EIB creditor asks Supreme Court to get assets of closed bank

Manila, Philippines -  Several private firms have sought relief from the Supreme Court (SC) on their bid to take assets of the now closed Export and Industry Bank (EIB) over supposed liability for the unauthorized sale of their over 32 million shares in DMCI stocks at the Philippine Stock Exchange (PSE).

In a 38-page petition for review filed last Wednesday, Pacific Rehouse Corp., Pacific Concorde Corp., Mizpah Holdings, Inc., Forum Holdings Corp. and East Asia Oil Co. Inc. questioned the ruling of the Court of Appeals (CA) last April 26 that had dismissed their claim.

Petitioners asked the high court to issue a temporary restraining order on the writ of preliminary injunction issued by special division under the former 14th Division of the appellate court, which stopped earlier rulings of the Makati City regional trial court ordering the return of the shares of stocks to complainants at the cost of EIB.

They cited technical ground in seeking SC relief, saying the CA ruling lacked signature or certification by the chairperson of the special division, Justice Socorro Inting.

Also, petitioners insisted that the CA should have dismissed the petition of EIB for supposedly violating rule on forum shopping. They alleged that EIB filed multiple petitions before the appellate court assailing the Makati RTC ruling and only withdrew the others when they already got favorable ruling from the former 14th Division.

“The Court of Appeals applied ruling in cases with facts materially different from those that obtain in the instant case,” they further argued.

Lastly, the companies asked the high court to reinstate the ruling of Makati RTC Judge Joselito Villarosa on July 29, 2011 that granted their civil claims against EIB.

The CA, in its ruling last April 26 through a vote of 3-2, held that the companies could pursue their claims over the unauthorized sale of said DMCI shares made by the bank’s subsidiary, EIB Securities Inc. (E-Securities).

But it stressed: “Private respondents’ frustration at not being able to have the judgment in their favor satisfied is understandable. But given the circumstances of this case, the seizure of petitioner’s properties cannot be done without violating its constitutionally enshrined right to due process.”

“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.

After declaring insolvency, EIB was recently placed under receivership by the Bangko Sentral ng Pilipinas (BSP).

Records showed that the Makati RTC ruled on July 29 last year that EIB E-Securities was a mere business conduit or alter ego of EIB, the dominant corporation, which justified piercing of the veil of corporate fiction.

The court had brushed aside E-Securities’ claim of denial of due process on the bank.

The RTC denied an appeal questioning an alias writ on August 26, 2011 and directed the garnishment of P1,465,799,000, the total amount of the P32,180,000 DMCI shares at P45.55 per share, against E-Securities.

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

The said garnishment covered 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.

This prompted the bank to ask redress before the CA, which in turn issued a writ of preliminary injunction on September 2, 2011.

On November 29, 2011, the RTC directed the sheriff to implement its August 26, 2011 order and continue with the garnishment of all property belonging to E-Securities. This prompted EIB to elevate the case to the CA.

EIB wont its case in the CA, prompting the private claimants this time to take the case to the SC.