Facts:

• The case involves two consolidated petitions for review on certiorari under Rule 45 of the Rules of Court.
• Petitioners: Metropolitan Bank and Trust Company (Metrobank), substituted by Meridian (SPV-AMCI) Corporation, and Chuayuco Steel Manufacturing Corporation (CSMC).
• Respondent: International Exchange Bank (IEB), now Union Bank of the Philippines.
• The dispute originates from financial transactions and legal issues involving Sacramento Steel Corporation (SSC), a steel manufacturing business in Tagoloan, Misamis Oriental.
• SSC entered into a Credit Agreement with IEB on September 10, 2001, which included an omnibus credit line and loans totaling P180,000,000.00.
• SSC secured these loans with five separate deeds of chattel mortgage over its equipment.
• SSC defaulted on its payments, leading IEB to file an action for injunction and a supplemental complaint for a writ of replevin or payment of SSC's obligations.
• SSC countered with a complaint for annulment of mortgage and specific performance, seeking to restructure its obligations and prevent IEB from foreclosing the mortgage.
• The Regional Trial Court (RTC) of Misamis Oriental issued various orders, including a writ of preliminary injunction and the admission of motions for intervention by Metrobank and CSMC.
• IEB filed a petition for certiorari with the Court of Appeals (CA), which annulled and set aside the RTC's orders.
• Metrobank and CSMC then filed petitions for review on certiorari with the Supreme Court.

Issue:

• (Unlock)

Ruling:

1. The Supreme Court ruled that Metrobank's complaint-in-intervention is indeed in the nature of an accion pauliana.
2. The Supreme Court affirmed the Court of Appeals' ruling that the RTC committed grave abuse of discretion in allowing Metrobank's intervention.
3. The Supreme Court ruled that IEB is not guilty of forum shopping.
4. The Supreme Court found that IEB's failure to file a motion for reconsider...(Unlock)

Ratio:

1. The Supreme Court found that Metrobank's complaint-in-intervention aimed to rescind the chattel mortgages executed by SSC in favor of IEB, which is characteristic of an accion pauliana. Under Article 1381 of the Civil Code, an accion pauliana is an action to rescind contracts in fraud of creditors. However, Metrobank did not exhaust other legal remedies before filing for rescission, making its action premature and improper.
2. The Court held that Metrobank's intervention was improper because it sought a remedy in the nature of an accion pauliana without exhausting other legal remedies. Th...continue reading