504 Phil.

150

FIRST DIVISION
[ G.R. NO. 143312, August 12, 2005 ]
RICARDO S. SILVERIO, JR., ESSES DEVELOPMENT CORPORATION,
AND TRI-STAR FARMS, INC., PETITIONERS, VS. FILIPINO BUSINESS
CONSULTANTS, INC., RESPONDENT.

DECISION

CARPIO, J.:

The Case

Before us is a petition for review of the Order of the Regional Trial Court, Fourth Judicial
Region, Branch XI, Balayan, Batangas ("RTC Balayan") dated 26 May 2000.[1] The order
suspended the enforcement of the writ of possession that the RTC Balayan had previously
issued in favor of petitioners Ricardo S. Silverio, Jr. ("Silverio, Jr."), Esses Development
Corporation ("Esses") and Tri-Star Farms, Inc. ("Tri-Star"). Filipino Business Consultants, Inc.
("FBCI"), now Filipino Vastland Company, Inc. sought to suspend the writ of possession on the
ground of a supervening event. FBCI claimed that it had just acquired all the stocks of Esses
and Tri-Star. As the new owner of Esses and Tri-Star, FBCI asserted its right of possession to
the disputed property. Petitioners Silverio, Jr., Esses and Tri-Star question the RTC Balayan's
suspension of the writ of possession and its jurisdiction to hold hearings on the supervening
event.

The Antecedent Facts

The parties are wrangling over possession of a 62 hectare-land in Calatagan, Batangas

("Calatagan Property"). Silverio, Jr. is the President of Esses and Tri-Star. Esses and Tri-Star
were in possession of the Calatagan Property, covered by TCT No. T-55200 and registered in
the names of Esses and Tri-Star.

On 22 September 1995, Esses and Tri-Star executed a Deed of Sale with Assumption of
Mortgage in favor of FBCI. Esses and Tri-Star failed to redeem the Calatagan Property.

On 27 May 1997, FBCI filed a Petition for Consolidation of Title of the Calatagan Property
with the RTC Balayan.[2]

FBCI obtained a judgment by default. Subsequently, TCT No. T-55200 in the names of Esses
and Tri-Star was cancelled and TCT No. T-77656 was issued in FBCI's name. On 20 April
1998, the RTC Balayan issued a writ of possession in FBCI's favor. FBCI then entered the
Calatagan Property.

When Silverio, Jr., Esses and Tri-Star learned of the judgment by default and writ of possession,
they filed a petition for relief from judgment and the recall of the writ of possession. Silverio,
Jr., Esses and Tri-Star alleged that the judgment by default is void because the RTC Balayan did
not acquire jurisdiction over them. FBCI allegedly forged the service of summons on them.

On 28 December 1998, the RTC Balayan nullified and set aside the judgment by default and the
writ of possession. The RTC Balayan found that the summons and the complaint were not
served on Silverio, Jr., Esses and Tri-Star. The RTC Balayan directed the service of summons
anew on Silverio, Jr., Esses and Tri-Star.

The RTC Balayan denied FBCI's motion for reconsideration of the order. FBCI then filed a
petition for certiorari with the Court of Appeals questioning the RTC Balayan's 28 December
1998 Order.[3] On 28 April 2000, the Court of Appeals denied FBCI's petition. The Court of
Appeals also denied FBCI's motion for reconsideration. On 13 August 2001, the Supreme Court
denied FBCI's petition.

On 14 April 1999, the RTC Balayan modified its 28 December 1998 Order by upholding FBCI's
possession of the Calatagan Property. The RTC Balayan ruled that FBCI could not be deprived
of possession of the Calatagan Property because FBCI made substantial improvements on it.
Possession could revert to Silverio, Jr., Esses and Tri-Star only if they reimburse FBCI. The
RTC Balayan gave Silverio, Jr., Esses and Tri-Star 15 days to file their responsive pleadings.

Silverio, Jr., Esses and Tri-Star moved for the partial reconsideration of the 14 April 1999
Order. Silverio, Jr., Esses and Tri-Star argued that since the judgment by default was nullified,
they should be restored to their possession of the Calatagan Property. FBCI did not file any
opposition to the motion.

