SECOND DIVISION
|
ZOMER
DEVELOPMENT COMPANY, INC. Petitioner, - versus - INTERNATIONAL
EXCHANGE BANK and SHERIFF IV ARTHUR R. CABIGON, Respondents. |
G.R. No. 150694 Present: QUISUMBING,
J., Chairperson, CARPIO
MORALES, TINGA, VELASCO,
JR., and BRION, JJ. Promulgated: March
13, 2009 |
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D E C I S I O N
CARPIO MORALES, J.:
On August 25, 1997, the Board of Directors of Zomer
Development Company, Inc. (petitioner) approved a resolution authorizing it to
apply for and obtain a credit line with respondent International Exchange Bank
(IEB) in the amount of P60,000,000 as well as temporary excesses or
permanent increases thereon as may be approved by IEB from time to time.[1] The Board of Directors also authorized
petitioner to assign, pledge, or mortgage its properties as security for this
credit line; and to secure and guarantee the term loan and other credit
facility of IDHI Prime Aggregates Corporation (Prime Aggregates) with IEB.[2]
Prime Aggregates obtained on August 26, 1997 a term
loan from IEB in the amount of P60,000,000.[3] On September 2, 1997, petitioner, through
its Treasurer Amparo Zosa (Amparo) and its General Manager Manuel Zosa, Jr. (Zosa),
executed a real estate mortgage covering three parcels of land (the real estate
mortgage) in favor of IEB to secure
1. The payment of all loans,
overdrafts, credit lines and other credit facilities or accommodations obtained or hereinafter obtained
by the MORTGAGOR and/or by IDHI Prime Aggregates Corporation (hereinafter
referred to as DEBTOR)
2. The payment of all interests, charges, penalties, reimbursements and other obligations owing by the MORTGAGOR and/or DEBTOR to the MORTGAGEE whether direct or indirect, principal or secondary; absolute or contingent as appearing in the accounts, books and records of the MORTGAGEE.
3. The payment of all obligations of the MORTGAGOR and/or DEBTOR of whatever kind or nature whether such obligations have been contracted before, during, or after the constitution of [the] MORTGAGE.
4. In case the MORTGAGOR and/or DEBTOR incurs subsequent obligations of whatever kind or nature whether such obligations, as extension thereof, or as new loans or is given any other kind of accommodations, the payment of said obligations, and/or accommodations without the necessity of executing new agreements.
5. The faithful and strict performance and compliance by the MORTGAGOR and/or DEBTOR of all the terms and conditions of the MORTGAGE, the credit agreements, promissory notes and other loan documents and agreements evidencing the loan, overdrafts, credit lines and other credit accommodations granted to the MORTGAGOR and/or DEBTOR; including all amendments thereon, such as but not limited to changes in the interest rates, penalties, charges, or fees; acceleration of payments; and the like.
x x x x[4] (Emphasis, italics and underscoring supplied)
Prime Aggregates subsequently obtained several loans
from IEB from September 1997 until September 1998.[5]
Prime Aggregates failed to settle its outstanding
obligation which stood at P90,267,854.96 and US$211,547.12[6]
as of September 15, 2000, drawing IEB to file a petition for extra-judicial
foreclosure of mortgage before the Regional Trial Court (RTC) of Cebu City.
Respondent Sheriff IV Arthur R. Cabigon (Cabigon) having
issued on October 18, 2000 a Notice of Extra-Judicial Foreclosure and Sale[7]
scheduled on November 28, 2000, petitioner filed a complaint[8]
for Injunction with application for writ of preliminary
injunction/temporary restraining order before the Cebu City RTC, alleging that
the real estate mortgage was null and void because Amparo and Zosa were
authorized to execute it to secure only one obligation of
Prime Aggregates. Petitioner thus prayed
x x x that after due notice and hearing,
judgment be rendered declaring the real estate mortgage and its extrajudicial
foreclosure sale as null and void and that defendant bank be sentenced to
pay plaintiff the sum of P100,000.00 as attorney’s fees and P100,000.00 as
litigation expenses.
