Sulo ng Bayan, Inc., a non-stock corporation, filed an accion reivindicatoria before the Court of First Instance of Bulacan to recover ownership and possession of approximately 27.98 million square meters of land in San Jose del Monte, Bulacan. It alleged that its members and their predecessors had openly, continuously, and adversely possessed and cultivated the property since the Spanish era, but were forcibly ejected by Gregorio Araneta, Inc. in 1958. The corporation further claimed that it later discovered that Original Certificate of Title (OCT) No. 466, issued in 1916, was void because it was allegedly obtained through fraud and without the required survey, plan, and notice to the actual occupants, rendering all subsequent transfer certificates of title likewise void. It prayed for the annulment of the titles, a declaration that its members were the rightful owners, the issuance of a new title, and damages.
The defendants moved to dismiss the complaint on the grounds that it failed to state a cause of action and that the action was barred by prescription and laches. During the pendency of the motions, Sulo ng Bayan sought the transfer of the case to another branch of the Court of First Instance, but failed to furnish the defendants copies of its motion as directed by the trial court. The trial court subsequently dismissed the complaint.
Sulo ng Bayan moved for reconsideration, arguing that the trial court had no jurisdiction to dismiss the case because the transfer request had allegedly been approved, that the complaint should be treated as a class suit due to the common interest of its numerous members, and that the action had not prescribed because an action to recover property registered through fraud and to challenge a void judgment may be brought at any time. After the trial court denied reconsideration, the case was appealed. Finding that only questions of law and jurisdiction were involved, the Court of Appeals certified the case to the Supreme Court for final resolution.
ISSUE : WON the Trial Court is correct
HELD : The Supreme Court ruled that the trial court validly dismissed the complaint. It held that the Secretary of Justice's approval of the transfer of the case to another branch of the Court of First Instance merely authorized the transfer and did not divest the original court of its jurisdiction or change the venue of the action. Thus, the trial court retained the authority to act on the pending motions, including the motion to dismiss.
On the merits, the Court found that Sulo ng Bayan, Inc. had no cause of action because it was not the real party in interest as required under Section 2, Rule 3 of the Rules of Court. The rights allegedly violated belonged to its individual members, not to the corporation. Since a corporation has a separate and distinct juridical personality from its members, and there was no allegation that the members had assigned their rights over the property to the corporation, it had no legal interest to recover the land or seek damages. The Court emphasized that the doctrine of piercing the corporate veil applies only to prevent fraud, illegality, or injustice, none of which was present in this case.
The Court likewise rejected the argument that the complaint should be treated as a class suit under Section 12, Rule 3 of the Rules of Court. It held that a class suit requires the representative plaintiff to have a common interest in the subject matter of the controversy with those represented. Here, the corporation had no ownership or legal interest in the disputed property, and each member's claim to the land depended on individual proof of possession and ownership. Accordingly, the action could not qualify as a class suit, making it unnecessary for the Court to rule on the issue of prescription.
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