In late 2001 the Traders Royal Bank (TRB) proposed to sell to petitioner Bank of Commerce (Bancommerce) for P10.4 billion its banking business consisting of specified assets and liabilities. Bancommerce agreed subject to prior Bangko Sentral ng Pilipinas' (BSP's) approval of their Purchase and Assumption (P & A) Agreement. On November 8, 2001 the BSP approved that agreement subject to the condition that Bancommerce and TRB would set up an escrow fund of P50 million with another bank to cover TRB liabilities for contingent claims that may subsequently be adjudged against it, which liabilities were excluded from the purchase.

Specifically, the BSP Monetary Board Min. No. 58 (MB Res. 58) decided as follows:

1. To approve the revised terms sheet as finalized on September 21, 2001 granting certain incentives pursuant to Circular No. 237, series of 2000 to serve as a basis for the final Purchase and Assumption (P & A) Agreement between the Bank of Commerce (BOC) and Traders Royal Bank (TRB); subject to inclusion of the following provision in the P & A:

The parties to the P & A had considered other potential liabilities against TRB, and to address these claims, the parties have agreed to set up an escrow fund amounting to Fifty Million Pesos (P50,000,000.00) in cash to be invested in government securities to answer for any such claim that shall be judicially established, which fund shall be kept for 15 years in the trust department of any other bank acceptable to the BSP. Any deviation therefrom shall require prior approval from the Monetary Board.

x x x x

Following the above approval, on November 9, 2001 Bancommerce entered into a P & A Agreement with TRB and acquired its specified assets and liabilities, excluding liabilities arising from judicial actions which were to be covered by the BSP-mandated escrow of P50 million.

To comply with the BSP mandate, on December 6, 2001 TRB placed P50 million in escrow with Metropolitan Bank and Trust Co. (Metrobank) to answer for those claims and liabilities that were excluded from the P & A Agreement and remained with TRB. Accordingly, the BSP finally approved such agreement on July 3, 2002.

Shortly after or on October 10, 2002, acting in G.R. 138510, Traders Royal Bank v. Radio Philippines Network (RPN), Inc., this Court ordered TRB to pay respondents RPN, Intercontinental Broadcasting Corporation, and Banahaw Broadcasting Corporation (collectively, RPN, et al.) actual damages of P9,790,716.87 plus 12% legal interest and some amounts. Based on this decision, RPN, et al. filed a motion for execution against TRB before the Regional Trial Court (RTC) of Quezon City. But rather than pursue a levy in execution of the corresponding amounts on escrow with Metrobank, RPN, et al. filed a Supplemental Motion for Execution^[1] where they described TRB as "now Bank of Commerce" based on the assumption that TRB had been merged into Bancommerce.

On February 20, 2004, having learned of the supplemental application for execution, Bancommerce filed its Special Appearance with Opposition to the same^[2] questioning the jurisdiction of the RTC over Bancommerce and denying that there was a merger between TRB and Bancommerce. On August 15, 2005 the RTC issued an Order^[3] granting and issuing the writ of execution to cover any and all assets of TRB, "including those subject of the merger/consolidation in the guise of a Purchase and Sale Agreement with Bank of Commerce, and/or against the Escrow Fund established by TRB and Bank of Commerce with the Metropolitan Bank and Trust Company."

This prompted Bancommerce to file a petition for certiorari with the Court of Appeals (CA) in CA-G.R. SP 91258 assailing the RTC's Order. On December 8, 2009 the CA^[4] denied the petition. The CA pointed out that the Decision of the RTC was clear in that Bancommerce was not being made to answer for the liabilities of TRB, but rather the assets or properties of TRB under its possession and custody.^[5]

In the same Decision, the CA modified the Decision of the RTC by deleting the phrase that the P & A Agreement between TRB and Bancommerce is a farce or "a mere tool to effectuate a merger and/or consolidation between TRB and BANCOM." The CA Decision partly reads:

x x x x

We are not prepared though, unlike the respondent Judge, to declare the PSA between TRB and BANCOM as a farce or "a mere tool to effectuate a merger and/or consolidation" of the parties to the PSA. There is just a dearth of conclusive evidence to support such a finding, at least at this point. Consequently, the statement in the dispositive portion of the assailed August 15, 2005 Order referring to a merger/consolidation between TRB and BANCOM is deleted.^[6]

x x x x

WHEREFORE, the herein consolidated Petitions are DENIED. The assailed Orders dated August 15, 2005 and February 22, 2006 of the respondent Judge, are AFFIRMED with the MODIFICATION that the pronouncement of respondent Judge in the August 15, 2005 Order that the PSA between TRB and BANCOM is a farce or "a mere tool to effectuate a merger and/or consolidation between TRB and BANCOM" is DELETED.

SO ORDERED.^[7]

On January 8, 2010 RPN, et al. filed with the RTC a motion to cause the issuance of an alias writ of execution against Bancommerce based on the CA Decision. The RTC granted^[8] the motion on February 19, 2010 on the premise that the CA Decision allowed it to execute on the assets that Bancommerce acquired from TRB under their P & A Agreement.

On March 10, 2010 Bancommerce sought reconsideration of the RTC Order considering that the December 8, 2009 CA Decision actually declared that no merger existed between TRB and Bancommerce. But, since the RTC had already issued the alias writ on March 9, 2010 Bancommerce filed on March 16, 2010 a motion to quash the same, followed by supplemental motion^[9] on April 29, 2010.

On August 18, 2010 the RTC issued the assailed Order^[10] denying Bancommerce pleas and, among others, directing the release to the Sheriff of Bancommerce's "garnished monies and shares of stock or their monetary equivalent" and for the sheriff to pay 25% of the amount "to the respondents' counsel representing his attorney's fees and P200,000.00 representing his appearance fees and litigation expenses" and the balance to be paid to the respondents after deducting court dues.

Aggrieved, Bancommerce immediately elevated the RTC Order to the CA via a petition for certiorari under Rule 65 to assail the Orders dated February 19, 2010 and August 18, 2010. On November 26, 2010 the CA^[11] dismissed the petition outright for the supposed failure of Bancommerce to file a motion for reconsideration of the assailed order. The CA denied Bancommerce's motion for reconsideration on February 9, 2011, prompting it to come to this Court.

The issues this case presents are:

1. Whether or not the CA gravely erred in holding that Bancommerce had no valid excuse in failing to file the required motion for reconsideration of the assailed RTC Order before coming to the CA; and

2. Whether or not the CA gravely erred in failing to rule that the RTC's Order of execution against Bancommerce was a nullity because the CA Decision of December 8, 2009 in CA-G.R. SP 91258 held that TRB had not been merged into Bancommerce as to make the latter liable for TRB's judgment debts.

Direct filing of the petition for
certiorari by Bancommerce 

Section 1, Rule 65 of the Rules of Court provides that a petition for certiorari may only be filed when there is no plain, speedy, and adequate remedy in the course of law. Since a motion for reconsideration is generally regarded as a plain, speedy, and adequate remedy, the failure to first take recourse to is usually regarded as fatal omission.

But Bancommerce invoked certain recognized exceptions to the rule.^[12] It had to forego the filing of the required motion for reconsideration of the assailed RTC Order because a) there was an urgent necessity for the CA to resolve the questions it raised and any further delay would prejudice its interests; b) under the circumstances, a motion for reconsideration would have been useless; c) Bancommerce had been deprived of its right to due process when the RTC issued the challenged order ex parte, depriving it of an opportunity to object; and d) the issues raised were purely of law.

In this case, the records amply show that Bancommerce's action fell within the recognized exceptions to the need to file a motion for reconsideration before filing a petition for certiorari.

First. The filing of a motion for reconsideration would be redundant since actually the RTC's August 18, 2010 Order amounts to a denial of Bancommerce motion for reconsideration of the February 19, 2010 Order which granted the application for the issuance of the alias writ. Significantly, the alias writ of execution itself, the quashal of which was sought by Bancommerce two times (via a motion to quash the writ and a supplemental motion to quash the writ) derived its existence from the RTC's February 19, 2010 Order. Another motion for reconsideration would have been superfluous. The RTC had not budge on those issues in the preceding incidents. There was no point in repeatedly asking it to reconsider.

