FIRST DIVISION
[G.R. No. 207142. July 24, 2019.]
TAN CHU LIM AS SUBSTITUTED BY HIS HEIRS, NAMELY, ANTONIO S. TAN, LORENZO S. TAN, EMILIO S. TAN, LYDIA T. CHENG, MARCELO S. TAN, VIRGINIA S. TAN, MARITA S. TAN, ROMEO S. TAN, ROSA S. TAN, AND RONALDO S. TAN, petitioners, vs.NIDA LAO, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution dated July 24, 2019which reads as follows:
"G.R. No. 207142 (Tan Chu Lim as substituted by his heirs, namely, Antonio S. Tan, Lorenzo S. Tan, Emilio S. Tan, Lydia T. Cheng, Marcelo S. Tan, Virginia S. Tan, Marita S. Tan, Romeo S. Tan, Rosa S. Tan, and Ronaldo S. Tan v. Nida Lao). — This is a petition for review on certiorari 1 assailing the Decision 2 dated December 28, 2012 and Resolution 3 dated May 6, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 88858. The CA reversed and set aside the Decision 4 dated November 3, 2006 of Branch 17, Regional Trial Court of Tabaco City (RTC Branch 17). In this case, we reiterate that "[o]ne having no material interest to protect cannot invoke the jurisdiction of the court as the plaintiff in an action." 5
Petitioner Tan Chu Lim (Tan) is the owner of Lot 511, 583 square meters (sq.m.) area of land located in Tabaco, Albay. On February 11, 1980, Tan entered into a Memorandum of Agreement (MOA) with Nida Lao (Lao) and Cua Hian Lin (Cua). Under the MOA, Tan sold a portion of Lot 511 to Lao and Cua under the condition that he shall have the right of pre-emption should Cua dispose of the portion sold to them within ten years from the execution of the MOA. 6
Accordingly, Tan executed a Deed of Absolute Sale (DOAS) in favor of Cua covering 101 sq.m. of Lot 511, which was designated as Lot 511-A. 7 Tan also executed a DOAS in favor of Lao covering 74 sq.m. of Lot 511, designated as Lot 511-B. A Transfer Certificate of Title (TCT) over Lot 511-B was issued in the name of Lao on December 14, 1982. 8
Thereafter, Lao mortgaged Lot 511-B to the Rural Bank of Malinao. It was eventually foreclosed. In its auction sale, Tabaco Liberty Commercial Center (TLCC), a single proprietorship owned by Tan, emerged as the highest bidder. 9 Lao however, redeemed Lot 511-B, and ownership was restored to her. 10 CAIHTE
Subsequently, Lao again mortgaged Lot 511-B, this time to Metro Bank & Trust Company (Metro Bank) as security for a loan. Due to her failure to pay the loan amounting to P35,925.38, Metro Bank foreclosed the mortgage. The case was assigned to Branch 17 of the RTC, Tabaco City (Foreclosure Case). 11 Lot 511-B was eventually sold in a public auction where TLCC, again, was the highest bidder. Hence, a Certificate of Sale was issued in its favor on February 9, 1987. 12
With the intention to redeem Lot 511-B, Lao tendered the sum of P58,051.98 to be added to her previous deposit of P1,948.02, for a total of P60,000.00 as the redemption price for the lot. Deputy Sheriff Jose A. Berces then issued a certificate of redemption dated December 29, 1987 in favor of Lao. 13
This prompted Tan to file a complaint for the nullification of the certificate of redemption, specific performance, damages, and injunction against Lao, Cua, and the respondent Deputy Sheriff Wilfredo C. Abrigo. The case, docketed as Civil Case No. T-1356, was assigned to Branch 15, Regional Trial Court of Tabaco City (RTC Branch 15) (nullification case). 14
Tan alleged that the issuance of the certificate of redemption was done in bad faith and in violation of Section 28, Rule 39 of the Rules of Court. 15 The amount tendered by Lao was insufficient since it did not include the interest of 1% per month, which in this case amounts to P7,200.00 and other expenses pertaining to the Sheriff's fees, legal fees, notarial and registration fees, among others, amounting to P13,900.00. Thus, the total redemption price that Lao should have paid is P81,100.00. 16
Cua, thus, deposited P21,100.00 as remaining balance of the redemption price submitted by Tan, and reserved his right to consider this amount as additional loan of Lao, with Lot 511-B as security. Cua also argued that TLCC must submit a list of its relevant expenses after the certificate of sale was issued in its favor. 17
For her part, Lao claimed that TLCC is at fault for failing to submit a summary of its legal expenses despite notice. Hence, she cannot be faulted for only paying P60,000.00. 18 Lao also argued that Tan had no personality to file the complaint since it was TLCC, a corporation with a separate and distinct personality, which participated in the auction and in whose name the certificate of sale was issued. 19
