Title
Tee Ling Kiat vs. Ayala Corporation
Case
G.R. No. 192530
Decision Date
Mar 7, 2018
A 1990 money judgment led to property levy; Tee Ling Kiat's third-party claim failed due to insufficient evidence and unrecorded share transfer, upheld by SC.
insufficient evidence
lack of recording
transfer of shares

Case Summary (G.R. No. 192530)

Factual Background

In 1980 AIDC granted Continental Manufacturing Corporation (CMC) a money market line up to P2,000,000.00. The Spouses Dewey and Lily Dee executed a surety agreement the same date. CMC issued a promissory note dated November 20, 1980 for P800,000.00 due January 16, 1981. AIDC endorsed the promissory note to Ayala Corporation, and when CMC defaulted, Ayala Corporation sued CMC and the Spouses Dee for sum of money. The RTC, presided over by Assisting Judge Ildefonso E. Gascon, rendered a decision on November 29, 1990 awarding P800,000.00 plus twelve percent per annum interest, attorney’s fees of P20,000.00, and costs against CMC and the Spouses Dee. The judgment became final and a writ of execution issued to enforce it.

Levy and Affected Properties

In executing the final judgment, the sheriff issued a Notice of Levy on November 21, 2006 addressed to the Register of Deeds of Antipolo City. The levy targeted "rights, claims, shares, interest, title and participation" that the Spouses Dee might have in three parcels of land covered by TCT Nos. R-24038, R-24039, and R-24040. These titles were registered in the name of Vonnel Industrial Park, Inc. (VIP), a corporation in which Dewey Dee had been an incorporator.

Third-Party Claim by Petitioner

Before the scheduled sale on execution, on March 26, 2007, Tee Ling Kiat filed a Third-Party Claim (terceria) asserting that Dewey Dee had sold all his shares in VIP to petitioner in December 1980. He alleged that Dewey Dee was no longer a stockholder and therefore had no rights in the levied properties. Petitioner attached an affidavit, photocopies of a Deed of Sale of Shares dated December 29, 1980, and cancelled checks claimed to evidence payment for the shares. The clerk issued a Notice of Third-Party Claim. Bienvenido B.M. Amora, Jr. posted an indemnity bond in the amount of P2,658,700.00 which VIP and Tee Ling Kiat opposed as insufficient.

Proceedings in the Regional Trial Court

The matter was re-raffled to RTC Branch 59. In an Order dated February 20, 2008, the RTC denied the Omnibus Motion to annul the Notice of Levy and dismissed Tee Ling Kiat’s Third-Party Claim. The RTC ruled that petitioner failed to prove that the sale of shares from Dewey Dee to petitioner had been effected in accordance with law because the purported Deed of Sale was not recorded in VIP’s stock and transfer books as required by Section 63 of the Corporation Code. The RTC also noted that VIP’s certificate of registration had been revoked by the SEC on August 11, 2003, and that under Section 122 the corporation’s capacity to sue was limited during the winding-up period. The RTC further held that the indemnity bond posted was sufficient because petitioner claimed only rights in shares and not ownership of the entire real property. The RTC denied petitioner’s motion for reconsideration on June 26, 2008.

Petition for Certiorari and Court of Appeals Ruling

Tee Ling Kiat brought a petition for certiorari under Rule 65 before the Court of Appeals, which the CA considered in CA-G.R. SP No. 105081. The CA, in its Decision dated September 24, 2009, denied the petition. The CA found that petitioner was not a real party-in-interest because he failed to prove the alleged sale and transfer of shares. The court emphasized that photocopies of the deed and cancelled checks were insufficient; petitioner needed evidence proving the transaction. The CA also rejected petitioner’s novel contention that he served as a trustee of VIP, noting an absence of evidence of such status. The CA denied petitioner’s motion for reconsideration in a Resolution dated May 26, 2010.

Issue Presented to the Supreme Court

The sole issue before the Supreme Court was whether the Court of Appeals committed reversible error in affirming the RTC Orders dated February 20, 2008 and June 26, 2008 which dismissed Tee Ling Kiat’s Third-Party Claim.

Petitioner’s Contentions

Tee Ling Kiat argued that he need not personally prove the recording of the alleged transfer in VIP’s books because Section 3(q), Rule 131 gives rise to the disputable presumption that a corporation followed its ordinary course of business, thereby shifting the burden to Amora to show otherwise. He also contended that, at most, the proper subject of levy would have been the specific shares of Dewey Dee rather than the real properties registered in VIP’s name. Petitioner sought injunctive relief to enjoin execution of the judgment.

Respondent’s Contentions

Bienvenido B.M. Amora, Jr. maintained that corporate records did not show petitioner as a stockholder and that VIP had failed to submit required reports to the SEC. Amora defended the levy and the sufficiency of the indemnity bond and argued that petitioner did not prove that any transfer of shares had ever been recorded in VIP’s books.

Supreme Court’s Ruling

The Supreme Court denied the petition and affirmed the Court of Appeals’ Decision and Resolution. The Court held that the petition lacked merit because petitioner failed to establish that Dewey Dee had in fact sold his shares to him, and thus failed to prove a real interest in the levied property. The Court declined to reexamine pure questions of fact in a Rule 45 petition and found that the resolution of petitioner’s claim involved factual determinations beyond the Court’s scope under that rule.

Legal Basis and Reasoning

The Court observed that a petition under Rule 45 raises questions of law and that factual disputes are not reviewable in such petitions. The Court reiterated that a third-party claimant who invokes a terceria must unmistakably establish ownership or right of possession of the levied property, and that if the evidence does not persuade the court of the validity of such title or possession, the third-party claim must be denied. The only evidence offered by petitioner consisted of cancelled checks and photocopies of a Deed of Sale, which the Court found insufficient. The Court cited Imani v. Metropolitan Bank & Trust Company to affirm that photocopies lack probative value and are inadmissible when the original is not explained. The Court further relied on Section 63 of the Corpo

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