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PACIFIC REHOUSE CORPORATION v. CA

FACTS:

These excerpts are from the same case involving different issues related to the dispute between the petitioners and Export Bank. In one instance, the Regional Trial Court (RTC) issued a judgment ordering EIB Securities Inc. (E-Securities), a subsidiary of Export Bank, to return shares to private respondents and instructing the latter to reimburse E-Securities for the buyback price of other shares. The Supreme Court affirmed this judgment. Private respondents filed for an alias writ of execution to hold Export Bank liable for the judgment obligation. E-Securities argued that it has a separate corporate personality but the RTC ruled that it is a mere alter ego of Export Bank and issued the alias writ of execution. Export Bank then filed a petition for certiorari with the Court of Appeals (CA) to nullify the RTC orders.

In another instance, the petitioners sought the execution of an alias writ of execution and garnishment of Export Bank's properties. The CA initially issued a temporary restraining order (TRO) to prevent the execution and set a hearing to determine the necessity of a writ of preliminary injunction. The CA later granted Export Bank's application for a writ of preliminary injunction, which was challenged by the petitioners. Eventually, the CA nullified the RTC's orders and made the writ of preliminary injunction permanent, leading the petitioners to file separate petitions for review.

Finally, there are two petitions being discussed in G.R. No. 199687 and G.R. No. 201537. In G.R. No. 199687, the petitioners challenge the validity of the resolutions issued by the CA, but the CA has already rendered its decision on the merits of the case, making the petitioners' concerns moot and academic. In G.R. No. 201537, the petitioners argue that the certified true copy of the CA Decision they received was not signed by the Chairperson of the Special Division of Five, but the CA clarified that this was due to inadvertence and subsequently provided the parties with copies of the decision signed by the Chairperson.

ISSUES:

In G.R. No. 199687:

  1. Whether the CA committed grave abuse of discretion in granting Export Bank's application for the issuance of a writ of preliminary injunction.

In G.R. No. 201537:

  1. Whether the CA committed a reversible error in ruling that Export Bank may not be held liable for a final and executory judgment against E-Securities in an alias writ of execution by piercing its veil of corporate fiction.

  2. Whether the CA committed a reversible error in ruling that the alter ego doctrine is not applicable.

RULING:

G.R. No. 199687:

  • The issue has become moot and academic due to the CA’s Decision on April 16, 2012, which disposed of the substantial merits of the case.

G.R. No. 201537:

  • The CA did not commit a reversible error in ruling that Export Bank cannot be held liable for a judgment against E-Securities by piercing the veil of corporate fiction, due to lack of jurisdiction over Export Bank.

  • The CA did not commit a reversible error in ruling that the alter ego doctrine is not applicable, as the necessary elements for piercing the corporate veil were not proven.

PRINCIPLES:

  1. Moot and Academic Principle: Courts will not determine questions that have become moot and academic because there is no longer any justiciable controversy.

  2. Jurisdiction and Corporate Veil: Piercing the veil of corporate fiction cannot confer on the court a jurisdiction it has not acquired over a non-impleaded corporation.

  3. Alter Ego Doctrine: Requires three elements: (1) complete domination and absence of independent will, (2) use of control to commit fraud or wrong, and (3) resultant injury or unjust loss due to the breach.

  4. Separate Legal Personality: A corporation is a separate legal entity distinct from its stockholders; its separate personality can only be disregarded under specific circumstances such as fraud or misuse.

  5. Service of Summons and Voluntary Appearance: Jurisdiction over a party is acquired either by valid service of summons or the party’s voluntary appearance in court.

  6. Corporate Control: Control per se does not justify disregarding the corporate fiction unless it is used to perpetuate fraud or accomplish wrongful acts.

  7. Subsidiary Relationship: The parent-subsidiary relationship itself is insufficient to establish an alter ego relationship for liability purposes without showing fraud or wrongful intent.