Case Digest (G.R. No. 167004) Core Legal Reasoning Model
Facts:
The case at hand is Development Bank of the Philippines (DBP) v. Ben P. Medrano and Privatization Management Office (PMO), decided by the Supreme Court of the Philippines on February 7, 2011. This dispute originates from the events of 1980 concerning the ownership of shares in Paragon Paper Industries, Inc. Respondent Ben Medrano, who served as the President and General Manager of Paragon, owned 37,681 shares in the company. DBP sought to buy these shares as part of a plan to consolidate its ownership of Paragon. During a meeting, DBP's Chairman instructed Medrano to contact minority shareholders, including himself, to facilitate the sale at P65.00 per share. Medrano was able to gather consensus from the minority shareholders, except one, to sell their shares to DBP. DBP then approved this transaction under Resolution No. 4270, setting conditions for the sale that included the surrender of shares to DBP and obtaining written agreements from all shareholders involved.
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Case Digest (G.R. No. 167004) Expanded Legal Reasoning Model
Facts:
Background of the Case:
- Respondent Ben Medrano was the President and General Manager of Paragon Paper Industries, Inc. (Paragon) and owned 37,681 shares in the company.
- In 1980, petitioner Development Bank of the Philippines (DBP) sought to consolidate its ownership in Paragon. DBP instructed Medrano to convince minority stockholders to sell their shares to DBP at P65.00 per share (65% of the stock's par value of P100.00).
Medrano's Actions:
- Medrano contacted all minority stockholders except one who was in Singapore. All agreed to sell their shares, and Medrano delivered his 37,681 shares to DBP, valued at P2,449,265.00.
- DBP approved the sale under Resolution No. 4270, subject to three conditions: (1) surrender of 57,596 shares to DBP, (2) written conformity from all parties, and (3) implementation within 45 days from approval (December 24, 1980).
Commission Agreement:
- DBP offered Medrano a commission of P185,010.00 if he could persuade all minority stockholders to sell their shares. Medrano convinced only two stockholders, reducing his commission to P155,455.00.
Failure to Pay:
- Medrano demanded payment for his shares and commission, but DBP refused, citing the failure to meet the conditions in Resolution No. 4270. Medrano filed a complaint for specific performance and damages on September 2, 1981.
Transfer of Shares:
- During the case, DBP transferred the shares to the Asset Privatization Trust (APT), later substituted by the Privatization Management Office (PMO). The APT argued that it assumed liabilities only to intermediaries, not individuals like Medrano.
RTC Decision:
- On January 26, 1999, the RTC ruled in favor of Medrano, ordering DBP to pay P2,449,265.00 plus legal interest, attorney's fees of P100,000.00, and costs of suit. The RTC dismissed DBP's cross-claim against the APT.
CA Decision:
- The CA affirmed the RTC decision on December 14, 2004, but refused to grant Medrano's claim for commission since he did not appeal the RTC decision. The CA held that DBP waived the conditions by retaining and transferring Medrano's shares.
Issues:
- Whether the CA erred in applying Article 1545 of the Civil Code and holding that DBP exercised the second option under the article to justify ordering DBP to pay the value of Medrano's shares.
- Whether the CA erred in awarding attorney's fees to Medrano.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)