Scribd Logo
Upload

Welcome to Scribd!

  • 837 views

    156 - Associated Bank vs. CA

    Uploaded by

    mimiyuki_
    Associated Bank and Citizens Bank and Trust Company merged to form Associated Citizens Bank. Lorenzo Sarmiento Jr. executed a promissory note in favor of Associated Bank for P2.5M, of which P2.25M remains unpaid. The Court of Appeals ruled in favor of Sarmiento, stating that Associated Bank was not the real party in interest as the note was made out to Citizens Bank. However, the Supreme Court held that under the terms of the merger agreement, all contracts entered into in the name of the absorbed bank (Citizens Bank) were to be understood as pertaining to the surviving bank (Associated Bank), making Associated Bank the real party in interest. The merger agreement was clear

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    156 - Associated Bank vs. CA

    Uploaded by

    mimiyuki_
    837 views2 pages
    Associated Bank and Citizens Bank and Trust Company merged to form Associated Citizens Bank. Lorenzo Sarmiento Jr. executed a promissory note in favor of Associated Bank for P2.5M, of which P2.25M remains unpaid. The Court of Appeals ruled in favor of Sarmiento, stating that Associated Bank was not the real party in interest as the note was made out to Citizens Bank. However, the Supreme Court held that under the terms of the merger agreement, all contracts entered into in the name of the absorbed bank (Citizens Bank) were to be understood as pertaining to the surviving bank (Associated Bank), making Associated Bank the real party in interest. The merger agreement was clear

    Original Title

    156_associated Bank vs. CA

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Associated Bank and Citizens Bank and Trust Company merged to form Associated Citizens Bank. Lorenzo Sarmiento Jr. executed a promissory note in favor of Associated Bank for P2.5M, of which P2.25M remains unpaid. The Court of Appeals ruled in favor of Sarmiento, stating that Associated Bank was not the real party in interest as the note was made out to Citizens Bank. However, the Supreme Court held that under the terms of the merger agreement, all contracts entered into in the name of the absorbed bank (Citizens Bank) were to be understood as pertaining to the surviving bank (Associated Bank), making Associated Bank the real party in interest. The merger agreement was clear

    Copyright:

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

    156 - Associated Bank vs. CA

    Uploaded by

    mimiyuki_
    Associated Bank and Citizens Bank and Trust Company merged to form Associated Citizens Bank. Lorenzo Sarmiento Jr. executed a promissory note in favor of Associated Bank for P2.5M, of which P2.25M remains unpaid. The Court of Appeals ruled in favor of Sarmiento, stating that Associated Bank was not the real party in interest as the note was made out to Citizens Bank. However, the Supreme Court held that under the terms of the merger agreement, all contracts entered into in the name of the absorbed bank (Citizens Bank) were to be understood as pertaining to the surviving bank (Associated Bank), making Associated Bank the real party in interest. The merger agreement was clear

    Copyright:

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

    ASSOCIATED BANK vs.

    COURT OF APPEALS

    (G.R. No. 123793; June 29, 1998)

    FACTS: Associated Banking Corporation and Citizens Bank and Trust Company merged
    to form Associated Citizens Bank which subsequently changed its corporate name to
    Associate Bank. The defendant Lorenzo Sarmiento Jr. executed a promissory note in
    favor of Associated Bank for P2.5M of which P2.25M remains unpaid. Despite repeated
    demands, the defendant failed to pay the sum due. Defendant denied all pertinent
    allegations in the complaint and alleged as affirmative and/or special defense that
    Associated Bank is not the real party in interest because the promissory note was
    executed in favor of Citizens Bank and Trust Company. Defendant was declared in
    default for not appearing in the Pre-Trial Conference and the plaintiff was allowed to
    present evidence ex-parte, the Motion to Life Order of Default and or Reconsideration
    of the Order being dismissed. The trial court ruled in favor of Associated Bank. On
    appeal, the CA reversed the trial court.

    ISSUE: WON Associated Bank, the surviving corporation, may enforce the promissory
    note made by Sarmiento in favor of CBTC, the absorbed company after the effectivity of
    the merger?

    HELD: Yes. Ordinarily, in the merger of two or more existing corporations, one of the
    combining corporations survives and continues the combined business, while the rest
    are dissolved and all their rights, properties and liabilities are acquired by the surviving
    corporation. Although there is a dissolution of the absorbed corporations, there is no
    winding up of their affairs or liquidation of their assets, because the surviving
    corporation automatically acquires all their rights, privileges and powers, as well as their
    liabilities.

    The merger, however, does not become effective upon the mere agreement of the
    constituent corporations. The procedure to be followed is prescribed under the
    Corporation Code. Section 79 of said Code requires the approval by the Securities and
    Exchange Commission (SEC) of the articles of merger which, in turn, must have been
    duly approved by a majority of the respective stockholders of the constituent
    corporations. The same provision further states that the merger shall be effective only
    upon the issuance by the SEC of a certificate of merger. The effectivity date of the
    merger is crucial for determining when the merged or absorbed corporation ceases to
    exist; and when its rights, privileges, properties as well as liabilities pass on to the
    surviving corporation.

    Consistent with the aforementioned Section 79, the September 16, 1975 Agreement of
    Merger, which Associated Banking Corporation (ABC) and Citizens Bank and Trust
    Company (CBTC) entered into, provided that its effectivity "shall, for all intents and
    purposes, be the date when the necessary papers to carry out this merger shall have
    been approved by the Securities and Exchange Commission."
    The fact that the promissory note was executed after the effectivity date of the merger
    does not militate against petitioner. The agreement itself clearly provides that all
    contracts — irrespective of the date of execution — entered into in the name of CBTC
    shall be understood as pertaining to the surviving bank, herein petitioner. Since, in
    contrast to the earlier aforequoted provision, the latter clause no longer specifically
    refers only to contracts existing at the time of the merger, no distinction should be
    made. The clause must have been deliberately included in the agreement in order to
    protect the interests of the combining banks; specifically, to avoid giving the merger
    agreement a farcical interpretation aimed at evading fulfillment of a due obligation.

    Thus, although the subject promissory note names CBTC as the payee, the reference to
    CBTC in the note shall be construed, under the very provisions of the merger
    agreement, as a reference to petitioner bank, "as if such reference was a direct
    reference to" the latter "for all intents and purposes."

    No other construction can be given to the unequivocal stipulation. Being clear, plain and
    free of ambiguity, the provision must be given its literal meaning and applied without a
    convoluted interpretation. Verba lelegis non est recedendum.

    You might also like