In the meantime, it is most respectfully prayed
that a writ of preliminary injunction/TRO be issued enjoining the
extrajudicial foreclosure sale of plaintiff’s properties scheduled on
November 28, 2000 or December 5, 2000.
. . . that after trial, the writ of
preliminary injunction be made permanent. x x x[9] (Emphasis and underscoring supplied)
The
complaint, docketed as Civil Case No. CEB-25762, was amended on November 15,
2000.
Branch 9 of the Cebu City RTC denied petitioner’s prayer for a writ of
preliminary injunction.[10] Petitioner filed a Motion for Reconsideration[11]
and a Motion for Admission of a Second Amended Complaint,[12]
albeit it later filed a Motion to Withdraw Second Amended Complaint and to
admit Third Amended Complaint.[13] The trial court denied petitioner’s Motion
for Reconsideration.[14]
Petitioner assailed the trial court’s orders denying its prayer for the
issuance of a writ of preliminary injunction before the Court of Appeals via
certiorari,[15]
docketed as CA-G.R. SP No. 64390 (certiorari case), alleging, in the main, that the real estate
mortgage it executed was null and void for being ultra vires[16]
as it was not empowered to mortgage its properties as security for the payment
of obligations of third parties; and that
Amparo and Zosa were authorized to mortgage its properties to secure only a P60,000,000
term loan and one credit facility of Prime Aggregates.[17]
In the meantime, Branch 15 of the Cebu City RTC to
which Civil Case No. CEB-25762 was re-raffled after the Presiding Judge of
Branch 9 inhibited himself in the case, dismissed petitioner’s Third Amended Complaint[18]
by Order of September 10, 2001. Petitioner
appealed this Order to the Court of Appeals which docketed it as CA-G.R. CV No.
73063.
By Decision[19]
of October 30, 2001, the appellate court, acting on the certiorari case filed
by petitioners, denied it due course as it found that the trial court committed
no grave abuse of discretion in denying petitioner’s prayer for preliminary
injunction.[20] It brushed aside petitioner’s arguments that
the real estate mortgage was ultra vires and that Amparo and Zosa were only authorized
to mortgage petitioner’s properties to secure the P60,000,000 term loan
and one credit facility of Prime Aggregates.
Hence, the present petition[21]
for review faulting the Court of Appeals in
I – X X X NOT HOLDING THAT THE JUDGE WHO
DENIED PETITIONER’S APPLICATION FOR INJUNCTION WAS A BIASED AND PARTIAL JUDGE
AS RESPONDENTS WERE GIVEN A COPY OF THE ORDER ON MARCH 2, 2001 WHEN IT WAS
SIGNED BY THE JUDGE BUT BEFORE ITS OFFICIAL RELEASE ON MARCH 5, 2001.
II – X X X USING THE DECISION OF THIS
HONORABLE COURT IN THE CASE OF UNION BANK V. COURT OF APPEALS, ET.
III – X X X HOLDING THAT [PRIME AGGREGATES]
IS A SUBSIDIARY OF PETITIONER IN THE ABSENCE OF A FINDING THAT PETITIONER OWNS
ANY SHARE IN [PRIME AGGREGATES].
IV – X X X NOT HOLDING THAT THE SECRETARY’S
CERTIFICATE OF PETITIONER WAS NULL AND VOID FOR NOT PUTTING ANY LIMITATION OF
THE AMOUNT OF THE OBLIGATION OF [PRIME AGGREGATES] TO BE SECURED BY A THIRD
PARTY MORTGAGE OF ITS PROPERTIES
V – X X X NOT HOLDING THAT THE THIRD PARTY
REAL ESTATE MORTGAGE EXECUTED BY THE AGENTS OF PETITIONER IN FAVOR OF PRIVATE
RESPONDENT IS NULL AND VOID BECAUSE THEY EXCEEDED THEIR AUTHORITY IN SIGNING
THE SAME.