On 9 November 1999, the RTC Balayan reversed its 14 April 1999 Order by holding that
Silverio, Jr., Esses and Tri-Star had no duty to reimburse FBCI. The RTC Balayan pointed out
that FBCI offered no evidence to substantiate its claim for expenses. The 9 November 1999
Order also restored possession of the Calatagan Property to Silverio, Jr., Esses and Tri-Star
pursuant to Rule 39, Section 5 of the 1997 Rules of Civil Procedure. This provision provides for
restitution in case of reversal of an executed judgment. On 7 January 2000, the RTC Balayan
denied FBCI's motion for reconsideration.

On 8 May 2000, the RTC Balayan issued the writ of possession to Silverio, Jr., Esses and Tri-
Star.

On 12 May 2000, FBCI filed with the RTC Balayan a Manifestation and Motion to Recall Writ
of Possession on the ground that the decision of the Court of Appeals in CA-G.R. SP No. 56924
was not yet final and FBCI's motion for reconsideration was still pending. The RTC Balayan set
the hearing on 26 May 2000.

On 23 May 2000, FBCI filed with the RTC Balayan an Urgent Ex-Parte Motion to Suspend
Enforcement of Writ of Possession. FBCI pointed out that it is now the new owner of Esses and
Tri-Star having purchased the "substantial and controlling shares of stocks"[4] of the two
corporations.
On the 26 May 2000 hearing, FBCI reiterated its claim of a supervening event, its ownership of
Esses and Tri-Star. FBCI informed the RTC Balayan that a new board of directors for Esses and
Tri-Star had been convened following the resignation of the members of the board of directors.
The previous actions of the former board of directors have been abandoned and the services of
Atty. Vicente B. Chuidian, the counsel of petitioners Silverio, Jr., Esses and Tri-Star, have been
terminated.

On the same day, the RTC Balayan issued the order suspending the writ of possession it had
earlier issued to Silverio, Jr., Esses and Tri-Star. The RTC Balayan reasoned that it would
violate the law on forum shopping if it executed the writ while FBCI's motion for
reconsideration of the Court of Appeals' decision and urgent motion to suspend the issuance of
the writ of possession remained pending with the Court of Appeals. The RTC Balayan noted
that because of FBCI's strong resistance, Silverio, Jr., Esses and Tri-Star have still to take
possession of the Calatagan Property. More than ten days had already passed from the time that
the RTC Balayan had issued the writ of possession. FBCI had barricaded the Calatagan
Property, threatening bloodshed if possession will be taken away from it. The RTC Balayan
believed that if it would not restrain Silverio, Jr., Esses and Tri-Star from taking possession of
the Calatagan Property, a violent confrontation between the parties might erupt as reported in
the Tempo newspaper in its 26 May 2000 issue. Without issuing a restraining order, the RTC
Balayan suspended the writ by requesting the counsel of Silverio, Jr., Esses and Tri-Star to
allow the court to study the voluminous records of the case, which are to be presented at the
hearing on 16 June 2000. The hearing would determine the existence of a supervening event.

On 15 June 2000, the RTC Balayan issued an Order cancelling the 16 June 2000 hearing so that
the Court of Appeals could resolve the issue regarding the existence of a supervening event.
However, the RTC Balayan declared that the suspension of the writ of possession would be
lifted on 17 June 2000.

On 8 August 2000, Silverio, Jr., Esses and Tri-Star filed a complaint for annulment of contracts
with damages with the Regional Trial Court of Las Piñas City, Branch 275 ("RTC Las Piñas").
[5]

Issues

Silverio, Jr., Esses and Tri-Star argue that:

An ex parte motion cannot legally constitute an initiatory basis for the RTC Balayan
to conduct additional hearings in order to validate certain new allegations. Neither
can said ex parte motion be the basis for the suspension of a writ of possession being
implemented.

II

When the RTC Balayan suspended the writ of possession, it was barred from hearing
intra-corporate disputes. And though Congress has now amended our law on the
matter, the RTC still cannot proceed because of due process and res judicata reasons.

III

A final and executory judgment cannot be enjoined except by an appropriate petition

for relief, a direct attack in another action or a collateral act in another action.

