GONZALES, JR. v. PEÑA

DELFIN C. GONZALES, JR., Petitioner, Vs. MAGDALENO M. PEÑA, ALABANG COUNTRY CLUB, INC., and MS. ARSENIA VERA, Respondents.

G.R. No. 214303

January 30, 2017

  

FACTS:

                The case is a Petition for Review on Certiorari assailing the Omnibus Resolution and resolution of the RTC of Makati City, Branch 65, which denied the prayer of petitioner Delfin C. Gonzales, Jr. to be restored as owner of the shares issued by respondent Alabang Country Club, Inc. (ACCI).

                In its Decision, the RTC of Bago City adjudged petitioner liable to respondent Magdaleno M. Peña for the payment of the agency’s fees and damages amounting to ₱28.5 million. Petitioner, together with his co-petitioners in that case, appealed the Decision, while Peña moved for execution pending appeal of this ruling. The grant of that motion resulted in the sale to Peña of petitioner’s ACCI shares. Through a private sale, he was able to sell and transfer the subject shares to respondent Arsenia Vera.

                On 19 October 2011, the Supreme Court (SC) issued a Decision in G.R. Nos.145817, 145822, 162562, entitled Urban Bank, Inc. v. Peña, which vacated with finality the Decision of the RTC.

                Considering that the Decision of the RTC had been completely vacated and declared null and void, SC held that the concomitant execution pending appeal was likewise null and without effect. Thus, SC held that Urban Bank and its officers and directors, including petitioner herein, were entitled to the full restoration of their ownership and possession of all properties that were executed pending appeal.

                The SC ordered a restitution proceedings which were raffled to the RTC of Makati City, Branch 65. Thereafter, petitioner moved for execution, seeking restoration of his actual ACCI shares. The ACCI countered that the club shares petitioner was claiming could no longer be returned to him, because they had already been transferred by Peña to Vera.

                In its Omnibus Resolution, the RTC concluded that Peña's private sale of the shares to Vera was valid, given that the latter was an innocent purchaser for value. As such, Vera could not be charged with knowledge of the controversy involving the ACCI shares. Considering the validity of the sale, the trial court held that the actual restitution of the property to petitioner was no longer possible.

Aside from herein petitioner, Delfin C. Gonzalez, Jr., his co-petitioners in Urban Bank - Eric L. Lee and Urban Bank, were likewise not restored to their ownership of their movable properties.

                Subsequently, petitioner moved for reconsideration but was denied by the RTC. Aggrieved, he came directly to this Court and asked for the reversal of the ruling of the trial court's ruling, as well as for the cancellation of the shares in the name of Vera.

ISSUE:

                Whether or not the RTC faithfully complied with our directive to restore to Urban Bank and the latter's officers their properties illegally obtained by Peña.

RULING:

                The SC grant the Petition. Indeed, the RTC did not comply with the ruling in Urban Bank when it refused to restore to petitioner the actual ownership of his club shares on the mere pretext that these had already been sold by Peña to his successor-in-interest.

                As stated in Supreme Court's Decision, the RTC was bound to comply with this relevant directive:

              (b) If the property levied or garnished has been sold on execution pending appeal and Atty. Magdaleno Peña is the winning bidder or purchaser, he must fully restore the property to Urban Bank or respondent bank officers, and if actual restitution of the property is impossible, then he shall pay the full value of the property at the time of its seizure, with interest;

                There is no factual dispute that Peña acquired the ACCI shares of petitioner by virtue of a winning bid in an execution sale that had already been declared by this Court, with finality, as null and void. In no uncertain terms, SC declared that the "concomitant execution pending appeal is likewise without any effect. Consequently, all levies, garnishment and sales executed pending appeal are declared null and void, with the concomitant duty of restitution."

                Void transactions do not produce any legal or binding effect, and any contract directly resulting from that illegality is likewise void and inexistent. Therefore, Peña could not have been a valid transferee of the property. As a consequence, his successor-in-interest, Vera, could not have validly acquired those shares. The RTC thus erred in refusing to restore the actual ACCI shares to petitioner on the basis of their void transfer to Vera.