SUMMARY OF CASES

Made by: Charlene P. Juliano (ACT222)

 SECOND DIVISION

[G.R. No. 210741, October 14, 2020]

MARIA LEA JANE I. GESOLGON AND MARIE STEPHANIE N. SANTOS, PETITIONERS, VS.
CYBERONE PH., INC., MACIEJ MIKRUT, AND BENJAMIN JUSON, RESPONDENTS.

Key People Involved

Petitioners Respondents
- Maria Lea Jane I. Gesolgon - CyberOne PH, Inc.
- Marie Stephanie N. Santos - Maciej Mikrut
- Benjamin Juson

Facts
Maria Lea Jane I. Gesolgon and Marie Stephanie N. Santos started as part-time home-
based remote Customer Service Representatives for CyberOne Pty. Ltd. (CyberOne AU), an
Australian company. Subsequently, they transitioned to full-time permanent positions and were
eventually promoted to Supervisors. In October 2009, Maciej Mikrut, CEO of both CyberOne
AU and CyberOne PH, asked them to become dummy directors or incorporators of CyberOne
PH, resulting in promotions to Managers with salary increases attributed to CyberOne PH.
Disputes arose in March 2011 when their salaries were reduced, and they were given three
options: an indefinite furlough (unpaid leave), acceptance of an entry-level position, or
resignation. They chose the first option.
Issue
Following disputes over salary reductions and given options of indefinite furlough
(unpaid leave), entry-level positions, or resignation in 2011, Maria Lea Jane I. Gesolgon and
Marie Stephanie N. Santos filed a complaint for illegal dismissal, non-payment of salaries, and
other claims against CyberOne PH, Maciej Mikrut, and Benjamin Juson; the Labor Arbiter ruled
in favor of respondents, asserting that petitioners were shareholders and not regular employees, a
decision later reversed by the NLRC, declaring petitioners as employees of both CyberOne AU
and CyberOne PH, only to be overturned again by the Court of Appeals, which stated that there
was no employer-employee relationship with CyberOne PH.
 Ruling
“We find the Petition without merit.”
The Supreme Court denied the petition, affirming the Court of Appeals' decision, citing
the lack of evidence establishing an employer-employee relationship with CyberOne PH,
deeming the piercing of the corporate veil unwarranted, and asserting no jurisdiction over
CyberOne AU, ultimately considering petitioners as stockholders, not employees.

Reference
https://lawphil.net/judjuris/juri2020/oct2020/gr_210741_2020.html
 FIRST DIVISION

[G.R. No. 246270. June 30, 2021]

SUSAN R. ROQUEL, PETITIONER, VS. PHILIPPINE NATIONAL BANK AND PNB GLOBAL
REMITTANCE AND FINANCIAL CO. (HK) LTD., RESPONDENTS.

Key People Involved

Petitioners Respondents
- Susan R. Roquel - Philippine National Bank (PNB)
- Philippine National Bank – IFL
- Philippine National Bank – HK
- Philippine National Bank – RCL
- Philippine National Bank – Global

Facts
Susan R. Roquel, employed by PNB International Finance Ltd. (PNB-IFL), a subsidiary
of the Philippine National Bank (PNB), in 1990, underwent multiple transfers within the PNB
Hong Kong Group, including assignments at PNB's Hong Kong Branch (PNB-HK) and PNB's
Remittance Center Limited (PNB-RCL). Following PNB-RCL's merger with PNB Global
Remittance and Finance Co. (HK) Ltd. (PNB Global), Roquel was terminated by PNB Global in
December 2011, prompting her to file a complaint for illegal dismissal. The dispute centered on
Roquel's 21-year employment, marked by transfers among entities within the PNB Hong Kong
Group, and the contentious termination by PNB Global in 2011.
Issue
The essence of the dispute between Susan R. Roquel and the Philippine National Bank
(PNB) revolved around conflicting assertions regarding the nature of Roquel's employment.
Roquel contended that she had an employer-employee relationship with PNB, emphasizing her
extended tenure (term of service) and various transfers within the PNB Hong Kong Group.
Conversely, PNB asserted that Roquel was an employee of PNB Global, a distinct entity. The
conflict delved into jurisdictional matters and hinged on the application of the alter ego doctrine,
with Roquel's claim challenging the separate juridical personality of PNB and PNB Global. The
resolution of these issues played a pivotal role in determining the legality of Roquel's dismissal
and the associated claims.
 Ruling
“The petition is meritorious.”
Initially ruling in favor of Roquel, the Labor Arbiter found her illegally dismissed, but the
NLRC reversed the decision, claiming no jurisdiction; the Court of Appeals upheld this, stating
PNB Global was her sole employer. However, the Supreme Court, applying the alter ego theory,
disagreed, reinstating the Labor Arbiter's decision and declaring PNB as Roquel's employer,
leading to the conclusion of her illegal dismissal and entitlement to back wages, separation pay,
moral and exemplary damages, and attorney's fees.

Reference
https://lawphil.net/judjuris/juri2021/jun2021/gr_246270_2021.html
 SECOND DIVISION

[G.R. No. 224307, August 6, 2018]

THE MISSIONARY SISTERS OF OUR LADY OF FATIMA (PEACH SISTERS OF LAGUNA),

represented by Rev. Mother Ma. Concepcion R. Realon, et al., PETITIONERS, VS. AMANDO V.
ALZONA, et al., RESPONDENTS.

Key People Involved

Petitioners Respondents
- The Missionary Sisters of Our Lady of - Legal heirs of the late Purificacion Y.
Fatima (also known as The Peach Sisters Alzona.
of Laguna) which is represented by Rev.
Mother Ma. Concepcion R. Realon (also
known as Mother Concepcion).

Facts
The petitioner, a religious and charitable group founded in 1989 with a primary mission
to care for abandoned and neglected elderly persons, received support from Purificacion Y.
Alzona, a spinster and property owner, who became their benefactor in 1996. In 1999,
Purificacion decided to donate her house and lot to the petitioner, and this intention was
formalized through a handwritten letter in October 1999 and a Deed of Donation executed in
August 2001. Notably, the petitioner was not yet registered with the Securities and Exchange
Commission (SEC) at the time of the donation, but they subsequently filed their registration
application in August 2001.
Issue
Following Purificacion's passing in October 2001, her brother, Amando Y. Alzona,
initiated legal action by filing a complaint to annul the Deed of Donation. Amando contended
that the petitioner, not having been registered with the Securities and Exchange Commission
(SEC) at the time of the donation, lacked the legal capacity to accept the donation. His argument
formed the basis for the legal dispute, prompting a court challenge to nullify the donation
agreement between Purificacion and the petitioner.
 Ruling
“The petition is meritorious.”
Initially, on August 14, 2013, the Regional Trial Court (RTC) dismissed the complaint,
affirming the validity of the Deed of Donation and the petitioner's capacity as a de facto
corporation. Subsequently, on January 7, 2016, the Court of Appeals (CA) partially granted the
respondents' appeal, declaring the Deed of Donation void due to the petitioner not being
considered a de facto corporation, lacking a bona fide attempt to incorporate at the time of the
donation. However, the Supreme Court (SC) reversed the CA's decision, ruling on the validity of
the donation by considering the petitioner as a corporation by estoppel. The SC emphasized
Purificacion's clear intent to donate, ratified by subsequent actions, and underscored the
significance of promoting charitable works, recognizing benevolent giving as a crucial aspect of
societal fabric. The SC acknowledged the doctrine of corporation by estoppel, stating that parties
dealing with a non-existent corporation are estopped from denying its legal existence when
enforcing a contract.
Reference
https://lawphil.net/judjuris/juri2018/aug2018/gr_224307_2018.html
 THIRD DIVISION

[G.R. No. 227990, March 7, 2018]

CITYSTATE SAVINGS BANK, PETITIONERS, VS. TERESITA TOBIAS AND SHELLIDIE

VALDEZ, RESPONDENTS.

