Banc, since its conclusions of law were
anchored on established principles and jurisprudence.
Indeed, nowhere in the Bitanga groups petition for certiorari
before the Court of Appeals was it shown that the SEC En Banc
committed such patent, gross and prejudicial errors of law or
fact, or a capricious disregard of settled law and jurisprudence,
as to amount to a grave abuse of discretion or lack of jurisdiction
on its part. Absent such showing, neither the Court of Appeals
nor this Court should engage in a review of the facts found nor
even of the law as interpreted or applied by the SEC En Banc,
for the writ of certiorari is an extraordinary remedy, and
certiorari jurisdiction is not to be equated with appellate
jurisdiction. The main thrust of a petition for certiorari under
Rule 65 of the Rules of Court is only the correction of errors of
jurisdiction including the commission of grave abuse of
discretion amounting to lack or excess of jurisdiction. However,
for this Court or the Court of Appeals to properly exercise the
power of judicial review over a decision of an administrative
agency, such as the SEC, it must first be shown that the tribunal,
board or officer exercising judicial or quasi-judicial functions
has indeed acted without or in excess of its or his jurisdiction,
and that there is no appeal, or any plain, speedy and adequate
remedy in the ordinary course of law. In the absence of any
showing of lack of jurisdiction or grave abuse tantamount to lack
or excess of jurisdiction, judicial review may not be had over an
administrative agencys decision.[31] We have gone over the
records of the case at bar and we see no cogent reason to hold
that the SEC En Banc had abused its discretion.
Moreover, it is a fundamental rule that factual findings of
quasi-judicial agencies like the SEC, if supported by substantial
evidence, are generally accorded not only great respect but even
finality, and are binding upon this Court, unless petitioner is able
to show that it had arbitrarily disregarded evidence before it or
had misapprehended evidence to such an extent as to compel a
contrary conclusion if such evidence had been properly
appreciated. This rule is rooted in the doctrine that this Court is
not a trier of facts, as well as in the respect to be accorded the
determinations made by administrative bodies in general on
matters falling within their respective fields of specialization or
expertise.[32]
In light of all the foregoing, we find that the Court of
Appeals erred in granting the extraordinary remedy of certiorari
to the Bitanga group. It is elementary that a special civil action
for certiorari is limited to correcting errors of jurisdiction or
grave abuse of discretion.[33] None of these have been found to
obtain in the petition before the Court of Appeals. What is more,
it is also settled that the issuance of the writ of preliminary
injunction as an ancillary or preventive remedy to secure the
rights of a party in a pending case is entirely within the discretion
of the court taking cognizance of the case, the only limitation
being that this discretion should be exercised based upon the
grounds and in the manner provided by law. The exercise of
sound judicial discretion by the lower court in injunctive matters
should not be interfered with except in cases of manifest abuse.[34]
WHEREFORE, in view of all the foregoing, the instant
petitions for review are GRANTED. The Decision of the Court
of Appeals dated November 23, 1998 in CA-G.R. SP No. 48374
and its resolution dated March 25, 1999 are SET ASIDE. The
Orders of the SEC En Banc dated July 21, 1998 and July 27,
1998 in SEC Case No. EB 611 are ordered REINSTATED.
 SO ORDERED. The facts of the case are as follows:
Kapunan, and Pardo, JJ., concur. Under a Principal Loan Agreement[4] and Complementary
Davide, Jr., C.J., (Chairman), joins Justice Puno in his Loan Agreement,[5] both dated November 4, 1992, Asian
dissent. Development Bank (ADB), a multilateral development finance
Puno, J., see dissent. institution, agreed to extend to Marcopper Mining Corporation
(Marcopper) a loan in the aggregate amount of
US$40,000,000.00 to finance the latters mining project at Sta.
Cruz, Marinduque. The principal loan of US$ 15,000,000.00
was sourced from ADBs ordinary capital resources, while the
[G.R. No. 138104. April 11, 2002] complementary loan of US$ 25,000,000.00 was funded by the
Bank of Nova Scotia, a participating finance institution.
On even date, ADB and Placer Dome, Inc., (Placer Dome),
MR HOLDINGS, LTD., petitioner, vs. SHERIFF a foreign corporation which owns 40% of Marcopper, executed
CARLOS P. BAJAR, SHERIFF a Support and Standby Credit Agreement whereby the latter
FERDINAND M. JANDUSAY, agreed to provide Marcopper with cash flow support for the
SOLIDBANK CORPORATION, AND payment of its obligations to ADB.
MARCOPPER MINING To secure the loan, Marcopper executed in favor of ADB
CORPORATION, respondents. a Deed of Real Estate and Chattel Mortgage[6] dated November
11, 1992, covering substantially all of its (Marcoppers)
DECISION properties and assets in Marinduque. It was registered with the
Register of Deeds on November 12, 1992.
