Metropolitan Bank & Trust Co . , v. Centro Development Corp., G.R. No.

180974, June 13 , 2012

DOCTRINE/S:

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.

FACTS:

On 20 March 1990, in a special meeting of the board of directors of

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

On 21 March 1990, respondent Centro, represented by Go Eng Uy,

executed a Mortgage Trust Indenture (MTI) with the Bank of the Philippines
Islands (BPI).

Thereafter, respondent alleged that there was a new mortgage constituted

by virtue of stockholders Resolution No. 005, s. 1994

Petitioner contends that the stockholders Resolution No. 005, s. 1994 did
not constitute a new mortgage in favor of petitioner. Instead, the stockholders
merely amended the existing MTI by appointing petitioner as the new trustee
for the MTI, which was already existing and held by BPI. Thus, there was no
need to secure a 2/3 vote from the stockholders. Petitioner posits that the
authority to mortgage the properties was granted in 1990, upon the execution
of the first MTI between respondent Centro and BPI.

Petitioner also maintains that the CA erred in interpreting the phrase "at
which meeting a quorum was present" contained in the Secretarys Certificate
dated 18 August 1994. The bank points out that the phrase indicates that at
least a quorum was present, rather than that only a quorum was present.
Thus, the Secretarys Certificate did not in any way limit the number of those
actually present.
ISSUE/S: WON MTI constituted a new mortgage?
HELD:
NO. Reading carefully the Secretarys 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.