Second. An urgent necessity for the immediate resolution of the case by the CA existed because any further delay would have greatly prejudiced Bancommerce. The Sheriff had been resolute and relentless in trying to execute the judgment and dispose of the levied assets of Bancommerce. Indeed, on April 22, 2010 the Sheriff started garnishing Bancommerce's deposits in other banks, including those in Banco de Oro-Salcedo-Legaspi Branch and in the Bank of the Philippine Islands Ayala Paseo Branch.

Further, the Sheriff forcibly levied on Bancommerce's Lipa Branch cash on hand amounting to P1,520,000.00 and deposited the same with the Landbank. He also seized the bank's computers, printers, and monitors, causing the temporary cessation of its banking operations in that branch and putting the bank in an unwarranted danger of a run. Clearly, Bancommerce had valid justifications for skipping the technical requirement of a motion for reconsideration.

Merger and De Facto Merger

Merger is a re-organization of two or more corporations that results in their consolidating into a single corporation, which is one of the constituent corporations, one disappearing or dissolving and the other surviving. To put it another way, merger is the absorption of one or more corporations by another existing corporation, which retains its identity and takes over the rights, privileges, franchises, properties, claims, liabilities and obligations of the absorbed corporation(s). The absorbing corporation continues its existence while the life or lives of the other corporation(s) is or are terminated.^[13]

The Corporation Code requires the following steps for merger or consolidation:

(1) The board of each corporation draws up a plan of merger or consolidation. Such plan must include any amendment, if necessary, to the articles of incorporation of the surviving corporation, or in case of consolidation, all the statements required in the articles of incorporation of a corporation.

(2) Submission of plan to stockholders or members of each corporation for approval. A meeting must be called and at least two (2) weeks' notice must be sent to all stockholders or members, personally or by registered mail. A summary of the plan must be attached to the notice. Vote of two-thirds of the members or of stockholders representing two-thirds of the outstanding capital stock will be needed. Appraisal rights, when proper, must be respected.

(3) Execution of the formal agreement, referred to as the articles of merger o[r] consolidation, by the corporate officers of each constituent corporation. These take the place of the articles of incorporation of the consolidated corporation, or amend the articles of incorporation of the surviving corporation.

(4) Submission of said articles of merger or consolidation to the SEC for approval.

(5) If necessary, the SEC shall set a hearing, notifying all corporations concerned at least two weeks before.

(6) Issuance of certificate of merger or consolidation.^[14]

Indubitably, it is clear that no merger took place between Bancommerce and TRB as the requirements and procedures for a merger were absent. A merger does not become effective upon the mere agreement of the constituent corporations.^[15] All the requirements specified in the law must be complied with in order for merger to take effect. Section 79 of the Corporation Code further provides that the merger shall be effective only upon the issuance by the Securities and Exchange Commission (SEC) of a certificate of merger.

Here, Bancommerce and TRB remained separate corporations with distinct corporate personalities. What happened is that TRB sold and Bancommerce purchased identified recorded assets of TRB in consideration of Bancommerce's assumption of identified recorded liabilities of TRB including booked contingent accounts. There is no law that prohibits this kind of transaction especially when it is done openly and with appropriate government approval. Indeed, the dissenting opinions of Justices Jose Catral Mendoza and Marvic Mario Victor F. Leonen are of the same opinion. In strict sense, no merger or consolidation took place as the records do not show any plan or articles of merger or consolidation. More importantly, the SEC did not issue any certificate of merger or consolidation.

The dissenting opinion of Justice Mendoza finds, however, that a "de facto" merger existed between TRB and Bancommerce considering that (1) the P & A Agreement between them involved substantially all the assets and liabilities of TRB; (2) in an Ex Parte Petition for Issuance of Writ of Possession filed in a case, Bancommerce qualified TRB, the petitioner, with the words "now known as Bancommerce;" and (3) the BSP issued a Circular Letter (series of 2002) advising all banks and non-bank financial intermediaries that the banking activities and transaction of TRB and Bancommerce were consolidated and that the latter continued the operations of the former.

The idea of a de facto merger came about because, prior to the present Corporation Code, no law authorized the merger or consolidation of Philippine Corporations, except insurance companies, railway corporations, and public utilities.^[16] And, except in the case of insurance corporations, no procedure existed for bringing about a merger.^[17] Still, the Supreme Court held in Reyes v. Blouse,^[18] that authority to merge or consolidate can be derived from Section 28½ (now Section 40) of the former Corporation Law which provides, among others, that a corporation may "sell, exchange, lease or otherwise dispose of all or substantially all of its property and assets" if the board of directors is so authorized by the affirmative vote of the stockholders holding at least two-thirds of the voting power. The words "or otherwise dispose of," according to the Supreme Court, is very broad and in a sense, covers a merger or consolidation.

But the facts in Reyes show that the Board of Directors of the Corporation being dissolved clearly intended to be merged into the other corporations. Said this Court:

It is apparent that the purpose of the resolution is not to dissolve the [company] but merely to transfer its assets to a new corporation in exchange for its corporation stock. This intent is clearly deducible from the provision that the [company] will not be dissolved but will continue existing until its stockholders decide to dissolve the same. This comes squarely within the purview of Section 28½ of the corporation law which provides, among others, that a corporation may sell, exchange, lease, or otherwise dispose of all its property and assets, including its good will, upon such terms and conditions as its Board of Directors may deem expedient when authorized by the affirmative vote of the shareholders holding at least 2/3 of the voting power. [The phrase] "or otherwise dispose of" is very broad and in a sense covers a merger or consolidation."^[19]

In his book, Philippine Corporate Law,^[20] Dean Cesar Villanueva explained that under the Corporation Code, "a de facto merger can be pursued by one corporation acquiring all or substantially all of the properties of another corporation in exchange of shares of stock of the acquiring corporation. The acquiring corporation would end up with the business enterprise of the target corporation; whereas, the target corporation would end up with basically its only remaining assets being the shares of stock of the acquiring corporation." (Emphasis supplied)

No de facto merger took place in the present case simply because the TRB owners did not get in exchange for the bank's assets and liabilities an equivalent value in Bancommerce shares of stock. Bancommerce and TRB agreed with BSP approval to exclude from the sale the TRB's contingent judicial liabilities, including those owing to RPN, et al.^[21]

The Bureau of Internal Revenue (BIR) treated the transaction between the two banks purely as a sale of specified assets and liabilities when it rendered its opinion^[22] on the tax consequences of the transaction given that there is a difference in tax treatment between a sale and a merger or consolidation.

Indubitably, since the transaction between TRB and Bancommerce was neither a merger nor a de facto merger but a mere "sale of assets with assumption of liabilities," the next question before the Court is whether or not the RTC could regard Bancommerce as RPN, et al.'s judgment debtor.

It is pointed out that under common law,^[23] if one corporation sells or otherwise transfers all its assets to another corporation, the latter is not liable for the debts and liabilities of the transferor if it has acted in good faith and has paid adequate consideration for the assets, except: (1) where the purchaser expressly or impliedly agrees to assume such debts; (2) where the transaction amounts to a consolidation or merger of the corporations; (3) where the purchasing corporation is merely a continuation of the selling corporation; and (4) where the transaction is entered into fraudulently in order to escape liability for such debts.^[24]

But, in the first place, common law has no application in this jurisdiction where existing statutes governing the situation are in place. Secondly, none of the cited exceptions apply to this case.