IV

Respondent FBCI is asking for a suspension of the writ of possession while at the
same time threatening violence if the writ of possession were to be implemented.
The RTC Balayan had no lawful basis to suspend the writ under these admitted
circumstances.

Respondent has not directly answered petitioners' legal theory. The petition is
founded on admitted facts upon which relief is sought under Rule 45. Respondent
has altered these facts - presenting its so called "counterstatements of facts and
issues" - which involve questions of fact that are still litis pendentia at the RTC
Balayan. And which even involve an attempt to vary res judicata.

VI

Contrary to respondent's claims, that the RTC order of 15 June 2000 has rendered
this case "moot and academic" - quite on the contrary - said order calls upon the
Supreme Court to decide whether or not, the RTC Balayan may continue to conduct
its hearings on suspending the writ of possession.

VII

Respondent's theory that an order suspending a writ of possession is interlocutory in

nature, and therefore inappealable, is not supported by jurisprudence.

VIII

Respondent's views on when suspending a writ of execution is appropriate - would

"make the exception as rule." And respondent's reliance on Flores vs. CA, et al. is
totally misplaced. In the Flores case, the party being dispossessed was a judgment
creditor, who was admitted by the adverse party to be the owner.

IX

The question of jus possessionis on the Calatagan Property is already res judicata
while the question of jus possidendi is still under litis pendentia. For that reason,
respondent has lost all his legal options in retaining the property procured under a
"faked service" of summons.

X
 Respondents arguments in his 11-06-01 Memo - on (a) "forum shopping", (b)
"petitioners" lack of capacity to sue", (c) "service of summons already served" (d)
"no intra-corporate dispute" and (e) "the relief herein preempted by events" - are
ratiocinations of miniscule weight, meriting only the slightest comment.[6]

FBCI raises the following issues:

1. Whether the present case has been rendered moot and academic by the Order of the RTC
Balayan dated 15 June 2000 and the filing of an action with the Regional Trial Court of
Las Piñas City;

2. Whether the present appeal should be dismissed on the ground of forum shopping;

3. Whether the RTC Balayan had the authority to suspend enforcement of the writ of
possession and to conduct hearings on a new set of facts;

4. Whether the present case involves an intra-corporate controversy;

5. Whether appeal by certiorari under Rule 45 is the proper remedy under the given facts of
the case.[7]

The Ruling of the Court

The petition has merit.

Procedural Issues

Before resolving the threshold issue, which is the existence of a supervening event, we first
address the following procedural issues: (1) whether appeal is the proper remedy against an
order suspending the execution of a writ of possession; (2) whether the issue of possession was
mooted by the 15 June 2000 Order of the RTC Balayan; and (3) whether the filing of a civil case
with the RTC Las Piñas constitutes forum shopping.

First, interlocutory orders are those that determine incidental matters that do not touch on the
merits of the case or put an end to the proceedings.[8] The proper remedy to question an
improvident interlocutory order is a petition for certiorari under Rule 65, not Rule 45.[9] A
petition for review under Rule 45 is the proper mode of redress to question final judgments.[10]

An order staying the execution of the writ of possession is an interlocutory order.[11] Clearly,
this order cannot be appealed. A petition for certiorari was therefore the correct remedy.
Moreover, Silverio, Jr., Esses and Tri-Star pointed out that the RTC Balayan acted on an ex-
parte motion to suspend the writ of possession, which is a litigious matter, without complying
with the rules on notice and hearing. Silverio, Jr., Esses and Tri-Star also assail the RTC
Balayan's impending move to accept FBCI's evidence on its subsequent ownership of Esses and
Tri-Star. In effect, Silverio, Jr., Esses and Tri-Star accuse the RTC Balayan of acting without or
in excess of jurisdiction or with grave abuse of discretion, which is within the ambit of
certiorari.

However, in the exercise of our judicial discretion, we will treat the appeal as a petition under
Rule 65.[12] Technical rules must be suspended whenever the purposes of justice warrant it,
such as in this case where substantial and important issues await resolution.