SANDOVAL-GUTIERREZ, J.:
When Marcopper defaulted in the payment of its loan
In the present Petition for Review on Certiorari, petitioner obligation, Placer Dome, in fulfillment of its undertaking under
MR Holdings, Ltd. assails the a) Decision[1] dated January 8, the Support and Standby Credit Agreement, and presumably to
1999 of the Court of Appeals in CA-G.R. SP No. 49226 finding preserve its international credit standing, agreed to have its
no grave abuse of discretion on the part of Judge Leonardo P. subsidiary corporation, petitioner MR Holding, Ltd., assumed
Ansaldo of the Regional Trial Court (RTC), Branch 94, Boac, Marcoppers obligation to ADB in the amount of US$
Marinduque, in denying petitioners application for a writ of 18,453,450.02. Consequently, in an Assignment
preliminary injunction;[2] and b) Resolution[3] dated March 29, Agreement[7] dated March 20, 1997, ADB assigned to petitioner
1999 denying petitioners motion for reconsideration. all its rights, interests and obligations under the principal and
complementary loan agreements, (Deed of Real Estate and
Chattel Mortgage, and Support and Standby Credit
Agreement). On December 8, 1997, Marcopper likewise
executed a Deed of Assignment[8] in favor of petitioner. Under
its provisions, Marcopper assigns, transfers, cedes and conveys
to petitioner, its assigns and/or successors-in-interest all of its
(Marcoppers) properties, mining equipment and facilities, to
wit:
Land and Mining Rights
Building and Other Structures
Other Land Improvements
Machineries & Equipment, and Warehouse Inventory
Mine/Mobile Equipment
Transportation Equipment and Furniture & Fixtures
Meanwhile, it appeared that on May 7, 1997, Solidbank
Corporation (Solidbank) obtained a Partial Judgment[9] against
Marcopper from the RTC, Branch 26, Manila, in Civil Case No.
96-80083 entitled Solidbank Corporation vs. Marcopper Mining
Corporation, John E. Loney, Jose E. Reyes and Teodulo C.
Gabor, Jr., the decretal portion of which reads:
WHEREFORE, PREMISES CONSIDERED, partial
judgment is hereby rendered ordering defendant
Marcopper Mining Corporation, as follows:
1. To pay plaintiff Solidbank the sum of Fifty
Two Million Nine Hundred Seventy
Thousand Pesos Seven Hundred Fifty Six and
89/100 only (PHP 52,970,756.89), plus
interest and charges until fully paid;
2. To pay an amount equivalent to Ten Percent
(10%) of above-stated amount as attorneys
fees; and
3. To pay the costs of suit.
"SO ORDERED.
Upon Solidbanks motion, the RTC of Manila issued a writ
of execution pending appeal directing Carlos P. Bajar,
respondent sheriff, to require Marcopper to pay the sums of
money to satisfy the Partial Judgment.[10] Thereafter, respondent
Bajar issued two notices of levy on Marcoppers personal and
real properties, and over all its stocks of scrap iron and
unserviceable mining equipment.[11] Together with
sheriff Ferdinand M. Jandusay (also a respondent) of the RTC,
Branch 94, Boac, Marinduque, respondent Bajar issued two
notices setting the public auction sale of the levied properties on
August 27, 1998 at the Marcopper mine site.[12]
Having learned of the scheduled auction sale, petitioner
served an Affidavit of Third-Party Claim[13] upon respondent
sheriffs on August 26, 1998, asserting its ownership over all
Marcoppers mining properties, equipment and facilities by
virtue of the Deed of Assignment.
Upon the denial of its Affidavit of ThirdParty Claim by the
RTC of Manila,[14] petitioner commenced with the RTC of Boac,
Marinduque, presided by Judge Leonardo P. Ansaldo, a
complaint for reivindication of properties, etc., with prayer for
preliminary injunction and temporary restraining order against
respondents Solidbank, Marcopper, and sheriffs Bajar and
Jandusay.[15] The case was docketed as Civil Case No. 98-13.
In an Order[16]dated October 6, 1998, Judge Ansaldo
denied petitioners application for a writ of preliminary
injunction on the ground that a) petitioner has no legal capacity
to sue, it being a foreign corporation doing business in the
Philippines without license; b) an injunction will amount to
staying the execution of a final judgment by a court of co-equal
and concurrent jurisdiction; and c) the validity of the
Assignment Agreement and the Deed of Assignment has been
put into serious question by the timing of their execution and
registration.
Unsatisfied, petitioner elevated the matter to the Court of
Appeals on a Petition for Certiorari, Prohibition and Mandamus,
docketed therein as CA-G.R. SP No. 49226. On January 8, 1999,
the Court of Appeals rendered a Decision holding that Judge
Ansaldo did not commit grave abuse of discretion in denying
petitioners prayer for a writ of preliminary injunction,
ratiocinating as follows:
Petitioner contends that it has the legal capacity to sue
and seek redress from Philippine courts as it is a non-
resident foreign corporation not doing business in the
Philippines and suing on isolated transactions.
xxxxxx
We agree with the finding of the respondent court that
petitioner is not suing on an isolated transaction as it
claims to be, as it is very obvious from the deed of
assignment and its relationships with Marcopper and
Placer Dome, Inc. that its unmistakable intention is to
continue the operations of Marcopper and shield its
properties/assets from the reach of legitimate creditors,
even those holding valid and executory court judgments
against it. There is no other way for petitioner to recover
its huge financial investments which it poured into
Marcoppers rehabilitation and the local situs where the
Deeds of Assignment were executed, without petitioner
continuing to do business in the country.
xxxxxx
While petitioner may just be an assignee to the
Deeds of Assignment, it may still fall within the
meaning of doing business in light of the Supreme
Court ruling in the case of Far East International
Import and Export Corporation vs. Nankai Kogyo Co.,
6 SCRA 725, that:
Where a single act or transaction however is not
merely incidental or casual but indicates the foreign
corporations intention to do other business in the
Philippines, said single act or transaction constitutes
doing or engaging in or transacting business in the
Philippines.