1. Bancommerce agreed to assume those liabilities of TRB that are specified in their P & A Agreement. That agreement specifically excluded TRB's contingent liabilities that the latter might have arising from pending litigations in court, including the claims of respondent RPN, et al. The pertinent provision of the P & A provides:

Article II

CONSIDERATION: ASSUMPTION OF LIABILITIES
In consideration of the sale of identified recorded assets and properties covered by this Agreement, BANCOMMERCE shall assume identified recorded TRB's liabilities including booked contingent liabilities as listed and referred to in its Consolidated Statement of Condition as of August 31, 2001, in the total amount of PESOS: TEN BILLION FOUR HUNDRED ONE MILLION FOUR HUNDRED THIRTY SIX THOUSAND (P10,410,436,000.00), provided that the liabilities so assumed shall not include:

x x x x

2. Items in litigation, both actual and prospective, against TRB which include but not limited to the following:

2.1 Claims of sugar planters for alleged undervaluation of sugar export sales x x x;

2.2 Claims of the Republic of the Philippines for peso-denominated certificates supposed to have been placed by the Marcos family with TRB;

2.3 Other liabilities not included in said Consolidated Statement of Condition; and

2.4 Liabilities accruing after the effectivity date of this Agreement that were not incurred in the ordinary course of business.^[25] (Underscoring supplied)

2. As already pointed out above, the sale did not amount to merger or de facto merger of Bancommerce and TRB since the elements required of both were not present.

3. The evidence in this case fails to show that Bancommerce was a mere continuation of TRB. TRB retained its separate and distinct identity after the purchase. Although it subsequently changed its name to Traders Royal Holding's, Inc. such change did not result in its dissolution. "The changing of the name of a corporation is no more than creation of a corporation than the changing of the name of a natural person is the begetting of a natural person. The act, in both cases, would seem to be what the language which we use to designate it imports a change of name and not a change of being."^[26] As such, Bancommerce and TRB remained separate corporations.

4. To protect contingent claims, the BSP directed Bancommerce and TRB to put up P50 million in escrow with another bank. It was the BSP, not Bancommerce that fixed the amount of the escrow. Consequently, it cannot be said that the latter bank acted in bad faith with respect to the excluded liabilities. They did not enter into the P & A Agreement to enable TRB to escape from its liability to creditors with pending court cases.

Further, even without the escrow, TRB continued to be liable to its creditors although under its new name. Parenthetically, the P & A Agreement shows that Bancommerce acquired greater amount of TRB liabilities than assets. Article II of the P & A Agreement shows that Bancommerce assumed total liabilities of P10,401,436,000.00 while it received total assets of only P10,262,154,000.00. This proves the arms-length quality of the transaction.

The dissenting opinion of Justice Mendoza cites certain instances indicating the existence of a de facto merger in this case. One of these is the fact that the P & A Agreement involved substantially all the assets and liabilities of TRB. But while this is true, such fact alone would not prove the existence of a de facto merger because a corporation "does not really lose its juridical entity"^[27] on account of such sale. Actually, the law allows a corporation to "sell, lease, exchange, mortgage, pledge or otherwise dispose of all or substantially all of its properties and assets including its goodwill" to another corporation.^[28] This is not merger because it recognizes the separate existence of the two corporations that transact the sale.

The dissenting opinion of Justice Mendoza claims that another proof of a de facto merger is that in a case, Bancommerce qualified TRB in its Ex Parte Petition for Issuance of Writ of Possession with the words "now known as Bancommerce." But paragraph 3 of the Ex Parte Petition shows the context in which such qualification was made. It reads:^[29]

3. On November 09, 2001, Bank of Commerce and Traders Royal Bank executed and signed a Purchase and Sale Agreement. The account of the mortgagor was among those acquired under the agreement. Photocopy of the agreement is hereto attached as Annex "A."

It is thus clear that the phrase "now known as Bank of Commerce" used in the petition served only to indicate that Bancommerce is now the former property owner's creditor that filed the petition for writ of possession as a result of the P & A Agreement. It does not indicate a merger.

Lastly, the dissenting opinion of Justice Mendoza cited the Circular Letter (series of 2002) issued by the BSP advising all banks and non-bank financial intermediaries that the banking activities and transaction of TRB and Bancommerce were consolidated and that the latter continued the operations of the former as an indication of a de facto merger. The Circular Letter^[30] reads:

CIRCULAR LETTER
(series of 2002)

TO: ALL BANK AND NON-BANK
FINANCIAL INTERMEDIARIES

The Securities and Exchange Commission approved on August 15, 2002 the Amendment of the Articles of Incorporation and By-Laws of Traders Royal Bank on the deletion of the term "banks" and "banking" from the corporate name and purpose, pursuant to the purchase of assets and assumption of liabilities of Traders Royal Bank by Bank of Commerce. Accordingly, the bank franchise of Traders Royal Bank has been automatically revoked and Traders Royal Bank has ceased to operate as a banking entity.

Effective July 3, 2002, the banking activities and transactions of Bank of Commerce and Traders Royal Bank have been consolidated and the former has carried their operations since then.

For your information and guidance.

                                      (Sgd.)

ALBERTO V. REYES

Deputy Governor

Indeed, what was "consolidated" per the above letter was the banking activities and transactions of Bancommerce and TRB, not their corporate existence. The BSP did not remotely suggest a merger of the two corporations. What controls the relationship between those corporations cannot be the BSP letter circular, which had been issued without their participation, but the terms of their P & A Agreement that the BSP approved through its Monetary Board.

Also, in a letter dated November 2, 2005 Atty. Juan De Zuñiga, Jr., Assistant Governor and General Counsel of the BSP, clarified to the RTC the use of the word "merger" in their January 29, 2003 letter. According to him, the word "merger" was used "in a very loose sense x x x and merely repeated, for convenience" the term used by the RTC.^[31] It further stated that "Atty. Villanueva did not issue any legal pronouncement in the said letter, which is merely transmittal in nature. Thus it cannot, by any stretch of construction, be considered as binding on the BSP. What is binding to the BSP is MB Res. 58 referring to the aforementioned transaction between TRB and Bancommerce as a purchase and assumption agreement."^[32]

Since there had been no merger, Bancommerce cannot be considered as TRB's successor-in-interest and against which the Court's Decision of October 10, 2002 in G.R. 138510 may be enforced. Bancommerce did not hold the former TRBs assets in trust for it as to subject them to garnishment for the satisfaction of the latter's liabilities to RPN, et al. Bancommerce bought and acquired those assets and thus, became their absolute owner.

The CA Decision in
CA-G.R. SP 91258

According to the dissenting opinion of Justice Mendoza, the CA Decision dated December 8, 2009 did not reverse the RTC's Order causing the issuance of a writ of execution against Bancommerce to enforce the judgment against TRB. It also argues that the CA did not find grave abuse of discretion on the RTC's part when it issued its August 15, 2005 Order granting the issuance of a writ of execution. In fact, it affirmed that order. Moreover, it argued that the CA's modification of the RTC Order merely deleted an opinion there expressed and not reversed such order.

But it should be the substance of the CA's modification of the RTC Order that should control, not some technical flaws that are taken out of context. Clearly, the RTC's basis for holding Bancommerce liable to TRB was its finding that TRB had been merged into Bancommerce, making the latter liable for TRB's debts to RPN, et al. The CA clearly annulled such finding in its December 8, 2009 Decision in CA-G.R. SP 91258, thus:

WHEREFORE, the herein consolidated Petitions are DENIED. The assailed Orders dated August 15, 2005 and February 22, 2006 of the respondent Judge, are AFFIRMED with the MODIFICATION that the pronouncement of respondent Judge in the August 15, 2005 Order that the PSA between TRB and BANCOM is a farce or "a mere tool to effectuate a merger and/or consolidation between TRB and BANCOM" is DELETED.

SO ORDERED.^[33]

Thus, the CA was careful in its decision to restrict the enforcement of the writ of execution only to "TRB's properties found in Bancommerce's possession." Indeed, the CA clearly said in its decision that it was not Bancommerce that the RTC Order was being made to answer for TRB's judgment credit but "the assets/properties of TRB in the hands of BANCOM." The CA then went on to state that it is not prepared, unlike the RTC, to declare the P & A Agreement but a farce or a "mere tool to effectuate a merger and/or consolidation." Thus, the CA deleted the RTC's reliance on such supposed merger or consolidation between the two as a basis for its questioned order.

