SIBAGAT TIMBER CORPORATION, PETITIONER, VS. ADOLFO B. GARCIA, USIPHIL, INC. AND STRONGHOLD INSUR­ANCE CO., INC., RESPONDENTS.

This is a petition for review on certiorari of the
decision of the Court of Appeals dated February 15, 1991 in CA-G.R. No. 20799
entitled, “Sibagat Timber Corp. vs. Adolfo B. Garcia, et al.,”
affirming the decision of the Regional Trial Court which dismissed the
petitioner’s petition for certiorari, prohibition and injunction with
restraining order and writ of preliminary injunction and damages (Spl. Case No.
548, RTC, Branch I, Butuan City).

On August 30, 1988, respondent Sheriff Adolfo B. Garcia, who was
entrusted with the implementation of the writ of execution issued by the
Regional Trial Court, Branch 147, Makati, Metro Manila in Civil Case No. 7180
entitled, “USIPHIL, INC. vs. Del Rosario and Sons Logging Enterprises,
Inc.,” levied on the following personal properties of Del Rosario &
Sons, Inc.:

One (1) Unit CAT Grader with SN 99E­-5016

One (1) Unit
Generating Set with Cummins

Engine No. 1074304
Model V-855QC

and Generator 125
KVA No. HA-90071

1720-1 and Panel
Switch Board

One (1)
Generating Set with CAT

D?311
Series H No. 51B4241

w/ Generator No.
30TH 211 1800

RPM, 60 Cycles,
30KVA

One (1) pc. Engine
Block CAT D-4600

One TD-25B w/ Hyster
D988, Triple

Drum Model BY B14
SN-9PI55E

One TD-25A w/ No.
Engine Number, w/

Radiator and X-2
Triple Drum

Model 149 Yarder
and blade

which he scheduled for sale at public
auction on September 7, 1988 at 10:00 o’clock in the morning. He also levied on:

One (1) Unit Reo
Logging Truck (5)

tonner not in
running condition; and

One (1) Unit White
Logging (5)

tonner not in
running condition

which he scheduled for sale at public
auction on September 8, 1988.

On the same date (August 30, 1988) that levy was made by the
sheriff, the petitioner herein, through Mariano Rana, filed a third-party claim
alleging that it is the lawful owner of the levied machinery and equipment, by
virtue of deeds of sale executed in its favor by Del Rosario & Sons Logging
Enterprises, Inc.

Pursuant to Section 17, Rule 39 of the Rules of Court, an
indemnity bond was posted by the judgment creditor, USIPHIL, Inc., to indemnify
the respondent sheriff against the claim of the third-party claimant.

On September 6, 1988, at 2:00 P.M., petitioner filed in the
Regional Trial Court of Butuan City, a petition for “Certiorari,
Prohibition and Injunction with Restraining Order & Writ of Preliminary
Injunction and Damages” in Special Civil Case No. 548. A temporary restraining order was issued on
September 6, 1988 by the Executive Judge of that court.

On September 7, 1988, at 11:10 A.M., the court employees who were
deputized to serve the restraining order arrived at the place where the auction
sale was to be held. However, they were
told by Sheriff Garcia that the auction sale was finished at 10:30 A.M. yet,
and that a certificate of sale for each of the personal properties to be
auctioned on that day had already been issued to USIPHIL, INC., the judgment
creditor, as the only bidder and purchaser.

After the hearing on the application for preliminary injunction
was held on September 15, 1988, the parties were directed to submit
simultaneous memoranda. Thereafter the
case was deemed submitted for resolution. In the meantime, respondent USIPHIL, INC. filed a formal motion to
dismiss the petition which the trial court granted on February 28, 1990.

On March 9, 1990, the petitioner appealed the order of dismissal
to the Court of Appeals (CA G.R. No. 20799). On February 15, 1991, the Court of Appeals dismissed the appeal.

Petitioner’s motion for reconsideration was denied by the Court
of Appeals. Hence, this petition for
review under Rule 45 of the Rules of Court.

The main issue raised by the petitioner is the supposed error of
the Court of Appeals in piercing the veil of corporate entity and in holding
that the third-party claimant, herein petitioner Sibagat Corporation, is not a
separate and distinct entity from the judgment debtor, Del Rosario & Sons
Logging Enterprises, Inc.

