13 – Tee Ling Kiat v.

Ayala Corporation (2018)

GR NO. 192530
TOPIC
Is the corporate property the stockholder’s property?
DOCTRINE
Money judgments are enforceable only against property incontrovertibly belonging to the
judgment debtor. They cannot be enforced against the corporate property of a corporation of
which the debtor is a stockholder.

EMERGENCY RECIT
Parcels of land registered in the name of Vonnel Industrial Park, Inc. (VIP) were levied to satisfy
a judgment against its incorporator, Dewey Dee. Tee Ling Kiat filed a third-party claim, alleging
that Dewey is no longer a stockholder of VIP since the latter had already sold his shares to the
former. Although the parcels of land were held to be properties of VIP and not of Dewey, the court
still disallowed the third-party claim because Tee Ling Kiat failed to prove that he bought the
allegedly sold shares.

FACTS
● Spouses Dewey and Lily Dee, in their personal capacities, were sureties of a money
market line transaction extended by Ayala Corp.
● The money market line was not paid; Ayala thus filed an action for collection against
Spouses Dee.
● Ruling in favor of Ayala, the court issued a notice to levy upon "the rights, claims, shares,
interest, title and participation" that the Spouses Dee may have in parcels of land
registered in the name of VIP. Dewey was an incorporator of VIP.
● Tee Ling Kiat filed a third-party claim, alleging that:
○ Although Dewey is an incorporator of VIP, he is no longer a stockholder thereof.
Dewey had already sold to him all his stocks in VIP. He presents as evidence: (1)
a cancelled check which Dewey issued in his favor; and (2) a photocopy of the
deed of sale of the stocks.
○ Assuming that Dewey is still a stockholder of VIP, at most he merely has rights,
claims, shares, interest, title and participation to its shares of stocks, but not as to
the real properties registered under its name. VIP is a corporate entity which has
a legal personality separate and distinct from Dewey or Lily. Thus, the subject
parcels of land are the sole and exclusive properties of VIP.
RTC:
● Disallowed the claim. Tee Ling Kiat failed to present evidence of the sale of Dewey’s
shares of stock to him.

CA:
● Affirmed the RTC.

ISSUES
1. WON the parcels of land are Dewey’s properties?
 2. WON the third-party claim should prosper?

HELD:
1. NO.
● Money judgments are enforceable only against property incontrovertibly belonging to the
judgment debtor.
● In this case, the judgment obtained by Ayala Corp. was against the Spouses Dewey and
Lily Dee in their personal capacities as sureties.
● Being a corporation, VIP is a juridical entity with personality separate and distinct
from Dewey, its incorporator.

2. NO.
● A person other than the judgment debtor who claims ownership over the levied properties
may challenge the levy. In the pursuit of such remedies, however, the third-party must
establish ownership over the levied property.
● In this case, that the only evidence adduced by Tee Ling Kiat to support his claim are a
cancelled check issued by Tee Ling Kiat in favor of Dewey Dee and a photocopy of the
deed of sale. A photocopy of a document has no probative value and is inadmissible in
evidence.
● Assuming that the sale had indeed transpired, such transfer is not binding on the
corporation if the same is not recorded in the books of the corporation.

Sec. 63, Corporation Code: "No transfer, x x x shall be valid, except as between the
parties, until the transfer is recorded in the books of the corporation showing the names
of the parties to the transaction, the date of the transfer, the number of the certificate or
certificates and the number of shares transferred."

The purported transaction between Tee Ling Kiat and Dewey has never been recorded in
VIP's corporate books. Thus, the transfer is not binding as to the corporation.