G.R. No. L-6515 - Daguhoy Enterprises, Inc. vs. Ponce

Case Summary (G.R. No. L-6515)

Factual Background

In 1950 RITA L. PONCE obtained a loan from DAGUHOY ENTERPRISES, INC. and executed a deed of mortgage over a parcel of land to secure P5,000, payable within six years at twelve percent annual interest. On March 10, 1951 she executed a second deed, with the consent of DOMINGO PONCE, increasing the obligation to P6,190 while keeping the same terms. The two mortgage deeds were presented to the Register of Deeds but were withdrawn by the Ponces after the register noted defects and requested corrections. The same property was thereafter mortgaged in favor of the Rehabilitation Finance Corporation (RFC).

Related Proceedings

Potenciano Gapol, the majority stockholder of DAGUHOY ENTERPRISES, INC., brought Civil Case No. 13753, styled for and on behalf of DAGUHOY ENTERPRISES, INC. against DOMINGO PONCE and Buhay M. Ponce for accounting, seeking at least the P6,190 and interest. In that action DOMINGO PONCE and Buhay deposited with the court an RFC check for P6,190 and interest of P266.10. The court denied Gapol’s petition to withdraw the deposit because of opposition by defendants in that case.

Original Action and Pleadings

Thereafter DAGUHOY ENTERPRISES, INC. filed the present action, Civil Case No. 15923, against RITA L. PONCE and DOMINGO PONCE to collect the loan of P6,190, plus interest at 12% from June 24, 1950, attorney’s fees, and litigation expenses. Defendants filed an answer admitting most allegations, pleaded affirmative defenses, counterclaimed for cancellation of the mortgage, and sought to implead Potenciano Gapol as a third party, with a third-party complaint for damages. Plaintiff opposed third-party inclusion and answered the counterclaim. Plaintiff moved for judgment on the pleadings; defendants opposed.

Trial Court Proceedings and Judgment

The trial court rendered judgment on the pleadings on October 9, 1952. The court ordered defendants to pay DAGUHOY ENTERPRISES, INC. P6,190 with interest at twelve percent from March 10, 1951 until full payment, attorney’s fees of P1,000, and P34 as expenses of litigation. The judgment was based on the finding that the obligation became pure and demandable when the mortgagor failed to perfect and register the mortgages and withdrew them, thereby depriving the debtor of the benefit of the period under article 1198 of the new Civil Code.

Issues on Appeal

The appeal raised, inter alia, whether the obligation remained a term obligation or became immediately demandable by operation of article 1198, whether the deposit of P6,190 and interest in Civil Case No. 13753 operated as payment that would stop accrual of interest, and whether DAGUHOY ENTERPRISES, INC. had capacity to sue because of an asserted corporate dissolution following a stockholders’ meeting.

Parties’ Contentions

Defendants contended that the obligation remained a term obligation payable within six years and that the deposit in Civil Case No. 13753 discharged their liability, thereby stopping interest. They also asserted that the corporation lacked capacity to sue because it had been dissolved by stockholders’ resolution and an assignee had been designated. Plaintiff maintained that the mortgagors’ withdrawal of the deeds and subsequent re-mortgage to RFC removed the suspensive condition and made the obligation due and demandable under article 1198, that the deposit in the separate accounting case did not constitute payment because the funds could not be withdrawn by the corporation, and that mere stockholders’ resolution did not effect statutory dissolution.

Supreme Court’s Analysis on Article 1198

The Court examined article 1198 of the new Civil Code and agreed with the trial court that the debtor lost the benefit of the term by reason of failure to give the agreed security in the form and manner stipulated. The Court found that the withdrawal of the mortgage deeds from the Register of Deeds and the subsequent mortgage to the RFC effectively deprived the creditor of the security contemplated by the parties and rendered the obligation pure and immediately demandable.

Supreme Court’s Analysis on the Deposit in Civil Case No. 13753

The Court held that the RFC check and interest deposited in Civil Case No. 13753 in favor of DAGUHOY ENTERPRISES, INC. did not constitute payment that relieved defendants from interest in the present case. The Court emphasized that Civil Case No. 13753 was a separate action with different parties and causes. Moreover, the trial court in that case denied the petition to withdraw the deposit because of defendants’ opposition, so the corporation never obtained possession of the funds. Consequently, the loan stood unpaid for purposes of the present action.

Supreme Court’s Analysis on Corporate Capacity and Dissolution

The Court rejected defendants’ contention that DAGUHOY ENTERPRISES, INC. lacked capacity to sue because of a stockholders’ resolution of dissolution. The Court observed that a mere resolution of stockholders or directors does not effect legal dissolution; administrative or judicial steps are required. The Court relied on section 77 of the Corporation Law to note that a dissolved corporation continues in existence for three years to wind up affairs and protect interests during liquidation. Therefore the corporation maintained capacity to prosecute the action.

Disposition and Modification

The Supreme Court affirmed the trial court’s decis

Case Syllabus (G.R. No. L-6515)

Parties and Posture

DAGUHOY ENTERPRISES, INC. sued RITA L. PONCE and DOMINGO PONCE in the Court of First Instance in Civil Case No. 15923 for collection of a loan of P6,190 with interest, attorney's fees, and litigation expenses.
The complaint specifically demanded P6,190 with interest at twelve percent per annum from June 24, 1950, P2,500 as attorney's fees, and P34 as expenses.
Defendants admitted nearly all allegations, pleaded affirmative defenses, and counterclaimed for cancellation of the mortgage securing the loan.
Defendants moved to join Potenciano Gapol as third-party litigant and filed a third-party complaint for damages of P25,000.
The trial court rendered judgment on the pleadings on October 9, 1952, and defendants appealed to the Supreme Court.

Key Factual Allegations

On June 24, 1950, RITA L. PONCE executed a mortgage over a parcel in Manila to secure a loan of P5,000 payable within six years with twelve percent interest.
On March 10, 1951, the mortgage was amended by consent of DOMINGO PONCE to increase the loan to P6,190 without changing other terms.
The two mortgage deeds were presented for registration but were withdrawn after the register of deeds noted defects; thereafter the same property was mortgaged in favor of the Rehabilitation Finance Corporation (RFC).
Potenciano Gapol, the majority stockholder of DAGUHOY ENTERPRISES, INC., filed Civil Case No. 13753 for accounting and, in that case, DOMINGO and his son BUHAY M. PONCE deposited an RFC check for P6,190 and interest of P266.10.
Petitions by Gapol to withdraw that deposit were denied because of opposition by defendants in Case No. 13753, and the deposited funds remained in that separate action.

Procedural Background

The trial court granted plaintiff's motion for judgment on the pleadings and entered a judgment ordering payment of P6,190 with interest at twelve percent per annum from March 10, 1951, plus P1,000 attorney's fees and P34 costs.
The defendants appealed the judgment to the Supreme Court, raising multiple defenses including lack of corporate capacity due to alleged dissolution.
The Supreme Court reviewed the case on the pleadings and the records of Civil Case No. 13753.

Issues Presented

Whether the obligation became due and demandable despite the six-year term on the mortgage loan.
Whether the deposit of P6,190 and interest in Civil Case No. 13753 consti