[ G.R. No.

257454, July 26, 2023 ] covered thereby to-the extent of her one-sixth
CALI REALTY CORPORATION, REPRESENTED BY share in Librada's estate.15
DR. CAMILO M. ENRIQUEZ, JR., PETITIONER, VS.
PAZ M. ENRIQUEZ, RESPONDENT. CRC filed a Petition for Cancellation of Adverse
DECISION Claim16 asserting that the annotations of
LAZARO-JAVIER, J.: adverse claim were erroneous because the TCTs
to which they were appended pertained to
The Case corporate properties of CRC,17 an entity which
This Petition for Review on Certiorari1 assails has a personality distinct from its
the following dispositions of the Court of shareholders.18 As such, the claim of Paz had
Appeals in CA-G.R. CV No. 07019 entitled "Cali no basis in law and equity.19 Eventually, the
Realty Corporation, represented by Dr. Camilo trial court granted the Petition and ordered the
Enriquez, Jr., v. Paz Enriquez", viz.: cancellation of the adverse claim of Paz.20

1. Decision2 dated September 29, 2020, By Decision21 dated June 17, 2013 in CA-G.R.
directing petitioner Cali Realty Corporation CV No. 03725, the Court of Appeals reversed,
(CRC) to convey to respondent Paz M. Enriquez finding that: (a) genuine issues existed which
(Paz) one-sixth of one-half of the properties needed to be addressed in a full-blown trial; (b)
covered by various Transfer Certificates of Title the validity of Paz's adverse claim must be
(TCTs) in its name3 which it received from determined; and (c) the counterclaim of Paz
Camilo M. Enriquez, Sr. (Camilo, Sr.); and pertaining to her portion in the shares of CRC
2. needed to be resolved.22 Due to CRC's failure to
2. Resolution4 dated June 9, 2021, denying appeal, the aforesaid decision attained finality
CRC's subsequent Motion for Reconsideration. on August 1, 2013.23

Antecedents The case was then remanded to the trial court

Camilo, Sr. and Librada Machica Enriquez for further proceedings.24 The parties
(Librada) got married on May 20, 1939 at Sto. presented their respective witnesses. Camilo, Jr.
Rosario Parish in Cebu City.5 Their union bore was the sole witness for CRC while Paz was the
five children, namely: Ernesto M. Enriquez sole witness for the defense.25 Both parties
(Ernesto), Camilo M. Enriquez, Jr. (Camilo, Jr.), offered the TCTs in the name of CRC as
Bella E. Brendel (Bella), Paz, and Diosdado M. evidence.26
Enriquez (Diosdado).6 Librada died on June 23,
1995.7 During the hearing, CRC maintained that the
adverse claim on the TCTs should be removed
On August 14, 1995, CRC was organized with an because: (a) the subject properties were
authorized capital stock of PHP exclusive properties of Camilo, Sr. which he
5,000,000.00.8 Its incorporators were Camilo, inherited from his parents; and (b) they were
Sr., Ernesto, Camilo, Jr., Bella, and corporate properties transferred by Camilo, Sr.
Diosdado.9 Paz was not included as an to CRC while he was still alive, hence, were not
incorporator or stockholder.10 part of his estate at the time of his death on
January 20, 2005.27
Subsequently, Camilo, Sr. executed a Deed of
Assignment in favor of CRC on October 5, 1995 For her part, Paz contended that: (a) the subject
(Deed of Assignment), conveying to it parcels of properties were conjugal in nature; (b) she
land which he allegedly inherited from his inherited one-sixth portion of the subject
parents.11 These parcels of land (subject properties upon the death of Librada; (c) she
properties), covered by various incurred actual expenses of PHP 1,000,000.00
TCTs,12 constituted an aggregate land area of for airfare from Canada to the Philippines, hotel
530,491 square meters13 and were registered accommodations, food and transportation; legal
in the name of Camilo, Sr.. After the expense of PHP 50,000.00; miscellaneous
assignment, however, they were transferred to expense of more than PHP 30,000.00; moral
the name of CRC.14 damages of PHP 100,000.00; and(d) she was
entitled to a share in the income of CRC.28
Thus, on September 27, 2001, Paz caused the
annotation of her adverse claim on CRC's TCTs,
asserting ownership over the parcels of land
Ruling of the Trial Court Whatever amounts due to respondent shall
By Decision29 dated August 22, 2018, the trial earn interest at six percent (6%) per
court ruled in favor of Paz, viz.: annum from the time it becomes due and until
this Decision becomes final and executory, and
WHEREFORE, based on the foregoing from finality of this Decision until full
discussion, the Petition is DENIED.1aшphi1 The satisfaction, the total amount due shall earn
adverse claim caused to be annotated by herein interest of six percent (6%) per annum until fully
respondent on the twelve (12) TCTs shall remain paid.
