ERNESTO CEASE, CECILIA CEASE, MARION CEASE, TERESA CEASE-LACEBAL, AND THE F.L. CEASE PLANTATION CO., INC. AS TRUSTEE OF PROPERTIES OF THE DEFUNCT TIAONG MILLING & PLANTATION CO.…

Appeal by certiorari from the decision of the Court of
Appeals in CA-G.R. No. 45474, entitled “Ernesto Cease, et al. vs. Hon. Manolo L. Maddela, Judge of the
Court of First Instance of Quezon, et al.”^[1]
which dismissed the petition for certiorari, mandamus, and
prohibition instituted by the petitioners against the respondent judge and the
private respondents.

The antecedents of the case, as found by the appellate court, are
as follows:

“IT RESULTING:  That the
antecedents are not difficult to understand; sometime in June 1908, one Forrest
L. Cease common predecessor in interest of the parties together with five (5)
other American citizens organized the Tiaong Milling
and Plantation Company and in the course of its corporate existence the company
acquired various properties but at the same time all the other original
incorporators were bought out by Forrest L. Cease together with his children
namely Ernest, Cecilia, Teresita, Ben­jamin, Florence
and one Bonifacia Tirante
also considered a member of the family; the charter of the company lapsed in
June 1958; but whether there were steps to liquidate it, the record is silent;
on 13 August 1959, Forrest L. Cease died and by extrajudicial partition of his
shares, among the children, this was disposed of on 19 October 1959; it was
here where the trouble among them came to arise because it would appear that
Benjamin and Florence wanted an actual division while the other children wanted
reincorporation; and proceeding on that, these other children Ernesto, Teresita and Cecilia and aforementioned other stockholder Bonifacia Tirante proceeded to
incorporate themselves into the FL Cease Plantation Company and registered it
with the Securities and Exchange Commission on 9 December, 1959; apparently in
view of that, Benjamin and Florence for their part initiated a Special
Proceeding No. 3893 of the Court of First Instance of Tayabas
for the settlement of the estate of Forrest L. Cease on 21 April, 1960 and one
month afterwards on 19 May, 1960 they filed Civil Case No. 6326 against
Ernesto, Teresita and Cecilia Cease together with Bonifacia Tirante asking that the
Tiaong Milling and Plantation Corporation be declared
identical to FL Cease and that its properties be divided among his children as
his intestate heirs; this Civil Case was resisted by aforestated
defendants and notwithstanding efforts of the plaintiffs to have the properties
placed under receivership, they were not able to succeed because defendants
filed a bond to remain as they have remained in possession; after that and
already during the pendency of Civil Case No. 6326
specifically on 21 May, 1961 apparently on the eve of the expiry of the three
(3) year period provided by the law for the liquidation of corporations, the
board of liquidators of Tiaong Milling executed an
assignment and conveyance of properties and trust agreement in favor of FL
Cease Plantation Co. Inc. as trustee of the Tiaong
Milling and Plantation Co. so that upon motion of the plaintiffs trial Judge
ordered that this alleged trustee be also included as party defendant; now this
being the situation, it will be remembered that there were thus two (2)
proceedings pending in the Court of First Instance of Quezon
namely Civil Case No. 6326 and Special Proceeding No. 3893 but both of these
were assigned to the Honorable Respondent Judge Manolo
L. Maddela, p. 43 and the case was finally heard and
submitted upon stipulation of facts pp. 34-110, rollo;
and trial Judge by decision dated 27 December 1969 held for the plaintiffs
Benjamin and Florence, the decision containing the following dispositive part:

“VIEWED IN THE LIGHT OF ALL THE FOREGOING, judgment is hereby
rendered in favor of plaintiffs and against the defendants declaring that:

1)          
The assets or properties of the
defunct Tiaong Milling and Plantation Company now
appearing under the name of F.L. Cease Plantation Company as Trustee, is the
estate also of the deceased Forrest L. Cease and ordered divided, share and
share alike, among his six children the plaintiffs and the defendants in
accordance with Rule 69, Rules of Court;

2)          
The Resolution to Sell dated
October 12, 1959 and the Transfer and Conveyance with Trust Agreement is hereby
set aside as improper and illegal for the purposes and effect that it was
intended and, therefore, null and void;

3)          
That F.L. Cease Plantation Company
is removed as Trustee for interest against the estate and essential to the
protection of plaintiffs’ rights and is hereby ordered to deliver and convey
all the properties and assets of the defunct Tiaong
Milling now under its name, custody and control to whomsoever be appointed as
Receiver — disqualifying any of the parties herein — the latter to act
accordingly upon proper assumption of office; and

4)          
Special Proceedings No. 3893 for
administration is terminated and dismissed; the instant case to proceed but on
issues of damages only and for such action inherently essential for partition.

