1.

Tan Boon Bee & Co., Inc. vs. Jarencio, 163 SCRA 205 , June 30, 1988
Case Title : TAN BOON BEE & CO., INC., petitioner, vs. THE HONORABLE
HILARION U. JARENCIO, PRESIDING JUDGE OF BRANCH XXIII of the Court
of First Instance of Manila, GRAPHIC PUBLISHING, INC., and PHILIPPINE
AMERICAN DRUG COMPANY, respondents.Case Nature : PETITION for
certiorari to review the order of the Court of First Instance of Manila, Br.
XXIII. Jarencio, J.
Syllabi Class : Execution|Corporations|Remedial Law|Third Party Claim|
Estoppel|Certiorari|Appeal
Syllabi:
1. Execution; Third Party Claim; A court issuing a writ ofexecution should
enforce the authority o?ily over the properties. of the j'udgment debtor; A
third party appearing.to claim the property levied by the sheriff should
litigate its claim in an independent and separate action. +
2. Execution; Third Party Claim; Estoppel; A party who voluntarily
participated in the trial cannot later on raise the issue of lack of jurisdiction.
+
3. Corporations; Doctrine ofpiercing the veil ofcorporate entity.+
4. Remedial Law; Certiorari; Appeal; Argument that if respondent judge
erred in not piercing the veil of corporate fiction, the error is merely an error
ofjudgment correctible by appecd and not by certiorari is a mere
technicality.+

Division: SECOND DIVTSION

Docket Number: No L-41337

Counsel: De Santos, Balgos & Perez Law Office, Araneta, Mendoza & Papa
Law Offtce

Ponente: PARAS

Dispositive Portion:
PREMISES CONSIDERED, the March 26,1975 Order of the then Court of First
Instance of Manila, is ANNULLED and SET ASIDE, and the Temporary
Restraining Order issued is hereby made permanent.

Citation Ref:
72 SCRA 347 | 107 Phil. 833 | 83 SCRA 200 | 67 SCRA 304 | 57 SCRA
408 | 52 SCRA 338 | 25 SCRA 845 | 13 SCRA 290 | 143 SCRA 168 | 145
SCRA 206 | 1 SCRA 160 | 11 SCRA 714

respondents. Jarencio No L-41337. THE HONORABLE HILARION U. vs. In the case of Bayer Philippines. 206 206 SUPREME COURT REPORTS ANNOTATED Tan Boon Bee & Co.. "x x x. the court issuing a writ of execution is supposed to enforce the authority only over properties of the judgment debtor. acted without jurisdiction.. JUNE 30.VOL. Agana (63 SCRA 355. the procedure laid down by the Rules is that such claim should be the subject of a separate and independent action.* TAN BOON BEE & CO. vs. June 30." . A third party appearing. A court issuing a writ ofexecution should enforce the authority o?ily over the properties. Third Party Claim. Jarencio claim the property levied upon by the sheriff. but in an independent civil proceeding. This contention is well-taken. Inc. Execution. of the j'udgment debtor. Rule 39 of the Rules of Court was not complied with. 366-367 [1975]). vs. INC.. This rule is dictated by reasons of convenience. but in the separate action instituted by the claimants. 163. and PHILIPPINE AMERICAN DRUG COMPANY. 1988 205 Tan Boon Bee & Co.—Petitioner contends that respondent judge gravely exceeded. this Court categorically ruled as follows: "In other words. GRAPHIC PUBLISHING. INC. "x x x. Inc. "x x x. intervention may not be permitted after trial has been concluded and a final judgment rendered in the case.1988. if not. the rights of third-party claimants over certain properties levied upon by the sheriff to satisfy the judgment should not be decided in the action where the thirdparty claims have been presented. Otherwise stated. in nullifying the sheriff s sale not only because Section 17. vs.. as 'intervention is more likely to inject confusion into the issues between the parties in the case x x x with which the thirdparty claimant has nothing to do and thereby retard instead of facilitate the prompt disp»atch of the controversy which is the underlying objective of the rules of pleading and practice.' Besides.. Inc. and should a third party appear to ________________ * SECOND DIVTSION. but more importantly because PADCO could not have litigated its claim in the same case. petitioner.to claim the property levied by the sheriff should litigate its claim in an independent and separate action. JARENCIO. construing Section 17 of Rule 39 of the Revised Rules of Court. PRESIDING JUDGE OF BRANCH XXIII of the Court of First Instance of Manila.

