Shareholders do not possess the direct and immediate legal interest in suits involving corporate property necessary to entitle them to intervene as parties, as the corporation has a distinct legal personality and owns the property itself; an interest as a shareholder is merely indirect, contingent, and inchoate.

The case arose from a dispute over a parcel of land ("Pequeña Island") acquired during the marriage of the late Senator Genaro Magsaysay and respondent Adelaida Rodriguez-Magsaysay. After the Senator's death, Adelaida discovered annotations on the title suggesting the property was his separate capital, a Deed of Assignment transferring the land to SUBIC Land Corporation (SUBIC), and a subsequent mortgage on the property executed by SUBIC. Adelaida filed suit to annul these transactions, claiming the land was conjugal, the transactions were fraudulent, and her consent was not obtained.

• Respondent Adelaida Rodriguez-Magsaysay, widow of Senator Genaro Magsaysay, filed an action to annul certain transactions concerning a property known as "Pequeña Island" (covered by TCT No. 3258), allegedly acquired with conjugal funds in 1958.
• After her husband's death, she discovered an annotation on TCT No. 3258 stating the land was acquired with his separate capital, the registration of a Deed of Assignment (June 25, 1976) purportedly executed by the Senator transferring the property to Subic Land Corporation (SUBIC), resulting in TCT No. 3258's cancellation and issuance of TCT No. 22431 to SUBIC, and the registration of a Deed of Mortgage (April 28, 1977) for P2.7 million executed by SUBIC in favor of FILMANBANK.
• Respondent alleged these acts were void, intended to defraud the conjugal partnership, done without her consent, and that the Senator did not execute the assignment or his consent was vitiated.
• Petitioners, sisters of the late Senator, filed a motion to intervene in the annulment suit.
• Petitioners based their claim to intervene on a Deed of Sale (June 20, 1978) where the late Senator allegedly conveyed to them one-half (1/2) of his shareholdings in SUBIC, totaling 416,566.6 shares or approximately 41.66% of SUBIC's outstanding stock.
• The trial court found that SUBIC did not keep corporate books and records, and the alleged transfer of shares to petitioners was never recorded.

• Petitioners argued they possess a substantial and legal interest in the subject matter (Pequeña Island) and the success of SUBIC in the litigation, deriving from their ownership of 41.66% of SUBIC's shares assigned to them by their late brother via a Deed of Sale.
• They asserted that this ownership stake gives them a significant vote in corporate affairs and makes them vitally interested in the outcome, as the suit concerns the corporation's only tangible asset.
• Petitioners claimed their interest was more vital than SUBIC's, suggesting SUBIC might enter into a compromise detrimental to their alleged shareholdings.
• They contended that the availability of other remedies is immaterial to their right to intervene, citing PNB v. Phil. Veg. Oil Co. to support their argument that significant stockholders can have the requisite interest.

• Respondent (as supported by the lower courts) argued that petitioners lack the legal interest required for intervention under the Rules of Court.
• It was maintained that SUBIC, the corporation, possesses a legal personality separate and distinct from its stockholders (petitioners).
• Any interest petitioners might have as alleged shareholders is merely indirect, contingent, remote, and collateral, not the direct and immediate interest required by law.
• The alleged transfer of shares was not recorded in SUBIC's non-existent corporate books, making it ineffective against third parties like the respondent.
• Petitioners' rights, if any, could be adequately protected in separate, already pending proceedings involving the same parties and related issues.

• Whether the petitioners, as alleged assignees of 41.66% of the shares of stock in SUBIC, have the requisite legal interest in the subject matter of the litigation (the annulment of the transfer of Pequeña Island to SUBIC) to be entitled to intervene in the case filed by the respondent widow.

