Facts
ADB extended to Marcopper a US$40M loan for
its mining project at Marinduque
·
ADB and Placer Dome, Inc., a FC
which owns 40% of Marcopper,
executed a Support and Standby Credit
Agreement whereby the latter agreed to provide Marcopper with cash flow
support.
·
Marcopper executed in favor of
ADB a Deed of Real Estate and Chattel Mortgage covering substantially all
of its properties and assets in Marinduque.
·
When Marcopper defaulted, Placer
Dome agreed to have its subsidiary
Corp., MR Holding, Ltd., assumed Marcoppers obligation to ADB for US$
18,453,450.02.
·
In an Assignment Agreement ADB
assigned to MR Holdings all its rights under the loan agreements, (Deed of Real
Estate and Chattel Mortgage, and Support and Standby Credit Agreement).
·
On Dec 8, 1997, Marcopper
likewise executed a Deed of
Assignment in favor of petitioner.
Solidbank obtained a Partial Judgment against Marcopper from the RTC Manila
·
RTC of Manila issued a writ of
execution pending appeal to require Marcopper to
pay the sums of money to satisfy the Partial
Judgment covering P52M + 10% AFS.
·
The Sheriff issued two notices of
levy on Marcoppers personal and real properties. Together with sheriff Jandusay of the RTC, Branch 94, Boac,
Marinduque, Bajar issued two notices setting the public auction sale of the
levied properties on Aug 27, 1998 at the Marcopper mine site.
affidavit of 3rd-party claim at
rtc-manila + complaint for reivindication
at rtc-boac marinduque
·
MR Holdings served an Affidavit of
Third-Party Claim upon the sheriffs.
·
Upon the denial of its Affidavit
of ThirdParty Claim by the RTC of
Manila, petitioner commenced with the RTC of Boac, Marinduque, presided by Judge Ansaldo, a complaint for reivindication + PI +
TRO.
·
WPI was denied OTG that
a.
petitioner has no legal capacity
to sue, it being a FC doing business in the PH
b.
an injunction will amount to
staying the execution of a final judgment by a court of co-equal and concurrent
jurisdiction
c.
the validity of the Assignment
Agreement and the Deed of Assignment has been put into serious question by the
timing of their execution and registration.
MR holdings filed a Petition for Certiorari,
Prohibition and Mandamus
·
CA held that RTC did not commit GAD
in denying petitioners prayer for a WPI
·
Petitioner is not suing on an isolated transaction as it
claims to be, as it is very obvious from the deed of assignment that its
intention is to continue the operations
of Marcopper
·
There is no other way for
petitioner to recover its huge financial investments which it poured into
Marcoppers rehabilitation without petitioner continuing to do business in the
country.
·
Even a
single act may constitute doing business if it is intended to be the beginning
of a series of transactions (Far East International Import and Export Corp.
vs. Nankai Kogyo Co).
·
The
Deeds of Assignment were made in fraud of creditors. The first Assignment
Agreement purportedly executed on March 20, 1997 was entered into after
Solidbank had filed on September 19, 1996 a case against Marcopper. The second
Deed of Assignment purportedly executed on Dec 28, 1997 was entered into by
President Gabor after Solidbank had filed its Motion for Partial SJ.
·
While the assignments may be
valid between the parties thereof, it produces no effect as against third parties.
petitioner’s
arguments
·
It is not doing business in the PH
and characterizes its participation in the assignment contracts as mere
isolated acts that cannot foreclose its right to sue in local courts.
·
The 2 assignment contracts are
not fraudulent conveyances as they were supported by valuable considerations.
·
They were executed in connection
with prior transactions that took place as early as 1992 which involved ADB, a
reputable financial institution.
Issue 1. Does petitioner have the legal
capacity to sue?
·
Right of a FC to sue
b.
if a FC is not doing business in the PH, it needs no license to sue before Philippine courts on an
isolated transaction or on a COA entirely
independent of any business transaction;
c.
if a FC does business in the PH with the required license,
it can sue before Philippine courts on any transaction.
·
The question WON a FC is doing
business is dependent principally upon the facts and circumstances of each
particular case.
·
Corp. Code is silent as
to what constitutes doing or transacting
business in the PH.
·
Case law definition: Mentholatum
vs. Mangaliman: The true test, however, seems to be whether the FC is
continuing the body or substance of the business or enterprise for which it was
organized or whether it has substantially retired from it and turned it over to
another.
·
The case law definition was
adopted in Foreign Investment Act of 1991 and Sec 1 of RA No. 5455.
The expression doing business should not be
given such a strict and literal construction as to make it apply to any
corporate dealing whatever.
·
CA categorized as doing business petitioners participation under the
Assignment Agreement and the Deed of Assignment. This is simply untenable.
·
The purpose for which
petitioner was organized is not discernible in the records. No effort was exerted by the CA to
establish the nexus between petitioners business and the acts supposed to
constitute doing business.
·
Thus, whether the assignment
contracts were incidental to petitioners business or were continuation thereof
is beyond determination.
·
In Far East a single act
may still constitute doing business if it
is not merely incidental or casual, but is of such character as distinctly to indicate a purpose on the part of the FC
to do other business in the state. In
said case, there was an express
admission from an official of the FC that he was sent to the PH to look into
the operation of mines.
·
Mere ownership by a FC of a
property in a certain state, unaccompanied
by its active use in furtherance of the business for which it was formed,
is insufficient in itself to constitute doing business.