The RTC Branch 15 in the nullification case dismissed the complaint. 20 It held that Tan was not a real party in interest, as he himself recognized that TLCC had a separate juridical personality. 21 It also refused to set aside the redemption proceedings before RTC Branch 17 in the foreclosure case since it already took jurisdiction over the case. 22 Hence, the RTC Branch 15 in the nullification case disposed of the case as follows:
WHEREFORE, in view of all the foregoing, decision is hereby rendered as follows:
1. Dismissing the complaint with costs against plaintiff, thereby upholding the validity of the certificate of redemption in question;
2. Ordering the herein defendant Ex-Officio Provincial Sheriff of Tabaco, Albay or his duly authorized successor/representative to pay to the Liberty Commercial Center, Inc., c/o herein plaintiff, the sum of P5,500.00 with legal interest thereon or 6% per annum from November 2, 1987 until the deposit of P21,000.00 was made by defendant Cua Hian Lin in this case on July 19, 1988 which shall be taken from said deposit of P21,000.00 and thereafter for said sheriff to return the remainder to defendant Cua Hian Lin;
3. Ordering the said sheriff to demand from Metro Bank and Trust Company in Civil Case No. T-1143, or if the same is no longer legally tenable or feasible, in an independent action, the return of the sum of P22,126.60 representing the excess paid by the sheriff to said bank over the amount of the judgment debt of P35,925.38 and thereafter, to turn over any such amount recovered by him to defendant Nida Lao or her duly authorized representative/attorney-in-fact;
4. Finally, ordering plaintiff to pay the amount of P3,000.00 each as attorney's fees and expenses of litigation to Cua Hian Lin and Nida Lao. All other claims and counterclaims are dismissed for lack of sufficient merit. 23 DETACa
Because of the unfavorable ruling, Tan appealed to the CA and the appeal was docketed as CA-G.R. CV No. 36588. In its Decision 24 dated November 7, 1996, the CA ruled that the nullification case should be remanded back to RTC Branch 17 so that it may resolve the issue on the legal infirmities of the certificate of redemption, among others. RTC Branch 15, being a co-equal court of RTC Branch 17, cannot disturb or modify the judgment or orders of the latter. 25 The decision of the CA became final and executory on March 14, 1997. 26
On November 11, 2003, Tan filed a motion before RTC Branch 15, asking it to comply with this Decision of the CA. RTC Branch 15 denied the motion in its Order dated January 19, 2004 on the ground that it had nothing to do with the resolution of the issues on the legal infirmities of the certificate of redemption. Tan filed a motion for reconsideration, arguing that RTC Branch 17 cannot resolve the case unless RTC Branch 15 orders the transfer of its records to the former. 27 The RTC Branch 15 granted Tan's motion and transmitted the records of the case to RTC Branch 17. 28
After the directive of the CA to remand the case to RTC Branch 17, it issued its Decision 29 declaring the certificate of redemption null and void for Lao's failure to comply with the mandatory requirements for redemption. In particular, Lao failed to tender the correct amount, which should include the interest of 1% per month. 30 Lao then appealed to the CA, and the appeal was docketed as CA G.R. No. 88858. 31
In its Decision 32 dated December 28, 2012, the CA granted the petition and set aside the ruling of the RTC Branch 17. First, the CA held that its Decision dated November 7, 1996 directing the remand of the nullification case has already become final. 33 Thus, RTC Branch 17 did not err in taking cognizance of the case and ruling on the validity of the certificate of redemption. 34 Second, Metro Bank should be impleaded if Lao wishes to recover any supposed excess in the auction price paid over the judgment debt. 35 Third, Tan was not a real party-in-interest to the case. TLCC should have been the one to file the complaint. This, in fact, was already stated in its Decision dated November 7, 1996. Thus, absent any showing that Tan was authorized to file the case on behalf of TLCC, he had no personality to assail the validity of the certificate of redemption. Consequently, the certificate of redemption remains valid. 36
Tan died while the case was pending before the CA. 37 The heirs of Tan then filed a motion for reconsideration which the CA denied. 38 They now come before us arguing that the CA erred in ruling that Tan was not a real party in interest.
We uphold the CA, and deny the petition.
