1) Rodolfo Dela Cruz filed a collection case against Panasia Bank for unauthorized withdrawals from his account totaling P56 Million.
2) Bank of Commerce later acquired some assets and liabilities of Panasia Bank through a purchase agreement, but claimed it did not assume Panasia's liabilities.
3) The Supreme Court ruled that without presenting the purchase agreement in court, there was no evidence that Bank of Commerce had merged with or assumed the liabilities of Panasia Bank. It dismissed the case against Bank of Commerce.
1) Rodolfo Dela Cruz filed a collection case against Panasia Bank for unauthorized withdrawals from his account totaling P56 Million.
2) Bank of Commerce later acquired some assets and liabilities of Panasia Bank through a purchase agreement, but claimed it did not assume Panasia's liabilities.
3) The Supreme Court ruled that without presenting the purchase agreement in court, there was no evidence that Bank of Commerce had merged with or assumed the liabilities of Panasia Bank. It dismissed the case against Bank of Commerce.
1) Rodolfo Dela Cruz filed a collection case against Panasia Bank for unauthorized withdrawals from his account totaling P56 Million.
2) Bank of Commerce later acquired some assets and liabilities of Panasia Bank through a purchase agreement, but claimed it did not assume Panasia's liabilities.
3) The Supreme Court ruled that without presenting the purchase agreement in court, there was no evidence that Bank of Commerce had merged with or assumed the liabilities of Panasia Bank. It dismissed the case against Bank of Commerce.
1) Rodolfo Dela Cruz filed a collection case against Panasia Bank for unauthorized withdrawals from his account totaling P56 Million.
2) Bank of Commerce later acquired some assets and liabilities of Panasia Bank through a purchase agreement, but claimed it did not assume Panasia's liabilities.
3) The Supreme Court ruled that without presenting the purchase agreement in court, there was no evidence that Bank of Commerce had merged with or assumed the liabilities of Panasia Bank. It dismissed the case against Bank of Commerce.
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I.SHORT TITLE: BANK OF COMMERCE V.
HEIRS OF DELA CRUZ
II. FULL TITLE: Bank of Commerce, petitioner, versus Heirs of Rodolfo Dela Cruz, respondent. – G.R. No. 211519, August 14, 2017, J. Bersamin
III. TOPIC: Mergers and Consolidations – Definition and Concept
IV. STATEMENT OF FACTS:
Rodolfo Dela Cruz was the owner of Mamertha Merchandising. He maintained a bank account with Panasia Banking.
He discovered that Panasia allowed his son, Allan, to withdraw money without his consent. He immediately instructed Panasia not to allow such withdrawals and even sent a letter expressly prohibiting withdrawal without his consent. Despite such instruction, Panasia still allowed further withdrawals without his knowledge and consent.
He demanded Panasia bank to restore around P56 Million which is the equivalent of the unauthorized withdrawals. The bank, despite several demands, failed to act on it.
V. STATEMENT OF THE CASE:
Dela Cruz filed an action for collection of sum of money against Panasia to recover the said P56 Million.
In the meantime, petitioner Bank of Commerce demanded payment from Dela Cruz. This represents the loan acquired by the latter from the Panasia pursuant to a Purchase and Sale Agreement between petitioner and Panasia in which petitioner acquired the assets and liabilities of Panasia on bank deposits.
Dela Cruz demanded petitioner bank to pay the liability of Panasia to him and setoff his loan with Panasia by deducting the amount of P27 Million from the P56 Million.
Petitioner insists that it acquired only select assets and liabilities from Panasia. Consequently, petitioner filed a petition for extra-judicial foreclosure of the real estate property mortgaged as security of the loan.
Dela Cruz amended his collection suit to implead Bank of Commerce and for issuance of TRO to refrain from acting upon the auction sale.
During the pendency of the case, Rodolfo Dela Cruz died and was duly substituted by his heirs.
The RTC found negligence on the part of Panasia and ruled in favor of the plaintiff and declared that Panasia and petitioner is solidarily liable to the plaintiff by virtue of a merger. The Court of Appeals affirmed the trial court.
ISSUE: Whether or not petitioner is solidarily liable with Panasia.
VI. RULING:
NO.
The CA and RTC both agreed that the petitioner’s failure to formally offer the Purchase and Sale Agreement and Deed of Assignment was fatal to its defense. The Court agrees with it as the court cannot consider evidence which was not formally offered.
Because of this, absence of such document caused a void in the link between the petitioner and Panasia necessary to support the pronouncement of the personal liability of the petitioner for the negligence on the part of Panasia. Without such Sale and Purchase Agreement, implicating petitioner in the negligence of Panasia is unjustified because there was no showing that petitioner had specifically merged with Panasia and assumed the latter’s liabilities.
Furthermore, the allegations of the complaint did not constitute proof of his cause of action against the petitioner. With the petitioner having specifically denied having merged with Panasia, averring instead that its purchase had concerned only selected assets and liabilities of Panasia, it became the burden of Dela Cruz to prove the merger with Panasia, and the petitioner’s becoming the surviving corporation.
Merger is an act that could not be presumed. Its details must be shown and its effects must be based on the terms adopted by the parties concerned and approved by the proper government office or agency regulating the merging parties. Judicial notice of the terms of the merger and its consequences, which the trial and appellate courts took in their decisions could not be justified.
A merger is the union of two or more existing corporations in which the surviving corporation absorbs the others and continues the combined business. The merger dissolves the non-surviving corporations, and the surviving corporation acquires all the rights, properties, and liabilities of the dissolved corporation. Considering that the merger involves fundamental changes in the corporation, as well as in the rights of the stockholders and creditors, there must be an express provision of law authorizing the merger. The merger does not become effective upon the mere agreement of the constituent corporations but upon the approval of the Articles of Merger by the SEC issuing the Certificate of Merger. Should any party in the merger be a special corporation, the Corporation Code mandates that a favorable recommendation of the appropriate government agency should first be obtained.
There are several specific facts whose existence must be shown and not merely assumed before the merger of two or more corporations can be declared established. In this case, Dela Cruz’s allegation was specifically denied by the petitioner. RTC should have required proof of the acquisition of the liability of Panasia on the part of petitioner. VII. DISPOSITIVE PORTION: WHEREFORE, the Court GRANTS the petition for review on certiorari; AFFIRMS the decision promulgated on August 29, 2013 by the Court of Appeals subject to the MODIFICATION that Civil Case No. C-19332 is DISMISSED insofar as petitioner Bank of Commerce is concerned for lack of cause of action; and ORDERS the respondents to pay the costs of suit.