The enforcement, therefore, of the decision in the main case should not include the assets and properties that Bancommerce acquired from TRB. These have ceased to be assets and properties of TRB under the terms of the BSP-approved P & A Agreement between them. They are not TRB assets and properties in the possession of Bancommerce. To make them so would be an unwarranted departure from the CA's Decision in CA-G.R. SP 91258.

WHEREFORE, the petition is GRANTED. The assailed Resolution of November 26, 2010 and the Resolution of February 9, 2011 of the Court of Appeals both in CA-G.R. SP 116704 are REVERSED and SET ASIDE. Accordingly, the assailed Orders dated February 19, 2010 and August 18, 2010, the Alias Writ of Execution dated March 9, 2010, all issued by the Regional Trial Court and all orders, notices of garnishment/levy, or notices of sale and any other action emanating from the Orders dated February 19, 2010 and August 18, 2010 in Civil Case Q-89-3580 are ANNULLED and SET ASIDE. The Temporary Restraining Order issued by this Court on April 13, 2011 is hereby made PERMANENT.

SO ORDERED.

Peralta, J., concur.
Velasco, Jr., (Chairperson), J., please see concurring opinion.
Mendoza, J., I dissent, see dissenting opinion.
Leonen, J., I dissent, see separate opinion.

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N O T I C E  OF J U D G M E N T

Sirs/Mesdames:

Please take notice that on ___April 21, 2014___ a Decision, copy attached herewith, was rendered by the Supreme Court in the above-entitled case, the original of which was received by this Office on June 16, 2014 at 2:15 p.m.

---

^[1] Rollo, pp. 111-115.

^[2] Id. at 116-118.

^[3] Id. at 119-127.

^[4] Penned by Associate Justice Francisco P. Acosta, with Associate Justices Juan Q. Enriquez, Jr., Priscilla Baltazar-Padilla and Michael P. Elbinias, concurring and Associate Justice Pampio Abarintos, dissenting; id. at 98-110.

^[5] Id. at 107-108.

^[6] Id. at 108.

^[7] Id. at 109.

^[8] Id. at 136-138.

^[9] Id. at 180-188.

^[10] Id. at 208-220.

^[11] Penned by Associate Justice Celia C. Librea-Leagogo, with Associate Justices Remedios A. Salazar-Fernando and Michael P. Elbinias, concurring; id. at 59-62.

^[12] See Republic v. Bayao, G.R. No. 179492, June 5, 2013, 697 SCRA 313, 323.

^[13] Agpalo, Ruben E., Comments on the Corporation Code of the Philippines (1993), citing SEC Opinion dated June 11, 1986, The SEC Quarterly Bulletin, Vol. XX, Nos. 1 and 2, March-June 1986, pp. 97-98.

^[14] Mindanao Savings and Loan Association, Inc. v. Willkom, G.R No. 178618, October 20, 2010, 634 SCRA 291, 302.

^[15] Associated Bank v. Court of Appeals, 353 Phil. 702, 712 (1998).

^[16] Campos, Jose Jr., The Corporation Code: Comments, Notes and Selected Cases (1990).

^[17] Id.

^[18] 91 Phil. 305 (1952).

^[19] Id. at 309.

^[20] 2001 ed., p. 616.

^[21] Rollo, pp. 93-97.

^[22] Id.

^[23] Supra note 16.

^[24] Edward J. Nell Company v. Pacific Farms, Inc., 122 Phil. 825, 827 (1965).

^[25] Rollo, pp. 80-81.

^[26] Philippine First Insurance Co., Inc. v. Hartigan, G.R. No. L-26370, July 31, 1970, 34 SCRA 252, 266.

^[27] Supra note 20 at 246.

^[28] Corporation Code of the Philippines, Art. 40.

^[29] CA rollo (CA-G.R. SP 91258), p. 233.

^[30] Id. at 20.

^[31] Id. at 259-260.

^[32] Id.

^[33] Rollo, p. 109.

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CONCURRING OPINION

VELASCO, JR., J.:

I concur in the ponencia of our esteemed colleague Justice Roberto A. Abad.

The nascent complaint with the Quezon City Regional Trial Court was filed by private respondents Radio Philippines Network, Inc. (RPN), Intercontinental Broadcasting Corporation (IBC) and Banahaw Broadcasting Corporation (BBC) against Traders Royal Bank (TRB) and Security Bank and Trust Company, Inc. (SBTC). On February 17, 1995, the trial court rendered a Decision holding both defendants liable to the private respondents.

On appeal, the CA absolved SBTC from any liability and held TRB solely liable to private respondents for damages and costs of suit. The dispositive portion of the April 30, 1999 Decision of the CA in CA-G.R. CV No. 54656 reads, thus:

WHEREFORE, the appealed decision is AFFIRMED with modification in the sense that appellant SBTC is hereby absolved from any liability. Appellant TRB is solely liable to the appellees for the damages and costs of suit specified in the dispositive portion of the appealed decision. Costs against appellant TRB. (Emphasis and underscoring supplied.)

TRB assailed the CA Decision by way of Petition for Review on Certiorari filed before this Court, entitled Traders Royal Bank v. Radio Philippines Network, Inc., Intercontinental Broadcasting Corporation and Banahaw Broadcasting Corporation, through the Board of Administrators, and Security Bank and Trust Company, and docketed as G.R. No. 138510.

Pending the resolution of the Petition for Review, TRB entered into a Purchase and Sale Agreement (PSA) with Bank of Commerce (Bancom) on November 9, 2001.^[1] Under the PSA, Bancom acquired identified assets of TRB valued at P10,262,154,000.00 in consideration of Bancom's assumption of TRB's identified liabilities amounting to P10,410,436,000.00. Articles II and III of the PSA read:

ARTICLE II

CONSIDERATION: ASSUMPTION OF LIABILITIES
In consideration of the sale of identified recorded assets and properties covered by this Agreement, BANCOMMERCE shall assume identified recorded TRB's liabilities including booked contingent liabilities as listed and referred to in its Consolidated Statement of Conditions as of August 31, 2001 in the total amount of PESOS: TEN BILLION FOUR HUNDRED ONE MILLION FOUR HUNDRED THIRTY SIX THOUSAND (P10,401,436,000.00), provided that the liabilities so assumed shall not include:

1. Liability for the payment of compensation, retirement pay, separation benefits and any labor benefit whatsoever arising from incidental to, or connected with employment in, or rendition of employee services to TRB, whether permanent, regular, temporary, casual or contractual.
   
   
2. Items in litigation, both actual and prospective, against TRB which include but are not limited to the following:
   
   2.1. (Portion of the machine copy submitted to the Court unreadable) x x x particularly the case entitled Lopez, et al. vs. Traders Royal Bank, et al., docketed as Civil Case No. 00 (unreadable), Bacolod Regional Trial Court, Branch 41, and Lacson, et al. vs. Benedicto, et al., originally docketed as Civil Case No. 95-9137, Bacolod Regional Trial Court, Branch 44 now pending appeal before the Supreme Court under S.C. G.R. No. 141508, and other related cases which might be filed in connection therewith;
   
   2.2. Claims of the Republic of the Philippines for peso-denominated certificates supposed to have been placed by the Marcos family with TRB;
   
   2.3. Other liabilities not included in said Consolidated Statement of Condition; and
   
   2.4. Liabilities accruing after the effectivity date of this Agreement that were not incurred in the ordinary course of business.
   