Furthermore, the court went further by declaring
that even a single act may constitute doing business
if it is intended to be the beginning of a series of
transactions. (Far East International Import and
Export Corporation vs. Nankai Kogyo Co. supra).
On the issue of whether petitioner is the bona fide
owner of all the mining facilities and equipment of
Marcopper, petitioner relies heavily on the Assignment
Agreement allegedly executed on March 20, 1997
wherein all the rights and interest of Asian Development
Bank (ADB) in a purported Loan Agreement were
ceded and transferred in favor of the petitioner as
assignee, in addition to a subsequent Deed of
Assignment dated December 28, 1997 conveying
absolutely all the properties, mining equipment and
facilities of Marcopper in favor of petitioner.
The Deeds of Assignment executed in favor of
petitioner cannot be binding on the judgment creditor,
private respondent Solidbank, under the general legal
principle that contracts can only bind the parties who
had entered into it, and it cannot favor or prejudice a
third person (Quano vs. Court of Appeals, 211 SCRA
40). Moreover, by express stipulation, the said deeds
shall be governed, interpreted and construed in
accordance with laws of New York.
The Deeds of Assignment executed by Marcopper,
through its President, Atty. Teodulo C. Gabor, Jr.,
were clearly made in bad faith and in fraud of
creditors, particularly private respondent Solidbank.
The first Assignment Agreement purportedly
executed on March 20, 1997 was entered into after
Solidbank had filed on September 19, 1996 a case
against Marcopper for collection of sum of money
before Branch 26 of the Regional Trial Court
docketed as Civil Case No. 96-80083. The second
Deed of Assignment purportedly executed on
December 28, 1997 was entered into by President
Gabor after Solidbank had filed its Motion for
Partial Summary Judgment, after the rendition by
Branch 26 of the Regional Trial Court of Manila of a
Partial Summary Judgment and after the said trial
court had issued a writ of execution, and which
judgment was later affirmed by the Court of
Appeals. While the assignments (which were not
registered with the Registry of Property as required by
Article 1625 of the new Civil Code) may be valid
between the parties thereof, it produces no effect as
against third parties. The purported execution of the
Deeds of Assignment in favor of petitioner was in
violation of Article 1387 of the New Civil Code x x
x. (Emphasis Supplied)
Hence, the present Petition for Review on Certiorari by
MR Holdings, Ltd. moored on the following grounds:
A. THE HONORABLE COURT OF
APPEALS COMMITS A REVERSIBLE
ERROR IN COMPLETELY
DISREGARDING AS A MATERIAL FACT
OF THE CASE THE EXISTENCE OF THE
PRIOR, REGISTERED 1992 DEED OF
REAL ESTATE AND CHATTEL
MORTGAGE CREATING A LIEN OVER
THE LEVIED PROPERTIES, SUBJECT
OF THE ASSIGNMENT AGREEMENT
DATED MARCH 20, 1997, THUS,
MATERIALLY CONTRIBUTING TO THE
SAID COURTS MISPERCEPTION AND
MISAPPRECIATION OF THE MERITS
OF PETITIONERS CASE.
B. THE HONORABLE COURT OF
APPEALS COMMITS A REVERSIBLE
ERROR IN MAKING A FACTUAL
FINDING THAT THE SAID
ASSIGNMENT AGREEMENT IS NOT
REGISTERED, THE SAME BEING
CONTRARY TO THE FACTS ON
RECORD, THUS, MATERIALLY
CONTRIBUTING TO THE SAID COURTS
MISPERCEPTION AND
MISAPPRECIATION OF THE MERITS
OF PETITIONERS CASE.
C. THE HONORABLE COURT OF
APPEALS COMMITS A REVERSIBLE
ERROR IN MAKING A FACTUAL
FINDING ON THE EXISTENCE OF AN
ATTACHMENT ON THE PROPERTIES
SUBJECT OF INSTANT CASE, THE
SAME BEING CONTRARY TO THE
FACTS ON RECORD, THUS,
MATERIALLY CONTRIBUTING TO THE
SAID COURTS MISPERCEPTION AND
MISAPPRECIATION OF THE MERITS
OF PETITIONERS CASE.
D. THE HONORABLE COURT OF
APPEALS COMMITS A REVERSIBLE
ERROR IN HOLDING THAT THE SAID
ASSIGNMENT AGREEMENT AND THE
DEED OF ASSIGNMENT ARE NOT
BINDING ON RESPONDENT
SOLIDBANK WHO IS NOT A PARTY
THERETO, THE SAME BEING
CONTRARY TO LAW AND
ESTABLISHED JURISPRUDENCE ON
PRIOR REGISTERED MORTGAGE
LIENS AND ON PREFERENCE OF
CREDITS.
