Philippine Blooming Mills Inc Vs Court of Appeals
Philippine Blooming Mills Inc Vs Court of Appeals
Philippine Blooming Mills Inc Vs Court of Appeals
FACTS:Ching was the Senior Vice President of PBM. In his personal capacity and not as a corporate officer, Ching signed a Deed of
Suretyshipfor trust receipts and bound himself as a co-maker of a promissory note to cover a trust loan. All of which were loaned from TRB.
PBM defaulted in its payment of the three liabilities. PBM and Ching filed a petition for suspension of payments with the Securities and
Exchange Commission. The petition sought to suspend payment of PBMs obligations and prayed that the SEC allow PBM to continue its normal
business operations free from the interference of its creditors. One of the listed creditors of PBM was TRB.
PBM and Ching moved to dismiss the complaint on the ground that the trial court had no jurisdiction over the subject matter of the
case. PBM and Ching invoked the assumption of jurisdiction by the SEC over all of PBMs assets and liabilities. TRB filed an opposition to the
Motion to Dismiss. TRB argued that (1) Ching is being sued in his personal capacity as a surety for PBM; (2) the SEC decision declaring PBM in
suspension of payments is not binding on TRB; and (3) Presidential Decree No. 1758 (PD No. 1758), which Ching relied on to support his
assertion that all claims against PBM are suspended, does not apply to Ching as the decree regulates corporate activities only.
The trial court denied the motion to dismiss with respect to Ching and affirmed its dismissal of the case with respect to PBM. The trial court
stressed that TRB was holding Ching liable under the Deed of Suretyship. As Ching’s obligation was solidary, the trial court ruled that TRB could
proceed against Ching as surety upon default of the principal debtor PBM. The trial court also held that PD No. 1758 applied only to corporations,
partnerships and associations and not to individuals.
Upon the trial courts denial of his Motion for Reconsideration, Ching filed a Petition for Certiorari and Prohibition before the Court of
Appeals. The appellate court granted Chings petition and ordered the dismissal of the case. The appellate court ruled that the SEC assumed
jurisdiction over Ching and PBM to the exclusion of courts or tribunals of coordinate rank.
TRB assailed the Court of Appeals Decision before this Court. In Traders Royal Bank v. Court of Appeals, this Court upheld TRB and
ruled that Ching was merely a nominal party in SEC Case No. 2250. Creditors may sue individual sureties of debtor corporations, like Ching, in a
separate proceeding before regular courts despite the pendency of a case before the SEC involving the debtor corporation.
In his Answer dated 6 November 1989, Ching denied liability as surety and accommodation co-maker of PBM. He claimed that the SEC
had already issued a decisionapproving a revised rehabilitation plan for PBMs creditors, and that PBM obtained the credit accommodations for
corporate purposes that did not redound to his personal benefit. He further claimed that even as a surety, he has the right to the defenses personal
to PBM. Thus, his liability as surety would attach only if, after the implementation of payments scheduled under the rehabilitation plan, there
would remain a balance of PBMs debt to TRB.
ISSUE: Whether Ching can be sued separately and whether Ching is liable for obligations PBM contracted after execution of the Deed of
Suretyship.
RULING:Yes, Ching can be sued separately to enforce his liability as surety for PBM, as expressly provided by Article 1216 of the New Civil
Code. It is elementary that a corporation has a personality distinct and separate from its individual stockholders and members. Being an officer or
stockholder of a corporation does not make ones property the property also of the corporation, for they are separate entities.Ching’s act of joining
as a co-petitioner with PBM in SEC Case No. 2250 did not vest in the SEC jurisdiction over his person or property, for jurisdiction does not
depend on the consent or acts of the parties but upon express provision of law.
Also, Ching is liable for credit obligations contracted by PBM against TRB before and after the execution of the 21 July 1977 Deed of
Suretyship. This is evident from the tenor of the deed itself, referring to amounts PBM may now be indebted or may hereafter become indebted to
TRB.The law expressly allows a suretyship for future debts. Article 2053 of the Civil Code provides:
A guaranty may also be given as security for future debts, the amount of which is not yet known; there can be no claim against the guarantor until
the debt is liquidated. A conditional obligation may also be secured. (Emphasis supplied)