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JOSELITO HERNAND M. BUSTOS v. MILLIANS SHOE

FACTS:

The case involves a petition assailing the decision and resolution of the Court of Appeals (CA) pertaining to the exclusion of a property in a Stay Order related to the assets under rehabilitation of respondent Millians Shoe, Inc. (MSI). Spouses Fernando and Amelia Cruz owned a property that was levied for nonpayment of real estate taxes. The property was then auctioned off, with petitioner Joselito Hernand Bustos emerging as the winning bidder. Petitioner applied for the cancellation of the previous title and the issuance of a new one under his name. However, notices of lis pendens were annotated on the title, indicating that the subject property was covered by rehabilitation proceedings for MSI and included in the Stay Order issued by the RTC. Petitioner sought the exclusion of the property from the Stay Order, claiming that it belonged to Spouses Cruz who were mere stockholders of MSI. The RTC denied petitioner's entreaty, ruling that ownership of the property had not yet been transferred to petitioner at the time of the issuance of the Stay Order. The CA affirmed the RTC's ruling, holding that the property remained an asset of Spouses Cruz, who were stockholders of MSI. Petitioner moved for reconsideration, asserting that the Stay Order undermined the power to tax and reiterating his argument that he had already won the auctioned property. The CA denied petitioner's motion for reconsideration, maintaining its ruling and ruling that his prayer to exclude the property was time-barred. Petitioner then brought the case to the Supreme Court, arguing that Spouses Cruz are not liable for MSI's debts, the Stay Order undermined the tax powers of Marikina City, and the time bar rule does not apply to him.

ISSUES:

  1. Whether the properties of Spouses Cruz are answerable for the obligations of MSI.

  2. Whether the Stay Order involving the assets of MSI includes the property covered by TCT No. N-126668.

  3. Whether petitioner is considered a creditor of MSI who must timely file an opposition to the proposed rehabilitation plan of the corporation.

RULING:

  1. The Court ruled in the affirmative on all the issues.

PRINCIPLES:

  • Stockholders and officers of a close corporation are personally liable for its debts and obligations.

  • The Stay Order involving the assets of a corporation includes properties owned by stockholders and officers of the corporation.

  • A creditor of a corporation must timely file an opposition to the proposed rehabilitation plan of the corporation.