CONCEPCION MAGSAYSAY-LABRADOR, SOLEDAD MAGSAYSAY-CABRERA, LUISA MAGSAYSAY-CORPUZ, ASSISTED BY HER HUSBAND, DR. JOSE CORPUZ, FELICIDAD P. MAGSAYSAY, AND MERCEDES MAGSAYSAY-DIAZ, …

In this petition for
review on certiorari, petitioners seek to reverse and set aside [1] the
decision of the Court of Appeals dated July 13, 1981,^[1] affirming that of the Court of First
Instance of Zambales and Olongapo
City which denied petitioners’ motion to intervene in an annulment suit
filed by herein private respondent, and [2] its resolution dated September 7,
1981, denying their motion for reconsideration.

Petitioners are raising a purely legal question:  whether or not respondent Court of Appeals
correctly denied their motion for intervention.

The facts are not controverted.

On February 9, 1979,
Adelaida Rodriguez-Magsaysay,
widow and special administratrix of the estate of the
late Senator Genaro Magsaysay,
brought before the then Court of First Instance of Olongapo
an action against Artemio Panganiban,
Subic Land Corporation (SUBIC),
Filipinas Manufacturer’s Bank (FILMANBANK) and the Register of Deeds of Zambales.  In her
complaint, she alleged that in 1958, she and her husband acquired, thru
conjugal funds, a parcel of land with improvements, known as “Pequeña Island”, covered by TCT No. 3258; that after
the death of her husband, she discovered [a] an annotation at the back of TCT
No. 3258 that “the land was acquired by her husband from his separate
capital;” [b] the registration of a Deed of Assignment dated June 25, 1976
purportedly executed by the late Senator in favor of SUBIC, as a result of
which TCT No. 3258 was cancelled and TCT No. 22431 issued in the name of SUBIC;
and [c] the registration of a Deed of Mortgage dated April 28, 1977 in the
amount of P2,700,000.00 executed by SUBIC in favor of FILMANBANK; that the
foregoing acts were void and done in an attempt to defraud the conjugal
partnership considering that the land is conjugal, her marital consent to the
annotation on TCT No. 3258 was not obtained, the change made by the Register of
Deeds of the titleholders was effected without the approval of the Commissioner
of Land Registration and that the late Senator did not execute the purported
Deed of Assignment or his consent thereto, if obtained, was secured by mistake, violence and intimidation.  She further alleged that the assignment in
favor of SUBIC was without consideration and
consequently null and void.  She prayed
that the Deed of Assignment and the Deed of Mortgage be annulled and that the
Register of Deeds be ordered to cancel TCT No. 22431 and to issue a new title
in her favor.

On March 7, 1979, herein petitioners, sisters of the late
senator, filed a motion for intervention on the ground that on June 20, 1978, their brother
conveyed to them one-half (1/2) of his shareholdings in SUBIC or a total of
416,566.6 shares and as assignees of around 41% of the total outstanding shares
of stock of SUBIC, they have a substantial and legal interest in the subject
matter of litigation and that they have legal interest in the success of the
suit with respect to SUBIC.

On July 26, 1979,
the court denied the motion for intervention, and ruled that petitioners have
no legal interest whatsoever in the matter in litigation and their being alleged assignees or transferees of
certain shares in SUBIC cannot legally entitle them to
intervene because SUBIC has a personality separate and
distinct from its stockholders.

On appeal, respondent Court of Appeals found no factual or legal
justification to disturb the findings of the lower court.  The appellate court further stated that
whatever claims the petitioners have against the late Senator or against SUBIC
for that matter can be ventilated in a separate proceeding, such that with the
denial of the motion for intervention, they are not left without any remedy or
judicial relief under existing law.

Petitioners’ motion for reconsideration was denied.  Hence, the instant recourse.

Petitioners anchor their right to intervene on the purported
assignment made by the late Senator of a certain portion of his shareholdings
to them as evidenced by a Deed of Sale dated June 20, 1978.^[2]
Such transfer, petitioners posit, clothes them with an interest, protected by
law, in the matter in litigation.

