Case Digest (G.R. No. 124535) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In The Rural Bank of Lipa City, Inc. v. Hon. Court of Appeals, et al. (G.R. No. 124535, September 28, 2001), the Rural Bank of Lipa City, Inc. (“the Bank”), through its officers and directors Bernardo Bautista, Jaime Custodio, Octavio Katigbak, Francisco Custodio and Juanita Bautista, filed a petition to annul orders of the Securities and Exchange Commission (“SEC”) en banc and its hearing officer Enrique L. Flores, Jr., in SEC Case No. 02-94-4683. Private respondent Reynaldo Villanueva, Sr., a stockholder, had executed on February 5, 1993 a Deed of Assignment of his 10,467 shares (including those of eight other shareholders under his control) in favor of the Bank’s stockholders. On November 10, 1993 he and his wife Avelina acknowledged a P4,000,000 debt to the Bank to be paid from the sale of their real property. Upon their failure to pay by December 31, 1993, the Bank demanded surrender of the stock certificates and additional collateral to cover a remaining balance of P3,346, Case Digest (G.R. No. 124535) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Background
- Petitioners: The Rural Bank of Lipa City, Inc., its officers and directors (Bernardo Bautista, Jaime Custodio, Octavio Katigbak, Francisco Custodio, Juanita Bautista)
- Private Respondents: Reynaldo Villanueva, Sr., Avelina M. Villanueva, Catalino Villanueva, Andres Gonzales, Aurora Lacerna, Celso Laygo, Edgardo Reyes, Alejandra Tonogan, Elena Usi
- Deed of Assignment and Debt Acknowledgment
- February 5, 1993: Reynaldo Villanueva, Sr. assigns his 10,467 shares (including shares of eight other stockholders under his control) to the Bank’s directors.
- November 10, 1993: Villanuevas acknowledge indebtedness of ₱4,000,000 to the Bank, to be paid from proceeds of real property sale.
- Failure to Pay and Conversion of Shares
- December 31, 1993 due date passes; Board demands surrender of stock certificates and additional collateral for ₱3,346,898.54 balance.
- Villanuevas ignore demand; Bank converts their shares into treasury stock; Villanuevas challenge legality.
- Stockholders’ Meeting and SEC Proceedings
- January 15, 1994: Annual stockholders’ meeting (without notice to Villanuevas) elects new directors; Villanuevas file SEC petition for annulment, damages, and preliminary injunction (SEC Case No. 02-94-4683).
- SEC Hearing Officer issues TRO (February 16, 1994) and later preliminarily enjoins new directors; SEC en banc on December 16, 1994 grants injunction; SEC orders upheld on reconsideration.
- Certiorari Proceedings and CA Review
- January 1995: Petitioners file certiorari vs. SEC Hearing Officer’s orders before SEC en banc (Case No. EB-440); SEC en banc denies relief (June 7 and September 29, 1995).
- Court of Appeals (CA-G.R. SP No. 38861) dismisses petition for review (February 27, 1996) and denies reconsideration (March 29, 1996).
Issues:
- Effectivity of Share Assignment
- Whether Reynaldo and Avelina Villanueva’s Deed of Assignment effected a valid transfer of their shares absent endorsement and delivery of certificates.
- Validity of SEC Injunctions and Stockholders’ Meeting
- Whether the SEC Hearing Officer and en banc committed grave abuse of discretion in issuing TRO and preliminary injunction.
- Whether the January 15, 1994 stockholders’ meeting and election of directors, held without notice to the Villanuevas, was valid.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)