THE Supreme Court (SC) on Thursday ordered the Regional Trial Court (RTC) in Makati City to issue a writ of preliminary attachment against the properties of Mega Pacific eSolutions Inc. (MPEI) and its incorporators who were earlier found to have committed fraud in trying to secure the P1.2-billion automation contract with the Commission on Elections (Comelec) in 2004.
In a 49-page decision penned by Chief Justice Ma. Lourdes Sereno, the SC’s First Division reversed and set aside the amended ruling issued by the Court of Appeals (CA) on September 22, 2008, which remanded the case to the RTC in Makati for the reception of evidence of fraud against the respondents and to determine whether the attachment should be issued over their properties.
The appellate court amended its previous ruling issued on January 31, 2008, which held that the government is entitled to the issuance of the writ.
The SC said writ of preliminary attachment should be issued in favor of the government petitioner over the properties of respondents MPEI and its incorporators, namely, Willy Yu, Bonnie S. Yu, Enrique T. Tansipek, Rosita Y. Tansipek, Pedro O. Tan, Johnson W. Fong, Bernard I. Fong and Lauriano Barrios.
“We reject the CA’s denial of petitioner’s plea for the ancillary remedy of preliminary attachment, considering that the cumulative effect of the factual findings of this Court establishes a sufficient basis to conclude that fraud had attended the execution of the automation contract,” the SC ruled.
The High Tribunal was referring to its 2004 decision that nullified the automation contract entered into by the Comelec with MPEI.
In the said decision which it upheld with finality in 2006, the Court declared the fraudulent contract null and void.
The contract, according to the SC, was entered into by the Comelec in disregard of its own bidding rules and procedure, and unreasonable haste and without adequately checking and observing mandatory financial, technical and legal requirements.
As a consequence of the nullification of the automation contract, the SC directed the Office of the Ombudsman to determine the possible criminal liability of the persons responsible for the contract.
Upon the finality of the declaration of nullity of the automation contract, respondent MPEI filed a complaint for damages before the trial court, insisting that it is entitled to be paid for the delivery of the automated counting machines.
However, the petitioner filed its answer with counterclaim with a prayer for a writ of preliminary attachment and argued that respondent MPEI could no longer recover the unpaid balance from the void automation contract, since the payments made were illegal disbursements of public funds, in line with the 2004 SC ruling.
After the RTC in Makati ruled against its plea for a writ of preliminary attachment, the government elevated the case before the CA, which initially ruled in its favor.
The appellate court later amended its decision to deny the issuance of the writ.
In reversing the CA decision, the Court explained that the government has sufficiently proved the commission of fraud by respondent MPEI in the execution of the automation contract.
It noted that the government was able to satisfy the requirement under Section l (d), Rule 57 of the Rules of Court for the issuance of a writ of preliminary attachment.
In the case of MPEI, the SC said the government was able to establish fraud on the part of the respondents.
“The established facts surrounding the eligibility, qualification and existence of MPC [Mega Pacific Consortium]—and of MPEI for that matter—and the subsequent execution of the automation contract with the latter, when all taken together, constitute badges of fraud that we simply cannot ignore,” the Court ruled.
The petitioner said the respondents had perpetrated a scheme against petitioner to secure the automation contract by using Mega Pacific Consortium as supposed bidder and eventually succeeding in signing the automation contract as MPEI alone, an entity which was ineligible to bid in the first place.
The government added that, while knowing that MPEI was not qualified to bid for the automation contract, respondents still signed and executed the contract.
“To a reasonable mind, the entire situation reeks of fraud, what with the misrepresentation of identity and misrepresentation as to creditworthiness. It is in these kinds of fraudulent instances, when the ability to abscond is greatest, to which a writ of attachment is precisely responsive,” the SC said.
The SC further explained that since all the individual respondents actively participated in the perpetration of the fraud against petitioner, their personal assets may be subject to a writ of preliminary attachment.
“It is clear to this Court that inequity would result if we do not attach personal liability to all the individual respondents. With a definite finding that MPEI was used to perpetrate the fraud against the government, it would be a great injustice if the remaining individual respondents would enjoy the benefits of incorporation despite a clear finding of abuse of the corporate vehicle,” the SC stressed.
Concurring with the ruling were Associate Justices Teresita Leonardo-De Castro, Lucas Bersamin, Perlas Bernabe and Alfreo Benjamin Caguioa.