until her share in the properties covered by the
TCTs is settled. SO ORDERED.30 (Emphasis in the original)

As to the counterclaim, petitioner Cali Realty The trial court found that CRC failed to adduce
Corporation is hereby ORDERED to: evidence to support its claim that the subject
properties were exclusively owned by Camilo,
a. EXECUTE a Deed of Conveyance to effect Sr..31 On the other hand, Paz traced back the
immediately the transfer to respondent PAZ M. origin of the 12 TCTs, all of which categorically
ENRIQUEZ of ONE SIXTH (1/6) of the ONE HALF stated that they were issued to Camilo, Sr.
(1/2) portion of the properties covered by the during his marriage to Librada.32 As such,
TWELVE (12) TRANSFER CERTIFICATES OF TITLE Article 160 of the Old Civil Code of the
(Exhibits "B" to "M"/"1" to "12") subject matter Philippines, the law in effect at the time of the
of this case; marriage of Camilo, Sr. and Librada, was
applicable.33 The subject properties were then
b. CONVEY AND TRANSFER to respondent PAZ presumed to belong to their conjugal
M. ENRIQUEZ TWO HUNDRED [FORTY-TWO] partnership in the absence of clear and
THOUSAND (242,000) shares of stocks of Cali convincing evidence to the
Realty Corporation representing Nineteen Point contrary.34 Consequently, upon Librada's
Thirty Six Percent (19.36%) of the capital death, she transmitted her rights and interests
structure of the corporation, and that over the subject properties to Paz and her
respondent PAZ M. ENRIQUEZ is siblings consisting of her one-half share.35 Thus,
hereby DECLARED as co-owner to the extent of Paz was entitled to have her adverse claim
Nineteen Point Thirty Six Percent (19.36%) of annotated on the TCTs to protect her one-sixth
Cali Realty Corporation; share over her mother's one-half share in the
conjugal partnership.36
c. ACCOUNT the proceeds of ONE SIXTH (1/6)
of the ONE HALF (1/2) portion of the properties Further, the trial court found that the
covered by the TWELVE (12) TRANSFER counterclaim of Paz stood on the same footing
CERTIFICATES OF TITLE (Exhibits "B" to "M"/"1" as an independent action and must be
to "12") utilized by Cali Realty Corporation in its resolved.37 In this regard, the trial court
business operations starting from its concluded that when Camilo, Sr. assigned the
incorporation up to the present; and to DELIVER subject properties to CRC, he erroneously
them to respondent PAZ M. ENRIQUEZ; included the share of Paz in the assignment. It is
only fair that CRC return to Paz her one-sixth
d. ACCOUNT the proceeds of the Nineteen share.38
Point Thirty Six Percent (19.36%) shares of
stocks of Cali Realty Corporation from 2005 up More, as a compulsory heir of Camilo, Sr., Paz
to the present and to DELIVER them to was likewise entitled to inherit from the former.
