CA stops seizure of Export Industry Bank properties

EXPORTBANK. ERWIN AGUILON/RADYO INQUIRER 990AM

MANILA, Philippines – The Court of Appeals has stopped the seizure of properties of the Export Industry Bank (EIB).

In a decision dated April 26, 2012, the five-man 14th Special Division of Associate Justice Mario Lopez stopped the implementation of the ruling by the Makati regional trial court ordering EIB to turn over to several corporations 32,180,000 DMCI shares worth P1,465,799,000.

The Makati Court said in a decision issued July 2011 said the sale of the shares by EIB was unauthorized.

The EIB was recently placed under receivership by the Monetary Board for its “inability to meet its obligations as they become due, insufficient realizable assets to meet its liabilities and its inability to continue business without involving probable losses to its depositors or creditors.”

The case against EIB was filed before the Makati Court by Pacific Rehouse Corporation, Pacific Concorde Corporation, Mizpah Holdings, Inc., Forum Holdings Corporation, and East Asia Oil Company, Inc.

“Private respondents’ frustration at not being able to have the judgment in their favor satisfied is understandable. But…the seizure of petitioner’s properties cannot be done without violating constitutionally enshrined right to due process,” the appeals court said.

“Neither can equity heal the unintended injustice to petitioner resulting from an erroneous piercing of corporate fiction, merely to compensate losses arising from the contractual obligation of a subsidiary corporation whose limited liability is recognized by law and by the parties. This is not a fitting denouncement for the business community,” it added.

On July 29, 2011, the RTC said that E-Securities, which was responsible for the alleged unauthorized sale of the shares, was a mere business conduit or alter ego of EIB.

The lower court in its ruling ordered the garnishment of P1,465,799,000  against E-Securities and EIB.

The trial court said that the bank as 99% owner of E-Securities has absolute control of the affairs of defendantcorporation “so much so that the lawyers of Export and Industry Bank, Inc. represented the defendant throughout the trial stage of the case.”

The garnishment covers “all those holding moneys, properties of any and all kinds, real and personal belonging to or owned by defendant E-Securities and/or Export and Industry Bank, Inc. in such amount as may be sufficient to acquire DMCI shares.”

The said ruling prompted EIB to take the case to the appeals court that issued a writ of preliminary injunction on Sept. 2, 2011 to stop the lower court from implementing its decision.

But on Nov. 29, 2011, the RTC directed the sheriff to implement its order and continue with the garnishment of all property belonging to E-Securities and the bank.

“The disquisition of the RTC, which is a declaration against the validity of a high court’s order, is a blatant disregard of the principle of hierarchy of courts,” the appeals court said in its recent ruling.

“From the antecedents, it is manifest that the RTC, desiring to cause the execution of its final and executory resolution arrogated unto itself the authority to rule against the validity of this court’s writ of preliminary injunction to justify the issuance of a notice of levy against petitioner’s property.”

Concurring in the decision were Associate Justices Amy Lazaro-Javier and Vicente Veloso while dissenting were Associate Justices Magdangal de Leon and Socorro Inting.