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457 Phil. 430

THIRD DIVISION

[ G.R. No. 140652, September 03, 2003 ]

OLIVERIO LAPERAL, PETITIONER, VS . PABLO V. OCAMPO, RESPONDENT.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

Assailed in this petition for review under Rule 45 of the 1997 Rules of Civil Procedure, as amended, is the Decision[1] dated October 29, 1999 of the Court of Appeals in CA-G.R. CV No. 46052, entitled "Pablo V. Ocampo versus Oliverio Laperal," affirming in toto the Decision[2] dated February 4, 1993 of the Regional Trial Court, Branch 50, Manila, in Civil Case No. 86-36794.

At the threshold, it bears emphasis that this case involves respondent Pablo Ocampo's action for payment of his remaining shares of stock which he sold to Industrial Horizons, Inc. (Industrial Horizons).  Respondent now seeks to recover the amount from Oliverio Laperal, herein petitioner, then President of Industrial Horizons, on the basis of the "alter ego" doctrine.  The Court of Appeals, in its assailed Decision, ruled in favor of respondent on the ground of res judicata considering that the "alter ego" doctrine issue has been passed upon by the same court in its Decision in C.A.-G.R. No. 65913-R which has become final.

On May 3, 1963, the Sunbeam Convenience Foods, Inc., (Sunbeam), of which petitioner and his wife were the principal stockholders, acquired from the government, through a sales patent two (2) parcels of land in the province of Bataan, designated as Lot 1, SGS-2409 and Lot 2, SGS-2409, covered by Original Certificate of Title (OCT) No. SP-24 of the Registry of Deeds of said province.  Later Sunbeam transferred the two (2) lots to Coral Beach Development Corporation (Coral Beach), of which petitioner and his wife were also the principal stockholders.  Thus, Transfer Certificate of Title (TCT) Nos. 12421 and 12422 were issued in the name of Coral Beach.

Subsequently, a suit was brought by respondent and Pablo Roman against Coral Beach and Laperal Development Corporation (Laperal Development) which culminated in a Compromise Judgment promulgated on January 10, 1974 by the Court of Appeals in C.A.-G.R. No. 48015-R.[3] In this Compromise Judgment, Coral Beach and Laperal Development conveyed to herein respondent and Pablo Roman an undivided 29% interest each (a total of 58%) in six (6) parcels of land in Bataan which includes the previously mentioned two (2) lots. The remaining 42% interest in the above properties was retained by Coral Beach and Laperal Development.

Thereafter, respondent transferred seven (7) percent of his undivided 29% interest in the above properties to Rodolfo Lejano and the Asiatic Integrated Corporation (Asiatic), resulting in the reduction of his pro indiviso interest in said properties to only 22%.

On July 10, 1975, petitioner and respondent, together with Oliverio Laperal, Sr., Pablo Roman, Jr., Rodolfo Lejano and Jose Rojas, Jr., formed the Offshore Resources and Development Corporation (Offshore Resources).  Again, the Laperals were the principal stockholders.

On May 11, 1976, respondent, together with Roman, Lejano, Laperal Development, Coral Beach, and Asiatic, conveyed to the said newly formed Offshore Resources all their rights, title and interests in the six (6) parcels of land, (plus one (1) lot described as Lot 780 covered by TCT No. T-13412).  This conveyance was for and in consideration of 7,416,993,500 common Class "A" shares with par value of P0.01 per share, or a total par value of P74,169,935.00.  To respondent pertained 1,613,196,086 shares with a par value of P16,131,960.86 in exchange for his remaining 22% undivided interest in the properties.

On May 17, 1976, however, the Republic of the Philippines filed against Sunbeam and Coral Beach an action for the reversion to the Government of the two (2) lots covered by TCT Nos. T-12421 and T-12422 on the ground that they are within the public forest of Mariveles, Bataan and, therefore, not subject to disposition under the Public Land Act.

On July 21, 1976, under and by virtue of a Deed of Assignment of Subscription To and Sale of Shares of Stock, [4] respondent sold to Industrial Horizons, Inc. (Industrial Horizons), through its president, herein petitioner, all his shares of stock in the Offshore Resources for a consideration of Four Million Pesos (P4,000,000.00), payable in installments.  The amount of P500,000.00 was to be paid at the time of the execution of the Deed of Assignment, the second P500,000.00 on July 28, 1976, and the balance of P3 million payable in six (6) equal quarterly installments of P500,000.00 each due on October 31, 1976, January 31, 1977, April 30, 1977, July 31, 1977, October 31, 1977 and January 31, 1978.