respondent PAZ M. ENRIQUEZ; But because Camilo, Sr. disposed of his
properties in favor of CRC, Paz could no longer
e. PAY respondent PAZ M. ENRIQUEZ the claim any inheritance from his estate. Instead,
following amounts by way of damages: she had the right to inherit part of the shares
1. THIRTY THOUSAND PESOS (P30,000.00) as owned by Camilo, Sr. at the time of his death in
litigation expenses; proportion to her share in his
2. THIRTY THOUSAND PESOS (P30,000.00) as estate.39 Accordingly, the trial court declared
attorney's fees plus TWO THOUSAND PESOS Paz a co-owner of CRC who was entitled to the
(P2,000.00) for every hearing attended by the proceeds of CRC's business operations arising
lawyer in this case; and from use of the subject properties.40
3. TO PAY the cost of this suit.
On damages, the trial court found no evidence characterized the statement "married to" as
showing that CRC perpetuated the unlawful acts merely an indication of the civil status of the
against Paz. Too, it appeared that Camilo, Sr. registered owner.53 On its own, the statement
singlehandedly caused Paz to be deprived of her does not create the presumption that the
share in the estate of her mother.41 There was property is conjugal in nature.54
also no showing that Paz demanded her share
from CRC and that the latter unjustifiably Further, the presumption of conjugality does
refused.42 The trial court nevertheless found not arise in this case because Paz failed to prove
CRC liable for litigation expenses and attorney's when the property alleged to be conjugal was
fees because in filing the Petition for acquired.55 It is settled that proof of acquisition
Cancellation of Adverse Claim, Paz was forced to during the coverture is a condition sine qua
litigate. non for the operation of the
presumption.56 Registration of the properties in
Ruling of the Court of Appeals the name of one of the spouses during the
By Decision43 dated September 29, 2020, the marriage is insufficient because acquisition and
Court of Appeals affirmed. It observed that the registration are two different acts.57
case involved a "scheme of exclusion
perpetrated against Paz by [her siblings, and] by Second. The subject properties have become
her father too, over her share of the family corporate properties of CRC which it acquired
inheritance."44 In the main, it concurred with through the Deed of Assignment executed by
the trial court that the subject properties were Camilo, Sr. during his lifetime.58 Paz could not
conjugal in nature because they were acquired have acquired successional rights over these
during the marriage of Camilo, Sr. and properties.59
Librada.45 Neither was CRC able to present
proof to the contrary.46 Finally. The counterclaim interposed by Paz,
which resulted in the award of 19.36% of the
The Court of Appeals also disregarded CRC's shares of CRC to her, was permissive and not
claim that the trial court improperly ruled on compulsory.60 Therefore, her nonpayment of
the permissive counterclaim of Paz despite her docket fees was a fatal defect that should have
nonpayment of docket fees. The nature of the led to the dismissal of the counterclaim.61 In
counterclaim was definitively settled by the any event, the counterclaim required the
Court of Appeals in its June 17, 2013 Decision presence of third persons (i.e., the other heirs
where it held that the counterclaim was of Camilo, Sr.) who were not impleaded and
compulsory in nature because "it is closely who were deprived of due process.62
intertwined with the issue of the main
case."47 CRC failed to appeal this In her Comment63 dated October 17, 2022, Paz
finding.48 Therefore, the treatment of Paz's maintains that, inter alia, the issue of ownership
counterclaim as compulsory has become the of the subject properties is a question of fact
law of the case and must be treated as the which is improper for a Rule 45
controlling legal rule between the parties.49 petition.64 Regardless, even if the facts were re-
examined, the conclusion would be the same
Reconsideration was denied under since the evidence clearly shows that the
Resolution50 dated June 9, 2021. subject properties were acquired during the
marriage of Camilo, Sr. and Librada. The TCTs
The Present Petition offered as evidence confirm the conjugal nature
CRC now charges the Court of Appeals with of the properties because they described
erroneously affirming the trial court's Camilo, Sr. as "married" or "married to Librada
dispositions. It argues: M. Enriquez." More, CRC failed to present
evidence to rebut the conjugal nature of the
First. The subject properties were not conjugal subject properties.65
properties of Camilo, Sr. and Librada.51 A close
scrutiny of the TCTs reveals that the subject Paz likewise avers that as far as strangers and
