Facts:

• The case involves Unlad Resources Development Corporation, Unlad Rural Bank of Noveleta, Inc., Unlad Commodities, Inc., Helena Z. Benitez, and Conrado L. Benitez II as petitioners.
• Respondents include Renato P. Dragon, Tarcisius R. Rodriguez, Vicente D. Casas, Romulo M. Virata, Flaviano Perdito, Teotimo Benitez, Elena Benitez, and Rolando Suarez.
• On December 29, 1981, respondents, as controlling stockholders of the Rural Bank of Noveleta, entered into a Memorandum of Agreement with Unlad Resources, represented by Helena Z. Benitez.
• The agreement required Unlad Resources to invest ₱4,800,000 in exchange for control and management of the bank.
• Respondents claimed they fulfilled their obligations by transferring control, but alleged Unlad Resources did not invest the agreed amount or pay the initial capital of ₱1,200,000.
• On August 10, 1984, Unlad Resources leased a mango plantation managed by Unlad Commodities, Inc., which respondents opposed as misaligned with bank operations.
• On May 20, 1987, Unlad Rural Bank announced plans to retire preferred shares, which respondents contested due to existing sinking funds.
• On July 3, 1987, respondents filed a complaint for rescission of the Memorandum of Agreement and return of control, along with claims for damages.
• The Regional Trial Court (RTC) ruled in favor of respondents, rescinding the agreement and ordering the return of control, along with damages.
• Petitioners appealed to the Court of Appeals (CA), which affirmed the RTC's decision, leading to a petition for review before the Supreme Court.

Issue:

• (Unlock)

Ruling:

• The Supreme Court ruled that the RTC had jurisdiction over the case, affirming the CA's decision.
• The Court held that the action for rescission had not prescribed, applying Article 1144 of the Civil Code.
• The Court found that the petitioners failed to comply with their obligations under the Memorandum of Agreement.
...(Unlock)

Ratio:

• The Supreme Court reasoned that the RTC's jurisdiction was appropriate as the case involved contract rescission, a matter within the trial court's purview, despite the corporate nature of the parties.
• The Court clarified that issues of mismanagement and corporate control were distinct from the contractual obligations under the Memorandum of Agreement.
• Regarding pres...continue reading