Key People Involved

Petitioners Respondents
- Citystate Savings Bank - Teresita Tobias
- Shellidie Valdez

Facts
The case involves Rolando Robles, a certified public accountant employed by Citystate
Savings Bank, who, in his capacity as branch manager, persuaded Teresita Tobias, a meat
vendor, to open an account and invest money with the bank. Robles frequently visited Tobias to
deliver interest earned on her deposits, creating a relationship of trust. Subsequently, Robles
enticed Tobias into the bank's back-to-back scheme, assuring her that the returns on her
investment would double. Lured by this promise, Tobias invested 1,800,000.00 worth of
Philippine Peso through Robles. Later, due to illness, Tobias included her daughter Shellidie
Valdez as a co-depositor. The case revolves around the alleged misappropriation of funds and
fraudulent schemes orchestrated by Robles, leading to legal proceedings against the bank and
Robles.
Issue
In 2005, after Rolando Robles failed to remit scheduled interest payments, respondents
attempted to contact him, but he was unreachable, leading them to discover that Robles had
withdrawn and misappropriated their money for personal use. In a meeting with Robles' siblings,
it was revealed that he had committed fraud by having Teresita Tobias sign blank documents,
falsely assuring her, in his capacity as branch manager for Citystate Savings Bank that
everything was in order. Despite promises from Robles to repay the money and pleas not to
report the incident, he failed to honor the agreement. Consequently, on January 8, 2007,
respondents filed a Complaint for sum of money and damages against Robles and the petitioner.
The complaint alleged fraudulent acts by Robles in his role as branch manager, resulting in
financial harm to the respondents.
 Ruling
“We find the petition without merit.”
The Regional Trial Court (RTC) initially favored the respondents, Tobias and Valdez, in
their case against Robles for damages. However, the Court of Appeals (CA) modified the
decision, holding both Citystate Savings Bank (petitioner) and Robles jointly and solidarily
liable for damages. The CA, supporting the respondents' appeal, applied the doctrine of apparent
authority and ordered compensation for damages and attorney's fees. The Supreme Court (SC)
denied the petition for review on certiorari, upholding the CA's decision. The SC underscored the
bank's accountability for acts within the apparent authority of its agents and employees, rejecting
the petitioner's argument that Robles acted personally. Emphasizing the fiduciary duty of banks,
the SC stressed the necessity for meticulous care in managing depositors' accounts and the
obligation to treat accounts with the highest diligence. The court found the petitioner, through
Robles, held apparent authority, rendering the bank liable under the doctrine. The decision
highlighted the bank's failure in due diligence, underscoring the public interest in the banking
business. This case serves as an illustration of the doctrine of apparent authority and the
demanding fiduciary obligations banks owe to their clients, emphasizing the imperative for
utmost diligence in their operations.
Reference
https://lawphil.net/judjuris/juri2018/mar2018/gr_227990_2018.html
 THIRD DIVISION

[G.R. No. 202364. August 30, 2017]

ARTURO C. CALUBAD, PETITIONER, VS. RICARCEN DEVELOPMENT CORPORATION,

RESPONDENT.

Key People Involved

Petitioners Respondents
- Arturo C. Calubad - Ricarcen Development Corporation

Facts
Ricarcen Development Corporation (Ricarcen), a domestic corporation primarily
involved in renting out real estate, found itself embroiled in a legal dispute centering on
transactions conducted by its former president, Marilyn R. Soliman. Serving as the president
from 2001 to August 2003, Marilyn, purportedly acting on behalf of Ricarcen, acquired a
substantial loan of P4,000,000.00 from Arturo C. Calubad on October 15, 2001. This loan was
secured by a real estate mortgage, and the terms included compounded interest and penalties for
payment delays. Subsequently, Marilyn, utilizing apparent authority, increased the loan amount
through amendments, securing an additional Php 2,000,000,00 loan from Calubad. To validate
her actions, Marilyn presented a Board Resolution and Secretary's Certificates dated October 15,
2001, December 6, 2001, and May 8, 2002.
However, as Ricarcen failed to meet its financial obligations, Calubad initiated
extrajudicial foreclosure proceedings, eventually becoming the highest bidder and acquiring a
Certificate of Sale on March 27, 2003. The revelation of Marilyn's transactions and their
implications came to light for Ricarcen in July 2003. In response, the corporation filed a
complaint seeking the annulment of the mortgage and claiming damages. This legal dispute
revolves around questions of authority, the validity of mortgage contracts, and the subsequent
foreclosure proceedings, forming a complex narrative of financial dealings and legal recourse.
Issue
Ricarcen denied authorizing Marilyn to obtain loans and mortgage its property. It argued
that documents presented as proof of Marilyn's authority were fabricated. Calubad asserted that
Ricarcen, through its officers, clothed Marilyn with apparent authority, and it was estopped from
denying the contracts.
 Ruling
The Regional Trial Court granted Ricarcen's complaint, annulling the mortgage contracts
and foreclosure. The Court of Appeals affirmed this decision, dismissing Calubad's appeal. The
courts held that the documents presented by Marilyn were fabricated, and Ricarcen was not
estopped from denying her authority. Calubad appealed to the Supreme Court, arguing that
Ricarcen was estopped and had benefited from the loans. The Supreme Court ruled in favor of
Calubad, stating that Marilyn had apparent authority, and Ricarcen was estopped from denying
it. Damages were not awarded.
Reference
https://lawphil.net/judjuris/juri2017/aug2017/gr_202364_2017.html
 FIRST DIVISION

[G.R. No. 200150, November 7, 2016]

CATHERINE CHING, LORENZO CHING, LAURENCE CHING, AND CHRISTINE CHING,

PETITIONERS VS. QUEZON CITY SPORTS CLUB INC. RESPONDENTS.