VI – X X X NOT CONSTRUING STRICTLY AGAINST
PRIVATE RESPONDENT THE SECRETARY’S CERTIFICATE AND THIRD PARTY REAL ESTATE
MORTGAGE WHICH WERE ALL DOCUMENTS OF ADHESION AND ALL PREPARED BY IT AND TO
EFFECT THE LEAST TRANSMISSION OF RIGHTS PURSUANT TO ARTICLE 1378 OF THE NEW
CIVIL CODE SINCE THE THIRD PARTY REAL ESTATE MORTGAGE IS A GRATUITOUS CONTRACT
WHICH WAS EXECUTED PURELY FOR ACCOMODATION OF [PRIME AGGREGATES].
VII – X X X NOT LAYING THE BLAME ON PRIVATE
RESPONDENT IN MAKING THE AGENTS OF PETITIONER SIGN AN ILLEGAL CONTRACT SINCE IT
WAS VERY WELL AWARE OF THEIR AUTHORITY AS ALL THE DOCUMENTS WERE ITS FORMS,
PRE-PRINTED AND PREPARED BY IT.
VIII – X X X HOLDING THAT THE PETITIONER
RATIFIED BY INACTION THE ILLEGAL CONTRACT EXECUTED BY ITS AGENTS SINCE THE
PRIVATE RESPONDENT WAS VERY WELL AWARE OF THE EXTENT OF THEIR AUTHORITY.
IX – MAKING CONFLICTING FINDINGS OF FACTS.[22]
Respondents, in their Comment[23]
dated February 27, 2002, move for the dismissal of the petition for being moot
and academic, alleging that:
On October 8, 2001 [sic], [petitioner’s] principal action for annulment of real
estate mortgage was dismissed by the trial court and that said
action is now on appeal with the Court of Appeals x x x [.]
On November 19, 2001, [petitioner’s] mortgaged
properties were foreclosed by [IEB].
In fact, as the highest bidder in the said foreclosure sale and in view
of the passage of the new General Banking Law (which allows banks to
consolidate its [sic] title within a
shorter period if the mortgagor of a foreclosed property is a corporation),
iBank had consolidated its title on the mortgaged properties.
[Petitioner’s] application for issuance of
writ of preliminary injunction, the subject of the instant appeal purportedly under Rule 45 of the
Rules of Court, cannot survive the dismissal of its principal action as
well as the foreclosure and consolidation in [IEB] name of its mortgaged
properties.[24] (Emphasis and underscoring supplied)
In its Reply,[25]
petitioner argues that when Branch 15 of the Cebu City RTC dismissed the Third Amended Complaint in Civil Case
No. CEB-25762 on September 10, 2001, it no longer had jurisdiction over it because
said Branch had on August 14, 2001 been designated as a drug court.
Petitioner goes on to argue that even if the acts sought
to be restrained have already been committed, since they are continuing in
nature and in derogation of its rights at the outset, preliminary mandatory
injunction may still be availed of to restore the status quo, citing Manila
Electric Railroad and Light Company v. del Rosario and Jose.[26]
Acting on petitioner’s appeal from the dismissal by Branch
15 of its Third Amended Complaint, the
appellate court, by Decision of April 14, 2005, set aside the trial court’s order of dismissal and ordered the
reinstatement of said complaint to the docket of Branch 15 of the Cebu City
RTC.
The records show that, indeed, petitioner’s mortgaged
properties were already foreclosed, as shown by the Certificate of Sale issued
by Cabigon on November 19, 2001.[27]
And they also show that ownership of the
lands-subject of the real estate mortgage had been consolidated and transfer
certificates of title had been issued in IEB’s name.[28] It is on this score that the Court finds petitioner’s
prayer for a writ of preliminary injunction moot and academic. This leaves it unnecessary for the Court to
still dwell on petitioner’s argument that it was not, under its By-Laws,
empowered to mortgage its properties to secure the obligation of a third party. In any
event, the Court finds well-taken the appellate court’s following
disposition of such argument:
We do agree that the Petitioner, under its “By-Laws,”
is not empowered to mortgage its properties as a security for the payment of
the obligations of third parties. This is on the general premise that the
properties of a corporation are regarded as held in trust for the payment of
corporate creditors and not for the creditors of third parties. However, the Petitioner is not proscribed
from mortgaging its properties as security for the payment of obligations of
third parties. In an opinion of the
Securities and Exchange Commission, dated April 15, 1987, it declared that a
private corporation, by way of exceptions, may give a third party mortgage:
“1. When
the mortgage of corporate assets/properties shall be done in the furtherance of
the interest of the corporation and in the usual and regular course of its
business; and
2. To
secure the debt of a subsidiary.”
