6. Tee Ling Kiat v Ayala Corp et al G.R. No.

192530
March 7, 2018

Topic: Sec 2 Corporation defined; Doctrine of separate juridical personality

Petitioner: Tee Ling Kiat
Respondent: Ayala Corporation (Substituted herein by its assignee and successor-in-interest,
Bienvenido B.M. Amora, Jr.)
Ponente: Caguioa, J.

DOCTRINE: It is a basic principle of law that money judgments are enforceable only against
property incontrovertibly belonging to the judgment debtor. The properties belonging to a
corporate entity, with personality separate and distinct from its shareholders, cannot be made to
answer upon the stockholder’s personal liability in a money judgment.

FACTS:

● Respondent Ayala Corporation obtained a favorable judgment from the RTC in a claim for
sum of money against Continental Manufacturing Corporation (CMC) and Spouses Dewey and
Lily Dee (Spouses Dee).

Background of that case, just in case:

o May 21, 1980: Ayala Investment and Development Corporation (AIDC)

granted in favor of CMC a money market line.

o Spouses Dee, Dewey Dee being the president of CMC, executed a Surety

Agreement as guarantee for the money market line.

o CMC’s availments were evinced by promissory notes. One of which, AIDC

endorsed to Respondent Ayala Corporation.

- Promissory Note dated Nov 20, 1980 for P800,000.00 due on Jan 16, 1981

o CMC defaulted on its obligation.

o Jan 28, 1981: Ayala Corp instituted a claim for sum of money against CMC

and the Spouses Dee.

o RTC: in favor of Ayala Corp

- ordered CMC and Spouses Dee to pay Ayala Corp P800,000.00 plus 12% interest per annum,
P20,000.00 as attorney’s fees, and costs of suit

• ● In executing the judgment, the sheriff was ordered to levy upon certain parcels
of land registered in the name of Vonnel Industrial Park, Inc (VIP), in which Dewey Dee
(Mr. Dee) was an incorporator.
 • ● Mar 26, 2007: However, before the scheduled sale on execution, Petitioner Tee
Ling Kiat filed a third-party claim.

• ● Tee Ling Kiat alleged that:

1. The Sheriff assumed that since Mr. Dee is one of the incorporators of VIP, it follows that he is
a stockholder thereof with rights, claims, shares, interest, title and participation in the real
properties belonging to VIP. However, Mr. Dee already sold to him all his stocks in VIP. Thus,
Mr. Dee may indeed be one of the incorporators but he is no longer a shareholder.

2. And even if Mr. Dee is still a stockholder, he merely has rights to VIP’s shares of stocks but
not as to the real properties registered under its name. VIP is a corporate entity which has a legal
personality separate and distinct from the Spouses Dee.

ISSUE: WON the sheriff may levy upon VIP’s real properties.

HELD/RATIO: NO.

● It is a basic principle of law that money judgments are enforceable only against property
incontrovertibly belonging to the judgment debtor.

● The judgment obtained by Ayala Corp was against the Spouses Dee in their personal capacities
as sureties. Yet, in the execution of said judgment, the properties levied upon were registered in
the name of VIP, a juridical entity with personality separate and distinct from Mr. Dee.

WHEREFORE, premises considered, the instant petition for review is DENIED. The Decision
dated September 24, 2009 and Resolution dated May 26, 2010 of the Court of Appeals in CA-
G.R. SP No. 105081 are hereby AFFIRMED.