Second, the RTC Balayan's 15 June 2000 Order lifting the suspension of the writ of possession
was issued to correct its action on FBCI's ex-parte motion, which did not have the required
notice and hearing. This issue has thus become a fait accompli. However, while the 15 June
2000 Order is supposed to have mooted the suspension of the execution of the writ of
possession by lifting the suspension on 17 June 2000, Silverio, Jr., Esses and Tri-Star claim that
the writ has not been executed in their favor. Thus, the issues in this petition are far from being
moot. Also, the existence of a supervening event is another issue that must be resolved since the
RTC Balayan had instead submitted to the "higher courts" the resolution of this issue.

Third, Silverio, Jr., Esses and Tri-Star are not guilty of forum shopping for filing another action
against FBCI with the RTC Las Piñas during the pendency of this case with the RTC Balayan.
Forum shopping consists of filing multiple suits involving the same parties for the same cause
of action, either simultaneously or successively, to obtain a favorable judgment.[13]

The parties and cause of action in the present case before the RTC Balayan and in the case
before the RTC Las Piñas are different. The present case was filed by FBCI against Silverio, Jr.,
Esses and Tri-Star for the consolidation of title over the Calatagan Property. On the other hand,
the case before the RTC Las Piñas was filed by Silverio, Jr., Esses and Tri-Star against FBCI
and other defendants for the annulment of contract with damages, tort and culpa aquiliana (civil
fraud).

In its complaint before the RTC Las Piñas, Silverio, Jr., Esses and Tri-Star informed the court
that there is a pending case with the RTC Balayan over the Calatagan Property.[14] Silverio, Jr.,
Esses and Tri-Star made it clear in the complaint that the case before the RTC Las Piñas will
focus on the Makati Tuscany property and any reference to the Calatagan Property is "meant to
serve only as proof or evidence of the plan, system, scheme, habit, etc., lurking behind
defendants" interlocking acts constituting interlocking tort and interlocking fraud."[15] Clearly,
FBCI's claim of forum shopping against Silverio, Jr., Esses and Tri-Star has no basis.

No Supervening Event in this Case

FBCI took possession of the Calatagan Property after the RTC Balayan rendered a judgment by
default in FBCI's favor. The judgment by default was nullified after the RTC Balayan found out
that the service of summons on Silverio, Jr., Esses and Tri-Star was procured fraudulently. The
RTC Balayan thus recalled the writ of possession it had issued to FBCI. Silverio, Jr., Esses and
Tri-Star were served anew with summons. The RTC Balayan restored possession of the
Calatagan Property to Silverio, Jr., Esses and Tri-Star as restitution resulting from the annulment
of the judgment by default. The order restoring possession of the Calatagan Property to Silverio,
Jr., Esses and Tri-Star has attained finality. This case then proceeded to pre-trial.

FBCI has resisted the enforcement of the writ of possession by barricading the Calatagan
Property and threatening violence if its possession of the property is taken away from it. To
avoid bloodshed, as FBCI also claimed that Silverio, Jr. had armed civilians threatening to shoot
FBCI's representatives,[16] the RTC Balayan momentarily suspended the execution of the writ.
The RTC Balayan also had to rule on FBCI's claim of a supervening event that would allegedly
make the execution of the writ absurd,[17] as FBCI alleges it now owns the controlling interest
in Esses and Tri-Star. The RTC Balayan lifted the suspension of the writ but it cancelled the
hearings on the supervening event to give way to the Court of Appeals' action on this issue. The
RTC Balayan decided to await the appellate court's resolution because it did not want to violate
the rule against forum shopping.

Silverio, Jr., Esses and Tri-Star argue that the RTC Balayan has no power to conduct hearings on
the supervening event because res judicata has set in on the issue. They also contend that the
supervening event is an intra-corporate controversy that is within the jurisdiction of the
Securities and Exchange Commission, not the trial court. Silverio, Jr., Esses and Tri-Star point
out that despite the lifting of the suspension RTC Balayan has still to execute the writ of
possession in their favor. On the other hand, FBCI maintains that its acquisition of Esses and
Tri-Star is a supervening event, which the RTC Balayan could hear and is sufficient ground to
stay the execution of the writ of possession.

We rule in favor of Silverio, Jr., Esses and Tri-Star.