On July 28, 1976, Industrial Horizons paid respondent P1 million.  However, on October 25, 1976, or before the third installment became due and payable, Industrial Horizons notified respondent that it was suspending payment of the unpaid installments due to the government's suit for reversion and cancellation of TCT Nos. T-12421 and T-12422.  According to Industrial Horizons, should the action instituted by the government succeed, the shares of Offshore Resources, which it purchased from respondent, "would be invalidated and worthless or x x x become watered stock."[5]

Feeling aggrieved, respondent filed with the then Court of First Instance (CFI), Branch 5, Manila, a case entitled "Pablo V. Ocampo vs. Industrial Horizons, Inc.," docketed as Civil Case No. 106913.

On May 28, 1979, the CFI rendered a Decision in favor of respondent, thus:
"FOR ALL THE FOREGOING CONSIDERATIONS, the Court renders judgment in favor of the plaintiff and against the defendant, and hereby orders defendant to pay the plaintiff the following sums:

(a) The first installment of P500,000.00 due on October 31, 1976, minus P243,963.24, with interest at 12% per annum from November 1, 1976 until said amount is fully paid;

(b) The second installment of P500,000.00 due on January 31, 1977, with interest at 12% per annum on said amount beginning February 1, 1977 until the same is fully paid;

(c) The third installment of P500,000.00 due on  April 30, 1977, with interest on said amount at the rate of 12% per annum from May 1, 1977 until said amount is fully paid;

(d) The fourth installment of P500,000.00 due July 31, 1977, with interest at the rate of 12% per annum beginning August 1, 1977 until said amount is fully paid;

(e) The fifth installment of P500,000.00 due on October 31, 1977, with interest at the rate of 12% per annum beginning November 1, 1977 until said amount is fully paid;

(f) The sixth installment of P500,000.00 due on January 31, 1978, with interest at the rate of 12% per annum beginning February 1, 1978, until said amount is fully paid.

"The defendant is finally ordered to pay plaintiff, attorney's fees equivalent to 10% of the aforesaid amounts, plus costs.

"SO ORDERED."[6]
On appeal, the Court of Appeals, on October 5, 1981, affirmed in toto the said Decision in CA-G.R. CV No. 65913-R, ratiocinating as follows:
"The seven (7) parcels of land which plaintiff and other incorporators of the Offshore Resources & Development Corporation conveyed to the corporation for stock, have a total area of 7,416,993.5 square meters, or more than 741 hectares. xxx Since 7,416,993.500 shares with a par value of P0.01 per share, or exactly P74,169,935.00 worth of shares, were issued to the incorporators, the shares were not `watered'. They were lawfully issued for value fully paid before the Government filed its action to recover two of the lots.  That supervening event (the Government's suit) did not render illegal the perfectly legal issuance of those shares.

xxx                    xxx                    xxx

"Another point to consider is that it was Laperal, through his Sunbeam Convenience Foods, Inc., who acquired the lots from the Government.  If, as the Government contends in its suit, the acquisition was irregular, Laperal would not be free from blame.

"Laperal conveyed to the plaintiff a 29% pro-indiviso interest in the lots as part of the compromise decision in favor of the plaintiff and Pablo Roman in CA-G.R. No. 48015-R (Exh. C). That interest was parlayed for shares of stock in Laperal's Offshore Resources & Development Corporation. These shares of stock were later purchased from the plaintiff by Laperal's Industrial Horizon, Inc., defendant herein.  It may be observed that the last transaction consolidated Laperal's ownership and control of the Offshore Resources & Development Corporation.  In effect, plaintiff's 22% interest in the property has come full circle to settle on Laperal from whom it originated.  To rescind the transaction because the Government has sued to recover the two lots, would in effect allow Laperal to reject, for alleged defect in the title, the very property (or interest therein) that he paid to the plaintiff in satisfaction of the latter's claim in CA-G.R. No. 48015-R. It would defraud the plaintiff of the fruits of that judgment.