ARTICLE III
EFFECTS AND CONSEQUENCES

The effectivity of this Agreement shall have the following effects and consequences:

1. BANCOMMERCE and TRB shall continue to exist as separate corporations with distinct personalities;
   
   
2. With the transfer of its branching licenses to BANCOMMERCE and upon surrender of its commercial license to BSP, TRB shall exist as an ordinary corporation placed outside the supervisory jurisdiction of BSP. To this end, TRB shall cause the amendment of its articles and by-laws to delete the terms "bank" and "banking" from its corporate name and purpose.
   
   
3. There shall be no employer-employee relationship between BANCOMMERCE and the personnel and officers of TRB.^[2]

The Bangko Sentral ng Pilipinas (BSP) approved the PSA on the condition that, to answer for any claim that shall be judicially established, the parties must set up an escrow fund amounting to ?50 million to be kept for 15 years. In compliance with the condition, TRB deposited ?50 million with the Metropolitan Bank and Trust Company (Metrobank) to answer for claims and liabilities of TRB not covered by its PSA with Bancom.

Further, pursuant to the terms of the PSA, TRB amended its articles of incorporation to change its name to Royal Traders Holding Co. Inc. (RTH) and to delete the business of banking in its enumerated purposes.^[3]

On October 10, 2002, this Court rendered a Decision in G.R. No. 138510 and modified the CA Decision in CA-G.R. CV No. 54656 by deleting the award of exemplary damages in favor of private respondents but granting them attorney's fees. Otherwise, all other aspects of the CA Decision were retained and affirmed. The Decision became final and executory on April 9, 2003. Significantly, there was absolutely no mention of Bancom as the party liable to pay the judgment debt.

In moving for the execution of the final judgment on July 18, 2003, however, private respondents captioned its motion for execution with "Radio Philippines Network Inc., Intercontinental Broadcasting Corporation, and Banahaw Broadcasting Corporation, thru Board Administrator vs. Traders Royal Bank (TRB) [now Bank of Commerce] and Security Bank and Trust Company (SBTC)."^[4]

RTH opposed the execution contending that the execution of the final judgment should be stayed because, as admitted by the private respondents' counsel in open court, TRB has no more assets and had been merged with Bancom. For its part, Bancom filed a Special Appearance^[5] similarly opposing the motion for execution on the grounds that (1) the trial court has no jurisdiction over it as it was only in the title of the Motion for Execution that it was included as a party; and (2) there was no merger between TRB and Bancom as the latter only acquired certain assets and assumed certain liabilities of TRB.

Learning of the escrow fund set up with Metrobank, private respondents also moved for the issuance of a subpoena duces tecum requiring Metrobank to bring the statement of the escrow fund that was established by TRB. The trial court granted the motion. In compliance with the subpoena, Metrobank submitted a Cash Transaction Report showing that the fund had already been depleted as of August 2003 with five (5) withdrawals of practically the entire fund made on the same day June 20, 2003.

On October 1, 2004, the trial court issued a subpoena directing (1) Bancom to bring "the list of assumed identified recorded assets and liabilities of TRB" under the PSA; and (2) Metrobank to bring any and all documents relative to the alleged withdrawals from the Escrow Fund.

Bancom and Metrobank separately filed a motion to quash the subpoena. On August 15, 2005, the trial court issued an Order^[6] granting private respondents' motion for execution. It reads:

WHEREFORE, premises considered, plaintiffs' [RPN, IBC and BBC's] motion for execution dated 18 July 2003 and supplemental motion for execution dated 20 January 2004, are GRANTED. Accordingly, let a Writ of Execution be issued to execute the judgment, as modified, against any and all assets of TRB found anywhere in the Philippines, including those subject of the merger/consolidation in the guise of the Purchase and Sale Agreement with Bank of Commerce, and/or against the Escrow Fund established by TRB and Bank of Commerce with the Metropolitan Bank and Trust Company.

SO ORDERED.^[7]

Assailing the August 15, 2005 Order, Bancom and Metrobank filed separate petitions for certiorari with the Court of Appeals docketed as CA-G.R. SP No. 91258 and CA-G.R. SP No. 94171, respectively. The petitions were consolidated by the appellate court.

On December 8, 2009, the Court of Appeals rendered a Decision^[8] holding, viz:

x x x The Order was so worded that it was not BANCOM itself that was being made to answer but the assets/properties of TRB in the hands of BANCOM.

We are not prepared though, unlike respondent Judge, to declare the PSA between TRB and BANCOM as a farce or "a mere tool to effectuate a merger and/or consolidation" of the parties to the PSA. There is just a dearth of conclusive evidence to support such finding, at least at this point. Consequently, the statement in the dispositive portion of the assailed August 15, 2005 Order referring to a merger/consolidation between TRB and BANCOM be deleted.

With the failure of petitioners METROBANK and BANCOM to prove that the ?50 million Escrow Fund established by TRB was disbursed pursuant to the conditions of the Escrow Agreement, private respondents RPN, IBC and BBC, as judgment creditors as TRB, had the right to claim that the Escrow Fund exists and remained undiminished. There can be no legal objection then to the August 15, 2005 Order of the respondent Judge directing the issuance of a writ of execution against the Escrow Fund with which private respondents can proceed to fully satisfy the judgment in their favor.

x x x x

WHEREFORE, the herein consolidated Petitions are DENIED. The assailed Orders dated August 15, 2005 and February 22, 2006 of the respondent Judge, are AFFIRMED with MODIFICATION that the pronouncement of respondent Judge in the August 15, 2005 Order that the PSA between TRB and Bancom is a "farce or a mere tool to effectuate a merger and/or consolidation between TRB and BANCOM" is deleted.^[9]

While Metrobank assailed the foregoing CA Decision via a petition for review on certiorari docketed as G.R. No. 190517 with this Court, Bancom did not pursue a further review of the CA Decision.

Thus, as to be expected, the private respondents filed with the RTC an Ex-Parte Urgent Motion (for issuance of an Alias Writ of Execution) on January 8, 2010.

On February 19, 2010, the RTC granted the Ex-Parte Urgent Motion^[10] and ordered the issuance of an Alias Writ of Execution in favor of private respondents.

On March 2, 2010, Bancom received a copy of the granting order and so filed an Urgent Motion for Reconsideration on March 10, 2010.^[11]

It appears, however, that an Alias Writ of Execution had already been issued on March 9, 2010.^[12] Thus, Bancom filed a Motion to Quash the Alias Writ of Execution on March 16, 2010^[13] and Supplemental Motion (to Motion to Quash Alias Writ of execution) on April 19, 2010.^[14]

On November 3, 2010, Bancom received a copy of the August 18, 2010 Order^[15] of the RTC denying Bancom's Urgent Motion for Reconsideration, Motion to Quash and Supplemental Motion to Quash.

Bancom forthwith filed a petition for certiorari^[16] with the CA assailing the February 19, 2010 and August 18, 2010 Orders of the trial court.

In a Resolution dated November 26, 2010,^[17] however, the appellate court dismissed Bancom's petition outright for its supposed failure to file a motion for reconsideration.^[18] Its motion for reconsideration having been denied by the appellate court,^[19] Bancom came to this Court on a petition for review claiming that the CA erred in dismissing its petition for certiorari outright and in sustaining the orders of the trial court allowing the final judgment rendered against TRB to be executed against Bancom, a stranger to the original case.

The assailed resolutions of the Court of Appeals should be overturned and the execution of the final judgment against Bancom should be invalidated, as the ponencia did.

Every person must be heard and given his day in court before a judgment may be enforced against him. This rule is so elementary and basic that it is enshrined in the first section of the Bill of Rights of our Constitution:

SECTION 1. No person shall be deprived of life, liberty or property without due process of law, nor shall any person be denied the equal protection of the laws. (Emphasis supplied.)