SO ORDERED.

Lucena
City, December 27, 1969., pp.
122-a-123, rollo;”

upon receipt of that, defendants there
filed a notice of appeal p. 129, rollo together with
an appeal bond and a record on appeal but the plaintiffs moved to dismiss the
appeal on the ground that the judgment was in fact interlocutory and not appealable p. 168 rollo and this
position of defendants was sustained by trial Judge, His Honor ruling that

“IN VIEW OF THE FOREGOING, the appeal interposed by plaintiffs
is hereby dismissed as premature and the Record on Appeal is necessarily
disapproved as improper at this stage of the proceedings.

SO ORDERED.

Lucena
City, April 27, 1970.”

and so it was said defendants brought the
matter first to the Supreme Court, on mandamus on 20 May, 1970 to compel
the appeal and certiorari and prohibition to annul the order of 27
April, 1970 on the ground that the decision was “patently erroneous”
p. 16, rollo; but the Supreme Court remanded the case
to this Court of Appeals by resolution of 27 May 1970, p. 173, and this Court
of Appeals on 1 July, 1970 p. 175 dismissed the petition so far as the mandamus
was concerned taking the view that the decision sought to be appealed dated 27
December, 1969 was interlocutory and not appealable
but on motion for reconsideration of peti­tioners and since there was possible
merit so far as its prayer for certiorari and prohibition was concerned,
by resolution of the Court on 19 August, 1970, p. 232, the petition was
permitted to go ahead in that capacity; and it is the position of petitioners
that the decision of 27 December, 1969 as well as the order of 27 April, 1970
suffered of certain fatal defects, which respondents deny and on their part
raise the preliminary point that this Court of Appeals has no authority to give
relief to petitioners because not

“in aid of its appellate jurisdiction,” and that the
questions presented cannot be raised for the first time before this Court of
Appeals;”

Respondent Court of Appeals in its decision pro­mulgated December 9, 1970 dismissed the
petition with costs against petitioners, hence the present petition to this
Court on the following assignment of errors:

THE
COURT OF APPEALS ERRED –

I.            
IN SANCTIONING THE WRONGFUL
EXERCISE OF JURISDICTION BEYOND THE LIMITS OF AUTHORITY CONFERRED BY LAW UPON
THE LOWER COURT,
WHEN IT PROCEEDED TO HEAR, ADJUDGE AND ADJUDICATE-

(a)  
Special Proceedings No. 3893 for
the settlement of the Estate of Forrest L. Cease, simultaneously and
concurrently with –

(b)  
Civil Case No. 6326, wherein the
lower Court ordered Partition under Rule 69, Rules of Court –

THE ISSUE OF LEGAL OWNERSHIP OF THE
PROPERTIES COMMONLY INVOLVED IN BOTH ACTIONS HAVING BEEN RAISED AT THE OUTSET
BY THE TIAONG MILLING AND PLANTATION COMPANY, AS THE REGISTERED OWNER OF SUCH
PROPERTIES UNDER ACT 496.

II.          
IN AFFIRMING – UNSUPPORTED BY ANY
EVIDENCE WHATSOEVER NOR CITATION OF ANY LAW TO JUSTIFY – THE UNWARRANTED
CONCLUSION THAT SUBJECT PROPERTIES, FOUND BY THE LOWER COURT AND THE COURT OF
APPEALS AS ACTUALLY REGIS­TERED IN THE NAME OF PETITIONER CORPORATION AND/OR
ITS PREDECESSOR IN INTEREST, THE TIAONG MILLING AND PLANTATION COMPANY, DURING
ALL THE 50 YEARS OF ITS CORPORATE EXISTENCE, “ARE ALSO PROPERTIES OF THE ESTATE
OF FORREST L. CEASE.”

III.         
IN AFFIRMING THE ARBITRARY CON­CLUSION
OF THE LOWER COURT
THAT ITS DECISION OF DECEMBER 27,
1969 IS AN “INTERLOCUTORY DECISION,” IN DISMISSING THE
PETITION FOR WRIT OF MANDAMUS, AND IN AFFIRMING THE MANI­FESTLY UNJUST
JUDGMENT RENDERED WHICH CONTRADICTS THE FINDINGS OF ULTIMATE FACTS THEREIN
CONTAINED.

