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FIRST DIVISION
G .R. No. 199687
PACIFIC REHOUSE
CORPORATION,
Petitioner,
- versus -
x-----------------------x
PACIFIC REHOUSE
CORPORATION, PACIFIC
CONCORDE CORPORATION,
MIZPAH HOLDINGS, INC.,
FORUM HOLDINGS
CORPORATION and
EAST ASIA OIL COMPANY, INC.,
Petitioners,
- versus -
MAR 2 4 2014
x----------------------------------------------------------------------DECISION
REYES, J.:
On the scales of justice precariously lie the right of a prevailing party
to his victor's cup, no more, no less; and the right of a separate entity from
being dragged by the ball and chain of the vanquished party.
Decision
The facts of this case as garnered from the Decision1 dated April 26,
2012 of the Court of Appeals (CA) in CA-G.R. SP No. 120979 are as
follows:
We trace the roots of this case to a complaint instituted with the
Makati City Regional Trial Court (RTC), Branch 66, against EIB
Securities Inc. (E-Securities) for unauthorized sale of 32,180,000 DMCI
shares of private respondents Pacific Rehouse Corporation, Pacific
Concorde Corporation, Mizpah Holdings, Inc., Forum Holdings
Corporation, and East Asia Oil Company, Inc. In its October 18, 2005
Resolution, the RTC rendered judgment on the pleadings. The fallo reads:
WHEREFORE, premises considered, judgment is
hereby rendered directing the defendant [E-Securities] to
return the plaintiffs [private respondents herein]
32,180,000 DMCI shares, as of judicial demand.
On the other hand, plaintiffs are directed to
reimburse the defendant the amount of [P]10,942,200.00,
representing the buy back price of the 60,790,000 KPP
shares of stocks at [P]0.18 per share.
SO ORDERED. x x x
The Resolution was ultimately affirmed by the Supreme Court and
attained finality.
When the Writ of Execution was returned unsatisfied, private
respondents moved for the issuance of an alias writ of execution to hold
Export and Industry Bank, Inc. liable for the judgment obligation as ESecurities is a wholly-owned controlled and dominated subsidiary of
Export and Industry Bank, Inc., and is[,] thus[,] a mere alter ego and
business conduit of the latter. E-Securities opposed the motion[,] arguing
that it has a corporate personality that is separate and distinct from
petitioner. On July 27, 2011, private respondents filed their (1) Reply
attaching for the first time a sworn statement executed by Atty. Ramon F.
Aviado, Jr., the former corporate secretary of petitioner and E-Securities,
to support their alter ego theory; and (2) Ex-Parte Manifestation alleging
service of copies of the Writ of Execution and Motion for Alias Writ of
Execution on petitioner.
On July 29, 2011, the RTC concluded that E-Securities is a mere
business conduit or alter ego of petitioner, the dominant parent
corporation, which justifies piercing of the veil of corporate fiction. The
trial court brushed aside E-Securities claim of denial of due process on
petitioner as xxx case records show that notices regarding these
proceedings had been tendered to the latter, which refused to even receive
them. Clearly, [petitioner] had been sufficiently put on notice and afforded
1
Penned by Associate Justice Mario V. Lopez, with Associate Justice Amy C. Lazaro-Javier,
concurring; Associate Justice Vicente S.E. Veloso penned a Separate Concurring Opinion. Associate
Justices Magdangal M. De Leon and Socorro B. Inting penned a Dissenting Opinion; rollo (G.R. No.
201537), pp. 47-68.
Decision
the chance to give its side[,] yet[,] it chose not to. Thus, the RTC
disposed as follows:
WHEREFORE, xxx,
Let an Alias Writ of Execution be issued relative to
the above-entitled case and pursuant to the RESOLUTION
dated October 18, 2005 and to this Order directing
defendant EIB Securities, Inc., and/or Export and
Industry Bank, Inc., to fully comply therewith.
The Branch Sheriff of this Court is directed to cause
the immediate implementation of the given alias writ in
accordance with the Order of Execution to be issued anew
by the Branch Clerk of Court.
SO ORDERED. x x x
With this development, petitioner filed an Omnibus Motion (Ex
Abundanti Cautela) questioning the alias writ because it was not
impleaded as a party to the case. The RTC denied the motion in its Order
dated August 26, 2011 and directed the garnishment of
P1,465,799,000.00, the total amount of the 32,180,000 DMCI shares at
P45.55 per share, against petitioner and/or E-Securities.2 x x x. (Citations
omitted)
The Regional Trial Court (RTC) ratiocinated that being one and the
same entity in the eyes of the law, the service of summons upon EIB
Securities, Inc. (E-Securities) has bestowed jurisdiction over both the parent
and wholly-owned subsidiary.3 The RTC cited the cases of Sps. Violago v.