Invoking the principle enunciated in the case of PNB v. Phil. Veg.
Oil Co., 49 Phil. 857,
862 & 863 (1927),^[3]
petitioners strongly argue that their ownership of 41.66% of the entire
outstanding capital stock of SUBIC entitles them to a significant vote in the
corporate affairs; that they are affected by the action of the widow of their
late brother for it concerns the only tangible asset of the corporation and
that it appears that they are more vitally interested in the outcome of the
case than SUBIC.

Viewed in the light of Section 2, Rule 12 of the Revised Rules of
Court, this Court affirms the respondent court’s holding that petitioners
herein have no legal interest in the subject matter in litigation so as to
entitle them to intervene in the proceedings below.  In the case of Batama
Farmers’ Cooperative Marketing Association, Inc. v. Rosal,^[4]
we held:  “As clearly stated in
Section 2 of Rule 12 of the Rules of Court, to be permitted to intervene in a
pending action, the party must have a legal interest in the matter in
litigation, or in the success of either of the parties or an interest against
both, or he must be so situated as to be adversely affected by a distribution
or other disposition of the property in the custody of the court or an officer
thereof.”

To allow intervention, [a] it must be shown that the movant has legal interest in the matter in litigation, or
otherwise qualified; and [b] consideration must be given as to whether the
adjudication of the rights of the original parties may be delayed or
prejudiced, or whether the intervenor’s rights may be
protected in a separate proceeding or not. 
Both requirements must concur as the first is not more important than
the second.^[5]

The interest which entitles a person to intervene in a suit
between other parties must be in the matter in litigation and of such direct
and immediate character that the intervenor will
either gain or lose by the direct legal operation and effect of the
judgment.  Otherwise, if persons not
parties of the action could be allowed to intervene, proceedings will become
unnecessarily complicated, expensive and interminable.  And this is not the policy of the law.^[6]

The words “an interest in the subject” mean a direct
interest in the cause of action as pleaded, and which would put the intervenor in a legal position to litigate a fact alleged
in the complaint, without the establishment of which plaintiff could not
recover.^[7]

Here, the interest, if it exists at all, of petitioners-movants is indirect, contingent, remote, conjectural,
consequential and collateral.  At the
very least, their interest is purely inchoate, or in sheer expectancy of a
right in the management of the corporation and to share in the profits thereof
and in the properties and assets thereof on dissolution, after payment of the
corporate debts and obligations.

While a share of stock represents a proportionate or aliquot
interest in the property of the corporation, it does not vest the owner thereof
with any legal right or title to any of the property, his interest in the
corporate property being equitable or beneficial in nature.  Shareholders are in no legal sense the owners
of corporate property, which is owned by the corporation as a distinct legal
person.^[8]

Petitioners further contend that the availability of other
remedies, as declared by the Court of Appeals, is totally immaterial to the availability
of the remedy of intervention.

We cannot give credit to such averment.  As earlier stated, that the movant’s interest may be protected in a separate proceeding
is a factor to be considered in allowing or disallowing a motion for
intervention.  It is significant to note
at this juncture that as per records, there are four pending cases involving
the parties herein, enumerated as follows: 
[1] Special Proceedings No. 122122 before the CFI of Manila, Branch XXII,
entitled “Concepcion Magsaysay­-Labrador,
et al. v. Subic Land Corp., et al.”, involving
the validity of the transfer by the late Genaro Magsaysay of one-half of his shareholdings in Subic Land Corporation; [2] Civil Case No. 2577-0 before
the CFI of Zambales, Branch III, “Adelaida Rodriguez-Magsaysay v. Panganiban, etc.; Concepcion
Labrador, et al. Intervenors“, seeking to annul
the purported Deed of Assignment in favor of SUBIC and its annotation at the
back of TCT No. 3258 in the name of respondent’s deceased husband; [3] SEC Case
No. 001770, filed by respondent praying, among other things, that she be
declared in her capacity as the surviving spouse and administratrix
of the estate of Genaro Magsaysay
as the sole subscriber and stockholder of SUBIC.  There, petitioners, by motion, sought to
intervene.  Their motion to reconsider
the denial of their motion to intervene was granted; [4] SP No. Q-26739 before
the CFI of Rizal, Branch IV, petitioners herein
filing a contingent claim pursuant to Section 5, Rule 86, Revised Rules of
Court.^[9]
Petitioners’ interests are no doubt amply protected in these cases.