107 Phil. 72 SCRA 347 |1976]j. To this argument of respondent.Doctrine ofpiercing the veil ofcorporate entity. Certiorari. Corporations are composed of natural persons and the legal fiction of a separate corporate personality is not a shield for the commission of injustice and inequity (Chenplex.. the doctrine that a corporation is a legal entity distinct and separate from the members and stockholders who compose it is recognized and respected in all cases which are within reason ajid the law (Villa Rey Transit. the error is merely an error ofjudgment correctible by appecd and not by certiorari is a mere technicality. CIR. bars it from questioning now the court's jurisdiction. Accordingly.. 1 SCRA 160 [1961]. 833 [1960]). 143 SCRA [1986]). business conduit or alter ego of another corporation. 57 SCRA 408 [1974]). Philippines. Inc. the Phillips corporation and the Hacienda . et al. SSS. Remedial Law. this Court ruled: "While We recognize the fact that these movants—the MBTC.. Intermediate Appellate Court. Argument that if respondent judge erred in not piercing the veil of corporate fiction. 13 SCRA 290 [1965]). Same. vs. However. in cases where it is used as a cloak or cover for fraud or illegality. this separate personality of the corporation may be disregarded. like the herein patitioner. this is 207 VOL. Inc. JUNE 30. Inc. or the veil of corporate flction pierced. 163.—However.—Respondent PADCO argues that if respondent judge erred in not piercing the veil of its corporate fiction. vs. vs. or where necessary to achieve equity or when necessary for the protection of creditors (Sulo ng Bayan.. Inc. et al.Same. the Phillips spouses. A party who voluntarily participated in the trial cannot later on raise the issue of lack of jurisdiction. Hon. As a matter of fact. vs. Inc. the fact that petitioner questioned the jurisdiction of the court during the initial hearing of the case but nevertheless actively participated in the trial. vs. Jarencio true when the corporation is merely an adjunct. Pamatian. 1988 207 Tan Boon Bee & Co. Appeal.—It is true that a corporation. Inc. Same. In the case of Rubio vs. is invested by law with a personality separate and distinct from that of the persons composing it as well as from any other legal entity to which it may be related (Yutivo & Sons Hardware Company vs. or to work an injustice. 25 SCRA 845 [1968]). Araneta. Likewise. Court of Tax Appeals. and Emilio Cano Enterprises. 343 I1973J). upon coming into being. Corporations. cannot later on raise the issue of the court's lack of jurisdiction (Philippine National Bank vs. suffice it to say that the same is a mere technicality. this separate and distinct personality is merely a fiction created by law for convenience and to promote justice (Laguna Transportation Company vs. the error is merely an error of judgment and not an error of jurisdiction correctable by appeal and not by certiorari. Mariano (52 SCRA 338. Estoppel. Ferrer. A party who voluntarily participated in the trial.

a promissory note was executed to cover the balance of P30.1975 Order of the then Court of First Instance of Manila. 310 119751). Jarencio the said machinery to its owner.. Petitioner herein. free from the unacceptable plea of technicalities (Heirs of Ceferino Morales vs. vs. PETITION for certiorari to review the order of the Court of First Instance of Manila. it was stipulated that the amount will be paid on monthly installments and that failure to pay any instaDment would make . J.365. to annul and set aside the March 26. Branch XXIII. Jarencio. herein private respondent Philippine American Drug Company. as much as possible. Every party-litigant must be afforded the amplest opportunity for the proper and just determination of his cause. 1972. XXIII.73.99. De Santos.214. and ordering the sheriff to return 208 208 SUPREME COURT REPORTS ANNOTATED Tan Boon Bee & Co. (GRAPHIC for short) paper products amounting to P55. GRAPHIC made partial payment by check to petitioner in the total amount of P24. Br. J. Inc. Balgos & Perez Law Office for petitioner. as well as the levy on the said property. Mendoza & Papa Law Offtce for respondent Phil. American Drug Company.Benitoj Inc.—did raise in their respective answers the issue as to the propriety of the instant petition for certiorari on the ground that the remedy should have been appeal within the reglementary period. doing business under the name and style of Anchor Supply Co. Inc. In the said promissory note." Litigations should. Court of Appeals.: This is a petition for certiorari.848. and on December 21. sold on credit to herein private respondent Graphic Publishing. 83 SCRA 200. be decided on their merits and not on technicality (De las Alas vs. 216 119781).. 67 SCRA 304. We considered such issue as a mere technicality which would have accomplished nothing substantial except to deny to the petitioner the right to litigate the matters he raised x x x. Court of Appeals. setting aside the sale of "Heidelberg" cylinder press executed by the sheriff in favor of the herein petitioner. PARAS. The facts are stated in the opinion of the Court. with prayer for preliminary injunction. On December 20.74. Araneta. 1972.

