G.R. No. L-31061 August 17, 1976
Sulo ng Bayan Inc., plaintiff-appellant, vs. Gregorio Araneta, Inc., Paradise Farms, Inc., National Waterworks & Sewerage Authority, Hacienda Caretas, Inc, and Register of Deeds of Bulacan, defendants-appellees.

FACTS

Sulo ng Bayan, Inc., a non-stock corporation, filed an accion de revindicacion against several defendants to recover a vast tract of land in San Jose del Monte, Bulacan. The complaint alleged that its members, through themselves and their predecessors-in-interest, had cleared, cultivated, and possessed the land since the Spanish regime under a claim of ownership. It was further claimed that the defendants’ titles originated from a fraudulent and void Original Certificate of Title (OCT No. 466), issued without proper jurisdiction and notice to the actual possessors. The corporation sought nullification of all derived titles, a declaration that its members were the absolute owners, and the issuance of new certificates of title in their favor, along with damages.
The defendants moved to dismiss the amended complaint on primary grounds that it stated no cause of action and that any action was barred by prescription and laches. The trial court granted the motion and dismissed the complaint. Sulo ng Bayan moved for reconsideration, arguing the complaint constituted a valid class suit and that actions based on fraud or a void judgment do not prescribe. The trial court denied the motion, prompting this appeal.

ISSUE

Whether a non-stock corporation has the legal capacity to institute an action for recovery of ownership and possession of property claimed to be owned by its individual members.

RULING

The Supreme Court affirmed the dismissal, holding that the plaintiff corporation lacked the legal capacity to sue for the recovery of property claimed by its members. The legal logic is grounded in the fundamental principle of separate juridical personality. A corporation has a legal personality distinct and separate from its members. Property registered in the name of the corporation is owned by the corporation as an entity, not by the members individually or collectively. Conversely, property owned by individual members is not owned by the corporation.
In this case, the cause of action asserted was for recovery of ownership (revindicacion) based on the alleged ownership of the individual members. The corporation itself did not assert any proprietary right of its own. It sought a declaration that its members were the absolute owners and for titles to be issued to them. Consequently, the real parties-in-interest were the individual members, not the corporate entity. A corporation cannot sue to enforce the property rights of its members where it has no derivative or representative interest. The proper remedy for the members was to file an action in their own names, potentially as a class suit if the requirements were met, but not through the corporation as a nominal plaintiff. Since the corporation had no legal interest in the property subject of the suit, it had no cause of action, rendering the complaint dismissible. The Court did not find it necessary to rule definitively on the issues of prescription and laches, as the foundational defect in legal capacity was dispositive.