Case Digest (G.R. No. 206327)
Case Digest (G.R. No. 206327)
Facts:
International Exchange Bank v. Rudy S. Labos & Associates, Inc., Spouses Rodolfo S. Labos and Consuelo R. Labos, and Rockwell Land Corporation, G.R. No. 206327, July 06, 2022, the Supreme Court First Division, Hernando, J., writing for the Court.Petitioner International Exchange Bank (IEB) sued respondents Rudy S. Labos & Associates, Inc. (RSLAI), Spouses Rodolfo S. and Consuelo R. Labos (the Spouses Labos), and Rockwell Land Corporation (Rockwell) for sum of money arising from RSLAI’s unpaid promissory notes, and prayed for preliminary attachment. RSLAI had been granted a P10,000,000 credit line by IEB and, as interim security, executed a Deed of Assignment (2 July 2003) assigning its rights over Unit 23-A Luna Gardens (a Contract to Sell originally between RSLAI and Rockwell). The Spouses executed a Continuing Surety Agreement in favor of IEB.
RSLAI executed several promissory notes that matured in July 2004 but defaulted. After failed restructuring negotiations, IEB consolidated the indebtedness into Promissory Note No. SCL04469 (29 Oct 2004) which matured 31 Jan 2005; RSLAI again defaulted. IEB learned that RSLAI had purportedly assigned the condominium to JHL & Sons Realty, Inc. (Deed of Assignment dated 25 Aug 2004; transfer confirmed by Rockwell), depriving IEB of collateral. IEB demanded payment and sued RSLAI and the Spouses for P5,729,726.94 (April 5, 2005 statement) and sought to hold Rockwell jointly and severally liable for allowing the transfer without IEB’s consent.
RSLAI and the Spouses pleaded novation (that the loan restructure extinguished prior obligations), challenged service of summons, and counterclaimed for damages and attorney’s fees. Rockwell denied privity under the Deed of Assignment, argued its signature was only a “conforme” reflecting consent required under the Contract to Sell, contended the Deed did not bind it to any obligation, and counterclaimed for attorney’s fees and damages.
The Regional Trial Court (RTC), Makati, Branch 62, in its December 22, 2009 Decision ruled for IEB against RSLAI and the Spouses (joint and several liability for the debt plus interest and collection fees) but dismissed the complaint as to Rockwell for lack of proof of liability. IEB appealed to the Court of Appeals (CA), which in a November 23, 2011 Decision modified the RTC ruling and held Rockwell jointly and severally liable with RSLAI and the Spouses, concluding Rockwell became bound by signing the Deed of Assignment and that novation took place. Rockwell filed a motion for reconsideration.
By Resolution dated December 20, 2012, the CA granted Rockwell’s motion for reconsideration, reversed its November 2011 Decision, and reinstated the RTC’s dismissal of Rockwell — reasoning that Rockwell’s signature was merely a conformity under its Contract to Sell and that no privity, novation, or assumed liability arose. IEB’s motion for reconsideration before the CA was denied (March 15, 2013). IEB then filed this Petition for Review on Certiorari under Rule 45 seeking reversal of the CA’s December 20, 2012 Resolution absolving Rockwell of liability.
Issues:
- Did IEB establish that Rockwell is a party to and bound by the Deed of Assignment such that Rockwell can be held liable to IEB?
- Did novation occur such that IEB stepped into RSLAI’s shoes as purchaser under the Contract to Sell?
- Can Rockwell be held liable for damages for bad faith or contractual breach resulting in IEB’s loss of collateral?
- Can Rockwell be held jointly and severally (solidarily) liable with RSLAI and the Spouses Labos for RSLAI’s loan obligation?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)