Neither do we lend credence to petitioners’ argument that they
are more interested in the outcome of the case than the corporation-assignee,
owing to the fact that the latter is willing to compromise with
widow-respondent and since a compromise involves the giving of reciprocal
concessions, the only conceivable concession the corporation may give is a
total or partial relinquishment of the corporate asset.^[10]

Such claim all the more bolsters the contingent nature of
petitioners’ interest in the subject of litigation.

The factual findings of the trial court are clear on this
point.  The petitioners cannot claim the
right to intervene on the strength of the transfer of shares allegedly executed
by the late Senator.  The corporation did
not keep books and records.^[11]
Perforce, no transfer was ever recorded, much less effected as to prejudice
third parties.  The transfer must be
registered in the books of the corporation to affect third persons.  The law on corporations is explicit.  Section 63 of the Corporation Code provides,
thus:  “No transfer, however, 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.”

And even assuming arguendo that there
was a valid transfer, petitioners are nonetheless barred from intervening
inasmuch as their rights can be ventilated and amply protected in another
proceeding.

WHEREFORE, the instant petition is hereby DENIED.  Costs against petitioners.

SO ORDERED.

Gutierrez, Jr., Bidin, and Cortes, JJ., concur.

Feliciano, J., on leave.

^[1]
Penned by Associate Justice Porfirio V. Sison and concurred in by Associate Justices Elias B.
Asuncion and Juan A. Sison.

^[2]
Rollo, p. 14.

^[3]
In this case, the appellee challenged the right of
Phil. C. Whitaker as intervenor to ask that the
mortgage contract executed by the Vegetable Oil Company be declared null and
void.  The Court held:  Appellee is right
as to the premises.  The Veg. Oil Co. is the defendant.  The corporation has not appealed.  At the same time, it is evident that Phil. C.
Whitaker was one of the largest
individual stockholders of the Veg. Oil Co., and was
until the inauguration of the
receivership, exercising control over and dictating the policy of the
company.  Out of twenty-eight thousand
shares of the Veg. Oil Co., Mr. Whitaker was the
owner of 5,893 fully paid shares of the par value of P100 each.  It was he who asked for the appointment of
the receiver.  It was he who was the leading
figure in the negotiations between the Veg. Oil Co.,
the Philippine National Bank, and the other creditors.  It was he who pledged his own property to the
extent of over P4,000,000 in an endeavor to assist in the rehabilitation of the
Veg. Oil Co. 
He is injuriously affected by the mortgage.  In truth, Mr. Whitaker is more vitally
interested in the outcome of this case than is the Veg.
Oil Company.  Conceivably if the mortgage had been the free act
of the Veg. Oil Co., it could not be heard to allege
its own fraud, and only a creditor could take advantage of the fraud to
intervene to avoid the conveyance.

^[4]
42 SCRA 408.

^[5]
Gibson v. Hon. Revilla, G.R. No. L-41432, 30 July 1979, 92 SCRA 219.

^[6]
Garcia v. David, 67 Phil. 279; Hacienda Sapang
Tayal Tenant’s League v. Yatco,
G.R. No. L-14651, Feb. 29, 1960.

^[7]
Bulova v. E.L. Barrett, Inc., 194 App. Div.
418, 185 NYS 424.

^[8]
Ballantine, 288-289, Pascual
v. Del Sanz
Orozco, 19 Phil. 82, 86.

^[9]
Rollo, pp. 112-120.

^[10]
Rollo, pp. 119-120.

^[11]
Rollo, p. 39.