properties were either registered under "Camilo the whole world are concerned, registration is
Enriquez, married to Librada M. Enriquez," the date of acquisition66 and "that for the
"Camilo Enriquez, married," or under the name presumption of the conjugal nature of the
of Camilo Enriquez and his sibling Donato property to arise, it is not necessary that it be
Enriquez.52 Jurisprudence has consistently proven first that the property was acquired
during the marriage using conjugal (h) When the findings are conclusions without
funds."67 Finally, CRC did not specify the citation of specific evidence on which they are
supposed legal errors committed by the Court based;
of Appeals in affirming the award of litigation (i) When the facts set forth in the petition as
expenses and attorney's fees.68 well as in the petitioner's main and reply briefs
are not disputed by the respondent;
Our Ruling (j) When the findings of fact are premised on
The Petition is meritorious. the supposed absence of evidence and
contradicted by the evidence on record; or
CRC assails the Decision of the Court of Appeals (k) When the Court of Appeals manifestly
on the premise that the subject properties were overlooked certain relevant facts not disputed
exclusively owned by Camilo, Sr. prior to their by the parties, which, if properly considered,
transfer to CRC.69 In this regard, it is settled would justify a different
that the issue of possession or ownership of conclusion.76 (Emphasis supplied)
land is a question of fact70 and thus improper
for a Rule 45 petition which is generally limited The Court finds that the second, forth, eighth,
to questions of law.71 and eleventh exceptions are present in this
case. As such, the Court is not precluded from
The difference between a question of law and a reviewing the factual findings of the lower
question of fact was explained in Disini v. courts because their decisions contain
Republic,72 viz.: conclusions that are bereft of evidentiary
support or factual basis.77
The test in determining whether a question is
one of law or of fact is whether the appellate The Court of Appeals erroneously affirmed the
court can resolve the issue raised without conclusion of the trial court that the subject
reviewing or evaluating the evidence, in which properties belonged to the conjugal partnership
case, it is a question of law. Any question that of Camilo, Sr. and Librada. It based its
invites evaluation of the whole evidence, as well conclusions on the following observations of the
as their relation to each other and to the whole, trial court:
is a question of fact and thus proscribed in a
Rule 45 petition.73 (Citations omitted) [I]n order to prove that these properties are
conjugal in nature, [Paz] traced back the origin
The Court is not a trier of facts, which of these twelve (12) TCTs. [Paz] was able to
undertakes the re-examination and re- show that:
assessment of the evidence presented during 1. TCT No. T-6118 (Exhibit "B"/"1") issued in the
trial.74 Appreciation and resolution of factual year 1996 in the name of [CRC] is a transfer
issues are functions of the trial court, whose from TCT No. T-500 (Exhibit "17"). TCT No. T-
findings are accorded great respect, if not 500 was issued in the year 1969 in the name of
finality, especially when affirmed by the Court [Camilo, Sr.], married.
of Appeals.75 This rule nonetheless admits of 2. TCT No. T-45290 (Exhibit "C"/"2") issued in
several exceptions, such as: the year 1996 in the name of [CRC] is a transfer
from TCT No. T-11031 (Exhibit "17-a"). TCT No.
(a) When the findings are grounded entirely on T-11031 was issued in the year 1975 in the
speculation, surmises, or conjectures; name of [Camilo, Sr.], married to [Librada].
(b) When the inference made is manifestly 3. TCT No. T-45289 (Exhibit "D"/"3") issued in
mistaken, absurd, or impossible; the year 1996 in the name of [CRC] is a transfer
(c) When there is grave abuse of discretion; from TCT No. T-11032 (Exhibit "17-b"). TCT No.
(d) When the judgment is based on a T-11032 was issued in the year 1975 in the
misapprehension of facts; name [of] [Camilo, Sr.], married to [Librada].
(e) When the findings of facts are conflicting; 4. TCT No. T-45288 (Exhibit "E"/"4") issued in
(f) When in making its findings the [Court of the year 1996 in the name of [CRC] is a transfer
Appeals] went beyond the issues of the case, or from TCT No. T-819 (Exhibit "17-c"). TCT No. T-
its findings are contrary to the admissions of 819 was issued in the year 1960 in the name of
both the appellant and the appellee; [Camilo, Sr.], married.
(g) When the [Court of Appeal's] findings are 5. TCT No. T-45287 (Exhibit "F"/"5") issued in
contrary to those by the trial court; the year 1996 in the name of [CRC] is a transfer
from TCT No. T-25135 (Exhibit "17-d"). TCT No.
