Case Digest (G.R. No. 187838)
Facts:
The case involves Adriatico Consortium, Inc. (ACI), Primary Realty Corporation (PRC), and Benito Cu-Uy-Gam as petitioners against the Land Bank of the Philippines as the respondent. The events leading to this case began in 1997 when William A. Siy, the president of ACI, applied for a credit line of PhP 200 million from Land Bank to fund the completion of the Pan Pacific Hotel and Adriatico Square, both owned by ACI. The lands on which these buildings were constructed belonged to PRC. The loan was approved, and a Mortgage Trust Indenture (MTI) was executed on January 15, 1998, designating Land Bank as the trustee for the mortgaged properties. The MTI was amended on April 28, 1998, increasing the secured amount to PhP 600 million, with both Land Bank and Metropolitan Bank participating in the agreement.
On July 8, 1998, Siy unilaterally amended the MTI to include J.V. Williams Realty and Development Corporation (JVWRDC) as a borrower without informing other ACI officials. Thi...
Case Digest (G.R. No. 187838)
Facts:
Background of the Loan Agreement
- In 1997, William A. Siy, president of Adriatico Consortium, Inc. (ACI), applied for a PhP 200 million credit line with Land Bank of the Philippines (Land Bank) to fund the construction of the Pan Pacific Hotel and Adriatico Square, both owned by ACI. The lands for these projects belonged to Primary Realty Corporation (PRC).
- A Mortgage Trust Indenture (MTI) was executed on January 15, 1998, to secure the loan, with Land Bank as trustee of the mortgaged properties.
Amendments to the MTI
- On April 28, 1998, the MTI was amended to increase the secured amount to PhP 600 million. Land Bank and Metrobank participated in the MTI, with Land Bank issued Mortgage Participation Certificate (MPC) No. 0001 for PhP 200 million and Metrobank issued MPC No. 0003 for PhP 100 million.
- On July 8, 1998, the MTI was amended again to include J.V. Williams Realty and Development Corporation (JVWRDC), a majority-owned corporation of Siy, as a borrower. Land Bank issued MPC No. 0002 for PhP 200 million and MPC No. 0004 for PhP 100 million to cover JVWRDC's loans.
Discovery of Fraud and Legal Action
- ACI fully paid the amounts under MPC No. 0001 and MPC No. 0003, but Land Bank refused to cancel the MTI, revealing that it had not received payments for the PhP 200 million loan under MPC No. 0001.
- ACI discovered that Siy had not remitted ACI's payments and that the second amendment to the MTI was facilitated by forged secretary's certificates from ACI and PRC.
- On June 6, 2000, ACI, PRC, and Benito Cu-Uy-Gam (ACI's new president) filed a Petition for Declaration of Nullity, Specific Performance, Injunction, and Damages against Land Bank and Siy.
Partial Compromise Agreement
- On November 14, 2000, the parties entered into a Partial Compromise Agreement, wherein ACI agreed to pay Land Bank PhP 289,656,868.97 to settle MPC No. 0001. The RTC approved the agreement on January 31, 2001.
- The agreement also stipulated that all actions regarding MPC Nos. 0002 and 0004 would be suspended until the parties liable were determined.
Land Bank's Sale of Receivables
- On January 15, 2008, Land Bank informed ACI that the JVWRDC loans under MPC Nos. 0002 and 0004 were included in a sealed-bid public auction of non-performing assets under the Special Purpose Vehicle Act.
- ACI viewed this as a violation of the Partial Compromise Agreement and filed a Motion for Execution and a Reiteration of Prayer for TRO and/or Writ of Preliminary Injunction to prevent the foreclosure of the MPCs.
- The RTC granted ACI's motion, issuing a Writ of Execution and a Writ of Preliminary Injunction, which Land Bank challenged before the Court of Appeals (CA).
Issue:
- Whether Land Bank's sale of the receivables during litigation violated its obligation under the Partial Compromise Agreement to cooperate with petitioners in determining the parties liable under MPC Nos. 0002 and 0004.
- Whether the sale of credit or receivables falls under the term "action" as proscribed in the Partial Compromise Agreement.
- Whether the CA erred in setting aside the writ of execution issued by the RTC due to Land Bank's violations of the compromise agreement.
Ruling:
The Supreme Court ruled in favor of petitioners, holding that Land Bank's sale of the receivables violated the Partial Compromise Agreement. The Court reinstated the RTC's Orders and Writ of Execution, nullifying the CA's decision.
Ratio:
- (Unlock)