Thus, the Rules of Court, in obvious fidelity to the imperatives of due process guarantee, permits only the execution of judgments against the judgment obligor and his properties, as plainly provided in Rule 39 of the Rules of Court:

SECTION 8. Issuance, form, and contents of a writ of execution. The writ of execution shall: (1) issue in the name of the Republic of the Philippines from the court which granted the motion; (2) state the name of the court, the case number and title, the dispositive part of the subject judgment or order; and (3) require the sheriff or other proper officer to whom it is directed to enforce the writ according to its terms, in the manner hereinafter provided:

(a) If the execution be against the property of the judgment obligor, to satisfy the judgment, with interest, out of the real or personal property of such judgment obligor;

(b) If it be against real or personal property in the hand of personal representatives, heirs, devisees, legatees, tenants, or trustees, of the judgment obligor, to satisfy the judgment, with interest, out of such property;

x x x x

SECTION 9. Execution of judgments for money, how enforced. (a) Immediate payment on demand. The officers shall enforce an execution of a judgment for money by demanding from the judgment obligor the immediate payment of the full amount stated in the writ of execution and all lawful fees. The judgment obligor shall pay in cash, certified bank check payable to the judgment obligee, or any other form of payment acceptable to the latter, the amount of the judgment debt under proper receipt directly to the judgment obligee or his authorized representative if present at the time of payment. x x x

If the judgment obligee or his authorized representative is not present to receive payment, the judgment obligor shall deliver the aforesaid payment to the executing sheriff. x x x

x x x x

(b) Satisfaction by levy. If the judgment obligor cannot pay all or part of the obligation in cash, certified bank check or other mode of payment acceptable to the judgment obligee, the officer shall levy upon the properties of the judgment obligor of every kind and nature whatsoever which may be disposed of for value and otherwise exempt from execution x x x.

(c) Garnishment of debts and credits. The officer may levy on debts due the judgment obligor and other credits, including bank deposits, financial interests, royalties, commissions and other personal property not capable of manual delivery in the possession or control of third parties. x x x (emphasis supplied)

Thus, this Court has ruled that execution may issue only upon a person who is a party to the action, and not against one who did not have his day in court. In Atilano v. Asaali,^[20] We held thus:

It is well-settled that no man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not bound by a judgment rendered by the court. Execution of a judgment can only be issued against one who is a party to the action, and not against one who, not being a party thereto, did not have his day in court. Due process dictates that a court decision can only bind a party to the litigation and not against innocent third parties.

At present, it is plain from the foregoing recitation of facts that petitioner Bancom was never a party to the original case. It was not the respondent, not the judgment obligor, and not the person found by this Court liable to pay for any indebtedness to the private respondents. To hold Bancom liable upon execution for a liability charged against another existing entity is the height of injustice.

It is best to recall that Bancom was dragged into this affray after the Decision of this Court in G.R. No. 138510 attained finality when private respondents conveniently, but without much of an explanation, inserted the bracketed phrase "now Bank of Commerce" after TRB's name on the caption of its motion for execution. Needless to state, this is not the lawful manner under the Rules of Court in impleading a person to a case. Jurisdiction over the person still requires the existence of a coercive process issued by the court to such party or its voluntary submission to the court. Neither had been done in this case.^[21] Note that Bancom made its entry to the case but by way of special appearance precisely to question the trial court's jurisdiction over its person. Thus, without any summons issued by the trial court, jurisdiction over Bancom's person had never been obtained by the trial court in this case. Any pronouncement against it is void for lack of jurisdiction.

What is more, with respect to the liability owing to private respondents, what had attained finality and had been rendered executory is the judgment of this Court declaring TRB liable to private respondents. By the principle of the finality of judgment, this is what the trial court should have executed. Nothing more.

In the execution of final and executory judgments, the trial court is bound by the terms of the decision.^[22] Thus, to order the execution against a non-party to an already concluded action is beyond the powers of the trial court and ergo illegal.

It needs to be emphasized that once a judgment becomes final and executory, that judgment may not be amended. Upon finality of the judgment, however, the courts lose the jurisdiction to amend, modify or alter the same. The judgment can neither be amended nor altered after it has become final and executory.^[23] This is the principle of immutability of final judgment, which We emphasized in Fermin v. Esteves:^[24]

The generally accepted principle is that no man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not bound by a judgment rendered by the court. Execution of a judgment can only be issued against one who is a party to the action, and not against one who, not being a party in the case, did not have his day in court. Due process requires that a court decision can only bind a party to the litigation and not against one who did not have his day in court.

x x x x

The Court recognizes the finality of the trial court's Decision in Civil Case No. 925-R x x x. Since petitioners are not parties to Civil Case No. 925-R, respondent has to file the proper action against petitioners to enforce his property rights within the bounds of the law and our rules. Petitioner's right to possession, if any, should be threshed out in a proper court proceeding.

Private respondents had impudently tried to circumvent the above principle by the simple expedience of changing the caption of its motion for execution. This simply cannot, and should not, be allowed.

It is now up to this Court to correct the procedural misstep taken by the trial court when it allowed the crafty inclusion of a non-party to a final judgment that led to a breach of a constitutional rule on due process. This Court is duty-bound to ensure that the execution of a final decision is made within the confines of its pronouncements. In QBE Insurance v. Laviña,^[25] this Court admonished the respondent for issuing a writ of execution beyond the bounds of the decision and against a stranger to a case, viz:

It must be noted that QBE Insurance was not a party to Civil Case No. 68287 wherein the writ of execution was issued. Neither was it included in the Writ of Execution issued by Judge Laviña.

Generally accepted is the principle that no man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not bound by judgment rendered by the court. In the same manner an execution can be issued only against a party and not against one who did not have his day in court. In Lorenzana v. Cayetano, http://sc.judiciary.gov.ph/jurisprudence/2007/october2007/RTJ-06-1971.htm - _ftn16 this Court held that only real parties-in-interest in an action are bound by judgment therein and by writs of execution and demolition issued pursuant thereto.

Indeed, a judgment cannot bind persons who are not parties to the action. It is elementary that strangers to a case are not bound by the judgment rendered by the court and such judgment is not available as an adjudication either against or in favor of such other person. A decision of a court will not operate to divest the rights of a person who has not and has never been a party to a litigation, either as plaintiff or as defendant. Verily, execution of a judgment can only be issued against one who is a party to the action, and not against one who, not being a party to the action, has not yet had his day in court. That execution may only be effected against the property of the judgment debtor, who must necessarily be a party to the case.

The writ of execution must conform to the judgment which is to be executed, as it may not vary the terms of the judgment it seeks to enforce. Nor may it go beyond the terms of the judgment which is sought to be executed. Where the execution is not in harmony with the judgment which gives it life and exceeds it, it has pro tanto no validity. To maintain otherwise would be to ignore the constitutional provision against depriving a person of his property without due process of law.^[26]

In this case, to repeat for added emphasis, this Court found TRB liable to private respondents. Now, TRB still exists, albeit as Royal Traders Holding Co. Inc. There is, therefore, no rhyme or reason for looking elsewhere for the satisfaction of its liability.

It should be noted, however, that the said PSA was executed by TRB and Bancom in November 2001, more than a year before the finality of this Court's judgment against TRB. The private respondents had all the opportunity to apprise this Court of the existence of such PSA and the consequences it may have. Private respondents also had more than adequate time to annotate its claim on the properties of TRB that were the subject of the PSA. It did neither of these things. Instead, after the execution of the PSA, its approval by the BSP and the Bureau of Internal Revenue (BIR), and the finality of the judgment against TRB, the private respondents simply inserted the phrase "Traders Royal Bank (TRB) [now Bank of Commerce]" on the caption of its motion for execution. Even this phrase is not accurate.

First, as stated before, Traders Royal Bank still exists and is now known as Royal Traders Holding Co. Inc., not Bank of Commerce. Second, the terms of the PSA do not justify a finding that TRB is "now Bank of Commerce." It is clear from the provisions of the PSA that "BANCOMMERCE and TRB shall continue to exist as separate corporations with distinct personalities." Third, the still standing rule is that where one corporation sells or transfers its assets to another corporation, the latter is not liable for the debts and liabilities of the transfer.^[27] A corporation has a personality separate and distinct from any other legal entity. Being separate entities, neither the properties nor liabilities of one can be considered the properties or liabilities of the other.