While admittedly,
the “Opinion” of the Securities & Exchange Commission may not
be conclusive on the
In the present
recourse, the
“a. The
plaintiff appears to be a family corporation. The incorporators and stockholders and the
membership of the board of directors are Zosa family. x x x
b.
Francis and Rolando Zosa are directors of [Prime Aggregates] and of
plaintiff corporation x x x
c.
The REM was executed by Amparo Zosa who was the treasurer of plaintiff
and Manuel Zosa, the General Manager, both are directors/stockholders of the
plaintiff. Amparo Zosa is the biggest
stockholder and is the mother of practically all the other stockholders of
plaintiff. Manuel Zosa, Jr. is the
General Manager and a son of Amparo.
d. The Corporate Secretary of plaintiff and
[Prime Aggregates] are members of the Zosa family. The Corporate Secretary of [Prime Aggregates]
is also the daughter of Francis Zosa, president of plaintiff.
e.
The President of plaintiff corporation, Francis Zosa and the president of
[Prime Aggregates], Rolando Zosa, are brothers (aside from being common
directors of both corporations.)
We agree with the
The Petitioner’s
shrill incantations that the “Resolution”, approved by its Board
of Directors, authorizing its Treasurer and General Manager to execute a “Real
Estate Mortgage” as security for the payment of the account of Prime
Aggregates, a sister corporation, is not for its best interest, is a
“puzzlement” xxx. Since when is a
private corporation, going to the aid of a sister corporation, not for the best
interest of both corporation? For in
doing so, the two (2) corporations are enhancing, boosting and promoting a
common interest, the interest of “family” having ownership of
both corporations. In the second place,
Courts are loathe to overturn decisions of the management of a corporation in
the conduct of its business via its Board of Directors x x x.
x x x x
There is no evidence
on record that the “Real Estate Mortgage” was executed by the
Petitioner and the Private Respondent to prejudice corporate creditors of the Petitioner
or will result in the infringement of the trust fund doctrine or hamper the
continuous business operation of the Petitioner or that the Prime Aggregates
was insolvent or incapable of paying the Private Respondent. Indeed, the latter approved Prime Aggregates’
loan availments and credit facilities after its investigation of the financial
capability of Prime Aggregates and its capacity to pay its account to the
Private respondent.[29]
x x x x
[U]nder the “Resolution”
of the Board of Directors, it authorized its Treasurer and General Manager to
execute a “Real Estate Mortgage” over its properties as security
for the “term loan and credit facility” of Prime Aggregates. The maximum amounts of such term loan and
credit facility were not fixed in the “Resolution”. The term “credit facility” is a broad term in
credit business transactions to denote loans, pledges, mortgages, trust receipt
transactions and credit agreements. And
then, again, such term loan and/or credit facility may be granted, by the Private
Respondent, in favor of Prime Aggregates, in trenches or in staggered basis,
each disbursement evidenced by separate agreements depending upon the needs of
Prime Aggregates for the establishment of its sand and gravel plant and port
facilities and the purchase of equipments and machinery for said project. Hence, the “Long Term Agreements”
and “Credit Agreements” executed by Prime Aggregates and
the Private Respondent, with the Petitioner’s properties, as collateral
therefore, were envisaged in the terms “term loan and credit facility” in the “Resolution”
of the Board of Directors of the Petitioner.
