Case Digest (G.R. No. 157966)
Facts:
In Waterfront Philippines, Inc., Wellex Industries, Inc., and The Wellex Group, Inc. vs. Social Security System (G.R. No. 249337, July 6, 2021), the petitioners (WPI, WII, WGI) entered into on October 28, 1999 a Contract of Loan with Real Estate Mortgage with Option to Convert to Shares of Stock for ₱375,000,000.00 with respondent Social Security System (SSS) as creditor. WII mortgaged two parcels of land in Green Meadows Subdivision, Quezon City, while WGI placed 200 million WPI common shares in escrow. WPI made partial interest payments and offered additional shares, but failed to effect full payment or timely transfer of the mortgaged properties following the March 14, 2001 dacion en pago, prompting SSS to rescind and foreclose extrajudicially. SSS then filed a complaint for sum of money in May 2004. The RTC (Jan. 13, 2015) dismissed the complaint, ruling the loan contract void for ultra vires acts of SSS officers and holding that WII and WGI were not solidary debtors. The CACase Digest (G.R. No. 157966)
Facts:
- Loan execution and securities
- On October 28, 1999, Waterfront Philippines, Inc. (WPI), Wellex Industries, Inc. (WII), and The Wellex Group, Inc. (WGI) (debtors) executed a P375,000,000 Contract of Loan with Real Estate Mortgage with Option to Convert to Shares of Stock in favor of Social Security System (SSS) (creditor), five-year term, interest at 364-day T-bill + 3% (floor 14.5% p.a.), repriced annually.
- Security: mortgage by WII over two Quezon City parcels (TCT N-153395 & N-153396); escrow of 200,000,000 WPI shares by WGI.
- Disbursement, partial payments, and dacion en pago
- SSS disbursed P375M in tranches (Oct–Nov 1999); initial interest P26,528,958.34 due April 26, 2000; WPI paid P10,875,000 on May 16, 2000, and added share collaterals.
- As of October 30, 2000, debt at P419,885,517.80; SSC Resolution No. 1003 (Dec 13, 2000) approved a debt-to-property swap (dacion en pago) of mortgaged properties at P267,508,000 and loan restructuring; Deed of Assignment executed March 14, 2001, requiring transfer in 60 days or voiding dacion en pago.
- Default, foreclosure, and proceedings
- WPI failed to transfer due to tax issues, made additional payments totalling P35,827,695.87; SSS declared loan due April 1, 2003: P577,005,247.26.
- SSS extrajudicially foreclosed properties (sale Aug 7, 2003; bid P198,638,000; deficiency P452,750,886.28 as of March 31, 2004).
- May 13, 2004: SSS filed complaint for sum of money with damages vs. WPI, WII, WGI; RTC dismissed Jan 13, 2015; CA reversed Aug 30, 2019; SC granted SSS’s petition.
Issues:
- Whether SSS officers had authority under R.A. 8282 Sec. 3(b) to enter the loan contract.
- Whether the principal loan contract is valid given charter and ultra vires investment restrictions.
- Whether the accessory mortgage contract is valid if the loan contract is void.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)