G.R. No. 170284 - Aratea vs. Suico

Petitioners Luis C. Clemente, Leonor Clemente de Elepano, heirs of Arcadio C. Ochoa represented by Fe O. Ochoa-Baybay, and the Elepano heirs (Concepcion, Mariano, Artemio, Vicente, Angelita, Roberto, Hernando, and Lourdes) filed a civil case (Civil Case No. 467-83-C) entitled "Declaration of Ownership with Receivership" before the Regional Trial Court (RTC), Branch XXXIV, Calamba, Laguna.
Respondents are The Hon. Court of Appeals, and private respondents Elvira Pandinco-Castro and Victor Castro.

The property involved is described as Lot No. 148-New, a parcel of land containing 5,349 square meters, situated in Barrio Lecheria, Municipality of Calamba, Laguna. Boundaries are the Provincial Road (Northeast), Irrigation Ditch and Lot No. 1651 (Southeast), Lot No. 148-B (Southwest), and Calle Burgos (Northwest).

Petitioners sought a declaration of ownership of the property based on their respective stockholdings in "Sociedad Popular Calambena," a corporation originally organized at the beginning of the 20th century.
They claimed the property was acquired by the Sociedad during its corporate existence from parcels of the friar land estate in installments between June 3, 1911, and June 16, 1931, with Patent No. 38994 issued to the Sociedad on August 5, 1936.
Petitioners asserted their ownership as heirs of original stockholders Mariano Elepano and Pablo Clemente, the latter’s shares having been apportioned among his heirs through a Project of Partition and Inventory of Property.
Their prayer was to be declared owners in proportion to their shareholdings and to have collections and benefits from the property distributed to them accordingly.

Defendants claimed ownership by acquisitive prescription but failed to present any evidence in support despite multiple opportunities during the trial.

The trial court found that the Sociedad Popular Calambena existed and conducted business (cockfighting) from at least 1909 to September 24, 1932, and acquired the disputed property through installments, which was later patented in its name.
Stock certificates were issued to original stockholders and later to their heirs after a partition.
Nonetheless, the trial court dismissed the petitioners’ complaint on the grounds that, absent corporate liquidation, ownership of corporate property remains with the corporation itself, not with the stockholders.
The court observed that there was no evidence the Sociedad asserted ownership over the property or paid taxes on it, nor was there proof of how the property came into possession of the defendants.

The Court of Appeals affirmed the dismissal, holding that the Sociedad was the legal owner as per the tax declarations and Patent No. 38994 (though the patent was not presented in trial).
It ruled that mere stock ownership does not vest ownership of corporate assets in shareholders, especially where the corporation law treats the corporation as a juridical entity separate and distinct from its stockholders.
The court found petitioners failed to satisfy their burden of proof in a reinvindicatory action by more than a preponderance of evidence.

The Supreme Court noted the lack of evidence to establish petitioners’ ownership, aside from showing succession from original stockholders.
It emphasized the need for proper corporate dissolution or liquidation before corporate property may be claimed by stockholders, citing the Corporation Code provisions on dissolution, liquidation, and termination of corporations.
The Court underscored that the corporation remains a juridical entity during dissolution and for three years thereafter to settle affairs and distribute assets, and that a trustee or receiver may be appointed for this purpose.
If no trustee or receiver is appointed within the three-year period, the board of directors or equivalent body may continue as trustees by legal implication to complete liquidation.
In absence of a board or trustees, interested parties including shareholders and creditors may approach the Securities and Exchange Commission for a final settlement.

Whether petitioners, as heirs of stockholders of "Sociedad Popular Calambena," can validly claim ownership of Lot No. 148-New based on their stockholdings without evidence of corporate liquidation or transfer of title.
Whether the failure to present evidence of corporate ownership assertion, payment of taxes, or proper corporate dissolution affects the petitioners’ claim to title over the property.
Whether the corporate entity’s separate juridical personality precludes stockholders from claiming ownership of corporate assets absent proper legal procedures.