Republic v. Philippine Resources Development
REITERATIONFacts
The Antecedents: The Republic of the Philippines, through the Bureau of Prisons, filed a complaint against Macario Apostol and Empire Insurance Co. for the collection of unpaid balances from Apostol's purchases of Palawan Almaciga and logs. Apostol allegedly owed P15,187.49 for Almaciga and P18,827.57 for logs, totaling P34,015.06. Procedural History: Philippine Resources Development Corporation (PRDC) moved to intervene, alleging that Apostol, its president, without the stockholders' knowledge or consent, disposed of PRDC's goods (G.I. sheets, black sheets, M.S. plates, round bars, and G.I. pipes) by delivering them to the Bureau of Prisons to settle his personal debts. PRDC sought to recover these goods. The Court of First Instance (CFI) denied PRDC's motion for intervention. The Court of Appeals (CA) set aside the CFI's order and allowed PRDC to intervene. The Petition: The Republic of the Philippines filed a petition with the Supreme Court to review the CA's decision, contending that PRDC had no legal interest in the matter in litigation, as the original action was for money collection, while PRDC sought to recover ownership and possession of specific goods. The Republic argued that allowing intervention would change a personal action to one ad rem and unduly delay the case.
Issue(s)
Whether the respondent corporation (PRDC) has a legal interest in the matter in litigation to be allowed to intervene. Whether the Court of Appeals erred in allowing the intervention, which allegedly changes the nature of the action and causes undue delay. Whether the counsel for the respondent corporation has the authority to file the complaint in intervention and represent the corporation.
Ruling
The Supreme Court affirmed the judgment of the Court of Appeals, holding that the respondent corporation has a legal interest in the matter in litigation and is entitled to intervene. The Court also found that the counsel for the respondent corporation was duly authorized to represent it.
Ratio Decidendi
On the legal interest for intervention: The Court held that PRDC possesses a legal interest in the matter in litigation that is actual, material, direct, and immediate. While the original case was for money collection, the goods PRDC claimed ownership of had been assessed and evaluated, with their price equivalent determined. If the respondent judge were to credit Apostol with the value of these goods, PRDC would be adversely affected if its claim of ownership was true. Therefore, allowing intervention would not unduly delay the case but would help clarify the vital issue of ownership and prevent multiplicity of suits. The Court noted that payment need not be exclusively in money, as Article 1458 of the Civil Code allows payment in "money or its equivalent." On changing the nature of the action and undue delay: The Court found no merit in the contention that intervention would change a personal action to one ad rem or cause undue delay. The Court emphasized that the resolution of the issues in the main case would virtually affect PRDC's rights. Allowing intervention would clarify the ownership of the materials, prevent multiplicity of suits, and not necessarily cause undue delay or prejudice the original parties. The Court reiterated that the trial court would still need to pass upon the sufficiency of the payment in kind. On the authority of the counsel: The Court upheld the CA's finding that PRDC's counsel was authorized to represent the corporation. Section 20 of Rule 127 presumes the authority of counsel. Furthermore, the Court noted that PRDC is a duly organized corporation with a personality distinct from its president. Even if the board of directors did not explicitly authorize the counsel, a single stockholder, who is also a director and secretary-treasurer, may sue in behalf of the corporation when the president and other directors are adversely affected or are the objects of the suit. The Court found that the counsel's authority was not questioned in the CFI and was presumed to be proper.
Main Doctrine
A corporation has legal personality distinct from its president or stockholders and possesses the right to bring suit to safeguard its interests. A stockholder, particularly a director who is also a secretary-treasurer, may sue in behalf of the corporation when the president and other directors are adversely affected or are the objects of the intended suit, especially when the corporation's counsel's authority to appear is presumed unless questioned in the lower court.