G.R. No. 90580 ; April 8, 1991
RUBEN SAW, ET AL., petitioners, vs. HON. COURT OF APPEALS, ET AL., respondents.

FACTS

A collection suit with preliminary attachment was filed by respondent Equitable Banking Corporation against Freeman, Inc. and its President, Saw Chiao Lian. Petitioners, stockholders of Freeman, Inc., moved to intervene, alleging the loan transactions were unauthorized and secured through collusion. The trial court denied their motion. While petitioners appealed this denial to the Court of Appeals, Equitable and Saw Chiao Lian entered into a compromise agreement, which the trial court approved. Upon non-compliance, a writ of execution was issued, leading to the auction sale of corporate properties.
The Court of Appeals sustained the denial of intervention. It ruled the petitioners’ rights as stockholders were merely inchoate and not the actual, material, direct, and immediate interest required for intervention under the Rules of Court. It also held that the petitioners’ appeal from the denial of intervention did not divest the trial court of jurisdiction to proceed with the main case and issue the writ of execution.

ISSUE

1. Whether the Court of Appeals erred in ruling that petitioners, as stockholders, lacked the requisite legal interest to intervene.
2. Whether the Court of Appeals erred in ruling that the trial court retained jurisdiction to execute the compromise judgment despite the pending appeal on the intervention issue.

RULING

The Supreme Court denied the petition, finding no reversible error. On the first issue, the Court held that for intervention to be proper, the intervenor must have a legal interest in the matter in litigation of such direct and immediate character that they will gain or lose by the judgment. Petitioners’ interest as stockholders in the corporate assets, prior to dissolution, is contingent and inchoate. The cited case of Everett is inapplicable, as that involved a derivative suit by minority stockholders against third parties for corporate wrongs, whereas here, the suit was a direct collection case against the corporation itself. Furthermore, the subject matter of the intervention—alleged unauthorized corporate acts—properly fell within the original jurisdiction of the Securities and Exchange Commission, where a related case was already pending.
On the second issue, the Court ruled that the petitioners’ appeal was confined solely to the order denying intervention. Since their personality as parties was never recognized by the trial court, the appeal did not affect the finality of the judgment in the main case or strip the court of jurisdiction to execute it. Finally, the Court emphasized that intervention is merely ancillary to a principal proceeding. With the main collection case already terminated by a final and executed judgment, there was no longer any principal action in which to intervene. Petitioners’ rights could be fully asserted in the separate SEC proceeding.