Case Digest (G.R. No. 21049)
Facts:
On December 29, 1981, Unlad Resources Development Corporation, through its chairperson Helena Z. Benitez, entered into a Memorandum of Agreement with the controlling stockholders of the then Rural Bank of Noveleta (hereafter respondents) whereby Unlad Resources would subscribe to P4,800,000.00 worth of non-voting shares and immediately pay P1,200,000.00 as part of this subscription, in exchange for control and management of the bank. The respondents promptly transferred such control and duly renamed the institution Unlad Rural Bank of Noveleta, Inc. Despite repeated demands, Unlad Resources failed to infuse the agreed capital of P4.8 million and to pay the P1.2 million initial subscription. Moreover, the bank entered into a lease and management agreement involving a mango plantation with Unlad Commodities, Inc., a subsidiary of Unlad Resources, resulting in irregular expenditures and Central Bank findings of non-bona fide rural banking operations. On July 3, 1987, respondents fiCase Digest (G.R. No. 21049)
Facts:
- Memorandum of Agreement (December 29, 1981)
- Parties: petitioners Unlad Resources Development Corporation (through its Chair, Helena Z. Benitez) and respondents (Renato P. Dragon et al.), controlling stockholders of Rural Bank of Noveleta, Inc.
- Terms: respondents to transfer control and management of the Rural Bank to Unlad Resources; Unlad Resources to subscribe to non-voting shares worth ₱4.8 million (minimum 480,000 shares) and pay up ₱1.2 million immediately as paid-in capital.
- Post-agreement acts and disputes
- Respondents complied by transferring control; bank renamed Unlad Rural Bank of Noveleta, Inc.; petitioners failed to pay ₱1.2 million and subscribe ₱4.8 million worth of shares despite repeated demands.
- August 10, 1984: Unlad Resources Board authorized lease of a mango plantation to the Rural Bank; Unlad Commodities, Inc. managed plantation under an 80%–20% profit-sharing scheme favoring UCI.
- May 20, 1987: Rural Bank notified respondents of Central Bank approval to retire Development Bank of the Philippines preferred shares; respondents objected, citing existing sinking fund and cheap funding source.
- Litigation history
- July 3, 1987: respondents filed Complaint before RTC Makati for rescission of the Memorandum of Agreement, return of control, and damages.
- RTC Decision (1991): declared the agreement rescinded; ordered Unlad Resources to return control of the Rural Bank; ordered mutual restitution (bank to return ₱1,003,070); appointed BSP Receiver; awarded actual damages (₱4,601,765.38), moral damages (₱500,000), exemplary damages (₱100,000), attorney’s fees (₱100,000), and costs.
- CA Decision (November 29, 2000) and Resolution (August 2, 2001): dismissed petitioners’ appeal for lack of merit; affirmed RTC in toto.
- Petition for Review on Certiorari (Rule 45) filed with the Supreme Court, challenging jurisdiction, prescription, performance/impossibility, rescission procedure, and damages awards.
Issues:
- Jurisdiction
- Whether the RTC has jurisdiction over a rescission suit involving intra-corporate relations, in light of P.D. 902-A and the SEC’s exclusive jurisdiction.
- Effect of R.A. 8799 (Securities Regulation Code) transferring intra-corporate dispute cases to RTC.
- Prescription
- Whether the action for rescission is governed by Article 1389 (four-year period for rescissible contracts) or by Article 1144 (ten-year period for written contracts).
- Time of accrual of the right of action.
- Performance and impossibility
- Whether petitioners fully complied with their subscription and payment obligations under the Memorandum of Agreement.
- Whether performance became legally or factually impossible due to authorized capital stock limits.
- Rescission and restitution
- Whether rescission was properly decreed under Article 1191 of the Civil Code.
- Whether mutual restitution (status quo ante) was correctly ordered under Article 1385.
- Damages and attorney’s fees
- Propriety and basis of actual compensatory damages (₱4,601,765.38).
- Basis for moral and exemplary damages.
- Entitlement to attorney’s fees in absence of stipulation.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)