T-25135 was issued in the year 1983 in the [Camilo, Sr.] while he was married to [Librada],
name of [Camilo, Sr.], married. mother of [Paz] and that they were acquired
6. TCT No. T-45282 (Exhibit "G"/"6") issued in from the years 1960 to 1983, well within the
the year 1996 in the name of [CRC] is a transfer duration of the marriage of [Camilo, Sr.] and
from TCT No. T-20513 (Exhibit "17-e"). TCT No. [Librada). (Camilo, Sr. and Librada married in
T-20513 was issued in the year 1981 in the 1939, and that marriage ended in June 23, 1995
name of [Camilo, Sr.], married to [Librada]. when Librada died).78 (Emphasis and
7. TCT No. T-45283 (Exhibit "H"/"7") issued in underscoring supplied)
the year 1996 in the name of [CRC] is a transfer
from TCT No. T-11030 (Exhibit "17-f). TCT No. T- In echoing the findings of the trial court, the
11030 was issued in the year 1975 in the name Court of Appeals declared:
of [Camilo, Sr.], married to [Librada].
8. TCT No. T-45284 (Exhibit "I"/"8") issued in the Under Article 1407 of the Spanish Civil Code,
year 1996 in the name of [CRC] is a transfer which CRC argues to be the applicable law, the
from TCT No. T-25137 (Exhibit "17-g"). TCT No. property of the spouses are deemed conjugal
T-25137 was issued in the year 1983 in the partnership property in the absence of proof
name of [Camilo, Sr.], married. that it belongs exclusively to one or the other
9. TCT No. T-51916 (Exhibit ''J''/"9") issued in spouse. This presumption arises with respect to
the year 1998 in the name of [CRC] is a transfer property acquired during the marriage. It is not
from TCT No. T-45285 (Exhibit "17-h"). TCT No. necessary to prove that the property was
T-45285 which was issued in 1996 in the name acquired with conjugal funds. In order to
of [CRC] and Donato Enriquez is a transfer from overthrow this presumption, the evidence to
TCT No. T-20509 (Exhibit "17-i"). TCT No. T- the contrary must be strong, clear, and
20509 was issued in 1981 in the name of convincing. x x x
[Camilo, Sr.], married to [Librada], and Donato
Enriquez, married to Emilia Jaca. As correctly held by the RTC, Paz established
10. TCT No. T-51917 (Exhibit "K"/" 10") issued in that the subject properties were acquired from
the year 1998 in the name of [CRC] is a transfer 1960 to 1983, during the marriage of Camilo, Sr.
from TCT No. T-45285 (Exhibit "17-h"). TCT No. and Librada, which subsisted from 1939 to
T-45285 which was issued in the year 1996 in 1995. Thus, the subject properties are
the name of [CRC] and Donato Enriquez is a presumed to be conjugal, unless proven
transfer from TCT No. T-20509 (Exhibit "17-i"). otherwise.
TCT No. T- 20509 was issued in 1981 in the
name of [Camilo, Sr.], married to [Librada], and As to the argument that the date of registration
Donato Enriquez, married to Emilia Jaca. is not the same as the date of acquisition, this
11. TCT No. T-51920 (Exhibit "L"/"11") issued in does not bear convincing quality.
the year 1998 in the name of [CRC] is a transfer
from TCT No. T-45286 (Exhibit "17-j"). TCT No. Basic is the rule that the registration of the deed
T-45286 which was issued in 1996 in the name is the effectual act which binds the land insofar
of [CRC] and Encarnacion Enriquez Llamas is a as third persons are concerned. x x x
transfer from TCT No. T-20510 (Exhibit"17-k").