Indeed, the rule against the transfer of liabilities to the purchaser corporation does not apply when any of the following conditions exists: (1) the purchaser corporation expressly or impliedly agrees to assume the debts, (2) where the transaction amounts to a consolidation or merger of the corporations, (3) when the corporation is merely a continuation of the selling corporation, and (4) where the transaction is fraudulently entered into in order to escape liability for those debts.^[28]

Even if this Court is inclined to verify the existence of these circumstances (in violation of the principle of immutability of judgments, in disregard of the trial court's want of jurisdiction over Bancom, and contrary to the principle that this Court is not a trier of facts), a closer look will reveal that none of these exceptional circumstances is availing.

The absence of the first circumstance, the supposed assumption of debts made by Bancom, can readily be verified from the terms of the PSA concluded by TRB and Bancom. Unlike in Caltex (Phils.), Inc. v. PNOC Shipping & Transport Corp.,^[29] where the agreement entered by PNOC Shipping & Transport Corporation (PSTC) with LUSTEVECO "specifically mentions the case between LUSTEVECO and Caltex, docketed as AC-G.R. CV No. 62613, then pending before the IAC," under the PSA, Bancom categorically assumed only identified and limited liabilities. Among those clearly excluded from the assumed liabilities are "[i]tems in litigation, both actual and prospective, against TRB." At the time of the execution of the PSA, the liability of TRB to private respondents was the subject of an actual litigation. It is, therefore, excluded from the liabilities assumed by Bancom. At best, it is more plausible to conclude that the liability owing to private respondents is covered by the escrow fund set up by TRB with Metrobank.

To find the existence of a de facto merger, this Court must at least ascertain the presence of the most essential element of a merger apart from compliance with the legalities set forth under the law: the dissolution of the separate judicial personality of the target corporation in fact, if not in law. It bears to stress that while this Court has recognized the existence of a de facto merger in this jurisdiction resulting from the transfer of assets and assumption of the liabilities of one corporation by another, the recognition had been made through the rubric of piercing the veil of corporate fiction,^[30] i.e., control over both corporations is lodged in the same person/s and that control is used to commit fraud or wrong.^[31] This is usually done by the transfer of all the assets of a corporation in exchange for the stocks of another corporation.^[32]

In this case, there is no indication, and the private respondents adduced no proof, that TRB and Bancom are subject to the same control and that their corporate personalities are mere instruments in committing a wrong. In fact, private respondents did not allege grounds, or ask the courts to declare the need for piercing the separate corporate veils of TRB and Bancom.

It is axiomatic that he who alleges an affirmative event, like the existence of the supposed merger in this case, must show proof in support thereof. Here, the burden to explain and to prove or disprove the existence of the merger should be with private respondents. If a shift of the burden of proof is at all justified, the shift should be taken against TRB, not Bancom, as it was TRB that advanced the existence of this supposed "supervening event" and it is TRB that will in effect be exonerated from satisfying the judgment against it.

In Pacific Mills, Inc. v. NLRC,^[33] this Court directed the party alleging a supervening event that may affect the execution of a judgment to prove the same by sufficient evidence:

There can be no question that the supervening events cited by petitioner would certainly affect the computation of the award in the decision of the NLRC. It is the duty of the NLRC to consider the same and inquire into the correctness of the execution, as such supervening events may affect such execution.

x x x x

WHEREFORE, the petition is GRANTED. The questioned orders of the National Labor Relations Commission dated May 5, 1989 and June 20, 1989 are both set aside. The said Commissioner is directed to immediately give petitioner its day in court to present its evidence on the supervening events that would affect the award and thereafter to immediately recompute the award for private respondents on the basis of the judgment which should be promptly satisfied. No costs. (emphasis supplied)

As neither private respondents nor TRB proffered any evidence or alleged any ground to justify the application of the doctrine of piercing the corporate veils as conduit to finding a de facto merger between TRB and Bancom, there is no basis to justify doing so.

In fact, in Our November 13, 2013 Decision in G.R. No. 180529 entitled Commissioner of Internal Revenue v. Bank of Commerce,^[34] where the same PSA between TRB and Bancom had been scrutinized to resolve the issue of whether Bancom can be held liable for the liabilities of TRB, sustaining the findings of the BIR and Court of Tax Appeals (CTA), this Court categorically ruled in the negative, viz:

As the CTA En Banc stated in its Amended Decision, the issue boils down to whether or not BOC is liable for the deficiency DST of TRB for taxable year 1999.

[T]he CTA 1st Division's Resolution in Traders Royal Bank, explicitly addressed the issue of merger between BOC and TRB. The CTA 1st Division, relying on the provisions in both the Purchase and Sale Agreement and the Tax Code, determined that the agreement did not result in a merger, to wit:

x x x x

Thus, when the CTA En Banc took into consideration the above ruling in its Amended Decision, it necessarily affirmed the findings of the CTA 1st Division and found them to be correct. This Court likewise finds the foregoing ruling to be correct. The CTA 1st Division was spot on when it interpreted the Purchase and Sale Agreement to be just that and not a merger.

The Purchase and Sale Agreement, the document that is supposed to have tied BOC and TRB together, was replete with provisions that clearly stated the intent of the parties and the purpose of its execution, viz:

1. Article I of the Purchase and Sale Agreement set the terms of the assets sold to BOC, while Article II was about the consideration for those assets. Moreover, it was explicitly stated that liabilities not included in the Consolidated Statement of Condition were excluded from the liabilities BOC was to assume, to wit:

x x x x

Moreover, the second whereas clause, which served as the premise for the subsequent terms in the agreement, stated that the sale of TRB's assets to BOC were in consideration of BOC's assumption of some of TRB's liabilities, viz:

x x x x

The clear terms of the above agreement did not escape the CIR itself when it issued BIR Ruling No. 10-2006, wherein it was concluded that the Purchase and Sale Agreement did not result in a merger between BOC and TRB.

x x x x

A perusal of BIR Ruling No. 10-2006 will show that the CIR ruled on the issue of merger without any reference to TRB's subject tax liabilities. The relevant portions of such ruling are quoted below:

One distinctive characteristic for a merger to exist under the second part of [Section 40(C)(b) of the 1997 NIRC] is that, it is not enough for a corporation to acquire all or substantially all the properties of another corporation but it is also necessary that such acquisition is solely for stock of the absorbing corporation. Stated differently, the acquiring corporation will issue a block of shares equal to the net asset value transferred, which stocks are in turn distributed to the stockholders of the absorbed corporation in proportion to the respective share.

After a careful perusal of the facts presented as well as the details of the instant case, it is observed by this Office that the transaction was purely concerning acquisition and assumption by [BOC] of the recorded liabilities of TRB. The [Purchase and Sale] Agreement did not mention with respect to the issuance of shares of stock of [BOC] in favor of the stockholders of TRB. Such transaction is absent of the requisite of a stock transfer and same belies the existence of a merger. As such, this Office considers the Agreement between [BOC] and TRB as one of "a sale of assets with an assumption of liabilities rather than 'merger'."

x x x x

Clearly, the CIR, in BIR Ruling No. 10-2006, ruled on the issue of merger without taking into consideration TRB's pending tax deficiencies. The ruling was based on the Purchase and Sale Agreement, factual evidence on the status of both companies, and the Tax Code provision on merger. The CIR's knowledge then of TRB's tax deficiencies would not be material as to affect the CIR's ruling. The resolution of the issue on merger depended on the agreement between TRB and BOC, as detailed in the Purchase and Sale Agreement, and not contingent on TRB's tax liabilities.

In Chinese Young Men's Christian Association of The Philippine Islands Doing Business Under The Name Of Manila Downtown YMCA v. Remington Steel Corporation,^[35] this Court explained the concept of stare decisis et non quieta movere, thus:

Under the doctrine, when the Supreme Court has once laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle, and apply it to all future cases, where facts are substantially the same.