During the period that ensued after the filing in this Court of
the respective briefs and the subse­quent submission of the case for decision,
some incidents had transpired, the summary of which may be stated as follows:

1. Separate from this present appeal, petitioners filed a petition
for certiorari and prohibition in this Court, docketed as G.R. No.
L-35629 (Ernesto Cease, et al. vs. Hon. Manolo L. Maddela, et al.) which challenged the order of respondent
judge dated September 27, 1972 appointing his Branch Clerk of Court, Mr. Eleno M. Joyas, as receiver of
the properties subject of the appealed civil case, which order, petitioners saw
as a virtual execution of the lower court’s judgment (p. 92, rollo).  In Our
resolution of November 13, 1972,
issued in G.R. No. L-35629, the petition was denied since respondent judge
merely appointed an auxilliary receiver for the
preservation of the properties as well as for the protection of the interests
of all parties in Civil Case No. 6326; but at the same time, We expressed Our
displeasure in the appointment of the branch clerk of court or any other court
personnel for that matter as receiver. 
(p. 102, rollo).

2.     
Meanwhile, sensing that the appointed
receiver was making some attempts to take possession of the properties,
petitioners filed in this present appeal an urgent petition to restrain
proceedings in the lower court.  We
resolved the petition on January 29, 1975 by issuing a corresponding temporary
restraining order enjoining the court a quo from implementing its
decision of December 27, 1969, more particularly, the taking over by, a
receiver of the properties subject of the litigation, and private respondents
Benjamin and Florence Cease from proceeding or taking any action on the matter
until further orders from this Court (pp. 99-100, rollo).  Private respondents filed a motion for
reconsideration of Our resolution of January 29, 1975. 
After weighing the arguments of the parties and taking note of Our
resolution in G.R. No. L-35629 which upheld the appoint­ment of a receiver, We
issued another resolution dated April 11, 1975 lifting effective immediately
Our previous temporary restraining order which enforced the earlier resolution
of January 29, 1975 (pp. 140-141, rollo).

3.     
On February 6, 1976, private respondents filed an
urgent petition to restrain proceedings below in view of the precipitate
replacement of the court appointed receiver Mayor Francisco Escueta
(vice Mr. Eleno M. Joyas)
and the appointment of Mr. Guillermo Lagrosa on the
eve of respondent Judge Maddela’s retirement (p. 166,
rollo).  The
urgent petition was denied in Our resolution of February 18, 1976 (p. 176, rollo).

4.     
Several attempts at a compromise
agreement failed to materialize.  A
Tentative Compromise Agreement dated July 30, 1975 was presented to the Court
on August 6, 1976 for the signature of the parties, but respondents
“unceremoniously” repudiated the same by leaving the courtroom
without the permission of the court (Court of First Instance of Quezon, Branch II) as a result of which respondents and
their counsel were cited for contempt (p. 195, 197, rollo);
that respondents’ reason for the repudiation appears to be petitioners’ failure
to render an audited account of their administration covering the period from
May 31, 1961 up to January 29, 1974, plus the inclusion of a provision on
waiver and relinquishment by respondents of whatever rights that may have
accrued to their favor by virtue of the lower court’s decision and the
affirmative decision of the appellate court.

We go now to the alleged errors committed by the respondent Court
of Appeals.

As can be gleaned from petitioners’ brief and the petition
itself, two contentions underlie the first assigned error.  First, petitioners argue that there was an
irregular and arbitrary termination and dismissal of the special proceedings
for judicial administration simultaneously ordered in the lower court’s
decision in Civil Case No. 6326 adjudicating the partition of the estate,
without categorically resolving the opposition to the petition for
administration.  Second, that the issue
of ownership had been raised in the lower court when Tiaong
Milling asserted title over the properties registered in its corporate name
adverse to Forrest L. Cease or his estate, and that the said issue was erroneously
disposed of by the trial court in the partition proceedings when it concluded
that the assets or proper­ties of the defunct company is also the estate of the
deceased proprietor.

The propriety of the dismissal and termination of the special
proceedings for judicial administration must be affirmed in spite of its
rendition in another related case in view of the established jurisprudence
which favors partition when judicial administration becomes unneces­sary.  As observed by the Court of Appeals, the
dismissal at first glance is wrong, for the reason that what was actually heard
was Civil Case No. 6326.  The technical
consistency, however, is far less in importance than the reason behind the
doctrinal rule against placing an estate under administration.  Judicial rulings consistently hold the view
that where partition is possible, either judicial or extrajudicial, the estate
should not be burdened with an administration proceeding without good and
compelling reason.  When the estate has
no creditors or pending obligations to be paid, the beneficiaries in interest
are not bound to submit the property to judicial administration which is always
long and costly, or to apply for the appointment of an administrator by the
court, especially when judicial administration is unnecessary and
superfluous.  Thus –