"Although the series of transaction were made through various corporations of Laperal, the notion of a separate corporate personality for each corporation should be disregarded where, as in this case, the corporations were merely an alter ego or business conduit of Laperal, and the corporate fiction would work an injustice or perpetrate a fraud upon the plaintiff (Yutivo Sons Hardware Co. vs. Court of Tax Appeals, 1 SCRA 160; Santos vs. Vasquez, 22 SCRA 1156).

xxx                    xxx                    xxx

 "WHEREFORE, finding no reversible error in the appealed decision, the same is affirmed in toto, with costs against the appellant.

"SO ORDERED.'"[7] (Emphasis supplied)
On December 24, 1981, Industrial Horizons filed with this Court praying for an extension of thirty (30) days from December 26, 1981 within which to file a petition for review on certiorari.  In a Resolution dated January 13, 1982, we granted the motion, giving Industrial Horizons until January 25, 1982 within which to file the same.  On January 25, 1982, Industrial Horizons filed its second motion for extension of time, asking for another fifteen (15) days to file its petition for review.  On February 3, 1982, we denied the said motion outright.  Industrial Horizons did not anymore file its petition for review.  Thus, the Decision of the Appellate Court in CA-G.R. CV No. 65913-R affirming the Decision of the RTC in Civil Case No. 106913 became final and executory on October 31, 1981.[8] This Decision was partially executed to the extent of P750,000.00, leaving an unpaid balance of P2,006,036.76.

On July 23, 1986, or after four (4) years, eight (8) months and twenty-three (23) days from finality of the Decision in CA-G.R. No. 65913-R, respondent filed with the RTC, Branch 50, Manila, another complaint, this time against petitioner himself, for the recovery of the balance of P2,006,036.76, docketed as Civil Case No. 86-36794, "Pablo V. Ocampo vs. Oliverio Laperal."

In his complaint,[9] respondent alleged, among others, that (1) despite diligent efforts exerted by the sheriff to locate the properties (personal and real) of Industrial Horizons, nothing could be found; (2) as held in Civil Case No. 106913, Industrial Horizons is but an alter ego or a business conduit of petitioner; and (3) under the circumstances, piercing the veil of the corporate entity of Industrial Horizons is justified, hence, petitioner is personally liable for the payment of the balance of the money judgment in Civil Case No. 106913, being the prime mover, president, and controlling stockholder of  Industrial Horizons.

On February 4, 1993, after trial on the merits, the trial court rendered its Decision in favor of respondent, thus:
"The final and executory decision of the Court of Appeals penned by Justice C. Griño-Aquino and concurred in by Justices Emilio A. Goncayco and Serafin R. Cuevas, who all subsequently became Justices of the Supreme Court, traced in detail the antecedent facts that gave rise to the suit between plaintiff Ocampo and Industrial Horizons, Inc. and undisputably came out with the conclusion that, in that case, the corporations used by Laperal in the series of transaction `were merely an alter ego or business conduit of Laperal and the corporate fiction would work an injustice or perpetuate a fraud upon plaintiff.' (Exhibit `B-1', p. 121, Vol. I, Records).

"As a consequence, defendant Laperal can be held personally liable for the outstanding obligation of Industrial Horizons, Inc. to plaintiff.

"WHEREFORE, judgment is hereby rendered ordering defendant Oliverio Laperal to pay plaintiff Pablo V. Ocampo the sum of P2,006,036.76 with 12% interest per annum from date of judicial demand on July 23, 1986 until fully paid, plus costs of suit.

"SO ORDERED."[10]
On appeal, the Court of Appeals in its assailed Decision affirmed in toto the Decision of the trial court, thus:
"WHEREFORE, the appeal is hereby DISMISSED and the Decision of the Court a quo dated February 4, 1993 in Civil Case No. 86-36794 is hereby AFFIRMED in toto.  With costs against defendant-appellant.