The court may stay immediate execution of a judgment when supervening events, occurring
subsequent to the judgment, bring about a material change in the situation of the parties.[18] To
justify the stay of immediate execution, the supervening events must have a direct effect on the
matter already litigated and settled.[19] Or, the supervening events must create a substantial
change in the rights or relations of the parties which would render execution of a final judgment
unjust, impossible or inequitable making it imperative to stay immediate execution in the
interest of justice.[20]

In this case, there is no judgment on the merits, only a judgment on a technicality. Even then,
the judgment of default rendered in FBCI's favor was voided because the RTC Balayan did not
acquire jurisdiction over Silverio, Jr., Esses and Tri-Star due to a fraudulent service of
summons. The case for consolidation of title, from which this petition stemmed, is in fact still
being litigated before the RTC Balayan.

The issuance of the writ of possession in favor of Silverio, Jr., Esses and Tri-Star is also not a
judgment on the merits.[21] A writ of possession is an order whereby the sheriff is commanded
to place a person in possession of real or personal property. [22] The issuance of the writ of
possession to Silverio, Jr., Esses and Tri-Star is but an order of restitution - a consequence of the
nullification of the judgment by default. The order of restitution placed the parties in the
situation prior to the RTC Balayan's rendition of the void judgment by default. Title to the
Calatagan Property is still in the names of Esses and Tri-Star. Possession of the Calatagan
Property must revert to Esses and Tri-Star as legal owners of the property.

However, with the reinstitution of the case for consolidation of title with the RTC Balayan,
possession of the Calatagan Property is now subject to the outcome of the case. Nonetheless,
while this case is still under litigation - it is only in the pre-trial stage - Esses and Tri-Star in
whose names the Calatagan Property is titled and in whose favor the order of restitution was
issued, are the ones entitled to possession of the property.

We do not agree with Silverio, Jr., Esses and Tri-Star's assertion that the RTC Balayan has no
power to conduct a hearing on the existence of a supervening event because of res judicata. Res
judicata does not set in where the court is without jurisdiction over the subject or person, and
therefore, the judgment is a nullity[23] such as the judgment by default in this case. The order
that voided the judgment by default and the order of restitution merely recognized the nullity of
the judgment by default. The orders did not adjudicate on the merits of the case. Since res
judicata had not set in, the case was tried anew upon the proper service of summons on Silverio,
Jr., Esses and Tri-Star.

Moreover, it is the court issuing the writ of possession that has control and supervision over its
processes.[24] The RTC Balayan can therefore hear the evidence on the existence of a
supervening event, provided the subject matter is within the jurisdiction of the court, as this
could affect the execution of the writ of possession.

We are, therefore, dismayed with the RTC Balayan's referral of the existence of the supervening
event to the "higher courts." Courts must not shirk from their duty to rule on an issue. The duty
of the appellate or higher courts is to review the findings and rulings of the lower courts, not to
issue advisories. Courts must execute its processes and should not succumb to threats by any of
the parties to resort to violence in case of such enforcement. Had the RTC Balayan immediately
passed upon FBCI's allegation of a supervening event, it would have been apparent that this
claim is without merit. The RTC Balayan should have then enforced posthaste the writ of
possession in Silverio, Jr., Esses and Tri-Star's favor.

FBCI's acquisition of the "substantial and controlling shares of stocks"[25] of Esses and Tri-Star
does not create a substantial change in the rights or relations of the parties that would entitle
FBCI to possession of the Calatagan Property, a corporate property of Esses and Tri-Star. Esses
and Tri-Star, just like FBCI, are corporations. A corporation has a personality distinct from that
of its stockholders. As early as the case of Stockholders of F. Guanzon and Sons, Inc. v.
Register of Deeds of Manila,[26] the Court explained the principle of separate juridical
personality in this wise:

A corporation is a juridical person distinct from the members composing it.