“When a person dies without leaving pending obligations to be
paid, his heirs, whether of age or not, are not bound to submit the property to
a judicial administration, which is always long and costly, or to apply for the
appointment of an administrator by the court. 
It has been uniformly held that in such case the judi­cial
administration and the appointment of an administrator are superfluous and unne­cessary
proceedings (Ilustre vs. Alaras
Frondosa, 17 Phil., 321; Malahacan
vs. Ignacio, 19 Phil, 434; Bondad vs. Bondad, 34 Phil., 232; Baldemor
vs. Malangyaon, 34 Phil., 367; Fule
vs. Fule, 46 Phil.,317).” Syllabus, Intestate
estate of the deceased Luz Garcia.  Pablo
G. Utulo vs. Leona Pasion Viuda de Garcia, 66 Phil. 302.

“Where the estate has no debts, recourse may be had to an
administration proceeding only if the heirs have good reasons for not resorting
to an action for partition.  Where
partition is possible, either in or out of court, the estate should not be
burdened with an administration proceeding without good and compelling
reasons.” (Intestate Estate of Mercado vs. Magtibay,
96 Phil. 383)

In the records of this case, We find no indication of any
indebtedness of the estate.  No creditor
has come up to charge the estate within the two-year period after the death of
Forrest L. Cease, hence, the pre­sumption under Section 1, Rule 74 that the
estate is free from creditors must apply. 
Neither has the status of the parties as legal heirs, much less that of
respondents, been raised as an issue. 
Besides, extant in the records is the stipulation of the parties to
submit the pleadings and contents of the administration pro­ceedings for the
cognizance of the trial judge in adjudicating the civil case for partition
(Respondents’ Brief, p. 20, rollo).  As respondents observe, the parties in both
cases are the same, so are the properties involved; that actual division is the
primary objective in both actions; the theory and defense of the respective
parties are likewise common; and that both cases have been assigned to the same
respondent judge.  We feel that the
unifying effect of the foregoing circumstances invites the wholesome exception
to the strictures of procedural rule, thus allowing, instead, room for judicial
flexibility.  Respondent judge’s
dismissal of the administration proceedings then, is a judicious move,
appreciable in today’s need for effective and speedy administration of
justice.  There being ample reason to
support the dismissal of the special proceedings in this appealed case, We
cannot see in the records any compelling reason why it may not be dismissed
just the same even if considered in a separate action.  This is inevitably certain specially when the
subject property has already been found appropriate for partition, thus
reducing the petition for administration to a mere unnecessary solicitation.

The second point raised by petitioners in their first assigned
error is equally untenable.  In effect,
petitioners argue that the action for partition should not have prospered in
view of the repudiation of the co-ownership by Tiaong
Milling and Plantation Company when, as early in the trial court, it already
asserted ownership and corporate title over the properties ad­verse to the
right of ownership of Forrest L. Cease or his estate.  We are not unmindful of the doctrine relied
upon by petitioners in Rodriguez vs. Ravilan,
17 Phil. 63 wherein this Court held that in an action for partition, it is
assumed that the parties by whom it is prosecuted are all co-owners or
co-proprietors of the property to be divided, and that the question of common
ownership is not to be argued, not the fact as to whether the intended parties
are or are not the owners of the property in question, but only as to how and
in what manner and proportion the said property of common ownership shall be
distributed among the interested parties by order of the Court.  Consistent with this dictum, it has been held
that if any party to a suit for partition denies the pro-indiviso
character of the estate whose partition is sought, and claims instead,
exclusive title thereto, the action becomes one for recovery of property
cognizable in the courts of ordinary jurisdiction.^[2]

Petitioners’ argument has only theoretical persuasion, to say the
least, rather apparent than real.  It
must be remembered that when Tiaong Milling adduced
its defense and raised the issue of ownership, its corporate existence already
terminated through the expiration of its charter.  It is clear in Section 77 of Act No. 1459
(Corporation Law) that upon the expiration of the charter period, the
corporation ceases to exist and is dissolved ipso facto except
for purposes connected with the winding up and liquidation.  The provision allows a three-year period from
expiration of the charter within which the entity gradually settles and closes
its affairs, disposes and conveys its property and to divide its capital stock,
but not for the purpose of continuing the business for which it was
established.  At this terminal stage of
its existence, Tiaong Milling may no longer persist
to maintain adverse title and ownership of the corporate assets as against the
prospective distributees when at this time it merely
holds the property in trust, its assertion of ownership is not only a legal
contra­diction, but more so, to allow it to maintain adverse interest would
certainly thwart the very purpose of liquidation and the final distribution of
the assets to the proper parties.