TCT No. T-20510 was issued in 1981 in the name Yet, even if we were to entertain the notion
of [Camilo, Sr.], married to [Librada], and that the date of registration is not the same as
Encarnacion Enriquez Llamas. the date of acquisition, CRC failed to proffer any
12. TCT No. T-51921 (Exhibit "M"/"12") issued in evidence as to the supposed actual dates of the
the year 1998 in the name of [CRC] is a transfer acquisitions. In fact, the most that it could
from TCT No. T-45286 (Exhibit "17-j"). TCT No. muster is to express uncertainty as to the exact
T-45286 which was issued in 1996 in the name dates that the subject properties were
of [CRC] and Encarnacion Enriquez Llamas is a acquired.79 (Emphasis supplied, citations
transfer from TCT No. T-20510 (Exhibit "17-k"). omitted)
TCT No. T-20510 was issued in 1981 in the name
of [Camilo, Sr.], married to [Librada], and At most, however, the findings of the lower
Encarnacion Enriquez Llamas. courts only confirm that the properties were
registered in the name of Camilo, Sr. during his
From the foregoing tracing of the origin of the marriage to Librada. Verily, acquisition of title
twelve (12) TCTs subject matter of this case, it and registration are two different acts.80 The
clearly appears that they were issued to latter merely confirms that the title is already
vested or existing.81 More, the lower courts during the lawful existence of [their
failed to cite any specific evidence that the marriage].87 (Emphasis and underscoring
properties were indeed acquired during the supplied.1aшphi1)
marriage of Camilo, Sr. and Librada. Hence, the
inference made by the courts a quo-i.e., that The same doctrine is reiterated in Metrobank v.
the properties are conjugal in nature-is Pascual,88 also cited by Paz:
misplaced and based on a misapprehension of
the evidence. Nicholson is correct in pointing out that
only proof of acquisition during the marriage is
In the recent case of Jorge v. Marcelo,82 which needed to raise the presumption that the
involved a similar dispute on whether the property is conjugal. Indeed, if proof on the use
property was conjugal in nature, the Court of conjugal [funds] is still required as a
ordained: necessary condition before the presumption can
arise, then the legal presumption set forth in
Before the presumption of conjugal nature of the law would veritably be a
property can apply, it must first be established superfluity.89 (Emphasis and underscoring
that the property was in fact acquired during supplied.)
the marriage. Proof of acquisition during the
coverture is a condition sine qua non for the For sure, Paz has not established the
operation of the presumption in favor of condition sine qua non for the presumption of
conjugal partnership. The party who asserts this conjugality of property to apply. She has not
presumption must first prove said time proven or even alleged when the properties
element. The presumption does not operate were actually acquired. Instead, she merely
when there is no showing as to when the claimed that the date of registration of property
property alleged to be conjugal was acquired. If is the same as the date of acquisition.90 Hence,
there is no showing as to when the property in in accordance with Jorge, we find that the
question was acquired, the fact that the title is subject properties, registered in the name of
in the name of the wife alone is determinative Camilo, Sr., are paraphernal in
of its nature as paraphernal, i.e., belonging nature.91 Consequently, the ruling of the trial
exclusively to said spouse. Notably, acquisition court that Paz had an interest in the subject
of title and registration thereof are two properties to the extent of her one-sixth share
different acts. It is well settled that registration in her mother's one-half share in the conjugal
under the Torrens title system does not confer partnership, has no leg to stand on.
or vest title but merely confirms one already
existing.83 (Emphasis and underscoring As for CRC's contention that the counterclaim
supplied, citations omitted) interposed by Paz, i.e., for reconveyance of the
subject properties, her rightful share in the
Thus, the Court of Appeals erroneously faulted shares of stock of CRC, as well as litigation
CRC for its "fail[ure] to proffer any evidence as expenses, attorney's fees, and damages,92 was
to the supposed actual dates of the permissive and should have been disallowed
acquisitions"84 for the burden of proof rests on due to nonpayment of docket fees,93 the Court
Paz. CRC has no obligation to prove its finds that the characterization of said
exception or defense.85 counterclaim as compulsory had long become
the law of the case in view of the finality of the
Even Spouses Go v. Yamane,86 cited by Paz in June 17, 2013 Decision of the Court of
her Comment, bolsters the paradigm that what Appeals.94 The doctrine of the law of the case
is material is the time of acquisition of the provides:
property:
It is well established that when a right or fact
As a general rule, all property acquired by the has been judicially tried and determined by a
spouses, regardless of in whose name the same court of competent jurisdiction, so long as it
is registered, during the marriage is presumed remains unreversed, it should be conclusive
to belong to the conjugal partnership of gains, upon the parties and those in privity with them.
