Case Summary (G.R. No. L-3282)
Background of the Case
Siain Enterprises, Inc. secured a loan of ₱37,000,000.00 from Cupertino Realty Corporation on April 10, 1995, through a promissory note signed by the respective presidents of both companies. The note authorized Cupertino to place the loan proceeds in escrow for another loan obligation of Siain with Development Bank of the Philippines (DBP). The petitioner secured this loan by executing a real estate mortgage over two parcels of land and other assets. An amendment to the promissory note executed on April 12, 1995, established an interest rate of 17% per annum on the principal.
Subsequent Transactions
On August 16, 1995, an additional promissory note for ₱160,000,000.00 was signed by Cua Le Leng, both as a maker on behalf of Siain and as a co-maker in her personal capacity. This note contained a stipulation for a 30% annual compounding interest. The amendment to the real estate mortgage reflected an increase in Siain's loan obligation to ₱197,000,000.00 to secure the payment of this second promissory note.
Conflict and Demand
On March 11, 1996, Siain's counsel demanded the release of the additional ₱160,000,000.00 loan, asserting Cupertino had failed to release funds despite verbal requests. Cupertino denied this allegation, claiming Siain had already received the funds and stating that the demands were meant to avoid their obligation after the first loan became overdue. Consequently, Cupertino initiated extrajudicial foreclosure of the mortgaged properties, prompting Siain to file a complaint requesting a restraining order to prevent the auction.
Arguments Laid Before the Courts
In the ensuing legal proceedings, the parties presented conflicting claims. Siain argued that the loan was agreed to be non-interest bearing and that their partial payments confirmed this arrangement. Cupertino contended that Siain had indeed received ₱160,000,000.00. The Regional Trial Court (RTC) ultimately dismissed Siain's complaint, finding insufficient evidence to support the claim of non-receipt of the loan amount.
Court's Findings
The RTC determined that all loan documents indicated Siain's indebtedness and supported the existence of consideration based on Cupertino's evidence. It ruled that the petitioner had failed to refute Cupertino's claims regarding the receipt of the loan proceeds, and the courts applied the doctrine of "piercing the veil of corporate fiction" to affirm that Siain and its affiliated corporations had received the funds as part of their obligations to Cupertino.
Appeal and Final Rulings
Siain appealed the RTC's dismissal, contin
...continue readingCase Syllabus (G.R. No. L-3282)
Case Background
- This case is a petition for review on certiorari under Rule 45 of the Rules of Court, contesting the decision of the Court of Appeals in CA-G.R. CV No. 71424.
- The case involves Siain Enterprises, Inc. (the petitioner) and Cupertino Realty Corporation, along with Edwin R. Catacutan (the respondents).
- The dispute arose from a loan agreement where Siain Enterprises borrowed P37,000,000.00 from Cupertino, secured by a real estate mortgage on April 10, 1995.
Loan Agreements and Terms
- Initially, a promissory note was signed by the presidents of both parties, allowing Cupertino to escrow the loan proceeds to pay off Siain's obligation to the Development Bank of the Philippines.
- An amendment to the promissory note was executed on April 12, 1995, stipulating a 17% interest rate on the loan.
- Subsequently, on August 16, 1995, Siain Enterprises signed a second promissory note for P160,000,000.00, which included a provision for a compounding interest rate of 30% per annum, along with severe penalties for default.
Conflict Emergence
- Siain Enterprises later demanded the release of the P160,000,000.00 loan increase on March 11, 1996, asserting it had not received these funds despite prior agreements.
- Cupertino denied this claim, asserting that Siain had already received the proceeds and characterized the demands as efforts to avoid payment obligations.
- A public auction for the mortgaged properties was scheduled, prompting Siain Enterprises to file for a r