We agree with the Court of Appeals in its reasoning that
substance is more important than form when it sustained the dismissal of
Special Proceedings No. 3893, thus –

“a)    As to the dismissal of Special Proceedings
No. 3893, of course, at first glance, this was wrong, for the reason that the
case that had been heard was Civil Case No. 6326; but what should not be overlooked
either is that respondent Judge was the same Judge that had before him in his
own sala, said Special Proceedings No. 3893, p. 43 rollo, and the parties to the present Civil Case No. 6326
had themselves asked respondent Judge to take judicial notice of the same and
its contents page 34, rollo; it is not difficult to
see that when respondent Judge in par. 4 of the dispositive
part of his decision complained of, ordered that,

‘4)   Special Proceedings No. 3893 for
administration is terminated and dismissed; the instant case to proceed but on
issues of damages only and for such action inherently essential or partition.’
p. 123, rollo,

in truth and in fact, His Honor was issuing
that order also within Civil Case No. 6326 but in connection with Special
Proceedings No. 3893; for substance is more important than form, the contending
parties in both proceedings being exactly the same, but not only this, let it
not be forgotten that when His Honor dismissed Special Proceedings No. 3893,
that dismissal precisely was a dismissal that petitioners herein had themselves
sought and solicited from respondent Judge as petitioners themselves aver in
their present petition pp. 5-6, rollo; this Court
must find difficulty in reconciling petitioners’ attack with the fact that it
was they themselves that had insisted on that dismissal; on the principle that not
he who is favored but he who is hurt by a judicial order is he only who should
be heard to complain and especially since extraordinary legal remedies are
remedies in extremis granted to parties who have been the victims not merely of
errors but of grave wrongs, and it cannot be seen how one who got what he had
asked could be heard to claim that he had been the victim of a wrong,
petitioners should not now complain of an order they had themselves asked in
order to attack such an order afterwards; if at all, perhaps, third parties,
creditors, the Bureau of Internal Revenue, might have been prejudiced, and
could have had the personality to attack that dismissal of Special Proceedings
No. 3893, but not petitioners herein, and it is not now for this Court of
Appeals to protect said third persons who have not come to the Court below or
sought to intervene herein;”

On the second assigned error, petitioners argue that no evidence
has been found to support the conclusion that the registered properties of Tiaong Milling are also properties of the estate of Forrest
L. Cease; that on the contrary, said properties are registered under Act No.
496 in the name of Tiaong Milling as lawful owner and
possessor for the last 50 years of its corporate existence.

We do not agree.  In
reposing ownership to the estate of Forrest L. Cease, the trial court indeed
found strong support, one that is based on a well-entrenched principle of
law.  In sustaining respondents’ theory
of “merger of Forrest L. Cease and the Tiaong
Milling as one personality”, or that “the company is only the
business conduit and alter ego of the deceased Forrest L. Cease and the
registered properties of Tiaong Milling are actually
properties of Forrest L. Cease and should be divided equally, share and share
alike among his six children, x x x“,
the trial court did aptly apply the familiar exception to the general rule by
disregarding the legal fiction of distinct and separate corporate personality
and regarding the corpo­ration and the individual member one and the same.  In shredding the fictitious corporate veil,
the trial judge narrated the undisputed factual premise, thus:

“While the records showed that originally its incorporators
were aliens, friends or third-parties in relation of one to another, in the
course of its existence, it developed into a close family corporation.  The Board of Directors and stockholders
belong to one family the head of which Forrest L. Cease always retained the
majority stocks and hence the control and management of its affairs.  In fact, during the reconstruction of its
records in 1947 before the Security and Exchange Commission only 9 nominal
shares out of 300 appears in the name of his 3 eldest children then and another
person close to them.  It is likewise
noteworthy to observe that as his children increase or perhaps become of age,
he continued distributing his shares among them adding Florence, Teresa and
Marion until at the time of his death only 190 were left to his name.  Definitely, only the members of his family benefited
from the Corporation.

“The accounts of the corporation and therefore its operation,
as well as that of the family appears to be indistinguishable and apparently
joined together.  As admitted by the
defendants (Manifestation of Compliance with Order of March 7, 1963 [Exhibit
“21”] the corporation ‘never’ had any account with any banking
institution or if any account was carried in a bank on its behalf, it was in
the name of Mr. Forrest L. Cease.  In
brief, the operation of the Corporation is merged with those of the majority
stockholders, the latter using the former as his instrumentality and for the
exclusive benefits of all his family. 
From the foregoing indication, therefore, there is truth in plaintiff’s
allegation that the corporation is only a business conduit of his father and an
extension of his personality, they are one and the same thing.  Thus, the assets of the corporation are also
the estate of Forrest L. Cease, the father of the parties herein who are all
legitimate children of full blood.”

