THIRD DIVISION

[G.R. No. 58168. December 19, 1989.]

CONCEPCION MAGSAYSAY-LABRADOR, SOLEDAD

MAGSAYSAY-CABRERA, LUISA MAGSAYSAY-CORPUZ,
assisted by her husband, Dr. Jose Corpuz, FELICIDAD P.
MAGSAYSAY, and MERCEDES MAGSAYSAY-DIAZ, petitioner,
vs. THE COURT OF APPEALS and ADELAIDA
RODRIGUEZ-MAGSAYSAY, Special Administratrix of the state of
the late Genaro F. Magsaysay, respondents.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; INTERVENTION; WHEN

ALLOWED. — 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, 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.

2. ID.; ID.; ID.; ID.; "INTEREST IN THE SUBJECT MATTER",

EXPLAINED. — 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
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 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. 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.

3. COMMERCIAL LAW; CORPORATION; SHARES OF STOCK; DOES

NOT VEST LEGAL RIGHT OR TITLE TO ANY OF THE PROPERTY OF THE
CORPORATION. — 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.

4. ID.; ID.; ID.; REQUISITES OF A VALID TRANSFER. — 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. Perforce, no transfer was ever recorded, much less affected 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."

DECISION

FERNAN, C.J : p

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. LLphil

Petitioners are raising a purely legal question; whether or not respondent Court
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 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 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 title holders 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. LexLib

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 such stocks of SUBIC,
they have a substantial and legal interest in the subject matter of litigation and that
they have a 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.

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 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 of litigation. LLphil

Invoking the principle enunciated in the case of PNB v. Phil. Veg. Oil Co., 49
Phil. 857, 862 & 853 (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." LLphil

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
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 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. LLphil

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
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 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. LLpr

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 assets. 10

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

The factual finding of the trial court are clear on this point. The petitioner
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 affected 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." LexLib

And even assuming arguendo that there was a valid transfer, petitioners are
nonetheless barred from intervening inasmuch as their right 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 Cortés, JJ., concur.

Feliciano, J., is on leave.

Footnotes
1. Penned by Associate Justice Porfirio V. Sison and concurred in by Associate Justices
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 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.

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