421 Phil. 883
QUISUMBING, J.:
"On June 27, 1983, Susana Realty, Inc. (SRI), by a deed of absolute sale, sold to the Light Rail Transit Authority (LRTA) several parcels of land located in Taft Avenue Extension, San Rafael District, Pasay City. Under paragraph 7 of the deed of sale, SRI reserved to itself the right of first refusal to develop and/or improve the property sold should the LRTA decide to lease and/or assign to any person the right to develop and/or improve the property.On January 7, 1991, the RTC rendered its decision, as follows:
On November 28, 1986, the LRTA and Phoenix Omega Development and Management Corporation (Phoenix Omega) entered into a Commercial Stall Concession Contract authorizing the latter to construct and develop commercial stalls on a 90 sq. m. portion of the property bought from SRI. SRI opposed the agreement as having violated the deed of sale it entered with LRTA. A tripartite agreement was later concluded by the parties, however, whereby SRI agreed to honor the terms of the concession contract and to lease to Phoenix Omega its (SRI's) property (remaining property) adjacent to the 90 sq. m. portion subject of the concession contract.
A contract was thus entered into on July 28, 1988 between Phoenix Omega and SRI with LRTA whereby Phoenix Omega undertook to construct commercial stalls on the 90-sq. m. property in accordance with plans and specifications prepared by the latter, the construction to begin, however, only upon SRI's approval of such plans and specifications. Also on July 28, 1988, Phoenix Omega, by a deed of assignment, assigned its right and interests over the remaining property unto its sister company, PKA Development and Management Corporation (PKA). Signatories to the deed of assignment were Eduardo Gatchalian in his capacity as President of Phoenix Omega, and Luisito B. Padilla (Padilla), one of the petitioners herein, in his capacity as President and General Manager of PKA. The development of the remaining property having been assigned to PKA, it entered into a contract of lease with SRI likewise on July 28, 1988.
In the meantime, SRI sold part of its remaining property to a third party. An amended contract of lease was thus forged in January 1989 among SRI, PKA and Phoenix Omega, whereby the parties agreed to substitute the already sold portion of SRI's remaining property with 2 parcels of land also belonging to SRI. In this amended contract of lease, PKA was again represented by Padilla in his capacity as its President and General Manager. And Phoenix Omega, which was not a party to the July 28, 1988 lease contract sought to be amended but which was a party, to the amended contract, was also represented by Padilla as Chairman of the Board of Directors of Phoenix Omega.
PKA's building permit was later revoked due to certain violations of the National Building Code (BP 344).
On August 24, 1989, PKA was allowed by the (Department) of Public Works and Highway(s) to resume construction on the leased premises subject to PKA's correction of the defects in the construction to conform to BP 344.
As SRI's approval of PKA's amended plans in the construction was required, PKA transmitted the same to SRI which withheld approval thereof pending PKA's correction of the defects in the construction.
Repeated requests for approval of its amended plans not having been heeded by SRI, PKA filed at the court a quo the action at bar for rescission of contract of lease against SRI, alleging that SRI's refusal to approve the plans without any justifiable reason deprived it of the use of the commercial stalls, thereby incurring losses.
SRI, upon the other hand, claimed that it was PKA which violated the terms of their contract, alleging that PKA failed to complete within six months the construction of the commercial stalls during which period it was not paying any rentals and that PKA undertook the construction without first having its plans approved."[2] (Underscoring in the original.)
"WHEREFORE, judgment is hereby rendered:PKA appealed the RTC decision to the Court of Appeals. On October 2, 1992, the CA affirmed the RTC decision, decreeing as follows:
1. Declaring the rescission and termination of the Contract of Lease, as amended, and the passing in ownership of all the improvements now existing on the premises, and ordering plaintiff to surrender possession of the leased premises to the defendant.