A rich store of jurisprudence has established the rule known as
the doctrine of disregarding or piercing the veil of corporate fiction.  Generally, a corporation is invested by law
with a personality separate and distinct from that of the persons composing it
as well as from that of any other legal entity to which it may be related.  By virtue of this attribute, a corporation
may not, generally, be made to answer for acts or liabilities of its
stockholders or those of the legal entities to which it may be connected, and vice
versa.  This separate and distinct
personality is, however, merely a fiction created by law for convenience and to
promote the ends of justice (Laguna Transportation Company vs. Social Security
System, L-14606, April 28, 1960; La Campana Coffee
Factory, Inc. vs. Kaisahan ng
mga Manggagawa sa La Campana, L-5677, May 25,
1953).  For this reason, it may not be
used or invoked for ends subversive of the policy and purpose behind its
creation (Emilio Cano Enterprises, Inc. vs. CIR, L-20502, Feb. 26, 1965) or
which could not have been intended by law to which it owes its being (McConnel vs. Court of Appeals, L-10510, March 17, 1961, 1
SCRA 722).  This is particularly true
where the fiction is used to defeat public convenience, justify wrong, protect
fraud, defend crime (Yutivo Sons Hardware Company vs.
Court of Tax Appeals, L-13203, Jan. 28, 1961, 1 SCRA 160), confuse legitimate
legal or judicial issues (R.F. Sugay & Co. vs.
Reyes, L-20451, Dec. 28, 1964), perpetrate deception or otherwise circumvent
the law (Gregorio Araneta, Inc. vs. Tuason de Paterno, L-2886, Aug.
22, 1952, 49 O.G. 721).  This is likewise
true where the corporate entity is being used as an alter ego,
adjunct, or business conduit for the sole benefit of the stockholders or of
another corporate entity (McConnel vs. Court of
Appeals, supra; Commissioner of Internal Revenue vs. Norton Harrison
Co., L-7618, Aug. 31, 1964).

In any of these cases, the notion of corporate entity will be
pierced or disregarded, and the corporation will be treated merely as an
association of persons or, where there are two corporations, they will be
merged as one, the one being merely regarded as part or the instrumentality of
the other (Koppel [Phil. 1, Inc. vs. Yatco, 77 Phil.
496; Yutivo Sons Hardware Company vs. Court of Tax
Appeals, supra).

So must the case at bar add to this jurisprudence.  An indubitable deduction from the findings of
the trial court cannot but lead to the conclusion that the business of the
corporation is largely, if not wholly, the personal venture of Forrest L.
Cease.  There is not even a shadow of a
showing that his children were subscribers or purchasers of the stocks they
own.  Their participation as nominal
shareholders emanated solely from Forrest L. Cease’s
gratuitous dole out of his own shares to the benefit of his children and
ultimately his family.

Were We to sustain the theory of petitioners that the trial court
acted in excess of jurisdiction or abuse of discretion amounting to lack of
jurisdiction in deciding Civil Case No. 6326 as a case for parti­tion when the
defendant therein, Tiaong Milling and Plantation
Company, Inc. as registered owner asserted ownership of the assets and
properties involved in the litigation, which theory must necessarily be based on
the assumption that said assets and properties of Tiaong
Milling and Planta­tion Company, Inc. now appearing under the name of F. L.
Cease Plantation Company as Trustee are distinct and separate from the estate
of Forrest L. Cease to which petitioners and respondents as legal heirs of
said  Forrest L. Cease are equally
entitled share and share alike, then that le­gal fiction of separate corporate
personality shall have been used to delay and ultimately deprive and defraud
the respondents of their successional rights to the
estate of their deceased father.  For Tiaong Milling and Planta­tion Company shall have been able
to extend its corporate existence beyond the period of its charter which lapsed
in June, 1958 under the guise and cover of F. L. Cease Plantation Company, Inc.
as Trustee which would be against the law, and said Trustee shall have been
able to use the assets and properties for the benefit of the petitioners, to
the great preju­dice and defraudation of private
respondents.  Hence, it becomes neces­sary
and imperative to pierce that corporate veil.

Under the third assigned error, petitioners claim that the
decision of the lower court in the partition case is not interlocutory but
rather final for it consists of final and determinative dispositions of the
contentions of the parties.  We find no
merit in petitioners’ stand.