Key People Involved

Petitioners Respondents
- Catherine Ching - Quezon City Sports Club Inc.
- Lorenzo Ching Board Of Directors:
- Laurence Ching Antonio T. Chua
- Christine Ching Margaret Mary A. Rodas
Alejandro G. Yabut Jr.
Robert C. Gaw
Edgardo A. Ho
Romulo D. Sales
Bienvenido Alano
Augusto E. Orosa
Finance Manager:
Lourdes Ruth M. Lopez

Facts
The case revolves around a dispute between the Ching family, acting as petitioners, and
the Quezon City Sports Club, Inc. (respondent Club). The focal point of contention is the
suspension of Catherine Ching's membership privileges within the Club, a punitive measure
attributed to her failure to remit payment for a special assessment fee imposed by the
organization. In response to this disciplinary action, the Ching family initiated a complaint for
damages against the Club, implicating not only the institution but also its Board of Directors
(BOD) and Finance Manager, Lourdes Ruth M. Lopez. The core of the disagreement lies in the
Ching family's assertion that the suspension contravened the Club's By-Laws, prompting their
pursuit of damages for perceived unjust conduct on the part of the respondents. The conflict thus
hinges on the interpretation of the Club's rules and the propriety of the suspension in response to
Catherine Ching's non-payment of the specified special assessment fee.
 Issue
The disagreement between the Ching family and the Quezon City Sports Club, Inc.
(respondent Club) centered on the nature of Catherine Ching's membership suspension. The
Ching family contended that the suspension ran afoul of the Club's By-Laws, arguing a violation
of the established rules. In contrast, the respondents maintained that the suspension adhered to
the regulations in place. The heart of the matter lay in the interpretation of whether the special
assessment, for which Catherine Ching faced suspension, fell under Section 33(a) or 35(a) of the
Club's By-Laws. This distinction was crucial in determining the procedural requirements,
particularly related to notice and hearing, associated with the imposition of such penalties.
Additionally, the Ching family made allegations of harassment persisting even after they settled
the outstanding special assessment, further contributing to the complexity of the dispute.
Ruling
The Court of Appeals rendered a decision favoring the respondents, asserting that the
suspension of Catherine Ching's membership privileges was in accordance with the Quezon City
Sports Club's By-Laws and highlighting the absence of evidence indicating bad faith on the part
of the Club's management. The court placed particular emphasis on the interpretation of Sections
33(a) and 35(a) of the Club's By-Laws, which played a pivotal role in determining the procedural
aspects of the suspension. While the court acknowledged a violation of due process concerning
Catherine Ching's suspension, it identified grounds for the penalty based on her nonpayment of
the special assessment.
Despite the due process violation, the court found insufficient evidence to support the
Ching family's claims of bad faith against the Club's management. Consequently, the initial
decision awarding damages to the Ching family was reversed. However, the court deemed it
appropriate to grant nominal damages amounting to ₱25,000 in recognition of the due process
violation. Importantly, the court clarified that only the respondent Club, not its officers, would
bear liability for the nominal damages awarded.
Reference
https://lawphil.net/judjuris/juri2016/nov2016/gr_200150_2016.html
 THIRD DIVISION

[G.R. No. 212885, July 17, 2019]

SPOUSES NOLASCO FERNANDEZ AND MARICRIS FERNANDEZ PETITIONERS VS. SMART

COMMUNICATION INC. RESPONDENTS.

Key People Involved

Petitioners Respondents
- Nolasco Fernandez - Smart Communication Inc.
- Maricris Fernandez

Facts
In the Petition for Review on Certiorari filed under Rule 45, the focus is on challenging
the Court of Appeals' December 2, 2013 Decision, which overturned the November 11, 2009
Order of the Regional Trial Court (RTC) of Makati City, Branch 62. The RTC's original order
had dismissed the complaint against Nolasco Fernandez and Maricris Fernandez in Civil Case
No. 09-199. Everything Online, Inc. (EOL), an internet services corporation, was at the center of
the legal dispute, with Nolasco and Maricris serving as its CEO and Board Member,
respectively. The conflict stemmed from EOL's engagement with Smart Communications, Inc.
(SMART), in 2006, seeking mobile communication services for its expansion. A significant
point of contention emerged regarding the alleged non-payment of bills for phone lines assigned
to EOL's franchisees. The dispute revolved around 2,000 post-paid lines, and EOL's purported
failure to settle the charges for lines assigned to its franchisees became a central issue.
Agreements, including the EOL Undertaking, were cited to establish the solidary liability of
EOL's officers, including Nolasco and Maricris, for charges related to SMART cell phone units.
The petition seeks a review of the appellate court's decision, challenging the reversal of the
RTC's initial dismissal order.
Issue
SMART alleges that Everything Online, Inc. (EOL) declined to settle outstanding bills
associated with phone lines designated for franchisees, prompting SMART to demand payment
for the accrued amounts. In response, petitioners Nolasco Fernandez and Maricris Fernandez
contest their personal liability, asserting that the complaint does not adequately establish a cause
of action against them. They challenge the basis on which they are held individually responsible
for the alleged non-payment and seek to refute the claims made by SMART regarding their
personal obligations in the matter.
Ruling
“The petition is meritorious.”
The Regional Trial Court (RTC) initially dismissed the complaint against the individual
defendants, Nolasco and Maricris. However, the Court of Appeals (CA) overturned the RTC
decision, citing evidence that the petitioners explicitly committed themselves to be solidarily
liable with Everything Online, Inc. (EOL) to SMART. The CA modified the RTC ruling,
reinstating the complaint against Nolasco and Maricris. The present petition challenges the CA
decision, asserting that the RTC did not engage in grave abuse of discretion in its initial
dismissal of the complaint against the individual defendants.
Reference
https://lawphil.net/judjuris/juri2019/jul2019/gr_212885_2019.html
 FIRST DIVISION

[G.R. No. 245858, December 02, 2020]

JOHN A. OSCARES, PETITIONER, VS. MAGSAYSAY MARITIME CORP., SK SHIPPING

(SINGAPORE) PTE. LTD., AND/OR ARNOLD B. JAVIER, RESPONDENTS.

Key People Involved

Petitioners Respondents
- John A. Oscares - Magsaysay Maritime Corp.
- SK Shipping (Singapore) Pte. Ltd.;
and/or:
- Arnold B. Javier

