Case Digest (G.R. No. 144476)
Facts:
Ong Yong, et al. v. David S. Tiu, et al., G.R. Nos. 144476 and 144629, February 01, 2002, Supreme Court Second Division, Buena, J., writing for the Court.The dispute arose from a Pre-Subscription Agreement dated August 15, 1994 between two groups: the Tiu Group (David S. Tiu, Cely Y. Tiu, Moly Yu Gaw, Belen See Yu, D. Terence Y. Tiu, John Yu and Lourdes C. Tiu) and the Ong Group (Ong Yong, Juanita Tan Ong, Wilson T. Ong, Anna L. Ong, William T. Ong, Willie T. Ong and Julie Ong Alonzo). Under the agreement the Ongs would subscribe P100,000,000.00 for 1,000,000 shares of First Landlink Asia Development Corporation (FLADC) in cash while the Tius would contribute certain properties (including a four-storey building through Intraland Resources and Development Corporation, a 1,902.30 sq.m. lot through Masagana Telamart, Inc., and a 151 sq.m. lot) to equalize shareholdings and allocate corporate offices and directorships between the groups. The agreement contemplated payment of FLADC’s outstanding P190,000,000.00 loan to Philippine National Bank (PNB) from the Ongs’ cash and available corporate funds.
Disputes followed: the Ongs advanced an additional P70,000,000.00 to FLADC and the Tius advanced P20,000,000.00 (the latter reportedly borrowed from the Ongs); later contentions arose that the Ongs failed to credit Masagana Telamart, Inc. with 300,000 shares for its land contribution, failed to credit the Tius for the 151 sq.m. lot, and obstructed the Tius from exercising their officer functions as Vice-President and Treasurer. The Tius on February 27, 1996 unilaterally rescinded the Pre-Subscription Agreement and sought SEC confirmation (docketed as SEC Case No. 02-96-5269).
SEC Hearing Officer Rolando G. Andaya, Jr. (May 19, 1997) rendered a decision confirming rescission and directing cancellation of the Ongs’ 1,000,000-share subscription and various restitutions and transfers. SEC Hearing Officer Manolito S. Soller partially reconsidered (November 24, 1997) declaring the P70,000,000.00 an advance/liability of FLADC, not a premium, and validating interest paid thereon. Appeals by both groups went to the SEC En Banc (SEC Cases Nos. 598 and 601). On September 11, 1998 the SEC En Banc confirmed rescission but reversed insofar as the P70,000,000.00 was treated as a loan rather than premium; it ordered return of P170,000,000.00 to the Ong Group, payment of P20,000,000.00 by the Tiu Group to the Ongs, and other reliefs.
The Ongs appealed the SEC En Banc order to the Court of Appeals by petition under Rule 43. On October 5, 1999 the Court of Appeals (Special Division) affirmed the SEC En Banc order but modified reliefs: it ordered liquidation of FLADC in accordance with actual cash and property contributions, transferred remaining assets and management to the Tiu Group, directed FLADC to pay the P70,000,000.00 advanced by the Ongs (with legal interest under Art. 2209), and ordered the Tius to pay the P20,000,000.00 lo...(Subscriber-Only)
Issues:
- May the Pre-Subscription Agreement be rescinded under Article 1191 of the New Civil Code?
- Did the Ong Group violate the Pre-Subscription Agreement by preventing the Tiu Group from assuming the duties of Vice‑President and Treasurer?
- Did the Ong Group breach the agreement by failing to credit Masagana Telamart, Inc. with 300,000 shares for its 1,902.30 sq.m. property contribution?
- Did the Court of Appeals err in ordering liquidation of FLADC and transferring remaining assets and management to the Tiu Group?
- Were the interest awards and accrual dates for (a) the P20,000,000.00 loan and (b) the P70,000,000.00 advance correctly fixed by the Court of Appeals?
- Should the Tiu Group be ...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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