·
MR was engaged only in isolated
acts or transactions. Single or
isolated acts, contracts, or transactions of FCs are not regarded as a doing or
carrying on of business.
Issue 2. Was the Deed of Assignment between
Marcopper and petitioner executed in fraud of creditors?
·
The Support Credit Agreement was
executed 4 years prior to
Marcoppers insovency, hence, the alleged intention
of petitioner to continue Marcoppers business could have no basis for at that time,
Marcoppers fate cannot yet be determined.
Art. 1387. All contracts by virtue of which
the debtor alienates property by gratuitous title are presumed to have been entered into in fraud of creditors, when the
donor did not reserve sufficient property to pay all debts contracted before
the donation.
Alienations by onerous title are
also presumed fraudulent when made by persons against whom some judgment has
been rendered in any instance or some writ of attachment has been issued.…
·
But this presumption of fraud may
be rebutted by satisfactory evidence. All
that is necessary is to establish affirmatively that the conveyance is made in
good faith and for a sufficient and valuable consideration.
·
It is incredible for petitioner
to be paying the huge sum of US $18M only for the purpose of defrauding
Solidbank of the sum of P53M.
·
We cannot see how Solidbanks
right was prejudiced considering that substantially all of Marcoppers
properties were already covered by REM and CM as early as Nov 11, 1992.
Issue 3. Are
MR Holdings, Ltd., Placer Dome, and Marcopper one and the same entity? no.
·
The mere fact that a Corp. owns
all of the stocks of another Corp., taken alone is not sufficient to justify
their being treated as one entity. If used to perform legitimate
functions, a subsidiarys separate existence shall be respected, and the
liability of the parent Corp. as well as the subsidiary will be confined to
those arising in their respective business.
·
PNB vs. Ritratto Group Inc.,:
circumstances which are useful in
the determination of whether a subsidiary is but a mere instrumentality of the
parent-Corp., to wit:
a.
The parent Corp. owns all or most
of the capital stock of the subsidiary.
b.
The parent and subsidiary Corp.s
have common directors or officers.
c.
The parent Corp. finances the
subsidiary.
d.
The parent Corp. subscribes to
all the capital stock of the subsidiary or otherwise causes its incorp..
e.
The subsidiary has grossly
inadequate capital.
f.
The parent Corp. pays the
salaries and other expenses or losses of the subsidiary.
g.
The subsidiary has substantially
no business except with the parent Corp. or no assets except those conveyed to
or by the parent Corp..
h.
In the papers of the parent Corp.
or in the statements of its officers, the subsidiary is described as a
department or division of the parent Corp., or its business or financial
responsibility is referred to as the parent Corp.s own.
i.
The parent Corp. uses the
property of the subsidiary as its own.
j.
The directors or executives of
the subsidiary do not act independently in the interest of the subsidiary, but
take their orders from the parent Corp..
k.
The formal legal requirements of
the subsidiary are not observed.
·
What is only extant in the
records is the matter of stock ownership. There
are no other factors indicative that
petitioner is a mere instrumentality of Marcopper or Placer Dome.
·
The mere fact that Placer Dome
agreed to provide Marcopper with cash flow support in paying its obligations to
ADB, does not mean that its personality has merged with that of Marcopper.
·
This singular undertaking,
performed by Placer Dome with its own stockholders in Canada and elsewhere, is
not a sufficient ground to merge its corporate personality with Marcopper which
has its own set of shareholders, dominated mostly by Filipino
issue 4. Is petitioner guilty of forum
shopping? no.
·
There could have been a violation
of the rules thereon if MR and Marcopper were indeed one and the same entity. But since petitioner has a separate
personality, it has the right to pursue
its third-party claim by filing the independent reivindicatory action with the
RTC of Boac, Marinduque, [R 39.16]
·
This reivindicatory action has
for its object the recovery of ownership or possession of the property seized
by the sheriff, despite the third party claim, as well as damages resulting
therefrom, and it may be brought against the sheriff and such other parties as
may be alleged to have connived with him in the supposedly wrongful execution
proceedings, such as the judgment creditor himself. Such action is an entirely separate
and distinct action from that in which execution has been issued.
issue 5. won
mr holdings is entitled to a wpi. yes.
·
A preliminary injunction may be
granted when it is established:
a.
That the applicant is entitled to
the relief demanded, and the whole or part of such relief consists in
restraining the commission or continuance of the act or acts complained of, or
in requiring the performance of an act or
acts, either for a limited period or perpetually;
b.
That the commission, continuance
or non-performance of the acts or acts complained of during the litigation
would probably work injustice to the applicant; or
c.
That a party, court, agency or a
person is doing, threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in violation of the rights of
the applicant respecting the subject of the action or proceeding, and tending
to render the judgment ineffectual.
·
An injunction is a proper remedy
to prevent a sheriff from selling the property of one person for the purpose of
paying the debts of another; and that while the general rule is that no court
has authority to interfere by injunction with the judgments or decrees of
another court of equal or concurrent or coordinate jurisdiction, however, it is
not so when a third-party claimant is
involved.
·
Herald
Publishing Company: If that be so and it is so
because the property, being that of a stranger, is not subject to levy then an
interlocutory order such as injunction, upon a claim and prima facie showing of
ownership by the claimant, cannot be considered as such interference either.
dispositive
·
Upon filing of a bond of P1M,
sheriffs are restrained from further implementing the writ of execution by the
RTC Manila. The RTC Boac,
Marinduque, is directed to dispose of CC No. 98-13 with dispatch.
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