Wise & Company, Inc. vs. Man Sun Lung

Personal property found in the store of a corporation is presumed to belong to the corporation and not to any member thereof unless proven otherwise; attachment of such goods under a writ issued against an individual member, without proof that the goods exclusively belong to that member, is illegal, and the court that issued the writ does not exceed its jurisdiction in ordering the attachment lifted and the goods delivered to the corporation's insolvency trustee.

Wise & Company, Inc. was a judgment creditor of Man Sun Lung, a natural person, distinct from Man Sun Lung & Co., Inc., a corporation that had been declared insolvent in separate insolvency proceedings before the Court of First Instance of Camarines Sur. The corporation's insolvency proceedings were pending, and a trustee (sindico) had been appointed to take possession and custody of the insolvent corporation's assets, subject to the orders of the court handling the insolvency. The dispute arose from the intersection of Wise & Company's efforts to execute its judgment against the individual Man Sun Lung and the insolvency proceedings involving the corporation.

Wise & Company, Inc. held a judgment against Man Sun Lung, a natural person, and sought to execute on that judgment by attaching goods found in the store of Man Sun Lung & Co., Inc. The Provincial Sheriff of Camarines Sur seized the goods from the store of Man Sun Lung & Co., Inc., believing them to be the property of the individual defendant Man Sun Lung, pursuant to a writ of execution issued in the case. The Sheriff thereafter delivered the seized goods to the trustee (sindico) of the insolvency of Man Sun Lung & Co., Inc., in compliance with an order from the Court of Camarines Sur, which was handling the corporation's insolvency proceedings. The trustee subsequently sold the goods by order of the same court, and the proceeds, amounting to P656.64, were deposited with the clerk of the Camarines Sur court by its order dated January 20, 1937.

On February 15, 1937, Wise & Company, Inc. filed a motion before the Court of First Instance of Manila, requesting that the Provincial Sheriff of Camarines Sur be ordered to sell the attached properties and to deliver the proceeds of the sale to the appellant. The lower court denied this motion, prompting the present appeal. The appellant assigned two errors: first, that the lower court failed to distinguish between the natural person Man Sun Lung and the corporation Man Sun Lung & Co., Inc.; and second, that the lower court improperly relinquished custody of the goods placed under preliminary attachment to the prejudice of Wise & Company, Inc.

• Failure to Distinguish Natural Person from Corporation: Petitioner argued that the lower court erred in failing to distinguish between the natural person Man Sun Lung and the corporation Man Sun Lung & Co., Inc.
• Improper Relinquishment of Attached Goods: Petitioner maintained that the lower court erred in gratuitously relinquishing its custody of the goods placed under preliminary attachment, to the prejudice of Wise & Company, Inc.

• Corporate Personality: Whether Man Sun Lung, a natural person, is legally distinct from Man Sun Lung & Co., Inc., a corporation, such that goods found in the corporation's store are presumed to be corporate property.
• Legality of Attachment: Whether the attachment by the Sheriff of goods found in the corporation's store, pursuant to a writ issued against the individual member Man Sun Lung, was legal absent proof that the goods belonged exclusively to him.
• Jurisdiction to Lift Attachment: Whether the court that issued the attachment writ exceeded its jurisdiction in ordering the attachment lifted and the goods delivered to the insolvency trustee of the corporation.

• Corporate Personality: Yes. Man Sun Lung, a natural person, is legally different and distinct from Man Sun Lung & Co., Inc., a juridical person with a personality separate and independent from his.
• Legality of Attachment: No. The attachment was illegal, as goods found in the store of a corporation are presumed to belong to the corporation and not to any individual member unless proven otherwise, and no proof was shown that the goods belonged exclusively to Man Sun Lung.
• Jurisdiction to Lift Attachment: No, the court did not exceed its jurisdiction. Having been shown that the attachment was illegal, the lower court acted within its competence in ordering the delivery of the goods to the insolvency trustee.