E. THE HONORABLE COURT OF
APPEALS COMMITS A REVERSIBLE
ERROR IN FINDING THAT THE
AFOREMENTIONED ASSIGNMENT
AGREEMENT AND DEED OF
ASSIGNMENT ARE SHAM, SIMULATED,
OF DUBIOUS CHARACTER, AND WERE
MADE IN BAD FAITH AND IN FRAUD
OF CREDITORS, PARTICULARLY
RESPONDENT SOLIDBANK, THE SAME
BEING IN COMPLETE DISREGARD OF,
VIZ: (1) THE LAW AND ESTABLISHED
JURISPRUDENCE ON PRIOR,
REGISTERED MORTGAGE LIENS AND
ON PREFERENCE OF CREDITS, BY
REASON OF WHICH THERE EXISTS NO
CAUSAL CONNECTION BETWEEN THE
SAID CONTRACTS AND THE
PROCEEDINGS IN CIVIL CASE NO. 96-
80083; (2) THAT THE ASIAN
DEVELOPMENT BANK WILL NOT OR
COULD NOT HAVE AGREED TO A
SHAM; SIMULATED, DUBIOUS AND
FRAUDULENT TRANSACTION; AND (3)
THAT RESPONDENT SOLIDBANKS
BIGGEST STOCKHOLDER, THE BANK
OF NOVA SCOTIA, WAS A MAJOR
BENEFICIARY OF THE ASSIGNMENT
AGREEMENT IN QUESTION.
F. THE HONORABLE COURT OF
APPEALS COMMITS A REVERSIBLE
ERROR IN HOLDING THAT
PETITIONER IS WITHOUT LEGAL
CAPACITY TO SUE AND SEEK
REDRESS FROM PHILIPPINE COURTS,
IT BEING THE CASE THAT SECTION
133 OF THE CORPORATION CODE IS
WITHOUT APPLICATION TO
PETITIONER, AND IT BEING THE CASE
THAT THE SAID COURT MERELY
RELIED ON SURMISES AND
CONJECTURES IN OPINING THAT
PETITIONER INTENDS TO DO
BUSINESS IN THE PHILIPPINES.
G. THE HONORABLE COURT OF
APPEALS COMMITS A REVERSIBLE
ERROR IN HOLDING THAT
RESPONDENT MARCOPPER, PLACER
DOME, INC., AND PETITIONER ARE
ONE AND THE SAME ENTITY, THE
SAME BEING WITHOUT FACTUAL OR
LEGAL BASIS.
H. THE HONORABLE COURT OF
APPEALS COMMITS A REVERSIBLE
ERROR IN HOLDING PETITIONER
GUILTY OF FORUM SHOPPING, IT
BEING CLEAR THAT NEITHER LITIS
PENDENTIA NOR RES JUDICATA MAY
BAR THE INSTANT REIVINDICATORY
ACTION, AND IT BEING CLEAR THAT
AS THIRD-PARTY CLAIMANT, THE
LAW AFFORDS PETITIONER THE
RIGHT TO FILE SUCH
REIVINDICATORY ACTION.
 I. THE HONORABLE COURT OF assignment contracts (whereby Marcoppers assets where
APPEALS COMMITS A REVERSIBLE transferred to it) as mere isolated acts that cannot foreclose its
ERROR IN RENDERING A DECISION right to sue in local courts. Petitioner likewise maintains that the
two assignment contracts, although executed during the
WHICH IN EFFECT SERVES AS
pendency of Civil Case No. 96-80083 in the RTC of Manila, are
JUDGMENT ON THE MERITS OF THE not fraudulent conveyances as they were supported by valuable
CASE. considerations. Moreover, they were executed in connection
with prior transactions that took place as early as 1992 which
J. THE SHERIFFS LEVY AND SALE, THE involved ADB, a reputable financial institution. Petitioner
SHERIFFS CERTIFICATE OF SALE further claims that when it paid Marcoppers obligation to ADB,
DATED OCTOBER 12, 1998, THE RTC- it stepped into the latters shoes and acquired its (ADBS) rights,
MANILA ORDER DATED FEBRUARY 12, titles, and interests under the Deed of Real Estate and Chattel
1999, AND THE RTC-BOAC ORDER Mortgage. Lastly, petitioner asserts its existence as a
corporation, separate and distinct from Placer Dome and
DATED NOVEMBER 25, 1998 ARE NULL Marcopper.
AND VOID.
In its comment, Solidbank avers that: a) petitioner is doing
K. THE HONORABLE COURT OF business in the Philippines and this is evidenced by the huge
APPEALS COMMITS A REVERSIBLE investment it poured into the assignment contracts; b) granting
that petitioner is not doing business in the Philippines, the nature
ERROR IN AFFIRMING THE DENIAL BY of its transaction reveals an intention to do business or to begin
THE RTC-BOAC OF PETITIONERS a series of transaction in the country; c) petitioner, Marcopper
APPLICATION FOR PRELIMINARY and Placer Dome are one and the same entity, petitioner being
INJUNCTION, THE SAME BEING IN then a wholly-owned subsidiary of Placer Dome, which, in turn,
TOTAL DISREGARD OF PETITIONERS owns 40% of Marcopper; d) the timing under which the
RIGHT AS ASSIGNEE OF A PRIOR, assignments contracts were executed shows that petitioners
REGISTERED MORTGAGE LIEN, AND purpose was to defeat any judgment favorable to it (Solidbank);
IN DISREGARD OF THE LAW AND and e) petitioner violated the rule on forum shopping since the
object of Civil Case No. 98-13 (at RTC, Boac, Marinduque) is
JURISPRUDENCE ON PREFERENCE OF similar to the other cases filed by Marcopper in order to forestall
CREDIT." the sale of the levied properties.
