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ROBERTO L. YUPANGCO v. O.J. DEVELOPMENT

FACTS:

The petitioners, Roberto Yupangco and Regina De Ocampo, filed a complaint for fraud against O.J. Development and Trading Corporation (OJDTC), Oscar Jesena, and Marioca Realty, Inc. (MRI). They alleged that OJDTC and Oscar engaged in a dollar exchange business with Grace Foreign Exchange (Grace) and were unable to pay the full amount of US dollars purchased by petitioners, resulting in an unpaid obligation of US$1.9 million. The petitioners claimed that Oscar induced them to loan the undelivered US$1.9 million to Grace on the pretext of the company needing a capital infusion for expansion. The parties executed a Memorandum of Agreement (MOA) secured by land deeds and a Promissory Note. Grace closed its business and OJDTC and Oscar could not account for the US$1.9 million. Oscar later acknowledged the outstanding obligation in a second MOA.

The facts of the case are as follows:

  1. The petitioners entered into two Memorandum of Agreements (MOAs) with Oscar Jesena and O.J. Development and Technology Center (OJDTC) for a joint venture involving a forex business.

  2. Under the MOAs, the petitioners provided funds to OJDTC and Oscar for the forex business.

  3. OJDTC and Oscar conveyed real properties to the petitioners as collateral.

  4. The forex business suffered losses and the petitioners experienced financial crisis.

  5. OJDTC and Oscar conveyed more real properties to the petitioners, offered to pay cash, and agreed to pay more after receiving inheritance.

  6. The transfer of properties between MRI and OJDTC and Oscar was alleged to be fraudulent and intended to hide their properties from creditors.

  7. The petitioners sought to hold OJDTC and Oscar liable, with MRI being held solidarily liable.

  8. The petitioners also sought legal interest, moral damages, exemplary damages, and attorney's fees.

  9. OJDTC and Oscar claimed that the funds were an investment and that the petitioners must share in the losses.

  10. MRI denied any transactions with the petitioners.

  11. The trial court dismissed the complaint, but awarded attorney's fees and moral damages to OJDTC and Oscar.

  12. The Court of Appeals upheld the trial court's decision.

ISSUES:

  1. Whether Roberto and Regina are real parties in interest.

  2. Whether the Second MOA entered into by the parties involved a loan obligation.

  3. Whether the term "best efforts" appearing in the Second MOA is a potestative condition dependent on the will of the obligor which nullifies the agreement.

  4. Whether the alleged transfer of properties to MRI is in fraud of creditors such as petitioners.

RULING:

  1. Roberto and Regina as Real Parties in Interest

    • The Supreme Court ruled that petitioners are real parties in interest since they have a material interest in an action made upon the Second MOA, being signatories and contracting parties to it.

  2. Nature of the Second MOA

    • The Supreme Court determined that the Second MOA is a loan contract. Despite the RTC and CA's findings that the initial MOAs involved investments, the Second MOA acknowledges an outstanding obligation, converting the nature of the agreement to a loan.

  3. Potestative Condition in the Second MOA

    • The Court rejected the contention that the term "best efforts" nullifies the agreement. The potestative condition imposed on the fulfillment (performance) of the obligation does not void the primary obligation to pay. Thus, the obligation remains unaffected.

  4. Fraudulent Transfer of Properties to MRI

    • The issue of whether the transfer of properties to MRI is fraudulent cannot be determined in this case for collection of sum of money. Petitioners must file a separate action for accion pauliana if they want to pursue this allegation.

PRINCIPLES:

  1. Real Party in Interest

    • Defined under Section 2, Rule 3 of the Rules of Court as one who stands to be benefited or injured by the judgment in the suit or is entitled to the avails of the suit.

  2. Determination of Loan Nature

    • Article 1933 of the New Civil Code states that a loan involves the delivery of money with an obligation to return the same amount of the same kind and quality.

  3. Potestative Conditions

    • Under Article 1182 of the Civil Code, a potestative condition dependent on the will of the debtor renders the condition void but does not affect the obligation itself if only imposed on the obligation’s performance or fulfillment.

  4. Accion Pauliana

    • A remedy available only when no other legal remedies exist to enforce a claim against a debtor; to annul fraudulent transfers when creditor’s remedies are exhausted.

  5. Legal Interest Rates

    • Obligations shall be subject to a legal interest rate of twelve percent (12%) per annum from the date of demand until June 30, 2013, and six percent (6%) per annum from July 1, 2013, until full satisfaction (as guided by jurisprudence and Republic Act No. 8183).