Case Digest (G.R. No. 197358)
Facts:
The case involves Butuan Development Corporation (BDC) as the petitioner and the Twenty-First Division of the Court of Appeals, Max Arriola, Jr., De Oro Resources, Inc. (DORI), and Louie A. Libarios as respondents. The events leading to the case began on March 31, 1966, when BDC, then in the process of incorporation, purchased a 7.6923-hectare parcel of land in Butuan City from the Spouses Jose and Socorro Sering. The Registry of Deeds for Butuan City subsequently issued Transfer Certificate of Title (TCT) No. RT-4724 in BDC's name on January 28, 1969. On May 5, 1998, Max L. Arriola, Jr., claiming to be the Chairman of BDC and armed with a notarized resolution from the BDC Board of Directors, mortgaged the subject property to DORI and its President, Louie A. Libarios.
BDC later executed its Articles of Incorporation on May 13, 2002, which the Securities and Exchange Commission approved on May 23, 2002. On August 23, 2005, BDC filed a complaint for the declaration of nu...
Case Digest (G.R. No. 197358)
Facts:
Background of the Case
- On March 31, 1966, Butuan Development Corporation (BDC), then in the process of incorporation, purchased a 7.6923-hectare parcel of land in Butuan City from the Spouses Jose and Socorro Sering.
- On January 28, 1969, Transfer Certificate of Title (TCT) No. RT-4724 was issued in BDC’s name.
Mortgage of the Property
- On May 5, 1998, Max L. Arriola Jr., representing himself as BDC’s Chairman, mortgaged the property to De Oro Resources, Inc. (DORI) and its President, Louie A. Libarios, using a notarized resolution allegedly from BDC’s Board of Directors.
Incorporation of BDC
- On May 23, 2002, BDC was officially incorporated after its Articles of Incorporation were approved by the Securities and Exchange Commission.
Discovery of Missing Title
- In 2004, BDC discovered that the owner’s duplicate copy of TCT No. RT-4724 was missing and later found in Libarios’s possession. BDC alleged that the Arriolas misrepresented themselves as BDC’s owners and directors to execute the mortgage.
Legal Action
- On August 23, 2005, BDC filed a complaint for the declaration of nullity of the real estate mortgage (REM) against Max Arriola Jr., Libarios, DORI, and others, claiming the mortgage was void.
Issue:
- Whether the Court of Appeals (CA) gravely abused its discretion in setting aside the Regional Trial Court’s (RTC) orders, ruling that BDC’s complaint failed to state a cause of action.
- Whether BDC, which was not yet incorporated at the time of the mortgage execution, had a right to the subject property.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Conclusion:
The Supreme Court ruled in favor of BDC, emphasizing that the complaint adequately stated a cause of action and that the issues raised should be resolved during trial. The CA’s dismissal was deemed unwarranted, and the case was remanded for further proceedings.