VOL. 93, OCTOBER 18, 1979 483: Cease vs. Court of Appeals
VOL. 93, OCTOBER 18, 1979 483: Cease vs. Court of Appeals
VOL. 93, OCTOBER 18, 1979 483: Cease vs. Court of Appeals
*
No. L-33172. October 18, 1979.
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* FIRST DIVISION
484
GUERRERO, J.:
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1 Special Seventh Division; Gatmaitan, J., ponente; Perez, J., concurring in the result;
Reyes, A., J., concurring.
485
period provided by the law for the liquidation of corporations, the board of
liquidators of Tiaong Milling executed an assignment and conveyance of
properties and trust agreement in favor of FL Cease Plantation Co. Inc., as
trustee of the Tiaong Milling and Plantation Co. so that upon motion of the
plaintiffs trial Judge ordered that this alleged trustee be also included as
party defendant; now this being the situation, it will be remembered that
there were thus two (2) proceedings pending in the Court of First Instance of
Quezon namely Civil Case No. 6326 and Special Proceeding No. 3893 but
both of these were assigned to the Honorable Respondent Judge Manolo L.
Maddela, p. 43 and the case was finally heard and submitted upon
stipulation of facts pp. 34-110, rollo; and trial Judge by decision dated 27
December 1969 held for the plaintiffs Benjamin and Florence, the decision
containing the following dispositive part:
486
SO ORDERED.
Lucena City, December 27, 1989., pp. 122-a-123, rollo;”
upon receipt of that, defendants there filed a notice of appeal p. 129, rollo
together with an appeal bond and a record on appeal but the plaintiffs
moved to dismiss the appeal on the ground that the judgment was in fact
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interlocutory and not appealable p. 168 rollo and this position of defendants
was sustained by trial Judge, His Honor ruling that
and so it was said defendants brought the matter first to the Supreme
Court, on mandamus on 20 May, 1970 to compel the appeal and certiorari
and prohibition to annul the order of 27 April, 1970 on the ground that the
decision was “patently erroneous” p, 16, rollo; but the Supreme Court
remanded the case to this Court of Appeals
487
and that the questions presented cannot be raised for the first time before
this Court of Appeals;”
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488
During the period that ensued after the filing in this Court of the
respective briefs and the subsequent submission of the case for
decision, some incidents had transpired, the summary of which may
be stated as follows:
489
490
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491
492
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2 See Martin, Rules of Court, Vol III, 308 (1973) citing the cases of Africa v.
Africa, 42 Phil. 902; Bargayo v. Camumot, 40 Phil. 856; Rodriguez v. Ravilan, 17
Phil. 63; De Castro vs. Echarri, 20 Phil. 23; Ferrer vs. Inchausti, 38 Phil. 905; Reyes
vs. Cordero, 46 Phil. 658; Villanueva vs. Capistrano, 49 Phil. 460; Hilario vs. Dilla, et
al., CA-G.R. No. 5266-R, Feb. 28, 1951.
493
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in truth and in fact, His Honor was issuing that order also within Civil
Case No. 6326 but in connection with Special Proceedings No. 3893; for
substance is more important than form, the contending par-
494
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ties in both proceedings being exactly the same, but not only this, let it not
be forgotten that when His Honor dismissed Special Proceedings No. 3893,
that dismissal precisely was a dismissal that petitioners herein had
themselves sought and solicited from respondent Judge as petitioners
themselves aver in their present petition pp. 5-6, rollo; this Court must find
difficulty in reconciling petitioners’ attack with the fact that it was they
themselves that had insisted on that dismissal; on the principle that not he
who is favored but he who is hurt by a judicial order is he only who should
be heard to complain and especially since extraordinary legal remedies are
remedies in extremis granted to parties who have been the victims not
merely of errors but of grave wrongs, and it cannot be seen how one who
got what he had asked could be heard to claim that he had been the victim of
a wrong, petitioners should not now complain of an order they had
themselves asked in order to attack such an order afterwards; if at all,
perhaps, third parties, creditors, the Bureau of Internal Revenue, might have
been prejudiced, and could have had the personality to attack that dismissal
of Special Proceedings No. 3893, but not petitioners herein, and it is not
now for this Court of Appeals to protect said third persons who have not
come to the Court below or sought to intervene herein;
495
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“While the records showed that originally its incorporators were aliens,
friends or third-parties in relation of one to another, in the course of its
existence, it developed into a close family corporation. The Board of
Directors and stockholders belong to one family the head of which Forrest
L. Cease always retained the majority stocks and hence the control and
management of its affairs. In fact, during the reconstruction of its records in
1947 before the Security and Exchange Commission only 9 nominal shares
out of 300 appears in the name of his 3 eldest children then and another
person close to them. It is likewise noteworthy to observe that as his
children increase or perhaps become of age, he continued distributing his
shares among them adding Florence, Teresa and Marion until at the time of
his death only 190 were left to his name. Definitely, only the members of his
family benefited from the Corporation.
