Case Digest (G.R. No. 206327) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
The case International Exchange Bank v. Rudy S. Labos and Associates, Inc., et al. arose from Civil Case No. 05-313 filed before the Regional Trial Court (RTC) of Makati City, Branch 62. On June 6 and July 2, 2003, petitioner International Exchange Bank (now Union Bank of the Philippines) granted a ₱10 million credit line to respondent Rudy S. Labos & Associates, Inc. (RSLAI), represented by Rodolfo S. Labos, under a Letter and Credit Agreement, secured by a Deed of Assignment over Condominium Unit 23-A, Luna Gardens, Rockwell Center, Makati City, and by a Continuing Surety Agreement executed by spouses Rodolfo and Consuelo Labos. RSLAI executed four promissory notes on January 30, 2004, all maturing July 30, 2004, defaulted, and thereafter consolidated them into a single promissory note on October 29, 2004, due January 31, 2005. When payment was not made, IEB demanded settlement by demand letters of September 8, 2004 and April 5, 2005, showing an outstanding obligation of ₱5,72... Case Digest (G.R. No. 206327) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Credit Facility
- International Exchange Bank (IEB) granted Rudy S. Labos & Associates, Inc. (RSLAI) a ₱10 million credit line under a Letter Agreement (June 6, 2003) and Credit Agreement (July 2, 2003).
- RSLAI, through its President Rodolfo S. Labos, assigned Unit 23-A Luna Gardens, Rockwell Center, Makati City to IEB as collateral via Deed of Assignment dated July 2, 2003.
- Spouses Rodolfo and Consuelo Labos executed a Continuing Surety Agreement (July 2, 2003) in IEB’s favor.
- Loan Availments and Default
- RSLAI availed of four promissory notes totaling ₱9,438,755, all maturing July 30, 2004, but defaulted upon maturity.
- IEB consolidated and extended the notes into one promissory note (₱5,434,709.95, due January 31, 2005); RSLAI again defaulted.
- As of April 5, 2005, RSLAI and the Spouses Labos owed ₱5,729,726.94; IEB demanded payment.
- Transfer of Collateral and Rockwell’s Role
- RSLAI assigned the condominium unit to JHL & Sons Realty, Inc. via Deed of Assignment (August 25, 2004); Rockwell Land Corp. (the developer) “conformed” by signing the transfer without IEB’s written consent.
- IEB notified Rockwell of breach of the Deed of Assignment’s Section 2.04, threatening legal action.
- Complaint, Defenses, and Lower Court Proceedings
- IEB sued RSLAI, the Spouses Labos, and Rockwell for the unpaid loan; RSLAI and the Spouses Labos raised novation, improper service, and excess collateral; Rockwell denied privity and liability under the Deed of Assignment.
- RTC (Branch 62, Makati City) on December 22, 2009: held RSLAI and the Spouses Labos jointly and severally liable for ₱5,729,726.94 plus interest and fees; dismissed complaint against Rockwell for lack of proven liability.
- CA November 23, 2011: granted IEB’s partial appeal, held Rockwell jointly and severally liable; CA December 20, 2012 Resolution on reconsideration: reversed that finding and affirmed the RTC decision absolving Rockwell.
- IEB’s motion for reconsideration was denied (CA Resolution, March 15, 2013); IEB filed this petition.
Issues:
- Whether Rockwell Land Corporation can be held liable to International Exchange Bank for RSLAI’s unpaid loan obligations by virtue of:
- Signing the “conforme” portion of the Deed of Assignment dated July 2, 2003;
- Alleged novation of the Contract to Sell;
- Provision of Section 2.04 of the Deed of Assignment; and
- Principles of bad faith, double sale, and solidary liability under the Civil Code.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)