"SO ORDERED."[11]
In holding so, the Court of Appeals ratiocinated as follows:
"The contention of defendant-appellant Laperal that it was error on the part of the court a quo in not compelling plaintiff-appellee Ocampo to adduce evidence in support of his alter ego theory instead of solely relying on the alter ego holding of this Court in CA-G.R. CV No. 65913 is bereft of merit.  Section 1, Rule 129 of the Revised Rules of Court provides that `a court shall take judicial notice, without the introduction of evidence, of x x x the official acts of the legislative, executive and judicial departments of the Philippines x x x.' Courts are required to take judicial notice of the decisions of the appellate courts as these are facts capable of unquestionable demonstration.  (Regalado, Remedial Law Compendium, Vol. II, p. 649 citing Baguio vs. Vda. De Jalogat, et al. L1-28100, November 29, 1971; Figueras vs. Serrano, 52 Phil. 28).  Thus, even in the absence of other substantiation, Our ruling in CA-GR CV No. 65913 can be a strong legal basis for the assailed decision in Civil Case No. 86-36794.

"Moreover, plaintiff-appellee introduced pieces of evidence in addition to the copy of the Decision in CA-G.R. CV No. 65913 and it was explained this way by the court below:
`Two pieces of evidence adduced by plaintiff clearly indicate that Industrial Horizons, Inc. is indeed an alter ego of Laperal.  These are (1) the check dated July 27, 1976 for P500,000.00 made payable to Oliverio Laperal representing payment to Industrial Horizons (Exhibit `I') and (2) cash voucher for P500,000.00 showing actual payment made to Oliverio Laperal by Asiatic Integrated Corporation representing its share `in buying out Pablo Ocampo's 25% participation and interest in the Offshore Resources and Development Corporation (Exhibit `J').  The Amended Articles of Incorporation of Industrial Horizons, Inc. likewise reveals that out of 100,000 shares of subscribed capital stock, Oliverio Laperal and his wife Emma own 54,000 shares or more than one-half (Exh. `C-1-A').'
"In this light, there was adequate and convincing proof to support the finding that Industrial Horizons, Inc., is an alter ego of defendant-appellant Laperal.

"Again, defendant-appellant insists that it was reversible error to allow the piercing of the veil of corporate fiction since allegedly, it is not one of the issues raised in Civil Case No. 106913 nor is it an assigned error in CA-G.R. CV No. 63913-R.   This contention must be rejected for paucity of merit.

"It cannot be denied that defendant-appellant Laperal presented controverting evidence during the trial before the court  a quo to dispute the trial court's alter ego holding as affirmed by this Court in CA-G.R. CV. No. 65913-R by proving that Industrial Horizons, Inc. was a duly organized and existing corporation which had a legitimate business activity and well-known and reputable stockholders who would not allow themselves to be used as mere dummies of the former as he himself was convinced that the resolution of said issue was fundamental to the resolution of the main issue.   Thus, granting en argumento that said issue on the alter ego theory was not averred as an issue in the pleadings in Civil Case 106913 nor in CA-G.R. CV No. 65913-R, still the evidence freely given by defendant-appellant Laperal is considered to have been put in issue by his implied permission.

x x x                x x x                    x x x

"Lastly, it is noteworthy to state that the Decision in CA-G.R. No. 65913 where the assailed `alter ego holding' is contained has long attained finality on October 31, 1981.  The lower court, in applying the effects of a final judgment on the issue of piercing the veil of corporate fiction, held:
`The final and executory decision of the Court of Appeals penned by Justice C. Griño-Aquino and concurred in by Justices Emilio A. Goncayco and Serafin R. Cuevas, who all subsequently became Justices of the Supreme Court, traced in detail the antecedent facts that gave rise to the suit between plaintiff Ocampo and Industrial Horizons, Inc. and undisputably came out with the conclusion that, in that case, the corporations used by Laperal in the series of transaction `were merely an alter ego or business conduit of Laperal and the corporate fiction would work an injustice or perpetuate a fraud upon plaintiff.'  (Exhibit `B-1', p. 121, Vol. I, Records).

`As a consequence, defendant Laperal can be held personally liable for the outstanding obligation of Industrial Horizons, Inc. to plaintiff.'

x x x                x x x                    x x x
"In view of the foregoing considerations, defendant-appellant's personal liability for the civil obligation of Industrial Horizons, Inc. to the tune of P2,006,036.76 has become inevitable." (Emphasis supplied)[12]
Hence, the present petition.

Petitioner contends, among others, that respondent failed to prove that Industrial Horizons is his alter ego; and that the stockholders of Industrial Horizons are reputable and well-known individuals who would not allow themselves to be used as mere dummies of petitioner.