2. Ordering plaintiff to pay to the defendant the following sums of money:
(a) P1,750,000.00 as of April 30, 1990, plus monthly rental of P200,000 per month starting in May, 1990, until plaintiff shall turn over possession of the premises to the defendant, with interest at 1% per month until fully paid;
(b) Moral damages in the amount of P100,000.00;
(c) Exemplary damages in the amount of P100,000.00; and
(d) Attorney's fees in the amount of P150,000.00; and
(e) The cost of suit."[3]
"WHEREFORE, with MODIFICATIONS that the award of P100,000.00 for moral damages and P100,000.00 for exemplary damages is DELETED from the judgment appealed from, the rest thereof not inconsistent herewith is AFFIRMED. No costs."[4]PKA's motion for reconsideration was denied by the CA in a resolution dated March 15, 1993. PKA then filed before this Court a petition for review on certiorari, which we denied in a resolution dated September 27, 1993. We likewise denied PKA's motion for reconsideration in a resolution dated January 17, 1994.
"NOW THEREFORE, you are hereby commanded to cause the execution of the aforesaid decision, ordering the plaintiff and all persons claiming under it to surrender possession of the premises to the defendant, and that of the goods and chattels of the plaintiff you cause to be made the sum of P1,750,000.00 plus monthly rental of P200,000.00 starting in May, 1990 until plaintiff shall turn over possession of the premises to defendant with interest of 1% per month until fully paid, and the further sum of P150,000.00 as attorney's fees, and the cost of suit, together with your lawful fees for service of this execution all in Philippine currency, and that you tender the same to defendant Susana Realty, Inc. aside from your own fees on this execution and to likewise return this writ to this Court within sixty (60) days from receipt hereof with your proceedings endorsed thereon.Possession of the subject properties was subsequently restored to SRI, but the monetary award was left unsatisfied. Thus, on November 14, 1994, SRI filed a motion for issuance of an alias writ against herein petitioners, based on the trial court's observation that PKA and Phoenix-Omega are one and the same entity. This was granted by the RTC in an order[6] dated November 29, 1994, which reads:
But if sufficient personal property of the plaintiff cannot be found whereof to satisfy the amount of said judgment, you are hereby directed to levy the real property of the said plaintiff and to sell the same or so much thereof in the manner provided for by law for the satisfaction of the said judgment."[5]
"WHEREFORE, as prayed for by the defendant-judgment creditor Susana Realty, Inc., let an alias writ of execution issue against the properties, both real and personal, of PKA Development and Management Corporation, of Phoenix-Omega Development Corporation, and of Luisito B. Padilla, for the enforcement of the decision dated January 7, 1991, promulgated by this Court, the same be implemented by deputy sheriff Edilberto A. Santiago." (Underscoring by petitioners.)The RTC issued an alias writ on the same day pursuant to the above order:
"NOW THEREFORE, you are hereby commanded to cause the execution of the aforesaid decision and that of the goods and chattels of the plaintiff, PKA Development and Management Corporation, Phoenix-Omega, caused to be made the sum of P1,750,000.00 plus monthly rentals of P200,000.00 starting in May, 1990 with interest of 1% per month, until fully paid, and the further sum of P150,000.00 as attorney's fees; P100,000.00 moral damages and the cost of suit, together with your lawful fees for service of this execution all in Philippine currency, and that you tender the same to the defendant SUSANA REALTY, INC., aside from your own fees on this execution and to likewise return this writ to this Court within 60 days from receipt hereof with your proceeding indorsed thereon.Alleging that the writ of execution cannot be enforced against them, herein petitioners filed with the RTC on December 15, 1994, an omnibus motion for the reconsideration of the order of November 29, 1994, and for annulment of the alias writ of the same date and cancellation of the notice of levy and sale dated December 16, 1994. Petitioners assailed these orders as confiscatory, since they were never parties to the case filed by PKA against SRI, and they were unable to present evidence on their behalf. The motion was denied on February 10, 1995.
