G.R. No. 119086 & 119087; January 25, 2002
EMMANUEL G. HERBOSA and ROSEMARIE L. HERBOSA, petitioners, vs. COURT OF APPEALS and PROFESSIONAL VIDEO EQUIPMENT a Division of Solid Distributors, Inc., and SOLID CORPORATION, respondents.
FACTS
Petitioner spouses contracted Professional Video Equipment (PVE), a division of Solid Distributors, Inc., to record their wedding. PVE failed to deliver the recording. The spouses sued for breach of contract and damages. The trial court ruled in their favor, awarding P100,000 in actual, moral, and exemplary damages, plus attorney’s fees. PVE filed a petition for relief from judgment, claiming non-receipt of the decision. The trial court denied this and issued a writ of execution. Levied properties were sold at auction before a temporary restraining order from the Court of Appeals could be served.
Subsequently, Solid Corporation filed a separate complaint for damages against the spouses and the sheriff, claiming ownership of the levied properties. The Court of Appeals consolidated PVE’s petitions and ruled in its favor, nullifying the sheriff’s sale and ordering the return of the sale proceeds to Solid Corporation. It also directed the trial court to give due course to PVE’s appeal. The spouses elevated the case to the Supreme Court.
ISSUE
The primary issue is whether the Court of Appeals erred in nullifying the execution sale and in recognizing Solid Corporation’s ownership of the levied properties, despite the trial court’s final judgment against PVE.
RULING
The Supreme Court reversed the Court of Appeals. The legal logic centers on the finality of judgments and the separate corporate personality doctrine. The trial court’s decision against PVE had become final and executory. PVE’s petition for relief was properly denied, as its claim of non-receipt of the decision was insufficient to overcome the presumption of service. The execution proceedings were therefore valid.
Regarding Solid Corporation’s claim, the Court emphasized that a corporation has a separate juridical personality from its stockholders and from other corporations. Solid Corporation failed to substantiate its claim of ownership over the levied properties with clear and convincing evidence. The mere fact that the properties were found in a showroom operated by its sister company, Solid Distributors, Inc., does not prove Solid Corporation’s ownership. The burden of proof was on Solid Corporation, and it did not discharge this burden. Consequently, the Court of Appeals erred in nullifying the sale and ordering the return of proceeds based on an unproven claim. The Supreme Court reinstated the trial court’s decision in favor of the Herbosa spouses.