Case Digest (G.R. No. 173349)
Facts:
Samuel U. Lee and Pauline Lee and Asiatrust Development Bank, Inc. v. Bangkok Bank Public Company, Limited, G.R. No. 173349, February 09, 2011, First Division, Velasco Jr., J., writing for the Court. Petitioners are the spouses Samuel U. Lee and Pauline Lee and Asiatrust Development Bank, Inc.; respondent is Bangkok Bank Public Company, Limited.In 1995–1996 Bangkok Bank extended credit lines to Midas Diversified Export Corporation (MDEC) and Manila Home Textile, Inc. (MHI), both Lee-family corporations, and obtained guaranties from members of the Lee family including Samuel. MDEC later obtained a loan facility from Asiatrust on July 25, 1996. Samuel purchased several parcels in Cupang, Antipolo (the Antipolo properties) in 1997 and, after MDEC defaulted in 1997, negotiated with Asiatrust to mortgage those properties as security for MDEC’s indebtedness. A real estate mortgage (REM) in favor of Asiatrust was executed and annotated on the titles on February 23, 1998; Asiatrust foreclosed and purchased the properties at auction on April 15, 1998, and the sale was registered April 21, 1998. New titles in Asiatrust’s name were issued April 30, 1999.
Before those events, Security Bank Corporation (SBC) obtained a writ of preliminary attachment against the Lees on January 30, 1998 in an unrelated case, and the Lee corporations filed a consolidated petition for declaration of a state of suspension of payments with the Securities and Exchange Commission (SEC) on February 16, 1998; the SEC issued a suspension order on February 20, 1998. Bangkok Bank sued the Lees on March 12, 1998 in Makati (securing writs of preliminary attachment) to recover on its guarantees, and later—on July 20, 1999—filed before the RTC, Branch 73 in Antipolo (Civil Case No. 99-5388) a complaint seeking rescission of the REM, annulment of the foreclosure sale, cancellation of Asiatrust’s titles and damages.
The RTC (Branch 73, Antipolo) after trial dismissed Bangkok Bank’s case on April 21, 2003 for lack of merit, finding no proven fraud, collusion or violation of the SEC suspension order. The Court of Appeals (CA) reversed on March 15, 2006, ordering rescission of the REM, annulment of the foreclosure sale, cancellation of Asiatrust’s titles and reversion of titles to the Lees; its decision relied largely on the SEC Suspension Order, the inclusion of the Antipolo parcels in...(Pro-only)
Issues:
- Whether Bangkok Bank may maintain an action to rescind the REM over the Antipolo properties despite not exhausting all legal remedies to satisfy its claim.
- Whether privately owned properties of natural persons may be covered by an SEC suspension order in a petition for suspension of payments.
- Whether a surety or guarantor (or a third-party mortgagee) is guilty of defrauding creditors for executing a REM in favor of one creditor prior to the filing ...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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