Facts
On August 14, 2015, the Philippine Overseas Employment Administration (POEA)
sanctioned the employment contract between John A. Oscares and SK Shipping (Singapore) Pte.
Ltd., facilitated by the manning agent Magsaysay Maritime Corporation. Functioning as the
Second Assistant Engineer on the vessel MV K. Garnet, Oscares encountered a significant
setback on November 4, 2015, when he suffered severe knee injuries while engaged in singing
activities in front of a videoke machine. The resulting diagnosis revealed fractures in both legs.
Repatriated on December 10, 2015, Oscares underwent surgery at his own expense, prompted by
the respondents' refusal to bear the incurred costs. The Panel of Voluntary Arbitrators
subsequently adjudicated in favor of Oscares, awarding him total and permanent disability fees,
moral damages, and attorney's fees. Nevertheless, the Court of Appeals (CA) later overturned
this decision, contending that Oscares' injury lacked a direct connection to his work
responsibilities, thus deeming it non-work-related. The conflicting perspectives on the
compensability of Oscares' injury form the crux of the dispute, with the initial award by the
Panel contested and ultimately reversed by the CA.
Issue
The central conflict in the case revolves around the classification of John A. Oscares'
knee injury as work-related and, consequently, whether it qualifies for compensation. Oscares,
serving as the Second Assistant Engineer aboard MV K. Garnet, suffered significant knee
injuries while engaging in a personal activity—singing in front of a videoke machine. The crux
of the dispute lies in determining whether this personal act, occurring on the vessel, can be
deemed an integral part of his employment responsibilities, thus making the ensuing injury
compensable. The Panel of Voluntary Arbitrators initially ruled in favor of Oscares, recognizing
the connection between the injury and his employment, leading to the award of disability fees
and damages. However, the Court of Appeals (CA) later contradicted this decision, asserting that
Oscares' injury lacked a direct link to his official duties, thereby rendering it non-work-related.
Consequently, the primary contention revolves around the interpretation of the circumstances
under which Oscares sustained his knee injury and whether these circumstances fall within the
scope of work-related incidents deserving compensation.
Ruling
The court reinstated the Panel's initial decision, affirming the award of total and
permanent disability benefits, moral damages, and attorney's fees to John A. Oscares. Oscares is
granted disability compensation equivalent to Grade 10, as outlined in the schedule of disability
under the Philippine Overseas Employment Administration Standard Employment Contract
(POEA-SEC). The court acknowledged the respondents' failure to fulfill their obligation of
providing necessary medical attention, leading to the award of moral damages and attorney's
fees. Importantly, the court held respondents, including the president of the manning agent,
jointly and severally liable for the granted benefits. The decision marks a reversal of the Court of
Appeals' ruling, reinstating the Panel's judgment with certain modifications.
Reference
https://lawphil.net/judjuris/juri2020/dec2020/gr_245858_2020.html
 FIRST DIVISION

[G.R. No. 249337, July 06, 2021]

WATERFRONT PHILIPPINES, INC., WELLEX INDUSTRIES, INC., AND THE WELLEX GROUP,
INC., PETITIONERS, VS. SOCIAL SECURITY SYSTEM, RESPONDENT.

Key People Involved

Petitioners Respondents
- Waterfront Philippines Inc. - Social Security System
- Wellex Industries Inc.
- Wellex Group Inc.

Facts
The case revolves around a 1999 Contract of Loan with Real Estate Mortgage,
embroiling the Social Security System (SSS) as the creditor and Waterfront Philippines, Inc.
(WPI), Wellex Industries, Inc. (WII), and Wellex Group, Inc. (WGI) as debtors. The loan,
amounting to P375,000,000.00, involved the mortgage of properties and the assignment of shares
as collateral. Notably, the contract lacked the signature of the SSS President, thereby violating
the SSS charter, and the authority of SSS officers to enter into the agreement was contested.
Additionally, allegations were made concerning violations of the SSS charter regarding
permissible investments of reserve funds. The case also addressed the foreclosure of the
mortgaged properties through a Certificate of Sale dated September 19, 2003.
Issue
The legal dispute centers on the validity of the Contract of Loan with Real Estate Mortgage and
the legality of the foreclosure proceedings. Key issues include questioning the authority of Social
Security System (SSS) officers to enter into the loan agreement. The case raises concerns about
compliance with legal requirements and proper authorization in financial transactions,
particularly in the context of real estate mortgages and the subsequent foreclosure actions.
Ruling
The court has declared the Contract of Loan with Real Estate Mortgage and the Certificate of
Sale dated September 19, 2003 null and void in a legal dispute between Social Security System
(SSS) and Waterfront Philippines, Inc. (WPI). The ruling mandates mutual restitution, with WPI
directed to pay P375,000,000.00 along with interest, and SSS ordered to return P35,827,695.87
to WPI. The properties covered by Transfer Certificate of Title Nos. N-153395 and N-153396
are to be reconveyed to Wellex Industries, Inc. (WII), and stock certificates are to be returned to
Wellex Group, Inc. (WGI). Additionally, all income, fruits, or dividends derived from the
properties and stock certificates must be returned with legal interest. The court instructs the
transmission of records to the Regional Trial Court for execution, with both parties required to
submit lists of fruits, income, or dividends, provide computations, and adhere to the directives
within six months from the finality of the decision.
Reference
https://lawphil.net/judjuris/juri2021/jul2021/gr_249337_2021.html
 FIRST DIVISION

[G.R. No. 223572, November 10, 2020]

JENNIFER M. ENANO-BOTE, VIRGILIO A. BOTE, JAIME M. MATIBAG, WILFREDO L.

PIMENTEL, TERESITA M. ENANO, PETITIONERS, VS. JOSE CH. ALVAREZ, CENTENNIAL AIR,
INC. AND SUBIC BAY METROPOLITAN AUTHORITY, RESPONDENTS.

Key People Involved

Petitioners Respondents
- Jennifer 14 M. Enano-Bote - Jose CH. Alvarez
- Virgilio A. Bote - Centennial Air Inc.
- Jaime M. Matibag - Subic Bay Metropolitan Authority
- Wilfredo L. Pimentel
- Teresita M. Enano

Facts
The case revolves around a disagreement between the Subic Bay Metropolitan Authority
(SBMA) and Centennial Air, Inc. (CAIR) concerning unpaid rentals for a property that SBMA
leased to CAIR in 1999. Under the terms of the lease agreement, CAIR was obligated to make
monthly rental payments for a duration of five years. However, CAIR failed to fulfill its financial
responsibilities, prompting SBMA to seek payment through written correspondences, including a
final demand letter. The dispute centers on CAIR's inability to meet the agreed-upon monthly
rental obligations, leading SBMA to pursue legal action to recover the outstanding rental
amounts.
Issue
Following Centennial Air, Inc.'s (CAIR) failure to meet the agreed-upon monthly rental
payments, the Subic Bay Metropolitan Authority (SBMA) initiated legal proceedings to address
the unpaid obligations. In response, individual stockholders, including the petitioners, disputed
their liability by asserting that they were no longer considered stockholders. They based this
claim on a Deed of Assignment of Subscription Rights (DASR), contending that the transfer of
subscription rights absolved them of any responsibility for CAIR's financial commitments. The
disagreement thus centers on whether the petitioners can be held accountable as stockholders for
CAIR's unpaid rentals, considering the purported transfer of their subscription rights through the
DASR.
 Ruling
The Regional Trial Court (RTC) determined that Centennial Air, Inc. (CAIR) and its
individual stockholders, including the petitioners, were jointly and severally liable for the unpaid
rentals, applying the trust fund doctrine which holds stockholders responsible for corporate
debts. This decision was affirmed by the Court of Appeals (CA), which emphasized that the
petitioners failed to provide evidence of a valid transfer of shares, thereby upholding their
liability as stockholders. However, the Supreme Court reversed the CA's decision, ruling that the
Subic Bay Metropolitan Authority (SBMA) did not sufficiently prove the grounds required for
the application of the trust fund doctrine. Consequently, CAIR was deemed solely responsible
for the unpaid obligations, leading to the dismissal of the case against the individual stockholders
and the third-party complaints.
Reference
https://lawphil.net/judjuris/juri2020/nov2020/gr_223572_2020.html
 FIRST DIVISION

[G.R. No. 204089, July 29, 2015]

GRACE BORGONA INSIGNE, DIOSDADO BORGONA, OSBOURNE BORGONA, IMELDA

BORGONA RIVERA, AND ARISTOTLE BORGONA, PETITIONER, VS. ABRA VALLEY
COLLEGES, INC. AND FRANCIS BORGONA, RESPONDENTS.

