Situs Development Corporation, et al. v. Asiatrust Bank

G.R. No. 180036, 25 July 2012

FACTS:

Tony Chua, started COLOR and ventured into real estates development/leasing by organizing SITUS in order to build a shopping mall complex know as Metrolane Complex (COMPLEX). To finance the construction of the COMPLEX, SITUS, COLOR and Tony Chua and his wife Siok Lu Chua, obtained several loan from (1) ALLIED secured by real estate mortgages over two lots (2) ASIATRUST secured by a real estate mortgage and (3) Global Banking Corporation, now METROBANK secured a real estate mortgaged. The Chua Family expanded into retail merchandizing and organized Daily Supermarket Inc.(DAILY). All three (3) corporations have interlocking directors and are all housed in the COMPLEX. The Chua family also resides in the COMPLEX, while the other units are being leased to tenants SITUS, COLOR AND DAILY obtain additional loans from ALLIED, ASIATRUST AND METROBANK and their real estate mortgages were updated and or amended.

Spouses Chua likewise executed five (5) Continuing Guarantee Comprehensive Surety in favor of ALLIED to guarantee the payment of the loans of SITUS AND DAILY but they failed to pay their obligations as they fell due, despite demands. Extra judicial foreclosure was obtained by some of the respondents. The petitioners raised arguments that are too substantial to merit the courts consideration and some are merely rehashed from previous proceedings. One of the contentions raised was the properties belonging to the petitioners corporations majority stockholders may be included in the rehabilitation plan. The properties should be included in the ambit of the Stay Order and Allied and Metro Bank were not the owners of the mortgaged properties when the Stay Order was issued by the rehabilitation court.

ISSUE:

Whether the properties belonging to the majority stockholders may be included in the rehabilitation plan as inventory of assets of the petitioner corporations.

RULING:

NO. In this case, the parcels of land mortgaged to respondent banks are owned not by petitioners, but by spouses Chua. Applying the doctrine of separate juridical personality, these properties cannot be considered as part of the corporate assets. Even if spouses Chua are the majority stockholders in petitioner corporations, they own these properties in their individual capacities. Thus, the parcels of land in question cannot be included in the inventory of assets of petitioner corporations.

The fact that these properties were mortgaged to secure corporate debts is of no moment. A mortgage is an accessory undertaking to secure the fulfillment of a principal obligation. In a third-party mortgage, the mortgaged property stands as security for the loan obtained by the principal debtor; but until the mortgaged property is foreclosed, ownership thereof remains with the third-party mortgagor.

Here, the properties owned by spouses Chua were mortgaged as security for the debts contracted by petitioner corporations. However, ownership of these properties remained with the spouses notwithstanding the fact that these were mortgaged to secure corporate debts. We have ruled that “when a debtor mortgages his property, he merely subjects it to a lien but ownership thereof is not parted with.”

This leads to no other conclusion than that, notwithstanding the mortgage, the real properties in question belong to spouses Chua; hence, these properties should not be considered as assets of petitioner corporations.

*Case digest by Earl M. Acoymo, Refresher, Andres Bonifacio Law School, SY 2019-2020

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