Case Digest (G.R. No. 125986)
Facts:
In the case G.R. No. 263887 decided on August 19, 2024, Philippine Primark Properties, Inc. (Primark) filed a Petition for Review on Certiorari challenging the Court of Appeals' (CA) decision which reversed the dismissal by the Regional Trial Court (RTC) Branch 57, Makati City, of an interpleader complaint and related claims. The dispute involved Primark, respondent China Banking Corporation Trust and Assets Management Group (CBC-TAMG), and BDO Unibank, Inc. (BDO). Background: On May 11, 2018, Primark entered into an Omnibus Notes Facility and Security Agreement (ONFSA) with China Banking Corporation (CBC) and China Bank Savings, Inc. granting a PHP 7 billion credit facility. Primark assigned its receivables from leases to CBC-TAMG as security. The ONFSA also established a Debt Service Reserve Account (DSRA), from which CBC-TAMG was authorized to debit funds for unpaid obligations. Primark later contested the validity of the ONFSA, claiming it was void ab initio for violating thCase Digest (G.R. No. 125986)
Facts:
- Parties and Transaction
- Philippine Primark Properties, Inc. (Primark) entered into an Omnibus Notes Facility and Security Agreement (ONFSA) on May 11, 2018, with China Banking Corporation (CBC) and China Bank Savings, Inc. (CBSI), collectively the Banks, for a loan facility amounting up to PHP 7 billion.
- Primark assigned all present and future receivables from tenant lease contracts to CBC-TAMG (China Banking Corporation Trust and Assets Management Group) as security trustee.
- Tenants including BDO Unibank, Inc. (BDO) were notified of the assignment.
- Debt Service Reserve Account (DSRA)
- Primark was required to maintain a DSRA under the ONFSA to cover loan obligations.
- Upon default, CBC-TAMG was authorized to debit DSRA to pay the Banks.
- Primark made ten drawdowns totaling about PHP 3.947 billion but later defaulted after failing to pay interest of about PHP 76.9 million in September 2019.
- Abrogation Claim and Default
- Primark sent notice abrogating the ONFSA claiming it was void ab initio due to violations of banking laws relating to DOSRI (directors, officers, stockholders and related interests) loans.
- Primark failed to replenish DSRA after debiting, and was declared in default on December 5, 2019.
- Lease Contracts and Assignments
- Primark leased properties to BDO for branches and informed BDO via multiple notices that receivables were assigned to CBC-TAMG.
- CBC-TAMG sent notices to BDO to pay receivables directly to CBC-TAMG after an acceleration event due to default.
- Primark instructed BDO to ignore CBC-TAMG’s instructions claiming the assignment was void ab initio.
- BDO was caught in the conflicting demands and filed an interpleader complaint to determine who should receive the rent payments.
- Litigation
- BDO filed a Complaint for Interpleader with Consignation against Primark and CBC-TAMG before RTC-57, Makati City.
- CBC-TAMG filed cross-claims and counterclaims denying the voidness of the ONFSA and asserting its rights as security trustee.
- Primark contested CBC-TAMG’s legal capacity to sue, alleging it was a mere department of CBC without juridical personality.
- RTC-57 dismissed the complaint, cross-claims, and counterclaims for lack of CBC-TAMG’s capacity to sue and be sued.
- CBC-TAMG appealed to the Court of Appeals (CA), which reversed the RTC and allowed the case to proceed, affirming CBC-TAMG’s capacity and real-party-in-interest status.
- Primark filed a Petition for Review on Certiorari with the Supreme Court assailing the CA ruling.
Issues:
- Whether the CA erred in giving due course to CBC-TAMG’s appeal from the RTC order dismissing the first interpleader case.
- Whether the CA erred in reinstating BDO’s first interpleader complaint despite BDO’s withdrawal of appeal.
- Whether CBC-TAMG has the legal capacity to sue and be sued as a separate juridical entity from CBC.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)