BA Finance Corp. et al.4 and Arcilla v. Court of Appeals5 where the doctrine
of piercing the veil of corporate fiction was applied notwithstanding that the
affected corporation was not brought to the court as a party. Thus, the RTC
held in its Order6 dated August 26, 2011:
WHEREFORE, premises considered, the Motion for
Reconsideration with Motion to Inhibit filed by defendant EIB Securities,
Inc. is denied for lack of merit. The Omnibus Motion Ex Abundanti
C[au]tela is likewise denied for lack of merit.
Pursuant to Rule 39, Section 10 (a) of the Rules of Court, the
Branch Clerk of Court or the Branch Sheriff of this Court is hereby
directed to acquire 32,180,000 DMCI shares of stock from the Philippine
Stock Exchange at the cost of EIB Securities, Inc. and Export and Industry
Bank[,] Inc. and to deliver the same to the plaintiffs pursuant to this
Courts Resolution dated October 18, 2005.
2
3
4
5
6
Id. at 48-50.
Id. at 230.
581 Phil. 62 (2008).
G.R. No. 89804, October 23, 1992, 215 SCRA 120.
Rollo (G.R. No. 201537), pp. 329-231.
Decision
Id. at 231.
Id. at 232-269.
9
Filmerco Commercial Co, Inc. v. Intermediate Appellate Court, 233 Phil. 197 (1987); Padilla v.
CA, 421 Phil. 883 (2001); Kukan International Corporation v. Reyes, G.R. No. 182729, September 29,
2010, 631 SCRA 596.
10
Rollo (G.R. No. 201537), pp. 271-272.
8
Decision
11
Id. at 272.
Id. at 334-362.
13
Id. at 352.
14
Id. at 353.
15
Id. at 355.
16
See Petitioners Memorandum, id. at 405-435; See Export Banks Memorandum, id. at 436-451.
17
Penned by Associate Justice Mario V. Lopez, with Associate Justice Magdangal M. De Leon,
concurring; Associate Justice Socorro B. Inting was on official leave; id. at 453-455. See also rollo (G.R.
No. 199687), pp. 27-29.
18
Rollo (G.R. No. 201537), p. 454; rollo, (G.R. No. 199687), p. 28.
12
Decision
19
Decision
26
Id. at 61.
Id. at 3-43.
28
Raffled to a Member of the Court belonging to the Second Division. In a Minute Resolution dated
September 5, 2012, the petition was denied for the petitioners failure to show reversible error with the CA
Decision.
27
Decision
29
Id. at 487-490.
Id. at 491-493.
31
Sec. 5. Action by a Justice. All members of the Division shall act upon an application for
temporary restraining order and preliminary injunction. However, if the matter is of extreme urgency and a
Justice is absent, the two other justices shall act upon the application. If only the ponente is present, then
he/she shall act alone upon the application. The action of the two Justices or of the ponente shall, however,
be submitted on the next working day to the absent member or members of the Division for ratification,
modification or recall.
32
Rollo (G.R. No. 199687), pp. 15-16.
33
Batas Pambansa Bilang 129, as amended by Executive Order No. 33
Section 6. Section 11 of the same Act is hereby amended to read as follows:
Sec. 11. Quorum. A majority of the actual members of the Court shall
constitute a quorum for its session en banc. Three members shall constitute a quorum for
the sessions of a division. The unanimous vote of the three members of a division shall
be necessary for the pronouncement of a decision or final resolution, which shall be
reached in consultation before the writing of the opinion by any member of the division.
In the event that the three members do not reach a unanimous vote, the Presiding Justice
shall request the Raffle Committee of the Court for the designation of two additional
Justices to sit temporarily with them, forming a special division of five members and the
concurrence of a majority of such division shall be necessary for the pronouncement of a
decision or final resolution. The designation of such additional Justices shall be made
strictly by raffle.
A motion for reconsideration of its decision or final resolution shall be resolved
by the Court within ninety (90) days from the time it is submitted for resolution, and no
second motion for reconsideration from the same party shall be entertained.
30
Decision
IRCA,34 such division is created only when the three members of a division
cannot reach a unanimous vote in deciding a case on the merits.35
Furthermore, for petitioner Pacific Rehouse, this Resolution is likewise
infirm because the purpose of the formation of the Special Division of Five
is to decide the case on the merits and not to grant Export Banks application
for a writ of preliminary injunction.36
We hold that the opposition to the CA resolutions is already nugatory
because the CA has already rendered its Decision on April 16, 2012, which
disposed of the substantial merits of the case. Consequently, the petitioners
concern that the Special Division of Five should have been created to
resolve cases on the merits has already been addressed by the rendition of
the CA Decision dated April 16, 2012.