Key People Involved

Petitioners Respondents
- Grace Borgona Insigne - Abra Valley Colleges Inc.
- Diosdado Borgona - Francis Borgona
- Osbourne Borgona
- Imelda Borgona Rivera
-Aristotle Borgona

Facts
In 1999, the Subic Bay Metropolitan Authority (SBMA) entered into a lease agreement
with Centennial Air, Inc. (CAIR) for a building, stipulating monthly rental payments over a five-
year period. However, CAIR encountered financial difficulties and subsequently failed to fulfill
its financial obligations, accumulating unpaid rentals. In response to CAIR's delinquency, SBMA
took steps to address the issue, issuing letters and a final demand letter to request the payment of
outstanding dues. This failure to meet the agreed-upon financial commitments led to a legal
conflict between SBMA and CAIR over the unpaid rentals and contractual obligations.
Issue
Centennial Air, Inc. (CAIR) encountered financial difficulties that resulted in its failure to
fulfill the agreed-upon monthly rentals, prompting the Subic Bay Metropolitan Authority
(SBMA) to initiate legal action. In response to SBMA's pursuit of the unpaid dues, individual
stockholders of CAIR, including petitioners, contested their liability. They argued that they were
no longer considered stockholders due to a Deed of Assignment of Subscription Rights (DASR).
This claim introduced a legal dispute over the extent of the stockholders' responsibility and the
validity of the DASR in absolving them of financial obligations, adding a layer of complexity to
the legal proceedings between CAIR, its stockholders, and SBMA.
 Ruling
The Regional Trial Court (RTC) rendered a decision holding Centennial Air, Inc. (CAIR)
and its individual stockholders jointly and severally liable for the unpaid rentals. The court
applied the trust fund doctrine, asserting that the funds and assets of a corporation are considered
trust funds for the payment of corporate debts. The Court of Appeals (CA) affirmed the RTC's
decision, emphasizing the stockholders' failure to provide sufficient evidence of a valid transfer
of shares that would release them from liability. However, the Supreme Court intervened and
reversed the CA's decision, contending that the Subic Bay Metropolitan Authority (SBMA)
failed to sufficiently establish the grounds for the application of the trust fund doctrine.
Consequently, CAIR was held solely liable for the unpaid obligations, and the case against the
individual stockholders was dismissed. This legal saga underscores the importance of meeting
evidentiary requirements and legal standards in establishing liability and enforcing corporate
obligations. Reference
https://lawphil.net/judjuris/juri2015/jul2015/gr_204089_2015.html
 THIRD DIVISION

[G.R. No. 184332, February 17, 2016]

ANNA TENG, PETITIONER, VS. SECURITIES AND EXCHANGE COMMISSION (SEC) and TING
PING LAY, RESPONDENTS.

Key People Involved

Petitioners Respondents
- Anna Teng - Securities and Exchange Commission
(SEC)
- Ting Ping Lay

Facts
Anna Teng is currently seeking the reversal of the Court of Appeals (CA) Decision and
Resolution, both of which upheld the Securities and Exchange Commission (SEC) orders. The
dispute revolves around Ting Ping Lay's acquisition of shares in TCL Sales Corporation (TCL),
amounting to 2,320 shares acquired on different dates. The conflict traces back to 1989 when,
following the death of Teng Ching, Ting Ping requested the transfer of the shares. However,
TCL and Anna Teng, the corporate secretary, refused to comply with the request, prompting
Ting Ping to file a petition with the SEC. In response, the SEC issued an order instructing TCL
and Anna Teng to record the shares, issue new certificates, and pay damages to Ting Ping. TCL's
attempt to contest this decision was dismissed by the CA in 1997, with the Supreme Court
affirming the decision in 2001 under G.R. No. 129777. The current legal proceedings involve
Anna Teng's challenge to the necessity of surrendering stock certificates before the registration
of the transfer and the Supreme Court's directive for the completion of the share transfer process.
Issue
Following the finality of the Supreme Court decision affirming Ting Ping Lay's
ownership of TCL Sales Corporation (TCL) shares, the Securities and Exchange Commission
(SEC) issued a writ of execution to facilitate the transfer of the shares. However, Anna Teng, the
corporate secretary, filed a complaint for interpleader with the Regional Trial Court (RTC),
causing a delay in the execution process. The RTC ruled in favor of Henry Teng for some shares
but allowed partial execution. In response, the SEC issued an alias writ of execution in 2006 to
enforce the earlier decision. Anna Teng subsequently filed motions to quash the alias writ of
execution in 2006, which were ultimately denied by the SEC in 2007. This legal sequence
reflects the ongoing disputes and legal maneuvers regarding the execution of the share transfer
and highlights the resistance faced by Ting Ping Lay in securing his rightful ownership of the
TCL shares.
Ruling
The Court of Appeals (CA) affirmed the Securities and Exchange Commission's (SEC)
order for partial execution, dismissing Anna Teng's petition. In response, Teng filed a petition to
the Supreme Court, challenging the necessity of surrendering stock certificates before the
registration of the transfer. The Supreme Court denied Teng's petition, thereby upholding the CA
decision. The Supreme Court's ruling emphasized Ting Ping Lay's obligation to surrender the
stock certificates for cancellation and instructed Anna Teng, the corporate secretary, to issue new
certificates for the transferred shares. The Court underscored the ministerial duty of the
corporation to record valid transfers in its books, solidifying Ting Ping Lay's rightful ownership
of the TCL shares as per the previous legal proceedings.
Reference
https://lawphil.net/judjuris/juri2016/feb2016/gr_184332_2016.html
 THIRD DIVISION

[G.R. No. 208281, June 28, 2021]

METROPLEX BERHAD AND PAXELL INVESTMENT LIMITED, PETITIONERS, VS. SINOPHIL

CORPORATION, BELLE CORPORATION, DIRECTOR BENITO A. CATARAN, IN HIS CAPACITY
AS HEAD OF THE COMPANY REGISTRATION AND MONITORING DEPARTMENT DIRECTOR
JUSTINA F. CALLANGAN, IN HER CAPACITY AS HEAD OF THE CORPORATION FINANCE
DEPARTMENT, ASST. DIRECTOR FERDINAND B. SALES, IN HIS CAPACITY AS HEAD OF
CORPORATE AND PARTNERSHIP REGISTRATION DIVISION, ASST. DIRECTOR YOLANDA L.
TAPALES, IN HER CAPACITY AS HEAD OF THE FINANCIAL ANALYSIS AND AUDIT DIVISION,
AND JOHN DOES, RESPONDENTS.