Rule 3, Section 2 39 of the Rules of Court is clear that an action must be filed by a real party in interest. Here, the CA in its Decision dated November 7, 1996 in the nullification case has already settled that Tan did not have the personality to file the suit. The CA held, thus:
After a holistic review of the case — taking note of existing jurisprudence — we are inclined to agree with the appellees [respondents herein]: there was nothing erroneous in the lower court's findings regarding the capacity and personality of the appellant [Tan] to initiate Civil Case No. 1356. We meticulously filtered the documentary evidence presented — the letter dated January 26, 1987 of Alberto B. Lawenko, legal counsel of the Liberty Commercial Center, to the sheriff of Branch 17, Regional Trial Court (marked Exhibits "O" and "10"); the "certificate of sale" dated January 26, 1987 (marked Exhibits "F" and "7"); and the "certificate of redemption" issued by Deputy Sheriff Jose A. Berces on December 29, 1987 and received by the court on January 5, 1988 (marked Exhibits "G" and "6") — and we only saw the name "Liberty Commercial Center" not that of the appellant herein thereby emulsifying appellees' aforequoted posture. Also, taking note of another document (Exhibit "28"), which showed that the articles of incorporation and by-laws of the Tabaco Liberty Commercial Center, Inc. were registered with the Securities and Exchange Commission on December 16, 1987. We are minded of the well-settled doctrine that a corporation is bestowed a judicial personality which is separate and distinct from its stockholders/members and from other corporations to which it may be connected (Cruz v. Dalisay, 152 SCRA 482; Philippine Veterans Investment Development Corporation vs. Court of Appeals, 181 SCRA 678; Del Rosario vs. National Labor Relations Commission, 187 SCRA 777). Appellant's pretension of ownership of the subject corporation did not cure the legal defect for it has been ruled that ownership by a single stockholder is not a ground for disregarding the separate corporate personality (Pabalan vs. National Labor Relations Commission, 184 SCRA 495). 40 (Emphasis supplied.)
Tan, however argues that the CA "erred when it failed to respect its earlier decision which remanded the case to the trial court solely for the exclusive purpose of resolving the case on the merits." 41 In other words, Tan insists that the CA should have confined its findings on the alleged infirmities of the certificate of redemption, and should not have included the issue of whether Tan is a real party in interest.
We do not agree with Tan. aDSIHc
The fallo of the CA decision, which it affirmed in its Resolution, reads:
WHEREFORE, premises considered, the appealed decision dated October 31, 1990, of the Regional Trial Court Branch 15 in Tabaco, Albay is hereby REVERSED and SET ASIDE and the case remanded back to said court for the afore-mentioned purposes.
SO ORDERED. 42
It is apparent that the CA did not restrict the ruling of the RTC Branch 17 to the issue of the validity of the certificate of redemption. If the CA so intended, it would have explicitly laid down such limit in the fallo of its decision. We note that "the fallo is the final order, and it becomes the subject of execution; while the body of the decision merely contains the reasons or conclusions of the court ordering nothing." 43 Here, the fallo's instruction on the remand was "for the aforementioned purposes," which reasonably refer not only to the issue of the legality of the certificate of redemption, but likewise includes Tan's personality to file the complaint. The issue of whether Tan possesses the required interest to file the suit is a legitimate issue that must be settled early on, as it may be determinative of the necessity to resolve all other issues. In this light, We hold that the CA did not err in ruling on the issue of whether Tan is a real party in interest.
We also find that the CA was correct in holding that Tan was not a real party-in-interest to the case.
According to his heirs, Tan was doing business through a sole proprietorship under the name Liberty Commercial. The certificate of sale was issued in the name of Tan and/or Liberty Commercial, which is different from TLCC. In fact, TLCC was not yet in existence when the auction sale was conducted. Hence, they argue that the CA erred in holding that it is TLCC which had the personality to file the suit.
In his complaint questioning the validity of the certificate of redemption, Tan stated that he "is a businessman doing business under the name and style Tabaco Liberty Commercial Center." 44 Records show that the certificate of sale was issued in the name of Tan and/or Liberty Commercial (sole proprietorship). Clearly, at the time when Tan filed the complaint, he can no longer claim that he was still acting as the owner of Liberty Commercial; he is bound by the statements he averred in the complaint. 45
Besides, TLCC was incorporated on December 16, 1987, or several months after the certificate of sale was issued on February 9, 1987, and several months before Tan filed his complaint with the RTC on April 5, 1988. Notably, the CA made it clear that the certificate of sale did not state Tan's name. 46 Thus, while it may be true that Tan purchased Lot 511-B in the auction sale in the name of a sole proprietorship, he did not have the requisite personality to file the complaint under the name of TLCC. In other words, Tan could no longer act as if TLCC was still a sole proprietorship because it was then already a corporation which has its own juridical personality. There was also no proof that the sole proprietorship "Liberty Commercial" continued to subsist alongside TLCC. Therefore, TLCC should have been the one to file complaint or it should have authorized Tan to file it on its behalf. Neither was done in this case. Accordingly, Tan's complaint must be dismissed for lack of cause of action. 47
WHEREFORE, the petition is DENIED. The Decision dated December 28, 2012 and Resolution dated May 6, 2013 of the Court of Appeals in CA-G.R. CV No. 88858 are AFFIRMED. ETHIDa
SO ORDERED." Del Castillo, J., on official leave; Jardeleza, J., designated as Acting Working Chairperson of the First Division per Special Order No. 2680 dated July 12, 2019.
