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RAMON E. REYES v. BANCOM DEVELOPMENT CORP.

FACTS:

payment on the Promissory Notes and fulfill their obligations under the guaranty. The defendants-appellants argued that their noncompliance was justified by earlier agreements with Bancom and Fereit, but the CA rejected this argument. The CA also noted that Abella Concepcion Regala & Cruz had withdrawn from representing Bancom as their client could not be contacted and had reportedly merged with another entity. Based on these facts, the CA affirmed the RTC's ruling holding Marbella and the Reyes Group jointly and severally liable to Bancom.

The case involves defendants-appellants who failed to fulfill their obligations under Promissory Notes and Continuing Guaranty issued in favor of Bancom. The authenticity and execution of these instruments are not disputed. Defendants-appellants' defense rests on the argument that their non-payment of the obligations is justified due to the alleged non-compliance of Bancom with the terms of the Memorandum of Agreement. However, defendants-appellants did not take any formal action or assert their rights against Bancom. The trial court ruled that their failure to seek remedies against Bancom indicates that they did not consider Bancom's non-compliance as affecting their own liability. The terms of the promissory notes and the Continuing Guaranty are clear and leave no room for interpretation. Petitioners filed a Motion for Reconsideration arguing that the Promissory Notes were not binding and that the suit should be considered abated because Bancom's Certificate of Registration was revoked by the SEC. Petitioners filed a Petition for Review after the denial of their Motion for Reconsideration. The issues to be resolved are whether the suit should be abated due to the revocation of Bancom's Certificate of Registration and whether petitioners are liable for the loan amounts and attorney's fees.

ISSUES:

  1. Whether the present suit should be deemed abated by the revocation by the SEC of the Certificate of Registration issued to Bancom.

  2. Whether the CA correctly ruled that petitioners are liable to Bancom for:

    a. the payment of the loan amounts indicated on the Promissory Notes issued by Marbella;

    b. attorney's fees.

RULING:

  1. The revocation of Bancom's Certificate of Registration does not justify the abatement of these proceedings. The Court held that even after the dissolution of a corporation, its directors are considered trustees by legal implication for the purpose of winding up its affairs. The mere revocation of Bancom's charter does not result in the abatement of proceedings.

  2. The Court affirmed the CA ruling that petitioners, as guarantors, are liable for the payment of the loan amounts indicated on the Promissory Notes issued by Marbella, including the award for attorney's fees. The responsibilities of Marbella and petitioners under the Promissory Notes and the Continuing Guaranty were plain and unqualified.

PRINCIPLES:

  1. Three-Year Winding-Up Period: Under Section 122 of the Corporation Code, a corporation whose charter is annulled can continue as a body corporate for three years for specific purposes, including the prosecution and defense of suits.

  2. Legal Interest Exception Post-Dissolution: Jurisprudence allows an appointed receiver, assignee, or trustee to continue suits on behalf of the corporation even after the three-year winding-up period.

  3. Trustees by Legal Implication: The board of directors of a dissolved corporation may be considered trustees by legal implication for the purpose of winding up the corporation's affairs.

  4. Substantive Rights and Liabilities: Dissolution of a corporation does not extinguish any right or remedy in favor of or against it or its stakeholders. The liability of the debtors to the dissolved corporation remains subsisting.

  5. Enforceability of Contracts: The terms of promissory notes and guaranty agreements that explicitly state payment obligations are binding and enforceable.

  6. Unjust Enrichment: Failure to hold debtors liable would result in unjust enrichment at the expense of the dissolved corporation.

  7. Legal Interest Rates: The Court modified stipulated interest rates to align with prevailing legal interest rates under current jurisprudence.