the executing sheriff levied upon one (1) unit printing machine identified as "Original Heidelberg Cylinder Press" Type H 222. The decretal portion of the said order. On motion of petitioner. but in a letter dated July 19. pp. presided over by herein respondent judge. 1975 (Ibid. an alias writ of execution was issued on July 2. 48). 5668). Civil Case No.99 with 12% interest from March 30. reads: "WHEREFORE. plus the costs of suit.. Philippine American Drug Company (PADCO for short) had informed the sheriff that the printing machine is its property and not that of GRAPHIC. p. 49-55).. Pursuant to the said issued alias writ of execution.1974. More than five (5) hours after the auction sale and the issuance of the certificate of sale. Cor. the Philippine American Drug Co. p. the sheriff proceeded with the scheduled auction sale. on July 30.. 91857 for a Sum of Money (Rollo. In a Notice of Sale of Execution of Personal Property dated July 29.1974. On September 6. said printing machine was scheduled for auction sale on July 26. and accordingly. the sale of the 'Heidelberg' cylinder press executed by the Sheriff in favor of the plaintiff as well as the levy on the said property is hereby set aside and declared to be without any force and effect. found in the premises of GRAPHIC. but the aforestated writ having expired without the sheriff finding any property of GRAPHIC. In a Decision dated January 18. The Sheriff is ordered to return the said machinery to its owner. 163. 45).. pp.the amount immediately demandable with an interest of 12% per annum. JUNE 30. PADCO filed with the Court of First Instance of Manila. advised the sheriff to cease and desist from carrying out 209 VOL." .. petitioner filed with the then Court of First Instance of Manila. a writ of execution was issued by respondent judge. Respondent judge declared GRAPHIC in default for failure to file its answer within the reglementary period and plaintiff (petitioner herein) was allowed to present its evidence exparte.. which was opposed by the petitioner (Ibid. 36-38). a Motion to Nullify Sale on Execution (With Injunction) (Ibid. 47). ruled in favor of PADCO. Atlanta St.. 1988 209 Tan Boon Bee & Co. 1974 at 10:00 o'clock at 14th St..365. Jarencio the scheduled auction sale on July 26. herein private respondent. vs. NR 78048. the trial court ordered GRAPHIC to pay the petitioner the sum of P30. pp. Thereafter. p. sold the property to the petitioner. in an Order dated March 26. 1974. Respondent judge. 1973. pp. pp. Branch XXIII. Branch XXIII. 1974 (Ibid.1973 until fully paid. and issued a Certificate of Sale in favor of petitioner (Rollo. Manila (76id. for failure of GRAPHIC to pay any instaUment. PADCO filed an "Affidavit of Third Party Claim" with the Office of the City Sheriff (Ibid. Notwithstanding the said letter. Port Area. 64-69). it being the highest bidder.1974.. 39-40). Inc. 1974.