In its petition, petitioner alleges that it is not doing business
in the Philippines and characterizes its participation in the
 Marcopper, in a separate comment, states that it is merely a
nominal party to the present case and that its principal concerns
are being ventilated in another case.
The petition is impressed with merit.
Crucial to the outcome of this case is our resolution of the
following issues: 1) Does petitioner have the legal capacity to
sue? 2) Was the Deed of Assignment between Marcopper and
petitioner executed in fraud of creditors? 3)Are petitioner MR
Holdings, Ltd., Placer Dome, and Marcopper one and the same
entity? and 4) Is petitioner guilty of forum shopping?
We shall resolve the issues in seriatim.
I commercial dealings and arrangements, and contemplates, to
The Court of Appeals ruled that petitioner has no legal
capacity to sue in the Philippine courts because it is a foreign
corporation doing business here without license. A review of
this ruling does not pose much complexity as the principles
governing a foreign corporations right to sue in local courts have
long been settled by our Corporation Law.[17] These principles
may be condensed in three statements, to wit: a) if a foreign
corporation does business in the Philippines without a license,
it cannot sue before the Philippine courts;[18] b) if a foreign
corporation is not doing business in the Philippines, it needs no
license to sue before Philippine courts on an isolated
transaction[19]or on a cause of action entirely independent of any
business transaction;[20] and c) if a foreign corporation does
business in the Philippines with the required license, it can
sue before Philippine courts on any transaction. Apparently, it is
not the absence of the prescribed license but the doing (of)
business in the Philippines without such license which debars
the foreign corporation from access to our courts.[21]
The task at hand requires us to weigh the facts vis--vis the
established principles. The question whether or not a foreign
corporation is doing business is dependent principally upon the
facts and circumstances of each particular case, considered in
the light of the purposes and language of the pertinent statute or
statutes involved and of the general principles governing the
jurisdictional authority of the state over such corporations.[22]
Batas Pambansa Blg. 68, otherwise known as The
Corporation Code of the Philippines, is silent as to what
constitutes doing or transacting business in the
Philippines. Fortunately, jurisprudence has supplied the
deficiency andhas held that the term implies a continuity of
that extent, the performance of acts or works or the exercise of
some of the functions normally incident to, and in progressive
prosecution of, the purpose and object for which the corporation
was organized.[23] In Mentholatum Co. Inc., vs.
Mangaliman,[24] this Court laid down the test to determine
whether a foreign company is doing business, thus:
x x x The true test, however, seems to be whether the
foreign corporation is continuing the body or
substance of the business or enterprise for which it
was organized or whether it has substantially retired
from it and turned it over to another. (Traction Cos.
vs. Collectors of Int. Revenue [C.C.A., Ohio], 223 F.
984,987.) x x x.
 The traditional case law definition has metamorphosed into
a statutory definition, having been adopted with some
qualifications in various pieces of legislation in our
jurisdiction. For instance, Republic Act No. 7042, otherwise
known as the Foreign Investment Act of 1991, defines doing
business as follows:
d) The phrase doing business shall include
soliciting orders, service contracts, opening
offices, whether called liaison offices or
branches; appointing representatives or
distributors domiciled in the Philippines or who
in any calendar year stay in the country for a
period or periods totalling one hundred eight(y)
(180) days or more; participating in the
management, supervision or control of any
domestic business, firm, entity, or corporation
in the Philippines; and any other act or acts
that imply a continuity of commercial
dealings or arrangements, and contemplate
to that extent the performance of acts or
works; or the exercise of some of the
functions normally incident to, and in
progressive prosecution of, commercial gain
or of the purpose and object of the business
organization; Provided, however, That the
phrase doing business shall not be deemed to
include mere investment as a shareholder by a
foreign entity in domestic corporations duly
registered to do business, and/or the exercise of
rights as such investor, nor having a nominee
director or officer to represent its interests in
such corporation, nor appointing a
representative or distributor domiciled in the
Philippines which transacts business in its own
name and for its own account. (Emphasis
supplied)[25]
Likewise, Section 1 of Republic Act No. 5455,[26] provides
that:
SECTION. 1. Definition and scope of this Act. - (1) x x
x the phrase doing business shall include soliciting
orders, purchases, service contracts, opening offices,
whether called liaison offices or branches; appointing
representatives or distributors who are domiciled in the
Philippines or who in any calendar year stay in the
Philippines for a period or periods totaling one hundred
eighty days or more; participating in the management,
supervision or control of any domestic business firm,
entity or corporation in the Philippines; and any
other act or acts that imply a continuity of
commercial dealings or arrangements, and
contemplate to that extent the performance of acts or
works, or the exercise of some of the functions
normally incident to, and in progressive prosecution
of, commercial gain or of the purpose and object of
the business organization.
There are other statutes[27] defining the term doing business in
the same tenor as those above-quoted, and as may be observed,
one common denominator among them all is the concept of
continuity.