Key People Involved

Petitioners Respondents
- Metroplex Berhad - Sinophil Corporation
- Paxell Investment Limited - Belle Corporation
- Director Benito A. Cataran
- Justine F. Callangan
- Ferdinand B. Sales
- Yolanda L. Tapales
- John Does

Facts
Metroplex Berhad and Paxell Investment Limited are seeking the reversal of the Court of
Appeals (CA) Decision and Resolution regarding the Securities and Exchange Commission's
(SEC) approval of the capital stock reduction of Sinophil Corporation. The conflict arose from
Sinophil's 1998 Share Swap Agreement with Metroplex and Paxell, involving the transfer of
shares for a stake in Sinophil, with Metroplex pledging two billion Sinophil shares as collateral.
Despite a 2001 Unwinding Agreement rescinding the 1998 Swap Agreement, Metroplex failed to
return some shares and retained two billion pledged shares. Sinophil's shareholders approved a
reduction in the authorized capital stock in 2002, 2005, and 2007. SEC's Company Registration
and Monitoring Department (CRMD) and Corporation Finance Department (CFD) approved the
reduction in 2006 and 2008, duly disclosed to the Philippine Stock Exchange (PSE). Petitioners,
including Yaw Chee Cheow, lodged a petition with the SEC, challenging the reduction on
grounds of lack of approval, violation of legal requirements, and prejudicial selective reduction.
However, the SEC denied the petition, asserting compliance with the Corporation Code
requirements.
Issue
Challenging the SEC's approval, petitioners contested the reduction, asserting non-
compliance with legal requirements and alleging a selective reduction. Both the SEC and the
Court of Appeals (CA) upheld the reduction, emphasizing adherence to Section 38 of the
Corporation Code and asserting no violation of legal procedures. Undeterred, petitioners sought a
Temporary Restraining Order (TRO) and injunction, contending fraud and asserting irreparable
harm to investors.
Ruling
The Court of Appeals (CA) affirmed the SEC's decision, endorsing compliance with
Section 38 and dismissing petitioners' contentions. Emphasizing the SEC's ministerial duty post-
compliance, the court invoked the business judgment rule, asserting that interference by the SEC
and courts should occur only if contracts are unconscionable or oppressive. No fraud or
irreparable harm was identified, with disclosure to the Philippine Stock Exchange considered
adequate notice to the investing public. The Petition for Review was denied, and the CA decision
was upheld.
Reference
https://lawphil.net/judjuris/juri2021/jun2021/gr_208281_2021.html
 FIRST DIVISION

[G.R. No. 218738. March 09, 2022]

METROPOLITAN BANK & TRUST COMPANY (METROBANK), PETITIONER, VS. SALAZAR

REALTY CORPORATION* REPRESENTED BY INCORPORATORS/ STOCKHOLDERS RAMON
ANG SALAZAR, JR., ROBERT ANG SALAZAR, ROGER ANG SALAZAR, AND ROSEMARIE
SALAZAR FERNANDEZ,** RESPONDENTS.

Key People Involved

Petitioners Respondents
- Metropolitan Bank & Trust Company - Salazar Realty Corporation
- Ramon Ang Salazar, Jr.
- Robert Ang Salazar
- Rosemarie Salazar Fernandez

Facts
A dispute unfolded between Metropolitan Bank & Trust Company (Metrobank) and
Salazar Realty Corporation (SARC) revolving around a loan, mortgage agreements, and
foreclosure proceedings. The crux of the matter arose when SARC initiated legal action, filing a
suit aimed at quieting the title and nullifying contracts against Metrobank. SARC's allegations
centered on the purported unauthorized encumbrance of properties and resultant losses. In
response, Metrobank sought to dismiss the case, contending a lack of standing and jurisdiction.
Specifically, Metrobank argued that the lawsuit constituted a derivative suit falling within the
purview of special commercial courts. However, the trial court rejected Metrobank's motion to
dismiss, a decision subsequently affirmed through the denial of subsequent motions. The
jurisdictional and standing issues between the parties set the stage for legal proceedings that
would ultimately be subject to higher court review.
Issue
The primary issue at hand revolves around jurisdiction, specifically questioning whether
the Regional Trial Court (RTC) possesses the authority to adjudicate a derivative suit brought by
Salazar Realty Corporation (SARC) against Metropolitan Bank & Trust Company (Metrobank),
or if such cases exclusively fall within the realm of special commercial courts. Metrobank
challenges the decision of the Court of Appeals, asserting that derivative suits, like the one in
question, should be under the exclusive purview of special commercial courts. In supporting its
stance, Metrobank underscores the application of the two-tier test utilized to ascertain intra-
corporate controversies, emphasizing the nature of the relationship between parties and the
inherent characteristics of the dispute. The dispute thus centers on the appropriate forum for
resolving derivative suits and whether they are within the competence of general Regional Trial
Courts or require the specialized attention of special commercial courts.
Ruling
The Supreme Court has granted the petition for review on certiorari, thereby reversing the
decision of the Court of Appeals, which resulted in the dismissal of Salazar Realty Corporation's
(SARC) case against Metropolitan Bank & Trust Company (Metrobank). The ruling underscores
the exclusive jurisdiction of special commercial courts over derivative suits, advocating for
consistency and efficiency in judicial administration. The importance of adherence to the
requisites outlined in the 2001 Interim Rules of Procedure on Intra-Corporate Controversies
(IRPIC) is emphasized, particularly highlighting the necessity for addressing appraisal rights and
providing a definitive statement precluding the characterization of the suit as a nuisance or
harassment. Reference
https://lawphil.net/judjuris/juri2022/mar2022/gr_218738_2022.html
 THIRD DIVISION

[G.R. No. 185979. March 16, 2016]

BANGKO SENTRAL NG PILIPINAS, PETITIONER, VS. VICENTE JOSE CAMPA, JR., MIRIAM M.
CAMPA, MARIA ANTONIA C. ORTIGAS, MARIA TERESA C. AREVALO, MARIA NIEVES C.
ALVAREZ, MARIAN M. CAMPA AND BALBINO JOSE CAMPA, RESPONDENTS.

