G.R. No. 185024, 4 April 2017

FACTS:

Spouses Fernando and Amelia Cruz owned a parcel of land. The City Government of Marikina levied the property for nonpayment of real estate taxes. The City Treasurer of Marikina auctioned off the property, with Joselito Hernand M. Bustos as the winning bidder.

Petitioner then applied for the cancellation of TCT. The Regional Trial Court rendered a final and executory Decision ordering the cancellation of the previous title and the issuance of a new one under the name of petitioner.

Meanwhile, notices of lis pendens were annotated. These markings indicated that SEC Corp. Case No. 036-04, which was filed before the RTC and involved the rehabilitation proceedings for MSI, covered the subject property and included it in the Stay Order issued by the RTC.

Petitioner moved for the exclusion of the subject property from the Stay Order. He claimed that the lot belonged to Spouses Cruz who were mere stockholders and officers of MSL He further argued that since he had won the bidding of the property, the auctioned property could no longer be part of the Stay Order. The RTC denied the entreaty of petitioner.

Petitioner moved for reconsideration but to no avail. He then filed an action for certiorari before the CA. He asserted that the Stay Order undermined the taxing powers of the local government unit. He also reiterated his arguments that Spouses Cruz owned the property, and that the lot had already been auctioned to him.

ISSUE:

Whether the CA correctly considered the properties of Spouses Cruz answerable for the obligations of MSI.

RULING:

The rulings of the CA lacks basis.

The general doctrine of separate juridical personality provides that a corporation has a legal personality separate and distinct from that of people comprising it. By virtue of that doctrine, stockholders of a corporation enjoy the principle of limited liability: the corporate debt is not the debt of the stockholder. Thus, being an officer or a stockholder of a corporation does not make one’s property the property also of the corporation.

Given that the true owner the subject property is not the corporation, petitioner cannot be considered a creditor of MSI but a holder of a claim against respondent spouses.

*Case digest by Teonilo M. Bagalanon Jr., JD – 4, Andres Bonifacio College, SY 2019 – 2020