Case Digest (G.R. No. 233930)
Facts:
In 1977, Elias Q. Tan, President of Lapulapu Foundation, Inc., secured four promissory notes of ₱100,000.00 each from Allied Banking Corporation, evidenced by Notes No. 504 (maturing Feb. 5, 1978), No. 621 (Mar. 28, 1978), No. 716 (Apr. 11, 1978) and No. 839 (May 5, 1978). By January 23, 1979, the principal and accrued unpaid interests totaled ₱493,566.61. Despite two demand letters dated January 3 and 30, 1979—shown as received via registry return cards—the Foundation and Tan defaulted. The Foundation denied corporate liability, claiming Tan borrowed in his personal capacity for his own benefit and filed cross-claims against Tan and counterclaims against the Bank. The Regional Trial Court of Cebu City, Branch 15, found for the Bank, ordering the defendants jointly and solidarily to pay the principal with 14% interest from January 24, 1979, plus 2% service charges, 1% monthly penalties, attorney’s fees and litigation expenses. On appeal, the Court of Appeals affirmed with modifiCase Digest (G.R. No. 233930)
Facts:
- Loan Transactions
- In 1977, petitioner Elias Q. Tan, as President of Lapulapu Foundation, Inc., obtained four loans of ₱100,000.00 each from Allied Banking Corporation, evidenced by promissory notes:
- BD No. 504 (Nov. 7, 1977; due Feb. 5, 1978; amount as of Jan. 23, 1979: ₱123,377.76)
- BD No. 621 (Nov. 28, 1977; due Mar. 28, 1978; amount as of Jan. 23, 1979: ₱123,411.10)
- BD No. 716 (Dec. 12, 1977; due Apr. 11, 1978; amount as of Jan. 23, 1979: ₱122,322.21)
- BD No. 839 (Jan. 5, 1978; due May 5, 1978; amount as of Jan. 23, 1979: ₱120,455.54)
- The notes provided for automatic annual “roll-over” of principal and unpaid interest until payment from proceeds of Tan’s shares in Lapulapu Industries Corporation.
- Judicial Proceedings
- Allied Bank sent two demand letters (Jan. 3, 1979 and Jan. 30, 1979); registry return cards were introduced at trial. Petitioners denied receipt.
- RTC Cebu (Branch 15) rendered judgment requiring petitioners to pay jointly and solidarily:
- ₱493,566.61 principal; 14% interest from Jan. 24, 1979; 2% service charge; 1% monthly penalty
- Attorneys’ fees (25% of total) and litigation expenses (₱1,000.00) plus costs
- On appeal, the CA affirmed with modification: deleted attorneys’ fees; held notes binding; applied parol evidence rule; found demand made; pierced the corporate veil to impose solidary liability on both petitioners.
Issues:
- Whether the loans became due and demandable despite petitioners’ denial of prior demand.
- Whether the CA correctly applied the parol evidence rule to exclude an alleged unwritten agreement on annual renewal and payment source.
- Whether the CA properly pierced the corporate veil and applied estoppel to hold Lapulapu Foundation, Inc. and Elias Q. Tan jointly and solidarily liable.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)