• The Supreme Court denied the petition and affirmed the Court of Appeals' decision, holding that the petitioners lack the required legal interest to intervene in the annulment suit.
• The Court reiterated that the interest required for intervention must be legal, direct, immediate, and of such character that the intervenor will either gain or lose by the direct legal operation and effect of the judgment.
• Petitioners' interest as alleged shareholders is merely indirect, contingent, inchoate, and purely an expectancy; it does not constitute a direct interest in the corporate property (Pequeña Island), which is owned by SUBIC as a distinct legal entity.
• Shareholders' interest in corporate property is only equitable or beneficial, not a legal right or title to the property itself.
• The alleged transfer of shares to petitioners was never recorded in the corporate books (which were non-existent), and under Section 63 of the Corporation Code, such transfers are not valid against third parties until recorded; thus, the transfer cannot prejudice the respondent.
• The Court also noted that intervention should not be permitted if it would unduly delay the proceedings or if the intervenor's rights are adequately protected in a separate proceeding, finding that petitioners' interests were already the subject of several other pending cases.

• Intervention (Rule 12, Section 2, Revised Rules of Court): This rule requires a party seeking intervention to have a legal interest in the matter in litigation, or in the success of either party, or an interest against both, or be situated such that they will be adversely affected by a distribution or disposition of property in the court's custody. The Court applied this by finding petitioners' shareholder interest was not the required direct and immediate legal interest in the specific property dispute between the respondent and the corporation (SUBIC). The court also considered the potential for delay and the availability of other remedies as factors in denying intervention.
• Separate Corporate Personality: This doctrine holds that a corporation has a legal existence separate and distinct from the individuals composing it (shareholders). The Court applied this by stating that SUBIC, not its shareholders (petitioners), owned Pequeña Island. Therefore, petitioners, merely as shareholders, had no direct legal claim or title to the property itself that would warrant intervention in a suit concerning that property.
• Requirement of Registration for Share Transfers (Section 63, Corporation Code): This provision states that no transfer of shares shall be valid, except as between the parties, until it is recorded in the books of the corporation. The Court applied this by noting the alleged transfer of shares to petitioners was never recorded (as SUBIC kept no books), thus it could not affect the respondent, who is a third party to that alleged transfer, nor could it form the basis for petitioners' claim of a direct legal interest in the litigation concerning corporate assets initiated by the respondent.

• "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 effect of the judgment."
• "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."
• "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...'"

• PNB v. Phil. Veg. Oil Co., 49 Phil. 857 (1927): Invoked by petitioners to argue that a major stockholder could have sufficient interest to intervene. The Supreme Court implicitly distinguished it, finding petitioners' interest here indirect and contingent, unlike the situation in PNB.
• Batama Farmers' Cooperative Marketing Association, Inc. v. Rosal, 42 SCRA 408: Cited to define the requirement of "legal interest" for intervention under Rule 12, Section 2.
• Gibson v. Hon. Revilla, 92 SCRA 219 (1979): Cited regarding the requirements for allowing intervention, specifically that both legal interest and the consideration of whether rights can be protected separately must concur.
• Garcia v. David, 67 Phil. 279: Cited for the principle that the interest for intervention must be direct and immediate to avoid making proceedings unnecessarily complicated, expensive, and interminable.
• Pascual v. Del Sanz Orozco, 19 Phil. 82: Cited alongside Ballantine to explain that shareholders are not legal owners of corporate property, their interest being equitable or beneficial.
• Hacienda Sapang Tayal Tenant's League v. Yatco, G.R. No. L-14651, Feb. 29, 1960: Cited alongside Garcia v. David regarding the nature of interest required for intervention.
• Bulova v. E.L. Barrett, Inc., 194 App. Div. 418, 185 NYS 424: Cited to define "an interest in the subject" as a direct interest in the cause of action as pleaded.

• Rules of Court, Rule 12, Section 2: Sets out the requirements for intervention in a pending action (requiring legal interest). This was the primary rule analyzed and applied to deny intervention.
• Corporation Code, Section 63: States the requirement for recording share transfers in the corporate books to bind third parties. This was applied to invalidate the petitioners' claim based on the unrecorded share transfer as against the respondent.
• Rules of Court, Rule 86, Section 5: Mentioned in relation to one of the pending cases where petitioners filed a contingent claim against the estate of the late Senator.