Key People Involved

Petitioners Respondents
- Bangko Sentral Ng Pilipinas - Vicente Jose Campa Jr.
- Miriam M. Campa
- Maria Antonia C. Ortigas
- Maria Teresa C. Arevalo
- Maria Nieves C. Alvarez
- Marian M. Campa
- Balbino Jose Campa

Facts
In the year 2000, the Bangko Sentral ng Pilipinas (BSP) extended a Special Liquidity
Facility (SLF) loan to Bankwise. As a condition for the loan, BSP mandated that Bankwise
provide mortgages on properties owned by third parties to secure the financial arrangement. In
compliance, Bankwise proceeded to mortgage various properties, including those belonging to
third-party owners such as Eduardo Aliño, Haru Gen Beach Resort, and others. However, when
Bankwise encountered difficulties in meeting its financial obligations, BSP initiated extrajudicial
foreclosure proceedings on the mortgages held on third-party properties. These properties were
subsequently acquired by BSP through public auction. In response to these actions, Eduardo
Aliño filed a Complaint against BSP, seeking specific performance, novation of contracts, and
damages. Aliño alleged that BSP had made assurances regarding a dacion en pago settlement,
where the properties offered as collateral would be sufficient to settle Bankwise's outstanding
obligations.
Issue
In 2000, the Bangko Sentral ng Pilipinas (BSP) extended a Special Liquidity Facility
(SLF) loan to Bankwise, stipulating that Bankwise provide mortgages on properties owned by
third parties as security for the loan. Bankwise complied by mortgaging properties belonging to
various third-party owners, including Eduardo Aliño and Haru Gen Beach Resort. Subsequently,
as Bankwise faced financial challenges and failed to fulfill its payment obligations, BSP initiated
extrajudicial foreclosure proceedings on the mortgages held on these third-party properties.
Through public auction, BSP acquired ownership of these properties. In response to these events,
Eduardo Aliño filed a Complaint against BSP, seeking specific performance, novation of
contracts, and damages. Aliño's claims were based on allegations that BSP had made assurances
regarding a dacion en pago settlement, whereby the offered properties would be utilized to settle
Bankwise's outstanding obligations.
Ruling
The Regional Trial Court (RTC) initially allowed the intervention of Haru Gen Beach
Resort in a case where the Bangko Sentral ng Pilipinas (BSP) was the defendant. BSP appealed
the decision, contending that Haru Gen Beach Resort lacked legal interest for intervention and
asserting that the case should be treated as a derivative suit. The Court of Appeals upheld the
RTC's decision to allow intervention.
However, the Supreme Court granted BSP's petition, ruling that the complaint did not
qualify as a derivative suit. As a result, the Supreme Court referred the case to the RTC
Executive Judge for re-docketing and ordered it to be re-raffled to all RTC branches in Manila.
This decision indicated a jurisdictional issue and a reevaluation of the nature of the complaint,
emphasizing that the case was not a derivative suit as initially argued.
Reference
https://lawphil.net/judjuris/juri2016/mar2016/gr_185979_2016.html
 SECOND DIVISION

[G.R. No. 172948. October 05, 2016]

PHILIPPINE ASSOCIATED SMELTING AND REFINING CORPORATION, PETITIONER, VS.

PABLITO O. LIM, MANUEL A. AGCAOILI, AND CONSUELO M. PADILLA, RESPONDENTS.

Key People Involved

Petitioners Respondents
- Philippine Associated Smelting And - Pablito O. Lim
Refining Corporation (PASAR) - Manuel A. Agcaoili
- Consuelo M. Padilla

Facts
PASAR initiated a legal action by filing a Petition for Review on Certiorari in response to
a decision by the Court of Appeals. The central concern of the case involved PASAR's efforts to
impede its former senior officers and shareholders from accessing specific records categorized as
confidential or deemed nonexistent by the company. In response to this, the Regional Trial Court
(RTC) granted a preliminary injunction, thereby limiting the rights of the respondents to inspect
the specified records. This injunction was designed to remain in effect until a more
comprehensive evaluation could be conducted to ascertain the confidentiality status of the
mentioned records.
Issue
In the legal proceedings, PASAR advocated for the restoration of the preliminary
injunction, contending that it was essential to safeguard the company from potential harm and
harassment that could arise from allowing the inspection of confidential records. The argument
was grounded in PASAR's assertion of its right to protect sensitive information. On the other
side, the respondents countered this claim, asserting that PASAR had not sufficiently
demonstrated a clear and unequivocal entitlement to injunctive relief. They underscored that, in
such situations, the appropriate course of action should be the pursuit of a mandamus action
initiated by stockholders aiming to secure the right to inspect corporate records. This presented a
conflict over the perceived legitimacy of the preliminary injunction as a protective measure for
PASAR.
 Ruling
“Wherefore, the Petition is denied.”
The Court of Appeals determined that PASAR's petition for injunction lacked merit,
asserting that the proper remedy for enforcing the right to inspection lies in a writ of mandamus
initiated by stockholders, rather than a corporation-issued injunction. The Supreme Court upheld
this stance, underscoring the significance of furnishing stockholders with information to facilitate
informed participation in governance. Criticism was directed at the use of injunctions by
corporations to impede inspection, with the court contending that objections should be raised
defensively during legal proceedings. The court stressed that confidentiality in business
transactions does not provide an absolute defense, requiring the corporation to substantiate
potential harm. It highlighted the discomfort of management in such situations as a component of
ensuring good governance, with courts tasked to evaluate the reasonableness of objections. The
Court of Appeals lifted the injunction through a certiorari petition under Rule 65, concentrating
on the alleged grave abuse of discretion by the RTC. Despite the petitioner's argument invoking
Rule 58, Section 6, and the Supreme Court denied the petition, affirming the decision to lift the
injunction.
Reference
https://lawphil.net/judjuris/juri2016/oct2016/gr_172948_2016.html
 FIRST DIVISION

[G.R. No. 164974, AUGUST 05, 2015]

CHARLIE TE, PETITIONER, v. HON. AUGUSTO V. BREVA, IN HIS CAPACITY AS THE

PRESIDING JUDGE OF THE REGIONAL TRIAL COURT, 11TH JUDICIAL REGION, BRANCH 10,
DAVAO CITY; U R. BAHINTING, IN HIS CAPACITY AS SPECIAL INVESTIGATOR OF THE
NATIONAL BUREAU OF INVESTIGATION, SARANGGANI DISTRICT OFFICE; AND PRYCE
GASES, INC., RESPONDENTS.

Key People Involved

Petitioners Respondents
- Charlie Te - Augusto V. Breva
- U R. Bahinting
- Saranggani District Office
- Pryce Gases Inc.