p. IF NOT ACTED WITHOUT JURISDICTION WHEN HE ACTED UPON THE MOTION OF PADCO.1975.Inc. pp. the case was submitted for decision in the Resolution of November 28. vs. Inc. 1975.. 7093) and an Addendum to Motion for Reconsideration (Ibid. the Second Drvision of this Court resolved to require the respondents to comment. if not.. in nullifying the sheriffs sale not only because Scction 17. raised two (2) issues. In the case of Bayer Philippines. After submission of the parties' Memoranda. to support its stand. Petitioner. the instant petition. but more importantly because PAJDCO could not have litigated its claim in the same case. but in an Order dated August 13. p. II THE RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION WHEN HE REFUSED TO PIERCE THE PADCO'S (IDENTITY) AND DESPITE THE ABUNDANCE OF EVIDENCE CLEARLY SHOWING THAT PADCO WAS CONVENIENTLY SHIELDING UNDER THE THEORY OF CORPORATE FICTION. Petitioner contends that respondent judge gravely exceeded. NOT ONLY BECAUSE SECTION 17. In a Resolution dated September 12. 366-367 [1975]).. to wit: I THE RESPONDENT JUDGE GRAVELY EXCEEDED. p. 109).. Jarencio CASE BEFORE HIM BUT IN INDEPENDENT PROCEEDING. BUT ALSO BECAUSE THE CLAIMS OF PAJQCO WHICH WAS NOT A PARTY TO THE CASE COULD NOT BE VENTILATED IN THE 210 210 SUPREME COURT REPORTS ANNOTATED Tan Boon Bee & Co. 1975 (Ibid. pp.. vs.Petitioner filed a Motion For Reconsideration (Ibid. the same was denied for lack of merit (Ibid. Rule 39 of the Rules of Court was not complied with. Hence. Agana (63 SCRA 355. this Court categorically ruled as follows: .. This contention is well-taken. and to issue a temporary restraining order (Rollo. RULE 39 OF THE RULES OF COURT WAS NOT COMPLIED WITH. 111). 94-108). acted without jurisdiction. but in an independent civil proceeding. 275).

contends that the controlling stockholders of the Philippine American Drug Co. Inc. JUNE 30. Otherwise stated.* Besides. therefore. A party who voluntarily participated in the trial. *'x x x. "x x x. vs. however. Inc. the levy upon the said machinery which was found in the premises occupied by the Graphic Publishing. This contention cannot be sustained because the two corporations were duly incorporated under the Corporation Law and each of them has a juridical personality distinct and separate from the other and the properties of one cannot be levied upon to satisfy the obligation of the other. 1988 211 Tan Boon Bee & Co. the rights of third-party claimants over certain properties levied upon by the sherifT to satisfy the judgment should not be decided in the action where the third-party claims have been presented. 143 SCRA [1986]). like the herein petitioner. the procedure laid down by the Rules is that such claim should be the subject of a separate and independent action. Inc. and. 163. are also the same controlling stockholders of the Graphic Publishing. cannot later on raise the issue of the court's lack of jurisdiction (Philippine National Bank vs.. This legal preposition is elementary and fundamental." However. bars it from questioning 211 VOL. Jarencio now the court's jurisdiction. As to the second issue (the non-piercing of PADCO's corporate identity) the decision of respondent judge is as follows: "The plaintiff. and should a third party appear to claim the property levied upon by the sheriff. intervention may not be permitted after trial has been concluded and a final judgment rendered in the case. should be upheld."In other words. construing Section 17 of Rule 39 of the Revised Rules of Court. This rule is dictated by reasons of convenience. the fact that petitioner questioned the jurisdiction of the court during the initial hearing of the case but nevertheless actively participated in the trial. the court issuing a writ of execution is supposed to enforce the authority only over properties of the judgment debtor. Intermediate Appellate Court. as 'intervention is more likely 'to inject confusion into the issues between the parties in the case x x x with which the third-party claimant has nothing to do and thereby retard instead of facilitate the prompt dispatch of the controversy which is the underlying objective of the rules of pleading and practice. "x x x." . but in the separate action instituted by the claimants.