Properties registered in the name of the corporation are owned by it as an entity
separate and distinct from its members. While shares of stock constitute personal
property, they do not represent property of the corporation. The corporation has
property of its own which consists chiefly of real estate (Nelson v. Owen, 113 Ala.,
372, 21 So. 75; Morrow v. Gould, 145 Iowa 1, 123 N.W. 743). A share of stock only
typifies an aliquot part of the corporation's property, or the right to share in its
proceeds to that extent when distributed according to law and equity (Hall & Faley v.
Alabama Terminal, 173 Ala 398, 56 So., 235), but its holder is not the owner of any
part of the capital of the corporation (Bradley v. Bauder, 36 Ohio St., 28). Nor is he
entitled to the possession of any definite portion of its property or assets (Gottfried v.
Miller, 104 U.S., 521; Jones v. Davis, 35 Ohio St., 474). The stockholder is not a co-
 owner or tenant in common of the corporate property (Harton v. Hohnston, 166 Ala.,
317, 51 So., 992).

Thus, FBCI's alleged controlling shareholdings in Esses and Tri-Star merely represent a
proportionate or aliquot interest in the properties of the two corporations. Such controlling
shareholdings do not vest FBCI with any legal right or title to any of Esses and Tri-Star's
corporate properties. As a stockholder, FBCI has an interest in Esses and Tri-Star's corporate
properties that is only equitable or beneficial in nature. Even assuming that FBCI is the
controlling shareholder of Esses and Tri-Star, it does not legally make it the owner of the
Calatagan Property, which is legally owned by Esses and Tri-Star as distinct juridical persons.
As such, FBCI is not entitled to the possession of any definite portion of the Calatagan Property
or any of Esses and Tri-Star's properties or assets. FBCI is not a co-owner or tenant in common
of the Calatagan Property or any of Esses and Tri-Star's corporate properties.

We see no reason why the execution of the writ of possession has been long delayed. Possession
of the Calatagan Property must be restored to Esses and Tri-Star through their representative,
Silverio, Jr. There is no proof on record that Silverio, Jr. has ceased to be the representative of
Esses and Tri-Star in this case.

WHEREFORE, we GRANT the petition. The Regional Trial Court, Branch XI, Balayan,
Batangas is ordered to immediately execute the writ of possession in Civil Case No. 3356 in
favor of Esses Development Corporation and Tri-Star Farms, Inc. through their representative,
Ricardo S. Silverio, Jr. No costs.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Azcuna, JJ., concur.

[1] Penned by Judge Roberto L. Makalintal.

[2] Docketed as Civil Case No. 3356.

[3] Docketed as CA-G.R. SP No. 56924.

[4] Rollo, pp. 70-71.

[5] Docketed as Civil Case No. LP-00-0163.

[6] Rollo, pp. 356-357.

[7] Ibid., p. 231.

[8] Diesel Construction Company, Inc. v. Jollibee Foods Corporation, 380 Phil. 813 (2000).

[9] Ibid.

[10] Ibid.

[11] Ibid.

[12] Ibid.; Go v. Court of Appeals, 358 Phil. 214 (1998).

[13] The Executive Secretary v. Gordon, 359 Phil. 266 (1998).

[14] Rollo, p. 253.

[15] Ibid.

[16] Ibid., p. 74.

[17] Ibid.

[18] Serrano v. Court of Appeals, G.R. No. 133883, 10 December 2003, 417 SCRA 415.

[19] Ibid.

[20] Ibid.

[21] See OSCAR M. HERERRA, REMEDIAL LAW, Vol. II, 2000 ed., p. 451.

[22] Ibid.

[23] Arevalo v. Hon. Benedicto, 157 Phil. 175 (1974).

[24]Heirs of Francisco Guballa, Sr. v. Court of Appeals, G.R. No. 78223, 19 December 1988,
168 SCRA 518 citing Vda. de Dimayuga vs. Raymundo and Nable, 76 Phil. 143 (1946).

[25] Rollo, pp. 70-71.

[26]
G.R. No. L-18216, 30 October 1962, 6 SCRA 373; See also Martinez v. Court of Appeals,
G.R. No. 131673, 10 September 2004, 438 SCRA 130; Good Earth Emporium, Inc. v. Court of
Appeals, G.R. No. 82797, 27 February 1991, 194 SCRA 544; Magsaysay-Labrador v. Court of
Appeals, G.R. No. 58168, 19 December 1989, 180 SCRA 266.
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