In the case at bar, the Court of Appeals categorized as doing
business petitioners participation under the Assignment
Agreement and the Deed of Assignment. This is simply
untenable. The expression doing business should not be given
such a strict and literal construction as to make it apply to any
corporate dealing whatever.[28] At this early stage and with
petitioners acts or transactions limited to the assignment
contracts, it cannot be said that it had performed acts intended to
continue the business for which it was organized. It may not be
amiss to point out that the purpose or business for which
petitioner was organized is not discernible in the records. No
effort was exerted by the Court of Appeals to establish the
nexus between petitioners business and the acts supposed to
constitute doing business. Thus, whether the assignment
contracts were incidental to petitioners business or were
continuation thereof is beyond determination. We cannot
apply the case cited by the Court of Appeals, Far East Intl
Import and Export Corp. vs. Nankai Kogyo Co., Ltd.,[29] which
held that a single act may still constitute doing business if it is
not merely incidental or casual, but is of such character as
distinctly to indicate a purpose on the part of the foreign
corporation to do other business in the state. In said case, there
was an express admission from an official of the foreign
corporation that he was sent to the Philippines to look into the
operation of mines, thereby revealing the foreign corporations
desire to continue engaging in business here. But in the case at
bar, there is no evidence of similar desire or intent. Unarguably,
petitioner may, as the Court of Appeals suggested, decide to
operate Marcoppers mining business, but, of course, at this
stage, that is a mere speculation. Or it may decide to sell the
credit secured by the mining properties to an offshore investor,
in which case the acts will still be isolated transactions. To see
through the present facts an intention on the part of
petitioner to start a series of business transaction is to rest
on assumptions or probabilities falling short of actual
proof. Courts should never base its judgments on a state of
facts so inadequately developed that it cannot be determined
where inference ends and conjecture begins.
Indeed, the Court of Appeals holding that petitioner was
determined to be doing business in the Philippines is based
mainly on conjectures and speculation. In concluding that
the unmistakable intention of petitioner is to continue
Marcoppers business, the Court of Appeals hangs on the wobbly
premise that there is no other way for petitioner to recover its
huge financial investments which it poured into Marcoppers
rehabilitation without it (petitioner) continuing Marcoppers
business in the country.[30] This is a mere presumption. Absent
overt acts of petitioner from which we may directly infer its
intention to continue Marcoppers business, we cannot give our
concurrence. Significantly, a view subscribed upon by many
authorities is that the mere ownership by a foreign corporation
of a property in a certain state, unaccompanied by its active
use in furtherance of the business for which it was formed,
is insufficient in itself to constitute doing business.[31] In Chittim
vs. Belle Fourche Bentonite Products Co.,[32] it was held
that even if a foreign corporation purchased
and took conveyances of a mining claim, did some
assessment work thereon, and endeavored to sell it, its acts
will not constitute the doing of business so as to subject the
corporation to the statutory requirements for the
transacting of business. On the same vein, petitioner, a foreign
corporation, which becomes the assignee of mining properties,
facilities and equipment cannot be automatically considered as
doing business, nor presumed to have the intention of engaging
in mining business.
One important point. Long before petitioner assumed
Marcoppers debt to ADB and became their assignee under the
two assignment contracts, there already existed a Support and
Standby Credit Agreement between ADB and Placer Dome
whereby the latter bound itself to provide cash flow support for
Marcoppers payment of its obligations to ADB. Plainly,
petitioners payment of US$ 18,453, 450.12 to ADB was more of
a fulfillment of an obligation under the Support and Standby
Credit Agreement rather than an investment. That petitioner had
to step into the shoes of ADB as Marcoppers creditor was just a
necessary legal consequence of the transactions that
transpired. Also, we must hasten to add that the Support and
Standby Credit Agreement was executed four (4) years prior
to Marcoppers insovency, hence, the alleged intention of
petitioner to continue Marcoppers business could have no basis
for at that time, Marcoppers fate cannot yet be determined.
In the final analysis, we are convinced that petitioner was
engaged only in isolated acts or transactions. Single or isolated
acts, contracts, or transactions of foreign corporations are not
regarded as a doing or carrying on of business. Typical examples
of these are the making of a single contract, sale, sale with the
taking of a note and mortgage in the state to secure payment
therefor, purchase, or note, or the mere commission of a
tort.[33] In these instances, there is no purpose to do any other
business within the country.
II
Solidbank contends that from the chronology and timing of
events, it is evident that there existed a pre-set pattern of
response on the part of Marcopper to defeat whatever court
ruling that may be rendered in favor of Solidbank.
We are not convinced.
While it may appear, at initial glance, that the assignment
contracts are in the nature of fraudulent conveyances, however,
a closer look at the events that transpired prior to the execution
of those contracts gives rise to a different conclusion. The
obvious flaw in the Court of Appeals Decision lies in its
constricted view of the facts obtaining in the case. In its factual
narration, the Court of Appeals definitely left out some
events. We shall see later the significance of those events.
Article 1387 of the Civil Code of the Philippines provides:
Art. 1387. All contracts by virtue of which the debtor
alienates property by gratuitous title are presumed to
have been entered into in fraud of creditors, when the
donor did not reserve sufficient property to pay all debts
contracted before the donation.
Alienations by onerous title are also presumed
fraudulent when made by persons against whom
some judgment has been rendered in any instance or
some writ of attachment has been issued. The
decision or attachment need not refer to the property
alienated, and need not have been obtained by the
party seeking rescission.
In addition to these presumptions, the design to defraud
creditors may be proved in any other manner recognized
by law and of evidence.