Very truly yours,
(SGD.) LIBRADA C. BUENADivision Clerk of Court
Footnotes
1.Rollo, pp. 3-34.
2.Id. at 45-61; penned by Associate Justice Apolinario D. Bruselas, Jr., with the concurrence of Associate Justices Rebecca De Guia-Salvador and Samuel H. Gaerlan.
3.Id. at 66-67.
4.Id. at 62-64; penned by Judge Arnulfo B. Cabredo.
5.Palm Avenue Holding Co., Inc. v. Sandiganbayan, G.R. No. 173082, August 6, 2014, 732 SCRA 156, 166.
6.Rollo, p. 46.
7.Id.
8.Rollo, pp. 46-47.
9.Id. at 47.
10.Id.
11.Id.
12.Rollo, pp. 47-48.
13.Id. at 48.
14.Id.
15. Tan erroneously cited Section 30. Upon perusal of the Rules of Court, it is Section 28 that applies:
Sec. 28. Time and Manner of, and Amounts Payable on, Successive Redemptions; Notice to be Given and Filed. — The judgment obligor, or redemptioner, may redeem the property from the purchaser, at any time within one (1) year from the date of the registration of the certificate of sale, by paying the purchaser the amount of his purchase, with one per centum per month interest thereon in addition, up to the time of redemption, together with the amount of any assessments or taxes which the purchaser may have paid thereon after purchase, and interest on such last named amount at the same rate; and if the purchaser be also a creditor having a prior lien to that of the redemptioner, other than the judgment under which such purchase was made, the amount of such other lien, with interest.
Property so redeemed may again be redeemed within sixty (60) days after the last redemption upon payment of the sum paid on the last redemption, with two per centum thereon in addition, and the amount of any assessments or taxes which the last redemptioner may have paid thereon after redemption by him, with interest on such last named amount, and in addition, the amount of any liens held by said last redemptioner prior to his own, with interest. The property may be again, and as often as a redemptioner is so disposed, redeemed from any previous redemptioner within sixty (60) days after the last redemption, on paying the sum paid on the last previous redemption, with two per centum thereon in addition, and the amounts of any assessments or taxes which the last previous redemptioner paid after the redemption thereon, with interest thereon, and the amount of any liens held by the last redemptioner prior to his own, with interest.
Written notice of any redemption must be given to the officer who made the sale and a duplicate filed with the registry of deeds of the place, and if any assessments or taxes are paid by the redemptioner or if he has or acquires any lien other than that upon which the redemption was made, notice thereof must in like manner be given to the officer and filed with the registry of deeds; if such notice be not filed, the property may be redeemed without paying such assessments, taxes, or liens.
16.Rollo, p. 49.
17.Id.
18.Id.
19.Rollo, pp. 49-50.
20.Id. at 74-83; penned by Judge Martin P. Badong.
21.Id. at 78-79.
22.Id. at 80.
23.Id. at 83.
24.Id. at 84-101; penned by Associate Justice Ramon Mabutas, Jr., with the concurrence of Associate Justices Minerva P. Gonzaga-Reyes and Oswaldo D. Agcaoili.
25.Id. at 100.
26.Id. at 52.
27.Id.
28.Rollo, pp. 53, 103.
29.Id. at 62-64.
30.Rollo, pp. 63-64.
31.Id. at 45-61.
32.Id.
33.Rollo, p. 55.
34.Id. at 57.
35.Id. at 57-58.
36.Id. at 58-60.
37.Id. at 39.
38.Id. at 66-67.
39.Sec. 2. Parties in interest. — A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest.
40.Rollo, pp. 98-99.
41.Id. at 16.
42.Id. at 100.
43.People v. Cilot, G.R. No. 208410, October 19, 2016, 806 SCRA 575, 593.
44.Rollo, p. 70. Emphasis supplied.
45.See Del Rosario v. Gerry Roxas Foundation, Inc., G.R. No. 170575, June 8, 2011, 651 SCRA 414.
46.Rollo, p. 98.
47. See Palm Avenue Holding Co., Inc. v. Sandiganbayan, G.R. No. 173082, August 6, 2014, 732 SCRA 156, 166.