In his comment on the petition, respondent maintains that the petition should be dismissed outright on the ground that the issue being raised, i.e., whether Industrial Horizons is an alter-ego or business conduit of petitioner, has been resolved with finality in CA-G.R. CV No. 65913-R.  Consequently, petitioner can be held liable for the payment to him (respondent) of the balance of P2,006,036.76.

We agree with the respondent.

It bears emphasis that respondent's second complaint, docketed as Civil Case No. 86-36794 in the RTC, Branch 50, Manila, was instituted within the 5-year period from the finality of the Decision in CA-G.R. CV No. 65913-R.[13] Thus, respondent's present recourse is actually a motion for revival of judgment under Section 6, Rule 39 of the same Rules, which provides:
"SEC. 6.  Execution by motion or by independent action. – A final and executory judgment or order may be executed on motion within five (5) years from the date of its entry.   After the lapse of such time, and before it is barred by the statute of limitation, a judgment may be enforced by action.  The revived judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations."
Petitioner raises the defense that Industrial Horizons is not his alter ego, hence, he is not liable to respondent for the unpaid balance of P2,006,036.76.  This issue has been resolved by the Court of Appeals in CA-G.R. CV No. 65913-R.  To reiterate, the Appellate Court ruled that Industrial Horizons is the alter ego of herein petitioner and, therefore, the latter can be held personally liable for the outstanding obligation of Industrial Horizons to respondent.  Such ruling which has become final and executory as early as October 31, 1981 is conclusive upon the parties.   It follows that the issue involved can no longer be litigated.  We have held that an action to revive judgment is not meant to retry the case all over again.[14] Its cause of action is the judgment itself and not the merits of the original action.[15]

Verily, the enforcement of the Judgment of the Court of Appeals in CA-G.R. CV No. 65913-R (originally Civil Case No. 106913) is in order.  We observed, however, that both lower courts ordered petitioner to pay respondent P2,006,036.76 with 12% interest per annum.  Considering that the said amount is not a loan or forbearance, the interest should only be 6%, not 12% per annum.[16]

WHEREFORE, the petition is hereby DENIED and the Decision dated October 29, 1999 of the Court of Appeals in CA-G.R. CV No. 46052 is AFFIRMED.

The final and executory Decision of the Court of Appeals in CA-G.R. No. 65913-R (originally Civil Case No. 106913) is REVIVED and ENFORCED.  Petitioner Oliverio Laperal is ordered to pay immediately respondent Pablo Ocampo the entire amount of P2,006,036.76 with 6% interest per annum from the date of judicial demand on July 23, 1986 until fully paid, plus costs of suit.

SO ORDERED.

Puno, (Chairman), Panganiban, Corona, and Carpio-Morales, JJ., concur.



[1] Penned by then Associate Justice Presbitero J. Velasco, now Court Administrator, and concurred in by Associate Justices B.A. Adefuin-Dela Cruz and Eloy R. Bello, Jr., Rollo at 9-23.

[2] Penned by then Judge Ruben T. Reyes, Rollo at 135-139, now Associate Justice of the Court of Appeals.

[3] The history of this particular case does not appear on the record but the Compromise Judgment was admitted by both parties and adopted by the Court of Appeals in the present assailed Decision dated October 29, 1999 in CA-G.R. CV No. 46052.

[4] Records, Vol. II at 8-13.

[5] C.A. Records at 39.

[6] Records, Vol. I at 17-18.

[7] Records, Vol. I at 25-29.

[8] Rollo at 12.

[9] Records, Vol. I at 2-4.

[10] Id., Vol. II at 134.

[11] Rollo at 23.

[12] Id. at 19-22.

[13] Under Section 2, Rule 36 of the 1997 Rules of Civil Procedure, as amended, the date of finality of the judgment or order shall be deemed to be the date of its entry.

[14] Enriquez vs. Court of Appeals, G.R. No. 137391, December 14, 2001, 372 SCRA 372, citing E. Paras, RULES OF COURT ANNOTATED, p. 791 (3rd ed. 1996).

[15] Id., citing Filipinas Investment Finance Corporation vs. IAC, 179 SCRA 728, 729.

[16] Eastern Assurance and Surety Corporation vs. Court of Appeals, G.R. No. 127135, January 18, 2000, 322 SCRA 73.

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