This article presumes the existence of fraud made by a
debtor. Thus, in the absence of satisfactory evidence to the
contrary, an alienation of a property will be held fraudulent if it
is made after a judgment has been rendered against the debtor
making the alienation.[34] This presumption of fraud is not
conclusive and may be rebutted by satisfactory and convincing
evidence. All that is necessary is to establish affirmatively
that the conveyance is made in good faith and for a sufficient
and valuable consideration.[35]
The Assignment Agreement and the Deed of Assignment
were executed for valuable considerations. Patent from the
Assignment Agreement is the fact that petitioner assumed the
payment of US$ 18,453,450.12 to ADB in satisfaction of
Marcoppers remaining debt as of March 20, 1997.[36] Solidbank
cannot deny this fact considering that a substantial portion of the
said payment, in the sum of US$ 13,886,791.06, was remitted in
favor of the Bank of Nova Scotia, its major stockholder.[37]
The facts of the case so far show that the assignment
contracts were executed in good faith. The execution of the
Assignment Agreement on Macrh 20, 1997 and the Deed of
Assignment on December 8,1997 is not the alpha of this
case. While the execution of these assignment contracts almost
coincided with the rendition on May 7, 1997 of the Partial
Judgment in Civil Case No. 96-80083 by the Manila RTC,
however, there was no intention on the part of petitioner to
defeat Solidbanks claim. It bears reiterating that as early as
November 4, 1992, Placer Dome had already bound itself under
a Support and Standby Credit Agreement to provide Marcopper
with cash flow support for the payment to ADB of its
obligations. When Marcopper ceased operations on account of
disastrous mine tailings spill into the Boac River and ADB
pressed for payment of the loan, Placer Dome agreed to have its
subsidiary, herein petitioner, paid ADB the amount of US
$18,453,450.12. Thereupon, ADB and Marcopper executed,
respectively, in favor of petitioner an Assignment Agreement
and a Deed of Assignment. Obviously, the assignment contracts
were connected with transactions that happened long before the
rendition in 1997 of the Partial Judgment in Civil Case No. 96-
80083 by the Manila RTC. Those contracts cannot be viewed in
isolation. If we may add, it is highly inconceivable that ADB, a
reputable international financial organization, will connive with
Marcopper to feign or simulate a contract in 1992 just to defraud
Solidbank for its claim four years thereafter. And it is equally
incredible for petitioner to be paying the huge sum of US $ 18,
453, 450.12 to ADB only for the purpose of defrauding
Solidbank of the sum of P52,970.756.89.
It is said that the test as to whether or not a conveyance is
fraudulent is -- does it prejudice the rights of creditors? [38] We
cannot see how Solidbanks right was prejudiced by the
assignment contracts considering that substantially all of
Marcoppers properties were already covered by the registered
Deed of Real Estate and Chattel Mortgage executed by
Marcopper in favor of ADB as early as November 11, 1992. As
such, Solidbank cannot assert a better right than ADB, the latter
being a preferred creditor. It is basic that mortgaged properties
answer primarily for the mortgaged credit, not for the judgment
credit of the mortgagors unsecured creditor. Considering that
petitioner assumed Marcoppers debt to ADB, it follows that
Solidbanks right as judgment creditor over the subject properties
must give way to that of the former.
 III
The record is lacking in circumstances that would suggest
that petitioner corporation, Placer Dome and Marcopper are one
and the same entity. While admittedly, petitioner is a wholly-
owned subsidiary of Placer Dome, which in turn, which, in turn,
was then a minority stockholder of Marcopper, however, the
mere fact that a corporation owns all of the stocks of another
corporation, taken alone is not sufficient to justify their
being treated as one entity. If used to perform legitimate
functions, a subsidiarys separate existence shall be respected,
and the liability of the parent corporation as well as the
subsidiary will be confined to those arising in their respective
business.[39]
The recent case of Philippine National Bank vs. Ritratto
Group Inc.,[40] outlines the circumstances which are useful in the
determination of whether a subsidiary is but a mere
instrumentality of the parent-corporation, to wit:
(a) The parent corporation owns all or most of the capital
stock of the subsidiary.
(b) The parent and subsidiary corporations have common
directors or officers.
(c) The parent corporation finances the subsidiary.
(d) The parent corporation subscribes to all the capital stock
of the subsidiary or otherwise causes its incorporation.
(e) The subsidiary has grossly inadequate capital.
(f) The parent corporation pays the salaries and other
expenses or losses of the subsidiary.
(g) The subsidiary has substantially no business except with
the parent corporation or no assets except those conveyed
to or by the parent corporation.
(h) In the papers of the parent corporation or in the
statements of its officers, the subsidiary is described as a
department or division of the parent corporation, or its
business or financial responsibility is referred to as the
parent corporations own.
(i) The parent corporation uses the property of the subsidiary
as its own.
(j) The directors or executives of the subsidiary do not act
independently in the interest of the subsidiary, but take
their orders from the parent corporation.
(k) The formal legal requirements of the subsidiary are not
observed.
In this catena of circumstances, what is only extant in
the records is the matter of stock ownership. There are no
other factors indicative that petitioner is a mere
instrumentality of Marcopper or Placer Dome. The mere fact
that Placer Dome agreed, under the terms of the Support and
Standby Credit Agreement to provide Marcopper with cash flow
support in paying its obligations to ADB, does not mean that its
personality has merged with that of Marcopper. This singular
undertaking, performed by Placer Dome with its own
stockholders in Canada and elsewhere, is not a sufficient ground
to merge its corporate personality with Marcopper which has its
own set of shareholders, dominated mostly by Filipino citizens.
