G.R. No. 192530 March 7, 2018
TEE LING KIAT, Petitioner vs. AYALA CORPORATION (Substituted herein by its Assignee And Successor-in-Interest, BIENVENIDO B.M. AMORA, JR.), Respondent

FACTS

Ayala Corporation obtained a final money judgment against Spouses Dewey and Lily Dee. To satisfy the judgment, the sheriff levied upon parcels of land registered in the name of Vonnel Industrial Park, Inc. (VIP), a corporation where Dewey Dee was an incorporator. Petitioner Tee Ling Kiat filed a third-party claim, asserting ownership over the levied properties. He alleged that Dewey Dee had sold all his VIP shares to him as early as December 1980, evidenced by cancelled checks, and thus the judgment debtor had no remaining interest in the corporate assets subject to levy.
The Regional Trial Court (RTC) dismissed the third-party claim. The Court of Appeals affirmed, finding the claim unsubstantiated. The appellate court noted the lack of corroborative evidence, such as stock certificates or corporate books, to prove the alleged share transfer. It also emphasized the separate juridical personality of VIP, ruling that corporate properties cannot be levied to satisfy a personal debt of a stockholder.

ISSUE

Whether the Court of Appeals erred in affirming the dismissal of Tee Ling Kiat’s third-party claim against the levy on execution of corporate properties.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ rulings. The legal logic rests on two fundamental principles. First, a corporation has a personality separate and distinct from its stockholders. Corporate assets are owned by the corporation, not by its shareholders individually. Therefore, a shareholder’s personal debt cannot be enforced against the corporation’s properties. The levy was improper because it targeted properties registered to VIP, not properties owned by the judgment debtor, Dewey Dee.
Second, the petitioner failed to substantiate his claim of ownership. His evidence, consisting of cancelled checks and an affidavit, was deemed insufficient to prove he acquired Dewey Dee’s shares. The Court highlighted that ownership of shares in a corporation is not proven by mere checks but requires evidence of the transfer recorded in the corporate books and the issuance of stock certificates. Without such proof, the claimant cannot establish a superior right over the levied properties. Consequently, the third-party claim was correctly dismissed for lack of merit, as the petitioner did not demonstrate a clear legal right to the properties superior to that of the judgment creditor.