Sulo ng Bayan, Inc vs Araneta, Inc. No. L-31061. August 17, 1976

Facts:

                Plaintiff-appellant Sulo ng Bayan, Inc. filed an action against defendant-appellees to recover the ownership and possession of a large tract of land in Bulacan, registered under Torrens System in the name of the defendants-appellees predecessors-in-interest. The plaintiff is a corporation organized and existing under the laws of the Philippines.

Issues:

1.       Whether or not Plaintiff Corporation (non-stock) may institute an action in behalf of its individual members for the recovery of certain parcels of land allegedly owned by said members.

2.       Whether the complaint filed by the corporation in behalf of its members may be treated as class suit.

Ruling:

1.       No.

It is a doctrine well-established and obtains both at law and in equity that a corporation is a distinct legal entity to be considered as separate and apart from the individual stockholders or members who compose it, and is not affected by the personal rights, obligations and transactions of its stockholders or members. The property of the corporation is its property and not that of the stockholders, as owners, although they have equities in it. Properties registered in the name of the corporation owned by it as an entity separate and distinct from its members. Conversely, a corporation ordinarily has no interest in the individual property of its stockholders unless transferred to the corporation even in the case of a one-man corporation.

                It has not been claimed that the members have assigned or transferred whatever rights they may have on the land in question to the plaintiff-corporation. Absent of any showing of interest, therefore, a corporation, like plaintiff-appellant herein, has no personality to bring an action for and in behalf of its stockholders or members for the purpose of recovering property which belongs to said stockholders or members in their personal capacities.

2.       No.

In order that a class suit may prosper, the following requisites must be present: (1) that the subject matter of the controversy is one of common or general interest to many persons; and (2) that the parties are so numerous that it is impracticable to bring them all before court.

                Here, there is only one plaintiff, and the plaintiff corporation does not even have an interest in the subject matter of the controversy, and cannot, therefore, represent its members or stockholders who claim to own in their individual capacities ownership of the said property.