The same view applies to petitioners payment of Marcoppers
remaining debt to ADB.
With the foregoing considerations and the absence of fraud
in the transaction of the three foreign corporations, we find it
improper to pierce the veil of corporate fiction that equitable
doctrine developed to address situations where the corporate
personality of a corporation is abused or used for wrongful
purposes.
IV
On the issue of forum shopping, there could have been a
violation of the rules thereon if petitioner and Marcopper were
indeed one and the same entity. But since petitioner has a
separate personality, it has the right to pursue its third-party
claim by filing the independent reivindicatory action with the
RTC of Boac, Marinduque, pursuant to Rule 39, Section 16 of
the 1997 Rules of Civil Procedures. This remedy has been
recognized in a long line of cases decided by this
Court.[41] In Rodriguez vs. Court of Appeals,[42] we held:
. . . It has long been settled in this jurisdiction that the
claim of ownership of a third party over properties
levied for execution of a judgment presents no issue for
determination by the court issuing the writ of execution.
. . .Thus, when a property levied upon by the sheriff
pursuant to a writ of execution is claimed by third
person in a sworn statement of ownership thereof, as
prescribed by the rules, an entirely different matter
calling for a new adjudication arises. And dealing as
it does with the all important question of title, it is
reasonable to require the filing of proper pleadings and
the holding of a trial on the matter in view of the
requirements of due process.
. . . In other words, construing Section 17 of Rule 39 of
the Revised Rules of Court (now Section 16 of the 1997
Rules of Civil Procedure), the rights of third-party
claimants over certain properties levied upon by the
sheriff to satisfy the judgment may not be taken up in
the case where such claims are presented but in a
separate and independent action instituted by the
claimants. (Emphasis supplied)
This reivindicatory action has for its object the recovery of
ownership or possession of the property seized by the sheriff,
despite the third party claim, as well as damages resulting
therefrom, and it may be brought against the sheriff and such
other parties as may be alleged to have connived with him in the
supposedly wrongful execution proceedings, such as the
judgment creditor himself. Such action is an entirely separate
and distinct action from that in which execution has been
issued. Thus, there being no identity of parties and cause of
action between Civil Case No. 98-13 (RTC, Boac) and those
cases filed by Marcopper, including Civil Case No. 96-80083
(RTC, Manila) as to give rise to res judicata or litis pendentia,
Solidbanks allegation of forum-shopping cannot prosper.[43]
All considered, we find petitioner to be entitled to the
issuance of a writ of preliminary injunction. Section 3, Rule 58
of the 1997 Rules of Civil Procedure provides:
SEC. 3 Grounds for issuance of preliminary injunction.
A preliminary injunction may be granted when it is
established:
(a) That the applicant is entitled to the relief demanded, and
the whole or part of such relief consists in restraining the
 commission or continuance of the act or acts complained
of, or in requiring the performance of an act or acts,
either for a limited period or perpetually;
(b) That the commission, continuance or non-performance
of the acts or acts complained of during the litigation
would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing,
threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in
violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to render
the judgment ineffectual.
Petitioners right to stop the further execution of the
properties covered by the assignment contracts is clear under the
facts so far established. An execution can be issued only against
a party and not against one who did not have his day in
court.[44] The duty of the sheriff is to levy the property of the
judgment debtor not that of a third person. For, as the saying
goes, one mans goods shall not be sold for another man's
debts.[45] To allow the execution of petitioners properties would
surely work injustice to it and render the judgment on the
reivindicatory action, should it be favorable,
ineffectual. In Arabay, Inc., vs. Salvador,[46] this Court held that
an injunction is a proper remedy to prevent a sheriff from selling
the property of one person for the purpose of paying the debts of
another; and that while the general rule is that no court has
authority to interfere by injunction with the judgments or
decrees of another court of equal or concurrent or coordinate
jurisdiction, however, it is not so when a third-party claimant is
involved. We quote the instructive words of Justice Querube C.
Makalintal in Abiera vs. Court of Appeals,[47] thus:
The rationale of the decision in the Herald Publishing
Company case[48] is peculiarly applicable to the one
before Us, and removes it from the general doctrine
enunciated in the decisions cited by the respondents and
quoted earlier herein.
1. Under Section 17 of Rule 39 a third person who
claims property levied upon on execution may vindicate
such claim by action. Obviously a judgment rendered in
his favor, that is, declaring him to be the owner of the
property, would not constitute interference with the
powers or processes of the court which rendered the
judgment to enforce which the execution was levied. If
that be so and it is so because the property, being
that of a stranger, is not subject to levy then an
interlocutory order such as injunction, upon a claim
and prima facie showing of ownership by the
claimant, cannot be considered as such interference
either.
WHEREFORE, the petition is GRANTED. The assailed
Decision dated January 8, 1999 and the Resolution dated March
29, 1999 of the Court of Appeals in CA G.R. No. 49226 are set
aside. Upon filing of a bond of P1,000,000.00, respondent
sheriffs are restrained from further implementing the writ of
execution issued in Civil Case No. 96-80083 by the RTC,
Branch 26, Manila, until further orders from this Court. The
RTC, Branch 94, Boac, Marinduque, is directed to dispose of
Civil Case No. 98-13 with dispatch.
SO ORDERED.
 Melo, (Chairman), Vitug, Panganiban, and Carpio,
JJ., concur.