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    3.2 Metrobank vs. Centro Development Corp

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    I took her to my penthouse and i freaked it
    This case involves a dispute over a Mortgage Trust Indenture (MTI) executed by Centro Development Corporation appointing Metrobank as successor-trustee. Centro took out loans secured by an MTI mortgaging substantially all its properties. Later, the MTI was amended to appoint Metrobank as trustee without stockholder approval. Centro argued this violated Section 40 of the Corporation Code requiring such approval. However, the court held Section 40 did not apply because the amendment did not substantially change the MTI's provisions, but rather was a regular business transaction that only required director approval. As there was no new mortgage, stockholder approval under Section 40 was not needed.

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    3.2 Metrobank vs. Centro Development Corp

    Uploaded by

    I took her to my penthouse and i freaked it
    31 views2 pages
    This case involves a dispute over a Mortgage Trust Indenture (MTI) executed by Centro Development Corporation appointing Metrobank as successor-trustee. Centro took out loans secured by an MTI mortgaging substantially all its properties. Later, the MTI was amended to appoint Metrobank as trustee without stockholder approval. Centro argued this violated Section 40 of the Corporation Code requiring such approval. However, the court held Section 40 did not apply because the amendment did not substantially change the MTI's provisions, but rather was a regular business transaction that only required director approval. As there was no new mortgage, stockholder approval under Section 40 was not needed.

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    This case involves a dispute over a Mortgage Trust Indenture (MTI) executed by Centro Development Corporation appointing Metrobank as successor-trustee. Centro took out loans secured by an MTI mortgaging substantially all its properties. Later, the MTI was amended to appoint Metrobank as trustee without stockholder approval. Centro argued this violated Section 40 of the Corporation Code requiring such approval. However, the court held Section 40 did not apply because the amendment did not substantially change the MTI's provisions, but rather was a regular business transaction that only required director approval. As there was no new mortgage, stockholder approval under Section 40 was not needed.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    31 views2 pages

    3.2 Metrobank vs. Centro Development Corp

    Uploaded by

    I took her to my penthouse and i freaked it
    This case involves a dispute over a Mortgage Trust Indenture (MTI) executed by Centro Development Corporation appointing Metrobank as successor-trustee. Centro took out loans secured by an MTI mortgaging substantially all its properties. Later, the MTI was amended to appoint Metrobank as trustee without stockholder approval. Centro argued this violated Section 40 of the Corporation Code requiring such approval. However, the court held Section 40 did not apply because the amendment did not substantially change the MTI's provisions, but rather was a regular business transaction that only required director approval. As there was no new mortgage, stockholder approval under Section 40 was not needed.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    METROBANK

    vs.
    CENTRO DEVELOPMENT CORP.

    FACTS:
     Centro Development Corporation (Centro), with BOD approval, its president Go Eng Uy
    was authorized to mortgage its properties and assets to secure the medium-term loan of
    P 84 million

     Executed a Mortgage Trust Indenture (MTI) with the Bank of the Philippines Islands
    (BPI).
     Under the MTI, respondent Centro expressed its desire to obtain from time to time loans
    and other credit accommodations from certain creditors for corporate and other
    business purposes
     To secure these obligations from different creditors, respondent Centro
    constituted a continuing mortgage on all or substantially all of its
    properties and assets in favor of BPI, the trustee.

     Later on, the MTI was amended, appointing Metrobank as the successor-trustee of the
    MTI. It is worth noting that this MTI did not amend the amount of the total obligations
    covered by the previous MTIs.
     On a side note, Chongking Kehyeng, Manuel Co Kehyeng and Quirino Kehyeng, allegedly
    discovered that the properties of respondent Centro had been mortgaged, and that the
    MTI that had been executed appointing petitioner as trustee
     the Kehyengs allegedly questioned the mortgage of the properties through letters
    addressed to Go Eng Uy and Jacinta Go
     They alleged that they were not aware of any board or stockholders'
    meeting when petitioner was appointed as successor-trustee of BPI in
    the MTI
     Meanwhile, during the period April 1998 to December 1998, San Carlos obtained
    additional loans, bringing the total principal amount of P812,793,513.23 from petitioner
    Metrobank.
     San Carlos failed to pay these outstanding obligations despite demand.
     Thus, petitioner, as trustee of the MTI, enforced the conditions thereof and initiated
    foreclosure proceedings.
     Before the scheduled foreclosure date, on 3 August 2000, respondents herein filed a
    Complaint for the annulment of the 27 September 1994 MTI with a prayer for a
    temporary restraining order (TRO) and preliminary injunction at Branch 138 of the RTC
    of Makati City
     The bone of contention in Civil Case No. 00-942 was that since the
    mortgaged properties constituted all or substantially all of the corporate
    assets, the amendment of the MTI failed to meet the requirements of
    Section 40 of the Corporation Code on notice and voting requirements.
    Under this provision, in order for a corporation to mortgage all or
    substantially all of its properties and assets, it should be authorized by
    the vote of its stockholders representing at least 2/3 of the outstanding
    capital stock in a meeting held for that purpose.

    ISSUE/S: Whether the requirements of Section 40 of the Corporation Code was complied with in
    the execution of the MTI

    HELD: Sec. 40 is NOT APPLICABLE in this case.


    Reading carefully the Secretary's Certificate, it is clear that the main purpose of the
    directors' Resolution was to appoint petitioner as the new trustee of the previously executed
    and amended MTI. Going through the original and the revised MTI, we find no substantial
    amendments to the provisions of the contract. We agree with petitioner that the act of
    appointing a new trustee of the MTI was a regular business transaction. The appointment
    necessitated only a decision of at least a majority of the directors present at the meeting in
    which there was a quorum, pursuant to Section 25 of the Corporation Code.
    The second paragraph of the directors' Resolution No. 005, s. 1994, which empowered
    Go Eng Uy "to sign the Real Estate Mortgage and all documents/instruments with the said bank,
    for and in behalf of the Company which are necessary and pertinent thereto," must be
    construed to mean that such power was limited by the conditions of the existing mortgage, and
    not that a new mortgage was thereby constituted.
    Thus, Section 40 of the Corporation Code finds no application in the present case, as
    there was no new mortgage to speak of under the assailed directors' Resolution.

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