Under the 1961 pronouncement and ruling of the Supreme Court in Vda. de Zaldarriaga vs.
Enriquez, 1 SCRA 1188 (and the sequel case of Vda.
de Zaldarriaga vs. Zaldarriaga,
2 SCRA 356), the lower court’s dismissal of petitioners’ proposed appeal from
its December 27, 1969 judgment as affirmed by the Court of Appeals on the
ground of pre­maturity in that the judgment was not
final but interlocutory was in order.  As
was said in said case:

“It is true that in Africa vs. Africa, 42 Phil. 934 and other
cases it was held contrary to the rule laid down in Ron vs. Mojica,
8 Phil. 328; Rodriguez vs. Ravilan, 17 Phil. 63 –
that in a partition case where defendant relies on the defense of exclusive
ownership, the action becomes one for title and the decision or order directing
partition is final, but the ruling to this effect has been expressly reversed
in the Fuentebella case which, in our opinion,
expresses the correct view, considering that a decision or order directing
partition is not final be­cause it leaves something more to be done in the
trial court for the complete disposition of the case, namely, the appointment
of com­missioners, the proceedings to be had before them, the submission of
their report which, according to law, must be set for hearing.  In fact, it is only after said hearing that
the court may render a final judgment finally disposing of the action (Rule 71,
section 7, Rules of Court).” (1 SCRA at page 1193).

It should be noted, however, that the said ruling in Zal­darriaga as based on Fuentebella
vs. Carrascoso, XIV Lawyers Journal 305 (May 27,
1942), has been expressly abandoned by the Court in Miranda vs. Court of
Appeals, 71 SCRA 295, 331-333 (June 18, 1976) wherein Mr. Justice Teehankee, speaking for the Court, laid down the following
doctrine:

“The Court, however, deems it proper for the guidance of the
bench and bar to now declare as is clearly indicated from the compelling
reasons and considerations hereinabove stated:

– that the Court considers the better rule to be that stated in H.
E. Heacock Co. vs. American Trading Co., to wit,
that where the primary purpose of a case is to ascertain and determine who
between plaintiff and defendant is the true owner and entitled to the exclusive
use of the dis­puted property, ‘the judgment … rendered by the lower court
[is] a judgment on the merits as to those questions, and [that] the
order of the court for an accounting was based upon, and is incidental
to the judgment on the merits.  That is
to say, that the judgment … [is] a final judgment …; that in this
kind of a case an accounting is a mere incident to the judgment;
that an appeal lies from the rendition of the judgment as rendered …’
(as is widely held by a great number of judges and members of the bar, as shown
by the cases so de­cided and filed and still pending with the Court) for the
fundamental reasons therein stated that ‘this is more in harmony with the administration
of justice and the spirit and intent of the [Rules].  If on appeal the judgment of t he lower court
is affirmed, it would not in the least work an injus­tice to any of the legal
rights of [appellee]. 
On the other hand, if for any reason this court should reverse the
judgment of the lower court, the accounting would be a waste of time and money,
and might work a material injury to the [appellant]; and

– that accordingly, the contrary ruling in Fuentebella
vs. Carrascoso which expressly reversed the Heacock case and a line of similar decisions and ruled that
such a decision for re­covery of property with accounting ‘is not final but
merely interlocutory and therefore not appeal­able‘
and subsequent cases adhering to the same must be now in turn abandoned
and set aside.

“Fuentebella adopted instead
the opposite line of conflicting decisions mostly in partition pro­ceedings and
exemplified by Ron vs. Mojica, 8 Phil. 928
(under the old Code of Civil Procedure) that an order for partition of real
property is not final and appealable until after the actual
partition of the property as reported by the court-appointed commissioners
and approved by the court in its judgment accepting the report.  It must be especially noted that such rule
governing partitions is now so expressly provided and spelled out in Rule 69 of
the Rules of Court, with special reference to sections 1, 2, 3, 6, 7 and 11, to
wit, that there must first be a preliminary order for partition of the real
estate (section 2) and where the parties-coowners
cannot agree, the court-appointed commissioners make a plan of actual partition
which must first be passed upon and accepted by the trial court and embodied in
a judgment to be rendered by it (sections 6 and 11).  In partition cases, it must be further borne
in mind that Rule 69, section 1 refers to ‘a person having the right to
compel the partition of real es­tate,’ so that the general rule of
partition that an appeal will not lie until the partition or distribution
proceedings are terminated will not apply where appellant claims exclusive
ownership of the whole property and denies the adverse party’s right
to any partition, as was the ruling in Villanueva vs. Capistrano and Africa
vs. Africa, supra, Fuentebella’s
express reversal of these cases must likewise be deemed now also abandoned in
view of the Court’s expressed preference for the rationale of the Heacock case.