The intention of the
Members of the Board of Directors of the Petitioner, in approving the “Resolution,”
may be ascertained xxx also from the contemporaneous and subsequent acts of the
Petitioner, the Private Respondent and Prime Aggregates. Given the factual milieu in the present
recourse, as found and declared by the Respondent Court, there can be no
equivocation that, indeed the Petitioner conformed to and ratified, and hence,
is bound by the execution, by its Treasurer and General Manager, of the “Real
Estate Mortgage” in favor of the Private respondent, with its
properties used as securities for the payment of the credit and loan availments
of Prime Aggregates from the Private Respondent on the basis of the “Resolution”
approved by its Board of Directors. As our Supreme Court declared, ratification
and/or approval by the corporation of the acts of its agents/officers may be
ascertained through x x x the acquiescence in his acts of a particular
nature, with actual or constructive thereof, whether within or beyond the scope
of his ordinary powers.
As it was, the
Petitioner finally awoke from its slumber when the Private Respondent filed its
“Petition” for the extra-judicial foreclosure of the “Real
Estate Mortgage”, with the Sheriff, and assailed the authority of its
Board of Directors to approve the said “Resolution” and of its
Treasurer and General Manager to execute the deed and brand the said “Resolution”
and the said deed as “ultra vires”
and hence, not binding on the Petitioner, and hurried off to the Respondent
Court and prayed for injunctive relief.
Before then, the Petitioner maintained a stoic silence and adopted a
“hands off” stance. We find the
Petitioner’s stance grossly inequitable.
We must take heed and pay obeisance to the equity rule that if one
maintains silence when, in conscience he ought to speak, equity will debar him
from speaking when, in conscience, he ought to remain silent. He who remains silent when he ought to speak
cannot be heard to speak when he ought to be silent. More, the transactions between the Petitioner
and the Private Respondent over its properties are neither malum in se or malum prohibitum. Hence, the Petitioner cannot hide behind the
cloak of “ultra vires” for a defense.
x x x x
The plea of “ultra vires” will not
be allowed to prevail, whether interposed for or against a corporation, when it
will not advance justice but, on the contrary, will accomplish a legal wrong to
the prejudice of another who acted in good faith.[30]
(Underscoring and emphasis in the original)
WHEREFORE, the
petition is DISMISSED.
Costs against petitioner.
SO
ORDERED.
CONCHITA
CARPIO MORALES
Associate Justice
WE CONCUR:
LEONARDO A.
QUISUMBING
Associate Justice
Chairperson
|
DANTE O. TINGA Associate Justice |
PRESBITERO J. VELASCO, JR. Associate Justice |
ARTURO D.
BRION
Associate Justice
CERTIFICATION
Pursuant to
Section 13, Article VIII of the Constitution, I certify that the conclusions in
the above decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
LEONARDO A.
QUISUMBING
Acting Chief Justice
[1] Exhibit “B,” records, p. 11.
[2] Ibid.
[3] Exhibit “3,” id. at 103-105.
[4] Exhibit “C,” id. at 13.
[5] CA rollo, pp. 105-159.
[6] Exhibit “62,” rollo, p. 255.
[7] Exhibit “A,” id. at 10.
[8] Id. at 1-9.
[9] Id. at 7-8.
[10] Id. at 348-357.
[11] Id. at 361-374.
[12] Id. at 378-385.
[13] Id. at 425-435.
[14] Id. at 418-421.
[15] CA rollo, pp. 2-28.
[16] Id. at 7-8.
[17] Ibid.
[18] Records, pp. 505-510.
[19] Penned by then-Court of Appeals Associate Justice Romeo J. Callejo, Sr. with the concurrence of Associate Justices Remedios Salazar-Fernando and Josefina Guevara-Salonga. Rollo, pp. 45-66.
[20] Id. at 53-54.
[21] Id. at 3-44.
[22] Id. at 11-12.
[23] Id. at 391-425.
[24] Id. at 405.
[25] Id. at 462-486.
[26] 22 Phil. 433 (1912).
[27] Rollo, p. 451.
[28] Id. at 452-454.
[29] Id. at 55-57.
[30] Id. at 61-63.