• Corporate Personality: The Court applied the fundamental principle of separate juridical personality, recognizing that Man Sun Lung as a natural person is legally distinct from Man Sun Lung & Co., Inc. as a corporation. The latter possesses a personality separate and independent from that of the individual. Because the goods were seized from the store of the corporation, and there was no evidence that they belonged to the individual defendant, the presumption arose that they were part of the corporation's assets. This presumption is consistent with the corporation's separate legal existence under the Corporation Law (Act No. 1956, Arts. 18, 60, and 69).

• Legality of Attachment: Since the Sheriff seized the goods from the store of Man Sun Lung & Co., Inc. and there was no showing, even prima facie, that the goods belonged to the individual Man Sun Lung, the attachment was illegal. The Sheriff acted on the mistaken belief that the goods were the property of the individual defendant, when the presumption of ownership favored the corporation. An attachment against the property of a person who is not shown to own it cannot stand.

• Jurisdiction to Lift Attachment: Because the attachment was illegal, the court that issued the writ did not exceed its jurisdiction in ordering the attachment lifted and the goods delivered to the insolvency trustee of Man Sun Lung & Co., Inc. The insolvency court, having appointed a trustee to take possession and custody of the insolvent corporation's assets, had jurisdiction over the disposition of those assets. The lower court's order releasing the goods to the trustee was therefore a proper exercise of authority, not an erroneous relinquishment of custody.

• Separate Juridical Personality of Corporations — A corporation possesses a legal personality distinct and independent from that of its members or stockholders. A natural person who shares a name with a corporation is legally different from that corporation. This principle was applied to hold that Man Sun Lung, the individual defendant, was legally distinct from Man Sun Lung & Co., Inc., the insolvent corporation.

• Presumption of Corporate Ownership of Goods in Corporate Store — Articles or movable goods found in the store of a corporation are presumed to be the property of the corporation and not of any member thereof, unless proven otherwise. This presumption rendered the Sheriff's attachment of goods from the corporation's store, under a writ against the individual member, illegal absent proof of individual ownership.

• Illegality of Attachment Without Proof of Ownership — An attachment levied on goods found in a corporation's store, pursuant to a writ issued against an individual member, is illegal where no proof is shown that the goods belong exclusively to that member. The court issuing the writ does not exceed its jurisdiction in ordering the attachment lifted and the goods delivered to the corporation's insolvency trustee.

• "Es indudable que Man Sun Lung, el demandado en la presente causa, es juridicamente diferente y distinto de Man Sun Lung & Co., Inc., declarada insolvente en el expediente de insolvencia correspondiente: el primero es una persona natural y la ultima es una persona juridica con personalidad distinta e independiente de la de aquel." — This passage articulates the ratio decidendi: the legal distinction between a natural person and a corporation, which underpins the entire decision and the presumption of corporate ownership.

• "los articulos o bienes muebles que se encuentran en la tienda de una corporacion, se presume que son de la propiedad de la corporacion y no de ningun miembro de la misma a menos que se pruebe lo contrario." — This is the Court's canonical formulation of the presumption of corporate ownership of goods found in a corporate store, a doctrine directly relevant to attachment and execution disputes involving corporate assets.

• Dharmdas vs. Buenaflor, 57 Phil. 505 — Cited in support of the principles regarding separate juridical personality and the disposition of attached goods.
• Cu Unjeng e Hijos vs. Mitchell, 58 Phil. 515 — Cited for principles relating to attachment and corporate personality.
• Bastida vs. Peñalosa, 30 Phil. 156 — Cited in support of the Court's reasoning on attachment and ownership.
• De Amuzategui vs. Macleod, 33 Phil. 85 — Cited in support of the Court's reasoning on attachment and ownership.

• Articles 18, 60, and 69, Corporation Law (Act No. 1956) — These provisions govern the juridical personality of corporations and the relationship between a corporation and its members. The Court relied on them to establish that Man Sun Lung & Co., Inc. possessed a personality separate and independent from the individual Man Sun Lung, and that goods in the corporation's store were presumed to be corporate assets.

Avanceña (Presiding Justice), Imperial, Diaz, Laurel, and Concepcion concurred with the decision.