But if sufficient personal properties of the plaintiff cannot be found whereof to satisfy the amount of said judgment, you are directed to levy the real property of the plaintiff, PKA Development and Management Corporation, Phoenix-Omega Development and Management Corporation and Luisito B. Padilla and to sell the same or so much thereof in the manner provided for by law for the satisfaction of the said judgment."[7]
Petitioners stress that the RTC, the CA, and this Court, in the main case (Civil Case No. 7302), did not find them solidarily liable with PKA, and rightly so since PKA and Phoenix-Omega are two different entities. Phoenix-Omega's only participation in the properties subject of the main case was as the construction company that would develop the properties on behalf of PKA. Phoenix-Omega was involved in the amended lease agreement between SRI and PKA only to the extent that it had to apply the terms of the tripartite agreement (among LRTA, SRI, and Phoenix-Omega) to the development of the LRTA-owned property situated in front of the lots leased to PKA by SRI.[10] Petitioners argue that the amended lease contract was, in reality, only between SRI and PKA.
- ...IN RENDERING THE DECISION AND RESOLUTION IN QUESTION... IN DEFIANCE OF LAW AND JURISPRUDENCE BY SUSTAINING THE TRIAL COURT'S ORDER AND WRIT BOTH DATED NOVEMBER 29, 1994... FINDING PETITIONERS JOINTLY AND SEVERALLY LIABLE WITH PKA, THEREBY AUTHORIZING THE EXECUTION OF THE DECISION... AGAINST THEIR PROPERTIES, DESPITE THE ADMITTED FACT THAT --
- PETITIONERS WERE NEVER IMPLEADED AS PARTIES IN THE CASE BEFORE THE TRIAL COURT (CIVIL CASE NO. 7302), THEREBY CONFIRMING THE OPPRESSIVE AND CONFISCATORY NATURE OF THE ORDER AND WRIT (ANNEXES N AND O);
- PETITIONERS COULD NOT AND DID NOT HAVE ANY OPPORTUNITY TO ADDUCE EVIDENCE TO REFUTE THE CAUSES OF ACTIONS ALLEGED IN RESPONDENT SRI'S COMPLAINT BEFORE THE TRIAL COURT (CIVIL CASE NO. 7302) THUS VIOLATING THEIR RIGHT TO DUE PROCESS OF LAW.
- ...IN CONCLUSIONS REACHED IN THE DECISION AND RESOLUTION IN QUESTION... BY AFFIRMING THE ORDER AND WRIT... AS ISSUED BY THE TRIAL COURT IN CIVIL CASE NO. 7302 WHICH EXPANDED THE SCOPE OF THE WRIT HOLDING PETITIONERS SOLIDARILY LIABLE WITH PKA NOTWITHSTANDING THAT THIS FINDING WAS NOT CONTAINED IN THE DISPOSITIVE PORTION OF THE DECISION..., IN DEFIANCE OF LAW AND JURISPRUDENCE ON THE MATTER.
- ...IN APPLYING THE DOCTRINE OF PIERCING THE VEIL OF CORPORATE FICTION TO THE CASE AT BAR DESPITE THE FACT THAT THE GROUNDS FOR ITS APPLICATION UNDER CASE LAW HAVE NOT BEEN SHOWN, THEREBY ABROGATING PRONOUNCEMENTS OF THIS HONORABLE COURT IN NUMEROUS DECISIONS ON THE SUBJECT.
- ...IN AFFIRMING THE ORDER AND WRIT... OF THE TRIAL COURT NOTWITHSTANDING THE ABSENCE OF ANY MISTAKE, OMISSION OR AMBIGUITY IN THE JANUARY 9, 1991 DECISION IN THE MAIN CASE... AS WOULD HAVE JUSTIFIED ITS MODIFICATION PURSUANT TO EXTANT JURISPRUDENCE ON THE MATTER.[9]
"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. xxx"[12]In the present case, we note that the trial court never acquired jurisdiction over petitioners through any of the modes mentioned above. Neither of the petitioners was even impleaded as a party to the case.[13]