. business conduit or alter ego of another corporation. this is true when the corporation is merely an adjunct.. Inc. upon coming into being. SSS. et al. the doctrine that a corporation is a legal entity distinct and separate from the members and stockholders who compose it is recognized and respected in all cases which are within reason and the law (Villa Rey Transit. vs. Inc. 72 SCRA 347 [1976]). or where necessary to achieve equity or when necessary for the protection of creditors (Sulo ng Bayan. in cases where it is used as a cloak or cover for fraud or illegality. or to work an injustice. Inc. 1966 from Capitol Publishing. Corporations are composed of natural persons and the legal fiction of a separate corporate personality is not a shield for the commission of injustice and inequity (Chenplex. et al. Likewise. Inc. Inc. 1 SCRA 160 [1961]. the error is merely an error of judgment and not an error of jurisdiction correctab^e by appeal and not by certiorari. 1966. respondent judge should have pierced PADCO's veil of corporate identity. In such case. Accordingly. Araneta.It is true that a corporation. However. Court of Tax Appeals. Philip- 212 212 SUPREME COURT REPORTS ANNOTATED Tan Boon Bee & Co. petitioner's evidence established that PADCO was never engaged in the printing business. and that PADCO holds 50% share of stock of GRAPHIC. Pamatian. even before PADCO purchased it from Capital Publishing on July 11. CIR. vs. Jarencio pines. Norton & Harrison. and Emilio Cano Enterprises. vs. the fiction of separate and distinct corporation entities should be disregarded (Commissioner of Internal Revenue vs. that the board of directors and the officers of GRAPHIC and PADCO were the same. Hon. vs. long before PADCO even acquired its alleged title on July 11.. Respondent PADCO argues that if respondent judge erred in not piercing the veil of its corporate fiction. Ferrer. Considering the aforestated principles and the circumstances established in this case. Inc. is invested by law with a personality'separate and distinct from that of the persons composing it as well as from any other legal entity to which it may be related (Yutivo & Sons Hardware Company vs. or the veil of corporate fiction pierced. 25 SCRA 845 [1968]). 57 SCRA 408 [1974]). this separate and distinct personality is merely a fiction created by law for convenience and to promote justice (Laguna Transportation Company vs. 1965. 833 [1960]). 1966. Petitioner likewise stressed that PADCO's own evidence shows that the printing machine in question had been in the premises of GRAPHIC since May.. As a matter of fact.. 13 SCRA 290 [1965]). vs. That the said machine was allegedly leased by PADCO to GRAPHIC on January 24. only serves to show that PADCO's claim of ownership over the printing machine is not only farce and sham but also unbelievable. 11 SCRA 714 [1964]). In the instant case. this separate personality of the corporation may be disregarded. 107 Phil.

Jarencio Litigations should. SO ORDERED.—did raise in their respective answers the issue as to the propriety of the instant petition for certiorari on the ground that the remedy should have been appeal within the reglementary period. 83 SCRA 200. Order annulled and set aside. the Phillips spouses. Inc. Yap (C. be decided on their merits and not on technicality (De las Alas vs.. No L-41337 June 30.To this argument of respondent. Notes. vs. and the Temporary Restraining Order issued is hereby made permanent.J. Court of Appeals. We considered such issue as a mere technicality which would have accomplished nothing substantial except to deny to the petitioner the right to litigate the matters he raised x x x . Mariano (52 SCRA 338..) Melencio-Herrera. Inc. Jarencio. 163 SCRA 205. JUNE 30." 213 VOL. 163. 67 SCRA 304.. the March 26. JJ. suffice it to say that the same is a mere technicality. the Phillips corporation and the Hacienda Benito.. 1988 . Every party-litigant must be afforded the amplest opportunity for the proper and just determination of his cause. NLRC. concur. Padilla and Sarmiento. this Court ruled: "While We recognize the fact that these movants—the MBTC. as much as possible. ——oOo—— 214 Tan Boon Bee & Co.1975 Order of the then Court of First Instance of Manila. free from the unacceptable plea of technicalities (Heirs of Ceferino Morales vs. Inc. 1988 213 Tan Boon Bee & Co. PREMISES CONSIDERED. 145 SCRA 206). vs. In the case of Rubio vs. The NLRC is authorized to look into the correctness of the execution of the decision and to consider supervening events that affect such execution (Abbott vs. 143 SCRA 168). 343 [1973]). Ylagan. 310 [1975]). 216 [1978]).—No need for sheriffs and respondent lawyer to secure a hreak-open order where the character of the writ in their hands authorized them if necessary to break-open the apartment (Arcadio vs. Court of Appeals. is ANNULLED and SET ASIDE.