“The accounts of the corporation and therefore its operation, as well as
that of the family appears to be indistinguishable and apparently joined
together. As admitted by the defendants (Manifestation of Compliance with
Order of March 7, 1963 [Exhibit “21”] the corporation ‘never’ had any
account with any banking institution or if any account was carried in a bank
on its behalf, it was in the name of Mr. Forrest L. Cease. In brief, the
operation of the Corporation is merged with those of the majority
stockholders, the latter using the former as his instrumentality and for the
exclusive benefits of all his family. From the foregoing indication, therefore,
there is truth in plaintiff’s allegation that the corporation is only a business
conduit of his father and an extension of his personality, they are one and
the same thing. Thus, the assets of the corporation are also the estate of
Forrest L. Cease, the father of the parties herein who are all legitimate
children of full blood.”
496
497
Trustee are distinct and separate from the estate of Forrest L. Cease
to which petitioners and respondents as legal heirs of said Forrest L.
Cease are equally entitled share and share alike, then that legal
fiction of separate corporate personality shall have been used to
delay and ultimately deprive and defraud the respondents of their
successional rights to the estate of their deceased father. For Tiaong
Milling and Plantation Company shall have been able to extend its
corporate existence beyond the period of its charter which lapsed in
June, 1958 under the guise and cover of F. L. Cease Plantation
Company, Inc. as Trustee which would be against the law, and said
Trustee shall have been able to use the assets and properties for the
benefit of the petitioners, to the great prejudice and defraudation of
private respondents. Hence, it becomes necessary and imperative to
pierce that corporate veil.
Under the third assigned error, petitioners claim that the decision
of the lower court in the partition case is not interlocutory but rather
final for it consists of final and determinative dispositions of the
contentions of the parties. We find no merit in petitioners’ stand.
Under the 1961 pronouncement and ruling of the Supreme Court
in Vda. de Zaldarriaga vs. Enriquez, 1 SCRA 1188 (and the sequel
case of Vda. de Zaldarriaga vs. Zaldarriaga, 2 SCRA 356), the
lower court’s dismissal of petitioners’ proposed appeal from its
December 27, 1969 judgment as affirmed by the
498
“It is true that in Africa vs. Africa, 42 Phil. 934 and other cases it was held
—contrary to the rule laid down in Ron vs. Mojica, 8 Phil. 328; Rodriguez
vs. Ravilan, 17 Phil. 63—that in a partition case where defendant relies on
the defense of exclusive ownership, the action becomes one for title and the
decision or order directing partition is final, but the ruling to this effect has
been expressly reversed in the Fuentebella case which, in our opinion,
expresses the correct view, considering that a decision or order directing
partition is not final because it leaves something more to be done in the trial
court for the complete disposition of the case, namely, the appointment of
commissioners, the proceedings to be had before them, the submission of
their report which, according to law, must be set for hearing. In fact, it is
only after said hearing that the court may render a final judgment finally
disposing of the action (Rule 71, section 7, Rules of Court).” (1 SCRA at
page 1193).
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‘The Court, however, deems it proper for the guidance of the bench and bar
to now declare as is clearly indicated from the compelling reasons and
considerations hereinabove stated:
—that the Court considers the better rule to be that stated in H. E.
Heacock Co. vs. American Trading Co., to wit, that where the primary
purpose of a case is to ascertain and determine who between plaintiff and
defendant is the true owner and entitled to the exclusive use of the disputed
property, ‘the judgment . . . rendered by the lower court [is] a judgment on
the merits as to those questions, and [that] the order of the court for an
accounting was based upon, and is incidental to the judgment on the merits.
That is to say, that the judgment . . . [is] a final judgment . . .; that in this
kind of a case an accounting is a mere incident to the judgment; that an
appeal lies from the rendition of the judgment as rendered . . .’ (as is widely
499
held by a great number of judges and members of the bar, as shown by the
cases so decided and filed and still pending with the Court) for the
fundamental reasons therein stated that ‘this is more in harmony with the
administration of justice and the spirit and intent of the [Rules]. If on appeal
the judgment of the lower court is affirmed, it would not in the least work an
injustice to any of the legal rights of [appellee]. On the other hand, if for any
reason this court should reverse the judgment of the lower court, the
accounting would be a waste of time and money, and might work a material
injury to the [appellant]; and
—that accordingly, the contrary ruling in Fuentebella vs. Carrascoso
which expressly reversed the Heacock case and a line of similar decisions
and ruled that such a decision for recovery of property with accounting ‘is
not final but merely interlocutory and therefore not appealable’ and
subsequent cases adhering to the same must be now in turn abandoned and
set aside.
“Fuentebella adopted instead the opposite line of conflicting decisions
mostly in partition proceedings and exemplified by Ron vs. Mojica, 8 Phil.
928 (under the old Code of Civil Procedure) that an order for partition of
real property is not final and appealable until alter the actual partition of the
property as reported by the court-appointed commissioners and approved by
the court in its judgment accepting the report. It must be especially noted
that such rule governing partitions is now so expressly provided and spelled
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500
The miranda ruling has since then been applied as the new rule by a
unanimous Court in Valdez vs. Bagasao, 82 SCRA 22 (March 8,
1978).
If there were a valid genuine claim of exclusive ownership of the
inherited properties on the part of petitioners to respondents’ action
for partition, then under the Miranda ruling, petitioners would be
sustained, for as expressly held therein “the general rule of partition
that an appeal will not lie until the partition or distribution
proceedings are terminated will not apply where appellant claims
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501
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Petition denied.
502
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——o0o——
503
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