It is well-settled that courts will not determine questions that have
become moot and academic because there is no longer any justiciable
controversy to speak of. The judgment will not serve any useful purpose or
have any practical legal effect because, in the nature of things, it cannot be
enforced.37 In such cases, there is no actual substantial relief to which the
petitioners would be entitled to and which would be negated by the dismissal
of the petition.38 Thus, it would be futile and pointless to address the issue
in G.R. No. 199687 as this has become moot and academic.
G.R. No. 201537
The petitioners bewail that the certified true copy of the CA Decision
dated April 26, 2012 along with its Certification at the bottom portion were
not signed by the Chairperson39 of the Special Division of Five; thus, it is
34
Rule VI, Section 10. Procedure in Case of Dissent. When the unanimous vote of the members of
the Division cannot be attained, the following shall be observed:
(a) Within five (5) working days from the date of deliberation, the Chairperson
of the Division shall refer the case in writing, together with the rollo, to the Raffle
Committee which shall designate two (2) Justices by raffle from among the Justices in the
same station to sit temporarily with the three members, forming a Special Division of
Five.
A written dissenting opinion shall be submitted by a Justice to the ponente and
the other members of the Special Division of Five within ten (10) working days from
his/her receipt of the records.
If no written dissenting opinion is submitted within the period above-stated, with
no additional period being agreed upon by majority of said Division, that Special
Division shall be automatically abolished and the case shall revert to the regular Division
as if no dissent has been made.
(b) The Special Division of Five shall retain the case until its final disposition
regardless of reorganization, provided that all the members thereof remain in the same
station. (Sec. 4, Rule 8, RIRCA [a])
xxxx
35
Rollo (G.R. No. 199687), p. 14.
36
Id. at 15.
37
Philippine Savings Bank (PSBANK) v. Senate Impeachment Court, G.R. No. 200238, November
20, 2012, 686 SCRA 35, 37-38, citing Sales v. Commission on Elections, 559 Phil. 593, 597 (2007).
38
Soriano Vda. De Dabao v. Court of Appeals, 469 Phil. 928, 937 (2004).
39
CA Associate Justice Magdangal M. De Leon.
Decision
10
not binding upon the parties.40 The petitioners quoted this Courts
pronouncement in Limkaichong v. Commission on Elections,41 that a
decision must not only be signed by the Justices who took part in the
deliberation, but must also be promulgated to be considered a Decision.42
A cursory glance on a copy of the signature page43 of the decision
attached to the records would show that, indeed, the same was not signed by
CA Associate Justice Magdangal M. De Leon. However, it must be noted
that the CA, on May 7, 2012, issued a Resolution44 explaining that due to
inadvertence, copies of the decision not bearing the signature of the
Chairperson were sent to the parties on the same day of promulgation. The
CA directed the Division Clerk of Court to furnish the parties with copies of
the signature page with the Chairpersons signature. Consequently, as the
mistake was immediately clarified and remedied by the CA, the lack of the
Chairpersons signature on the copies sent to the parties has already become
a non-issue.
It must be emphasized that the instant cases sprang from Pacific
Rehouse Corporation v. EIB Securities, Inc.45 which was decided by this
Court last October 13, 2010. Significantly, Export Bank was not impleaded
in said case but was unexpectedly included during the execution stage, in
addition to E-Securities, against whom the writ of execution may be
enforced in the Order46 dated July 29, 2011 of the RTC. In including Export
Bank, the RTC considered E-Securities as a mere business conduit of Export
Bank.47 Thus, one of the arguments interposed by the latter in its
Opposition48 that it was never impleaded as a defendant was simply set
aside.
This action by the RTC begs the question: may the RTC enforce the
alias writ of execution against Export Bank?
The question posed before us is not novel.
The Court already ruled in Kukan International Corporation v.
Reyes that compliance with the recognized modes of acquisition of
jurisdiction cannot be dispensed with even in piercing the veil of corporate
fiction, to wit:
49
40
41
42
43
44
45
46
47
48
49
Decision
11
From the preceding, it is therefore correct to say that the court must
first and foremost acquire jurisdiction over the parties; and only then would
the parties be allowed to present evidence for and/or against piercing the veil
of corporate fiction. If the court has no jurisdiction over the corporation, it
follows that the court has no business in piercing its veil of corporate fiction
because such action offends the corporations right to due process.