Facts
The petitioner in this case sought to annul a search warrant issued against him, which was
based on applications submitted by both the National Bureau of Investigation (NBI) and Pryce
Gases, Inc. The search warrant was specifically issued due to allegations of the petitioner
hoarding liquefied petroleum gas (LPG) in violation of relevant laws. In response, the petitioner
filed an Omnibus Motion to Quash Warrant, bringing forward various issues such as the lack of
probable cause, failure to specify the offense, and the perceived illegality of the search. The
ensuing legal conflict revolves around the denial of this motion, with the respondent Presiding
Judge asserting that there was indeed probable cause, a clear specification of the offense, and
justification for the search under the plain view doctrine. This disagreement led the petitioner to
file a certiorari petition in the Court of Appeals, where further complications arose in relation to
the inclusion of the People of the Philippines as respondents and proof of serving the petition to
the Office of the Solicitor General. The Court of Appeals eventually dismissed the petition on
these grounds, a decision that was subsequently affirmed by the higher court.
Issue
The respondent Presiding Judge denied the petitioner's motion, asserting the existence of
probable cause, specifying the offense, and justifying the search under the plain view doctrine.
Dissatisfied with this decision, the petitioner filed a certiorari petition in the Court of Appeals
(CA), seeking to challenge the denial of the motion to quash the search warrant. However, the
CA dismissed the petition on the grounds of failure to implead the People of the Philippines and
the lack of proof regarding the service of the petition to the Office of the Solicitor General.
Ruling
The Court of Appeals (CA) ruled that the failure to implead the People of the Philippines
and the lack of proof of service on the Office of the Solicitor General were sufficient grounds for
dismissal. The petitioner argued that impleading the People was premature as no criminal case
had been filed, but the CA rejected this argument. Emphasizing that a search warrant is issued in
the name of the People of the Philippines, the CA deemed their omission from the petition as
fatal. The Court affirmed the CA decision, asserting that the People of the Philippines were
indispensable parties, and the dismissal was justified.
Reference
https://chanrobles.com/cralaw/2015augustdecisions.php?id=661
 SECOND DIVISION

[G.R. No. 210538, March 07, 2018]

DR. GIL J. RICH, PETITIONER, VS. GUILLERMO PALOMA III, ATTY. EVARISTA TARCE AND
ESTER L. SERVACIO, RESPONDENTS.
Key People Involved
Petitioners Respondents
- Gil J. Rich - Guillermo Paloma III
- Evarista Tarce
- Ester L. Servacio

Facts
In 1997, Dr. Gil Rich extended a loan of P1,000,000 to his brother Estanislao, and to
secure the debt, a real estate mortgage was placed on a property in Maasin City. Unfortunately,
Estanislao defaulted on the loan, prompting the foreclosure of the property through a public
auction in 2005. During this process, Dr. Gil Rich emerged as the highest bidder. Prior to the
foreclosure, in 2005, Estanislao entered into a loan agreement with Maasin Traders Lending
Corporation (MTLC), using the same property as collateral. Following the foreclosure,
Respondent Ester L. Servacio, serving as the president of MTLC, exercised equitable redemption
by offering P2,090,000 as redemption money. Subsequently, Dr. Gil Rich contested this action,
filing a complaint seeking the annulment of the Deed of Redemption. Dr. Gil Rich's primary
contention was that MTLC, having been dissolved by the Securities and Exchange Commission,
had lost its juridical personality, rendering the redemption legally invalid.
Issue
Dr. Gil Rich contended that Maasin Traders Lending Corporation (MTLC), dissolved by
the Securities and Exchange Commission in September 2003, lacked juridical personality to
carry out equitable redemption. He asserted that the dissolution of MTLC extinguished its legal
existence and, therefore, any actions taken afterward, including the redemption, were void. In
response, MTLC, represented by Ester L. Servacio, argued that the redemption was legitimate.
They pointed to Section 122 of the Corporation Code, which grants a dissolved corporation a
three-year period for the purpose of liquidation. According to MTLC, this provision allowed
them to engage in activities necessary for settling affairs, paying debts, and distributing assets
even after dissolution.
 Ruling
The Regional Trial Court (RTC) initially ruled in favor of Dr. Gil Rich, declaring the
Real Estate Mortgage between Estanislao and Maasin Traders Lending Corporation (MTLC) as
null and void due to the corporation's dissolved status. The Court of Appeals (CA) later reversed
this decision, asserting that the forgery allegations were unsubstantiated and highlighting the
validity of the notarized mortgage agreement between Estanislao and MTLC. The CA, however,
upheld the RTC's finding that Ester L. Servacio's non-appearance during pre-trial was
unjustified. The Supreme Court intervened, overturning the CA's decision. The highest court
declared the Real Estate Mortgage null and void, emphasizing that MTLC had already lost its
juridical personality before entering into the mortgage agreement, and therefore, any subsequent
actions, including the mortgage and redemption, were deemed invalid.
Reference
https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64077
 SECOND DIVISION

[G.R. No. 208638, January 24, 2018]

SPOUSES FRANCISCO ONG and BETTY LIM ONG, and SPOUSES JOSEPH
ONG CHUAN and ESPERANZA ONG CHUAN, PETITIONER, VS. BPI FAMILY
SAVINGS BANK, INC., RESPONDENTS.

Key People Involved

Petitioners Respondents
- Fransico Ong - BPI Family Savings Bank Inc.
- Betty Lim Ong
- Joseph Ong Chuan
- Esparanza Ong Chuan

Facts
Spouses Francisco Ong and Betty Lim Ong, in partnership with Spouses Joseph Ong
Chuan and Esperanza Ong Chuan, conducted their business operations under the banner of
"MELBROS PRINTING CENTER." In 1996, they engaged in discussions with managers from
the Bank of Southeast Asia (BSA) regarding potential loan facilities to support their business
expansion. Subsequently, in April 1997, the petitioners entered into a real estate mortgage
(REM) agreement, pledging their property in Paco, Manila, as collateral for a ₱15,000,000.00
term loan and a ₱5,000,000.00 credit line, amounting to ₱20,000,000.00 in total. Despite
assurances from BSA, only ₱10,444,271.49 was disbursed for the term loan, and ₱3,000,000.00
for the credit line, with a promise to release the remaining ₱2,000,000.00 upon the full payment
of ₱3,000,000.00. The petitioners complied with the conditions, paying the specified amount, but
BSA failed to fulfill its commitment, resulting in the petitioners' decision to cease further
amortization payments. Subsequently, BPI Family Savings Bank (BPI) merged with BSA,
inheriting all rights and obligations associated with the previous agreement.
Issue
In response to the failure of Bank of Southeast Asia (BSA) to release ₱2,000,000.00 and
the subsequent foreclosure attempt by BPI, the petitioners initiated legal proceedings, suing BPI
to enjoin the foreclosure and seeking damages. The trial court ruled in favor of the petitioners,
directing BPI to pay ₱20,469,498.00 as actual damages and ₱500,000.00 as attorney's fees.
However, the Court of Appeals (CA) reversed this decision, dismissing the complaint for
damages. The petitioners contested this reversal, asserting that the CA erred in its determination
that there was no perfected contract for the omnibus credit line and in its finding that BSA did
not incur any delay in fulfilling its obligations.
Ruling
The Supreme Court overturned the decision of the Court of Appeals, affirming the
existence of a perfected contract for the omnibus credit line. It underscored that the delay by
Bank of Southeast Asia (BSA) in releasing ₱2,000,000.00 constituted a violation of the contract's
terms, justifying the petitioners' refusal to continue paying amortizations. BPI, as the successor
to BSA, was deemed liable for BSA's obligations and was precluded from premature foreclosure.
The Supreme Court awarded ₱2,772,000.00 as actual damages, ₱100,000.00 as exemplary
damages, and adjusted attorney's fees to ₱300,000.00. Furthermore, it declared the extrajudicial
foreclosure of the real estate mortgage as void.
Reference
https://lawphil.net/judjuris/juri2018/jan2018/gr_208638_2018.html