Case Digest (G.R. No. 119176) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In G.R. No. 218738, Metropolitan Bank & Trust Company (Metrobank) v. Salazar Realty Corporation decided on March 9, 2022 under the 1987 Constitution, Metrobank challenged orders of the Regional Trial Court (RTC), Branch 9, Tacloban City, which refused to dismiss a derivative suit filed in 2001 by incorporators and stockholders of Salazar Realty Corporation (SARC)—Ramon Ang Salazar, Jr., Robert Ang Salazar, Roger Ang Salazar and Rosemarie Salazar Fernandez—seeking nullification of mortgage and foreclosure proceedings. SARC alleged that five parcels of its land were illegally mortgaged by its then officers, Consuelo and Ralph Salazar, to secure Tacloban RAS Construction Corp.’s loan from Metrobank, and that their deaths and resulting board vacancies voided corporate authorization. Metrobank acquired the properties via extrajudicial foreclosure and registered titles in its favor. Upon learning this, SARC’s shareholders lodged an adverse claim and filed a suit for quieting title, nu Case Digest (G.R. No. 119176) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Background
- Metropolitan Bank & Trust Company (Metrobank) – banking corporation.
- Salazar Realty Corporation (SARC) – real estate corporation, represented by stockholders-incorporators Ramon Jr., Robert, Roger, and Rosemarie.
- Tacloban RAS Construction Corporation (Tacloban RAS) – separate construction corporation.
- On November 5, 2001, SARC filed Civil Case No. 2001-11-164 in RTC Tacloban for quieting title and nullification of loan/mortgage contracts alleged to cloud its titles.
- Loan, Mortgage, and Foreclosure
- Tacloban RAS obtained loans from Metrobank: ₱10,000,000 (1992), increased to ₱12,000,000 (1996) and ₱18,500,000 (1999). Promissory note signed by Tacloban RAS officers.
- To secure the loan, SARC mortgaged five registered lots via a January 9, 1996 mortgage contract (amended in 1999), signed by SARC officers Consuelo and Ralph Salazar.
- Tacloban RAS defaulted; Metrobank foreclosed extrajudicially before RTC Tacloban, became winning bidder, and obtained new certificates of title in its name.
- Stockholders’ Derivative Suit
- Upon learning of foreclosure, SARC’s incorporators-stockholders discovered cancellation of SARC titles and registered adverse claims.
- They filed suit on SARC’s behalf alleging:
- Ultra vires mortgage (no corporate power to encumber substantially all assets without stockholder authorization under Corp Code Sec 40).
- Lack of authority of officers (vacant director seats unfilled; no valid board or stockholder resolution).
- Defective foreclosure proceedings (notice/publication defects; no personal notice; single bidder; alleged void petition).
- Metrobank’s negligence for failing to confirm signatories’ authority and corporate capacity.
- Metrobank moved to dismiss for lack of standing (derivative suit must be in special commercial court), jurisdictional defect (intra-corporate controversy), and failure to state cause of action. Trial court denied motion; CA affirmed denial of special-court jurisdiction.
Issues:
- Jurisdiction
- Must derivative suits be filed exclusively in special commercial courts under the Securities Regulation Code (RA 8799, Sec 5.2) and 2001 IRPIC?
- Did RTC Tacloban Branch 9 (regular court) lack jurisdiction over SARC’s derivative suit?
- Compliance with IRPIC Requisites for Derivative Suits
- Did SARC allege non-availment or futility of appraisal rights for mortgaging substantially all corporate assets (Corp Code Sec 40)?
- Did SARC certify that the derivative suit is not a nuisance or harassment?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)