Jurisdiction over the defendant is acquired either upon a valid service
of summons or the defendants voluntary appearance in court. When the
defendant does not voluntarily submit to the courts jurisdiction or when
there is no valid service of summons, any judgment of the court which has
no jurisdiction over the person of the defendant is null and void.51 The
defendant must be properly apprised of a pending action against him and
assured of the opportunity to present his defenses to the suit. Proper service
of summons is used to protect ones right to due process.52
As Export Bank was neither served with summons, nor has it
voluntarily appeared before the court, the judgment sought to be enforced
against E-Securities cannot be made against its parent company, Export
Bank. Export Bank has consistently disputed the RTC jurisdiction,
50
51
52
Id. at 618-619.
Pascual v. Pascual, G.R. No. 171916, December 4, 2009, 607 SCRA 288, 304.
Manotoc v. CA, 530 Phil. 454, 462 (2006).
Decision
12
Decision
13
corporate liability which cannot even bind the corporation as the latter is not
a party to the collection suit. The Court made the succeeding observations:
[B]y no stretch of even the most fertile imagination may one be able to
conclude that the challenged Amended Decision directed Csar Marine
Resources, Inc. to pay the amounts adjudged. By its clear and
unequivocal language, it is the petitioner who was declared liable therefor
and consequently made to pay. x x x, even if We are to assume
arguendo that the obligation was incurred in the name of the corporation,
the petitioner would still be personally liable therefor because for all legal
intents and purposes, he and the corporation are one and the same. Csar
Marine Resources, Inc. is nothing more than his business conduit and alter
ego. The fiction of a separate juridical personality conferred upon such
corporation by law should be disregarded. x x x.58 (Citation omitted)
58
59
Decision
14
60
Cirtek Employees Labor Union-Federation of Free Workers v. Cirtek Electronics, Inc., G.R. No.
190515, June 6, 2011, 650 SCRA 656, 660, citing Rule 45 of the Rules of Court.
61
Concept Builders, Inc. v. National Labor Relations Commission, 326 Phil. 955, 964-965 (1996).
62
Id. at 965-966.
63
Id. at 966.
Decision
15
64
Philippine National Bank v. Hydro Resources Contractors Corporation, G.R. No. 167530, March
13, 2013, 693 SCRA 294, 309-310.
Decision
16
6.
The lawyers handling the suits and legal matters of
defendant EIB Securities are the same lawyers in the Legal Department of
the bank parent corporation. The Court notes that in [the] above-entitled
suit, the lawyers who at the start represented said defendant EIB Securities
and filed all the pleadings and filings in its behalf are also the lawyers in
the Legal Services Division of the bank parent corporation. They are
Attys. Emmanuel A. Silva, Leonardo C. Bool, Riva Khristine E. Maala
and Ma. Esmeralda R. Cunanan, all of whom worked at the Legal Services
Division of Export Industry Bank located at 36/F, Exportbank Plaza, Don
Chino Roces Avenue, cor. Sen. Gil Puyat Avenue, Makati City.
7.
Finally[,] and this is very significant, the control and sway
that the bank parent corporation held over defendant EIB Securities was
prevailing in June 2004 when the very act complained of in plaintiffs
Complaint took place, namely the unauthorized disposal of the 32,180,000
DMCI shares of stock. Being then under the direction and control of the
bank parent corporation, the unauthorized disposal of those shares by
defendant EIB Securities is attributable to, and the responsibility of the
former.65
Decision
17
71
Philippine National Bank v. Ritratto Group Inc., 414 Phil. 494, 503 (2001).
Henry W. Ballantine, Separate Entity of Parent and Subsidiary Corporations, p. 20, California
Law Review Volume 14 (1925), citing Erkenbrecher v. Grant, 187 Cal. 7, 200 Pac. 641, (1921); Minifie v.
Rowlev, 187 Cal. 481, 202 Pac. 673, (1921); <http://scholarship.law.berkeley.edu/californialawreview/
vol14/iss1/1> (visited January 20, 2013).
73
Pacific Rehouse Corporation v. EIB Securities, Inc., supra note 45.
74
Rollo (G.R. No. 201537), p. 62.
75
Philippine National Bank v. Hydro Resources Contractors Corporation, supra note 64, at 311.
72
18
Decision
Associate Justice
WE CONCUR:
76
(2002).
Philippine National Bank v. Andrada Electric & Engineering Company, 430 Phil. 882, 894-895
19
Decision
..
TERESITA
CASTRO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that
the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court's
Division.