The doctrine of stare decisis is based upon the legal principle or rule involved and not upon judgment which results therefrom. In this particular sense stare decisis differs from res judicata which is based upon the judgment.

The doctrine of stare decisis is one of policy grounded on the necessity for securing certainty and stability of judicial decisions, thus:

Time and again, the court has held that it is a very desirable and necessary judicial practice that when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the same. Stare decisis et non quieta movere. Stand by the decisions and disturb not what is settled. Stare decisis simply means that for the sake of certainty, a conclusion reached in one case should be applied to those that follow if the facts are substantially the same, even though the parties may be different. It proceeds from the first principle of justice that, absent any powerful countervailing considerations, like cases ought to be decided alike. Thus, where the same questions relating to the same event have been put forward by the parties similarly situated as in a previous case litigated and decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue.

Based on the foregoing, the issue of existence of merger, whether de jure or de facto, between TRB and Bancom under the PSA is now foreclosed. As the issue in G.R. No. 180529 is substantially similar, if not identical, to the issue in the present case, Our ruling therein bars, following the stare decisis rule, any attempt to re-litigate the issue already decided therein.

The third exception to the rule on the non-accountability of a purchasing corporation is similarly non-existent in the present case. Once again, TRB still exists albeit under a different name RTH. Bancom could not, therefore, be considered to have continued TRB when TRB still exists as RTH. It is axiomatic that as a corporation is imbued with legal personality, it has the right of succession and it incurs its own liabilities and is legally responsible for payment of its obligations.^[36]

As to the fourth exception, We need only recall that the PSA had been given the stamp of approval by both the BSP and the BIR^[37] as a valid agreement that We cannot plausibly conclude that the same had been entered to defraud creditors. More importantly, by the very terms of the PSA, the transfer of the assets from TRB to Bancom had not been exchanged for assets of equal or more value. Rather, the transfer of assets had been executed precisely in exchange for the assumption of identified debts and liabilities and not to escape liability. That by itself negates the existence of the fourth exception, i.e., the PSA had been entered into to escape the payment of debts.

Considering the absence of any of the recognized circumstances that would justify the execution of a final judgment against a non-party to the case, it is my considered view that the CA should have exercised its sound judicial discretion when it dismissed petitioner's certiorari action. The appellate court should have carefully weighed the issues presented and grievances presented by petitioner vis-à-vis the supposed procedural defect of its petition. The CA should have ruled in the interest of substantial justice and petitioner's constitutionally-guaranteed right to due process and relaxed the general rule requiring the filing of a motion for reconsideration in order to prevent an apparent mockery of justice in this case.

In fact, the CA need not have resorted to the exceptions to the rule requiring the filing of a motion for reconsideration because petitioner did file a motion for reconsideration. A scrutiny of the records will immediately reveal that the petition for certiorari interposed with the appellate court principally questioned the February 19, 2010 order of the trial court, which granted the private respondents' ex-parte urgent motion for the issuance of an alias writ of execution. Before filing a petition for certiorari immediately assailing this order, Bancom filed an Urgent Motion for Reconsideration, which was in turn denied by the trial court's August 18, 2010 Order. There was, therefore, no need for Bancom to file yet another motion for reconsideration before it can lodge a petition for certiorari with the appellate court.

For all the foregoing, I vote to GRANT the petition, SET ASIDE the November 26, 2010 and February 9, 2011 Resolutions of the Court of Appeals, and NULLIFY the Alias Writ of Execution issued by the Regional Trial Court as mandated in its February 19, 2010 and August 18, 2010 Orders.

---

^[1] Rollo, pp. 79-92.

^[2] Id. at 80-81; emphasis supplied.

^[3] Id. at 253-266, Certificate of Filing of Amended Articles of Incorporation dated August 15, 2002.

^[4] Id. at 111-115, Supplemental Motion for Execution dated January 20, 2004; emphasis supplied.

^[5] Id. at 116-118.

^[6] Id. at 119-127.

^[7] Id. at 127.

^[8] Id. at 98-109. Penned by Associate Justice Francisco P. Acosta, with Justices Juan Q. Enriquez, Pampio A. Abarintos, Priscilla Baltazar-Padilla, and Michael P. Elbinias concurring, Division of Five of the Tenth Division.

^[9] Id. at 108-109; emphasis supplied.

^[10] Id. at 136-138; 149-151.

^[11] Id. at 139-143.

^[12] Id. at 144-146.

^[13] Id. at 152-156.

^[14] Id. at 180-187.

^[15] Id. at 208-221.

^[16] Id. at 221-249.

^[17] Id. at 59-62. Penned by Associate Justice Celia C. Librea-Leagogo with Associate Justices Remedios A. Salazar-Fernando and Michael P. Elbinias, concurring, Second Division.

^[18] Id. at 63-72.

^[19] Id. at 74-78, in a Resolution dated February 9, 2011.

^[20] G.R. No. 174982, September 10, 2012, 680 SCRA 345, 351; citing Fermin v. Hon. Antonio Esteves, G.R. No. 147977, March 26, 2008, 549 SCRA 424, 428; Panotes v. City Townhouse Development Corporation, G.R. No. 154739, January 23, 2007, 512 SCRA 269; Mariculum Mining Corporation v. Brion, G.R. Nos. 157696-97, February 9, 2006, 482 SCRA 8.

^[21] Veneracion v. Mancilla, G.R. No. 158238, July 20, 2006, 495 SCRA 712, 726.

^[22] Doliente v. Blanco, No. L-3525, November 29, 1950.

^[23] Aguila v. Baldovizo, G.R. No. 163186, February 28, 2007517 SCRA 91, 97.

^[24] G.R. No. 147977, March 26, 2008, 549 SCRA 424, 428-429, 431-432.

^[25]A.M. No. RTJ-06-1971, October 17, 2007, 536 SCRA 372.

^[26] Id. at 385-386; emphasis supplied.

^[27] Philippine National Bank and National Sugar Development Corporation v. Andrada Electric and Engineering Company, G.R. No. 142936, April 17, 2002, 381 SCRA 244; Jiao, et al. v. NLRC, G.R. No. 182331, April 18, 2012, 670 SCRA 184.

^[28] The Edward J. Nell Company v. Pacific Farms, Inc., No. L-20850, November 29, 1965, 15 SCRA 415, 417; citing Fletcher Cyclopedia Corporations, Vol. 15, Sec. 7122, pp. 160-161.

^[29] 530 Phil. 149, 158 (2006).

^[30] Aquino, Timoteo B. Philippine Corporate Law Compendium, 2006 ed., p. 375.

^[31] See "G" Holdings, Inc. v. National Mines and Allied Workers Union Local 103, G.R. No. 160236, October 16, 2009, 604 SCRA 73; citing Concept Builders, Inc. v. National Labor Relations Commission, G.R. No. 108734, May 29, 1996, 257 SCRA 149, 159.

^[32] See Philippine National Bank v. Hydro Resources Contractors Corporation, G.R. Nos. 167530, 167561 & 167603, March 13, 2013, 693 SCRA 294.

^[33] 206 Phil. 135, 137-138 (1990).

^[34] G.R. No. 180529, November 13, 2013.

^[35] G.R. No. 159422, March 28, 2008, 550 SCRA 180, 197-198.

^[36] Philippine National Bank v. Hydro Resources Contractors Corporation, G.R. Nos. 167530, 167561 & 167603, March 13, 2013, 693 SCRA 294; citing Rands, William, Domination of a Subsidiary by a Parent, 32 Ind. L. Rev. 421, 423 (1999), citing Philip I. Blumberg, Limited Liability and Corporate Groups, 11 J. Corp. L. 573, 575-576 (1986) and Stephen Presser, Thwarting the Killing of the Corporation: Limited Liability, Democracy and Economics, 87 NW. U. L. Rev. 148, 155 (1992).

^[37] Rollo, pp. 93-97. See BIR Revenue Ruling 4010-2006 dated October 6, 2006.

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