TOPIC:POWER TO INVEST CORPORATE FUNDS IN ANOTHER CORPORATION OR BUSINESS

Doctrine: Generally accepted is the principle that no man shall be affected by any proceeding to which
he is a stranger and strangers to a case are not bound by judgment rendered by the court.

Heirs of Antonio Pael vs. Court of Appeals

FACTS:
Spouses Maria and Pedro Destura together with private respondents executed a Memorandum of
Agreement (MOA) which provided that Chin and Mallari, as first parties; Pedro Destura, as second
party; and a certain Jaime B. Lumasag, Jr., as third party, whereby the parties agreed to sell the property
subject of this petition to an interested buyer and to share in the proceeds, with Lumasag acting as
broker of the sale. However, the prospective buyer of Lumasag backed out and the sale did not
materialize. However, Pedro filed for the nullification of the said MOA but was dismissed by the RTC.
Only after a period of fifteen (15) years did PFINA come forward to present the deed and claim the
subject properties. The said deed and the circumstances surrounding its issuance are suspect. The deed
may be fabricated and the signatures of the parties and witnesses forged. The CA gave credence to the
objections interposed by private respondents. In its Resolution, it cited badges or indicia of fraud in the
alleged acquisition of the property by PFINA as well as the cancellation of the title of the Paels and
issuance of a new title in favor of PFINA.

ISSUE:
W/N PFINA can acquired the property subject of the litigation for substantial and valuable consideration
from the Paels by virtue of a deed of assignment.

HELD:
No. The Court held that the trial-court's decision is not only erroneous but is void from the beginning as
the title was given to the Paels despite the fact that they were not parties and have been total strangers
to the said case. They were never impleaded nor did they intervene in the case wherein the disputed
property was awarded to them. The Court also upheld the appellate court in ruling that Maria Destura's
complaint should have been dismissed on the ground of litis pendentia and res judicata, considering that
her husband Pedro Destura had earlier filed a complaint against respondents Chin and Mallari, for,
among others, annulment of their titles and annulment of the MOA. The Paels, having no longer any
right over the subject property, had nothing to sell to PFINA. Therefore, the title obtained by PFINA
allegedly by virtue of the deed of assignment executed by the Paels in its favor is a nullity. Worse, the
Register of Deeds of Quezon City connived and conspired with PFINA when the former registered the
deed of assignment on the basis of fake and spurious documents. The Court of Appeals also found it
unbelievable for PFINA to acquire extremely valuable real estate in Quezon City for only P30.00 per
square meter. In 1983, PFINA Mining and Exploration, Inc. was a mining company. It changed its
corporate name to PFINA Properties, Inc., only on January 22, 1998, six (6) days before filing its petition-
in-intervention with the Court of Appeals. In its petition, PFINA claimed to have bought urban real estate
in 1983, notwithstanding that at the time it was still a mining company which had no business dabbling
in the highly speculative urban real estate trade.