G.R. No. 98185 December 11, 1992
SIBAGAT TIMBER CORPORATION, petitioner, vs. ADOLFO B. GARCIA, USIPHIL, INC. and STRONGHOLD INSURANCE CO., INC., respondents.

FACTS

On August 30, 1988, respondent Sheriff Adolfo B. Garcia levied on several units of machinery and equipment (including a CAT Grader, Generating Sets, and logging trucks) belonging to Del Rosario & Sons Logging Enterprises, Inc., to implement a writ of execution issued by the RTC of Makati in Civil Case No. 7180 (USIPHIL, INC. vs. Del Rosario and Sons Logging Enterprises, Inc.). The sheriff scheduled the auction sales for September 7 and 8, 1988. On the same date of the levy, petitioner Sibagat Timber Corporation, through its office manager Mariano Rana, filed a third-party claim, asserting ownership of the levied properties by virtue of deeds of sale executed in its favor by Del Rosario & Sons Logging Enterprises, Inc. The judgment creditor, USIPHIL, Inc., posted an indemnity bond pursuant to Section 17, Rule 39 of the Rules of Court. On September 6, 1988, petitioner filed a petition for Certiorari, Prohibition and Injunction with a restraining order in the RTC of Butuan City (Special Civil Case No. 548). A temporary restraining order was issued on September 6, 1988. However, when court employees attempted to serve the order on September 7, 1988, Sheriff Garcia informed them that the auction sale had already been concluded at 10:30 A.M. and a certificate of sale had been issued to USIPHIL, INC. as the sole bidder. The RTC later granted USIPHIL’s motion to dismiss the petition. The Court of Appeals affirmed the dismissal. Petitioner’s motion for reconsideration was denied, prompting this petition for review.

ISSUE

The main issue is whether the Court of Appeals erred in piercing the veil of corporate entity by holding that petitioner Sibagat Timber Corporation is not a separate and distinct entity from the judgment debtor, Del Rosario & Sons Logging Enterprises, Inc.

RULING

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that the circumstances justified piercing the corporate veil. It was established that: (1) petitioner and Del Rosario & Sons Logging Enterprises, Inc. shared the same office; (2) their officers and directors were practically the same (with Policarpio C. Del Rosario as President of both and Conchita Del Rosario as Vice-President/General Manager of both); and (3) the Del Rosarios assumed management and control of Sibagat. These facts bolstered the conclusion that petitioner was an alter ego of the judgment debtor. The corporate fiction may be pierced when used as a shield to perpetrate fraud or confuse legitimate issues, or when two corporations are owned, conducted, and controlled by the same parties. The Court also rejected petitioner’s contention that a prior Supreme Court decision ( G.R. No. 84497 ) had settled its ownership of the properties, noting that the issue in that case was procedural, not ownership, and that ownership is a factual question not reviewable in a petition under Rule 45. Even assuming ownership was established, piercing the corporate veil was still proper as petitioner was found to be a mere conduit or adjunct of the judgment debtor.