o Repeated requests for approval of its amended plans not having been
LUISITO PADILLA and PHOENIX-OMEGA DEVELOPMENT AND MANAGEMENT
CORPORATION, petitioners, vs. THE HONORABLE COURT OF APPEALS and SUSANA
REALTY, INC., respondents.
G.R. No. 123893 l November 22, 2001 l QUISUMBING, J.
FACTS:
 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. SRI
reserved to itself the right of first refusal to develop and/or improve the property.
 November 28, 1986: LRTA and Phoenix Omega Development and Management
Corporation (Phoenix Omega) entered into a Commercial Stall Concession Contract
to construct and develop commercial stalls on the property.
o SRI opposed for being violative of the deed of sale.
o A tripartite agreement was later concluded whereby SRI agreed to honor
the terms of the concession contract and to lease to Phoenix Omega its
(SRIs) remaining property adjacent to the portion subject of the
concession contract.
 July 28, 1988: A contract was entered into on 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 SRIs approval of such plans and
specifications.
o Also, 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).
o 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.
o The development of the remaining property having been assigned to PKA,
it entered into a contract of lease with SRI.
 January 1989: An amended contract of lease was thus forged among SRI, PKA
and Phoenix Omega, whereby the parties agreed to substitute the already sold
portion of SRIs remaining property with 2 parcels of land also belonging to SRI.
o 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.
 PKAs building permit was revoked due to violations of the National Building Code
(BP 344) but was later allowed by DPWH to resume construction on the leased
premises subject to PKAs correction of the defects in the construction to conform
to BP 344.
 As SRIs approval of PKAs amended plans in the construction was required, PKA
transmitted the same to SRI which withheld approval thereof pending PKAs
correction of the defects in the construction.
heeded by SRI, PKA filed for rescission of contract of lease against SRI.
o SRI, claimed that it was PKA which violated the terms of their contract.
 RTC: Declared the rescission and termination of the Contract of Lease CA affirmed
RTC. MR denied. SC denied petition for review. MR denied. [In short final na talaga
ung decision]
 RTC then rendered a writ of execution however monetary award was left
unsatisfied.
 November 14, 1994: SRI filed a motion for issuance of an alias writ against herein
petitioners on the gorund that PKA and Phoenix-Omega are one and the same
entity. The RTC issued an alias writ on the same day.
 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.
o CA denied. MR denied. CA agreed that there is evidence on record to
support the RTCs conclusion that PKA and Phoenix-Omega are one and
the same, or that the former is a mere conduit of the latter.
Issue: W/N the trial court had jurisdiction over petitioners, to justify the issuance of an alias
writ of execution against their properties? NO
 A court acquires jurisdiction over a person through either a valid service of summons
or the persons voluntary appearance in court. A court must necessarily have
jurisdiction over a party for the latter to be bound by a court decision.
 ITC: 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.
o Without the trial court having acquired jurisdiction over petitioners, the
latter could not be bound by the decision of the court.
o Execution can only be issued against a party and not against one who was
not accorded his day in court. To levy upon their properties to satisfy a
judgment in a case in which they were not even parties is not only
inappropriate; it most certainly is deprivation of property without due
process of law.
 The TC ruled that petitioner Padilla had his day in court. As general manager of PKA,
he actively participated in the case in the trial court. He ha(d) the right to control
the proceedings, to make defense, to adduce and cross examine witnesses, and to
appeal from a decision. Therefore, Padilla and Phoenix-Omega, of which Padilla is
chairman of the board, could not now argue that they did not have the opportunity
to present their case in court, according to private respondent.
o However, Padilla participated in the proceedings below as general
manager of PKA and not in any other capacity. The fact that at the same
time he was the chairman of the board of Phoenix-Omega cannot, by any
stretch of reasoning, equate to participation by Phoenix-Omega in the
same proceedings. We again stress that Phoenix-Omega was not a party
to the case and so could not have taken part therein.
 Private respondent, however, insists that the trial court had pierced the veil of
corporate fiction protecting petitioners, and this justifies execution against their
properties.
  The general rule is that a corporation is clothed with a personality separate and
distinct from the persons composing it. It may not be held liable for the obligations
of the persons composing it, and neither can its stockholders be held liable for its
obligations.
o This veil of corporate fiction may only be disregarded in cases where the
corporate vehicle is being used to defeat public convenience, justify
wrong, protect fraud, or defend crime.
o PKA and Phoenix-Omega are admittedly sister companies, and may be
sharing personnel and resources, but we find in the present case no
allegation, much less positive proof, that their separate corporate
personalities are being used to defeat public convenience, justify wrong,
protect fraud, or defend crime.
o For the separate juridical personality of a corporation to be disregarded,
the wrongdoing must be clearly and convincingly established. It cannot be
presumed.

RULING: Petition GRANTED.