As pointed out by the Court of Appeals in its decision:

“Gleaned from the records of this case, Mariano Rana, the
third-party claimant for and in behalf of petitioner testified, among others,
that he is the office manager of Sibagat Timber Corporation (p. 58, Record);
that he is the administrative manager of Del Rosario and Sons Logging
Enterprises, Inc. in a concurrent capacity (p. 60 id.); that the officers of
the Sibagat Timber Corporation are: Mr.
Policarpio C. Del Rosario, President and General Manager; Miss Conchita C. Del
Rosario, Vice-President and General Manager (p. 60, id.); and the Directors
are: Policarpio del Rosario, Jr.,
Cristina del Rosario, Mrs. Jasmin del Rosario, and Vicente C. del Rosario (pp.
61-63, id.). On the part of Del Rosario
and Sons Logging Enterprises, Inc., the officers of the company are: Mr. Policarpio C. del Rosario, President;
Miss Conchita del Rosario, Vice-President/General Manager/Director and
Treasurer; Mrs. Jasmin A. del Rosario, Querubin del Rosario, and Cristeta del
Rosario, respectively.” (p. 29, Rollo.)

The circumstances that: (1)
petitioner and Del Rosario & Sons Logging Enterprises, Inc. hold office in
the same building; (2) the officers and directors of both corporations are
practically the same; and (3) the Del Rosarios assumed management and control
of Sibagat and have been acting for and managing its business (p. 30, Rollo),
bolster the conclusion that petitioner is an alter ego of the Del Rosario &
Sons Logging Enterprises, Inc.

The rule is that the veil of corporate fiction may be pierced
when made as a shield to perpetrate fraud and/or confuse legitimate issues
(Jacinto vs. CA, 198 SCRA 211). The
theory of corporate entity was not meant to promote unfair objectives or
otherwise, to shield them (Villanueva vs.
Adre, 172 SCRA 876). Likewise,
where it appears that two business enterprises are owned, conducted, and
controlled by the same parties, both law and equity will, when necessary to
protect the rights of third persons, disregard the legal fiction that two
corporations are distinct entities, and treat them as identical (Phil. Veterans
Investment Development Corp. vs. CA, 181 SCRA 669).

The petitioner further contends that the Court of Appeals
erroneously disregarded the decision of this Court in G.R. No. 84497 entitled,
“Alfonso Escovilla, Jr., Cecilio M. Meris and Cuison Engineering and
Machinery Co., Inc., Petitioner vs. The Hon. Court of Appeals, Sibagat Timber
Corporation and Conchita del Rosario, Respondents,” wherein this Court
held that private respondents (herein petitioner) are the actual owners of the
properties subject of execution by virtue of a sale in their favor by Del
Rosario & Sons Logging Enterprises, Inc.

That allegation has no merit. The issue raised in that case was “whether or not an action for
prohibition will prosper as a remedy for acts already accomplished.” It
was a procedural question, not the ownership of the properties subject of the
execution.

The issue of ownership being raised now by the petitioner
involves a factual question requiring an assessment of the
evidence. This may not be done in a
petition for review under Rule 45 for it is not the function of this Court to
examine and weigh evidence already considered in the proceedings below. Our jurisdiction is limited to reviewing
only errors of law that may have been committed by the lower courts (Navarra
vs. CA, 204 SCRA 850).

Assuming arguendo that this Court in G.R. No. 84497 held
that petitioner is the owner of the properties levied under execution, that
circumstance will not be a legal obstacle to the piercing of the corporate
fiction. As found by both the trial and
appellate courts, petitioner is just a conduit, if not an adjunct of Del
Rosario & Sons Logging Enterprises, Inc. In such a case, the real ownership becomes unimportant and may be
disregard for the two entities may/can be treated as only one agency or
instrumentality.

“The corporate entity is disregarded where a corporation is
the mere alter ego, or business conduit of a person or where the corporation is
so organized and controlled and its affairs are so conducted, as to make it
merely an instrumentality, agency, conduit or adjunct of another
corporation.” (Aguedo F. Agbayani Commercial Laws of the Philippines, Vol.
3, 1984 Ed., p. 30, citing
decided cases.)

WHEREFORE, the petition for review is DENIED and the
decision of the Court of Appeals is AFFIRMED.

SO ORDERED.

Cruz, (Chairman), Padilla, and
Bellosillo, JJ., concur.