unless it is proved that it pertains exclusively to The dictum therein laid down became the law of
the husband or to the wife. x x x What was the case and what was once irrevocably
material was the time the fishpond lease right established as the controlling legal rule or
was acquired by the grantee, and that was decision continues to be binding between the
same parties as long as the facts on which the consisted of the subject properties.103 Paz
decision was predicated continue to be the facts unsurprisingly claims otherwise.104 Without a
of the case before the court. Hence, the binding clear determination thereon, any transfer of
effect and enforceability of that dictum can no shares to Paz by virtue of the assailed Decision
longer be resurrected anew since such issue had could be lesser or greater than what she is
already been resolved and finally laid to rest, if actually entitled to. Simply put, since the Court
not by the principle of res judicata, at least by is unable to compute Paz's legitime, it cannot
conclusiveness of judgment.95 (Citations accurately determine the extent to which said
omitted) legitime had allegedly been prejudiced.

It is undisputed that the Court of Appeals, in its As for CRC's contention that its shareholders
June 17, 2013 Decision, ruled that "the were not afforded due process,105 we find the
counterclaim is compulsory as it is closely same to be unmeritorious. Generally, before a
intertwined with the issue of the main person may be deprived of his or her property,
case."96 On the one hand, CRC has not shown he or she must be given the opportunity to be
that it appealed the June 17, 2013 Decision. On heard and to submit any evidence in support of
the other, Paz has presented an Entry of his or her defense.106 Here, none of the
Judgment97 in CA-G.R. CV No. 03725 shareholders of CRC have been impleaded. It
categorically stating that the June 17, 2013 thus appears that they are strangers whose
Decision had attained finality. Consequently, the rights cannot be determined by the Court.107
pronouncements in said Decision became final
and cannot be re-litigated before the Court at Nevertheless, in International Academy of
this late stage of the proceedings. For purposes Management and Economics (I/AME) v. Litton
of this case, therefore, the counterclaim of Paz and Company, Inc.,108 we ordained:
is compulsory.
In general, corporations, whether stock or non-
As such, the Court is bound to rule on the stock, are treated as separate and distinct legal
propriety of Paz's counterclaim. On this score, entities from the natural persons composing
there is no dispute that Paz is a compulsory heir them. The privilege of being considered a
of the late Camilo, Sr. and is thus entitled to her distinct and separate entity is confined to
legitime in the absence of a valid legitimate uses, and is subject to equitable
disinheritance.98 It is likewise settled that any limitations to prevent its being exercised for
compulsory heir to whom the testator has left fraudulent, unfair or illegal purposes. However,
by any title less than the legitime belonging to once equitable limitations are breached using
him or her may demand that the same be fully the coverture of the corporate veil, courts may
satisfied.99 The assailed Decision of the Court of step in to pierce the same.
Appeals supposes that Paz had, in fact, been
disinherited, and seeks to rectify the situation As we held in Lanuza, Jr. v. BF Corporation:
by awarding her 19.36% of the shares of
CRC.100 Piercing the corporate veil is warranted when
"[the separate personality of a corporation] is
The Court, however, cannot subscribe to this used as a means to perpetrate fraud or an illegal
conclusion. For one, the legitime to which Paz is act, or as a vehicle for the evasion of an existing
entitled has not been established with obligation, the circumvention of statutes, or to
reasonable certainty. No conclusion as to the confuse legitimate issues." It is also warranted
legal share due to a compulsory heir can be in alter ego cases "where a corporation is
reached without: (1) determining first the net merely a farce since it is a mere alter ego or
value of the estate of the decedent; (2) collating business conduit of a person, or where the
all the donations inter vivos in favor of some of corporation is so organized and controlled and
the heirs; and (3) ascertaining the legitime of its affairs are so conducted as to make it merely
the compulsory heirs.101 For another, there is an instrumentality, agency, conduit or adjunct
insufficient information on whether Camilo, Sr. of another corporation."
and Librada owned any other property other
than the subject properties. All that the record When [the] corporate veil is pierced, the
contains is Camilo, Jr.'s bare and corporation and persons who are normally
uncorroborated claim that Librada's estate "was treated as distinct from the corporation are
settled"102 and that Camilo, Sr.'s entire estate treated as one person, such that when the
corporation is adjudged liable, these persons, Q: Why did the corporation exclude Paz
too, become liable as if they were the Enriquez and include only all the other children
corporation. of Camilo - except Paz? Why is it so?
