G.R. No. 123893 - Padilla vs. Court of Appeals

On June 27, 1983, Susana Realty, Inc. (SRI), by a deed of absolute sale, sold parcels of land located in Pasay City to the Light Rail Transit Authority (LRTA), reserving a right of first refusal should LRTA lease or assign rights to develop the property.
On November 28, 1986, LRTA and Phoenix Omega Development and Management Corporation (Phoenix Omega) entered into a Commercial Stall Concession Contract to develop a 90 sq. m. portion of the LRTA property. SRI opposed the agreement for violating its deed of sale.
A tripartite agreement later reconciled the parties, whereby SRI agreed to honor the concession contract terms and lease adjacent remaining property to Phoenix Omega.
On July 28, 1988, Phoenix Omega and SRI, with LRTA’s consent, contracted for commercial stall construction, contingent on SRI’s approval of plans. Simultaneously, Phoenix Omega assigned its interest over the remaining property to its sister company, PKA Development and Management Corporation (PKA), represented by petitioner Luisito Padilla. PKA then leased the property from SRI.
In January 1989, an amended lease contract substituted a sold portion of SRI’s remaining property with two other parcels, with Padilla representing PKA and Phoenix Omega in their respective capacities.

PKA’s building permit was revoked due to National Building Code violations but was later allowed to resume construction after corrective conditions were imposed.
SRI withheld approval of PKA’s amended construction plans due to outstanding defects. Repeated requests by PKA for approval were ignored.
PKA filed an action for rescission of contract of lease against SRI, alleging unjustified refusal to approve plans, resulting in loss of use and damages. SRI contended PKA breached the contract by not completing construction timely and not paying rent during the initial six months.
RTC ruled on January 7, 1991, rescinding and terminating the lease contract, ordering PKA to surrender possession and pay SRI monetary damages, moral and exemplary damages, attorney’s fees, and costs.

The Court of Appeals affirmed the RTC decision on October 2, 1992, deleting damages for moral and exemplary damages but otherwise affirming the judgment. Subsequent motions for reconsideration and petition for review were denied by higher courts.
A writ of execution was issued directing satisfaction of the judgment from PKA’s properties. Possession was restored to SRI, but monetary awards remained unpaid.
On November 14, 1994, SRI moved for issuance of an alias writ against petitioners Luisito Padilla, Phoenix Omega, and PKA, based on the RTC’s finding that PKA and Phoenix Omega were one and the same. The RTC issued such writ and ordered levy and sale of petitioners’ properties.
Petitioners filed a motion seeking annulment of the alias writ and cancellation of the levy, arguing they were not parties to the case, deprived of due process, and incorrectly held jointly liable. The RTC denied the motion.
Petitioners elevated the matter to the Court of Appeals by petition for certiorari and prohibition, which was denied as well, affirming the RTC’s ruling that petitioners and PKA were a single entity, thus justifying execution against petitioners’ properties.

Petitioners argued that the RTC, CA, and this Court in the main case did not find them jointly liable, and that PKA and Phoenix Omega are separate corporations. Phoenix Omega’s role was limited to construction, not leasing.
They contended that piercing the corporate veil requires a showing of abuse of corporate personality to defeat justice, fraud, or crime, which was not present.
Private respondent argued the proceedings demonstrated that Phoenix Omega and Padilla effectively controlled PKA and participated in the case under that capacity, justifying their inclusion in the alias writ.
The CA and RTC consulted the entire text of the judgment, not only the dispositive portion, to determine the parties liable.

Whether or not the trial court had jurisdiction over petitioners Luisito Padilla and Phoenix Omega, justifying the issuance of an alias writ of execution against their properties despite not being parties to the original case.
Whether the doctrine of piercing the corporate veil applies to hold petitioners jointly and severally liable with PKA and subject their properties to execution.
Whether the issuance of the alias writ of execution and related levy and sale violated petitioners’ constitutional right to due process.
Whether the dispositive portion alone governs the scope of execution or the entire judgment can be considered for enforcement purposes.