“The Court’s considered opinion is that imperative
considerations of public policy and of sound practice in the
courts and adherence to the constitutional mandate of simplified, just,
speedy and inexpensive determination of every action call for considering such
judgments for recovery of property with accounting as final
judgments which are duly appealable (and would
therefore become final and executory if not
appealed within the reglementary period) with the
accounting as a mere incident of the judgment to be rendered
during the course of the appeal as provided in Rule 39, section 4 or to be
implemented at the execution stage upon final affirmance
on appeal of the judgment (as in Court of Industrial Relations unfair labor
practice cases ordering the reinstatement of the worker with accounting,
computation and payment of his backwages less
earnings elsewhere during his layoff) and that the only reason given in Fuentebella for the contrary ruling, viz, ‘the general harm that would follow from throwing the
door open to multiplicity of appeals in a single case’ is of lesser import and
consequence. ” (Italics copied).

The Miranda ruling has since then been applied as the new rule by
a unanimous Court in Valdez vs. Bagasao, 82
SCRA 22 (March 8, 1978).

If there were a valid genuine claim of exclusive ownership of the
inherited properties on the part of petitioners to respondents’ action for
partition, then under the Miranda ruling, petitioners would be sustained, for
as expressly held therein “the general rule of partition that an appeal
will not lie until the partition or distribution proceedings are terminated
will not apply where appellant claims exclusive ownership of the whole
pro­perty and denies the adverse party’s right to any partition.”

But this question has now been rendered moot and academic for the
very issue of exclusive ownership claimed by petitioners to deny and defeat
respondents’ right to partition – which is the very core of their rejected
appeal – has been squarely resolved herein against them, as if the appeal had
been given due course.  The Court has
herein expressly sustained the trial court’s findings, as affirmed by the Court
of Appeals, that the assets or properties of the defunct company constitute the
estate of the deceased proprietor (supra at page 7) and the defunct company’s
assertion of ownership of the properties is a legal contradiction and would but
thwart the liquidation and final distribution and partition of the properties
among the parties hereof as children of their deceased father Forrest L.
Cease.  There is therefore no further
hindrance to effect the partition of the properties among the parties in
implementation of the appealed judgment.

One last consideration. 
Parties are brothers and sisters, legal heirs of their deceased father,
Forrest L. Cease.  By all rights in law
and jurisprudence, each is entitled to share and share alike in the estate,
which the trial court correctly ordained and sustained by the appellate
court.  Almost 20 years have lapsed since
the filing of Special Proceedings No. 3893 for the administration of the Estate
of Forrest L. Cease and Civil Case No. 6326 for liquidation and partition of
the assets of the defunct Tiaong Milling and
Plantation Co., Inc.  A suc­cession of
receivers were appointed by the court to take, keep in pos­session, preserve
and manage properties of the corporation which at one time showed an income of
P386,152.90 and expenses of P308,405.01 for the period covering January 1, 1960
to August 31, 1967 as per Sum­mary of Operations of Commissioner for Finance
appointed by the Court (Brief for Respondents, p. 38).  In the meantime, ejectment
cases were filed by and against the heirs in connection with the properties
involved, aggravating the already strained relations of the parties.  A prudent and practical realization of these
circumstances ought and must cons­train the parties to give each one his due in
law and with fairness and dispatch that their basic rights be enjoyed.  And by remanding this case to the court a
quo for the actual partition of the properties, the substantial rights of
everyone of the heirs have not been impaired, for in fact, they have been
preserved and maintained.

WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed
from is hereby AFFIRMED with costs against the petitioners.

SO ORDERED.

Teehankee, Acting C.J., (Chairman), Makasiar, Fernandez, De Castro, and Melencio-Herrera, JJ., concur.

^[1] Special
Seventh Division; Gatmaitan, J., ponente;
Perez, J., concurring in the result; Reyes, A., J., concurring.

^[2]
See Martin, Rules of Court, Vol. III, 308 (1973) citing the cases of Africa v.
Africa, 42 Phil. 902; Bargayo v. Camumot, 40 Phil. 856; Rodriguez v. Ravilan, 17 Phil. 63; De Castro vs. Echarri, 20 Phil. 23; Ferrer vs.
Inchausti, 38 Phil. 905; Reyes vs. Cordero, 46
Phil. 658; Villanueva vs. Capistrano, 49 Phil. 460; Hilario
vs. Dilla, et al., CA-G.R. No. 5266-R, Feb.
28, 1951.