A: We had no direct control of what my father
The piercing of the corporate veil is premised on would decide when he was still alive. Physically
the fact that the corporation concerned must and mentally, my father was so domineering,
have been properly served with summons or we didn't have a say.
properly subjected to the jurisdiction of the Q: So, in other words, you will agree with the
court a quo. Corollary thereto, it cannot be Court now that your father deliberately
subjected to a writ of execution meant for excluded Paz Enriquez from these properties?
another in violation of its right to due process. A: The way I understand it. That is the way I
perceive it.
There exists, however, an exception to this rule: Q: Don't you pity your sister?
if it is shown "by clear and convincing proof that A: Your Honor, our father was so domineering
the separate and distinct personality of the we had no say.
corporation was purposefully employed to Q: Your father is dead now. You and your
evade a legitimate and binding commitment siblings are now controlling the corporation.
and perpetuate a fraud or like wrongdoings." You are saying that your father was
domineering at the time. Can't you correct that
The resistance of the Court to offend the right mistake now by including your sister?
to due process of a corporation that is a A: This may not be relevant to the case right
nonparty in a main case, may disintegrate not now, but there were really bad incidents that
only when its director, officer, shareholder, happened in th[ese] cases we are talking about.
trustee or member is a party to the main case, I have no control - to dictate to my father. I
but when it finds facts which show that piercing think he really did it on his own - not us.
of the corporate veil is merited. Q: You are part of this corporation, being a child
of Camilo Enriquez, Sr. and your other siblings
Thus, as the Court has already ruled, a party are part of this corporation being children of
whose corporation is vulnerable to piercing of Camilo Enriquez, Sr. Is that correct?
its corporate veil cannot argue violation of due A: Yes, your Honor.
process.109 (Emphases supplied; citations Q: So it was only Paz Enriquez who is not part of
omitted) your corporation. Right?
A: Yes, your Honor.112
Though the courts a quo did not mention the
doctrine of piercing the veil of corporate fiction, The acts of Camilo, Sr., as well as the inaction of
they both found that CRC was actually used to Paz's siblings, are unequivocal. Camilo, Sr.
perpetuate fraud and injustice against transferred the subject prope1iies to CRC in
Paz, viz.:110 exchange for shares of stock.113 Prior to his
death, he then transferred his shares to his
It is crystal clear from the testimony of Camilo, other children, and other third persons to the
Jr., as highlighted by the RTC, that Paz was exclusion of Paz.114 When Camilo, Sr. died,
unduly deprived of her shares in the subject Camilo, Jr. and his other siblings took no
properties. Camilo, Sr. and Paz's siblings measures to rectify the situation. In all, CRC is
obviously used CRC as an instrument to exclude merely a subterfuge employed by the late
Paz from enjoying her share as a compulsory Camilo, Sr. and CRC's shareholders to unlawfully
heir, in violation of the laws on succession. The deprive Paz of her legitime.
RTC wisely resolved the issues of the case that
effectively ended the scheme of exclusion The Court is acutely aware that this case has
perpetrated against Paz by her own siblings, nay been pending for a prolonged period.
by her father too, over her share of the family Nevertheless, we are constrained to remand it
inheritance.111 to the trial court so that it can rule on the
remaining factual issues which this Court is ill-
Camilo, Jr.'s answers to the clarificatory equipped to determine, i.e., the extent of Paz's
questions of the trial judge are conclusive on legitime, her entitlement to shareholdings in
this point: CRC, and to any fruits produced thereby.115
ACCORDINGLY, the Petition for Review
on Certiorari is GRANTED. The Decision dated
September 29, 2020 and the Resolution dated
June 9, 2021 of the Court of Appeals in CA-G.R.
CV. No. 07019 are SET ASIDE. The case
is REMANDED to the Regional Trial Court -
Tacloban City, Branch 9 for the sole purpose of
determining the extent of Paz's legitime, her
entitlement to shareholdings in CRC, and to any
fruits produced in the interim. The trial court
is DIRECTED to resolve this case with utmost
dispatch.

SO ORDERED.