G.R. No. 242074 . November 10, 2021.
ROBERTO L. YUPANGCO AND REGINA Y. DE OCAMPO, PETITIONERS, VS. O.J. DEVELOPMENT AND TRADING CORPORATION, OSCAR JESENA, AND MARIOCA REALTY, INC., RESPONDENTS.

FACTS

Petitioners Roberto L. Yupangco and Regina Y. De Ocampo filed a complaint for sum of money and damages against respondents O.J. Development and Trading Corporation (OJDTC), Oscar Jesena (Oscar), and Marioca Realty, Inc. (MRI). Petitioners alleged they had a long-standing arrangement with OJDTC and Oscar, wherein they would advance the peso equivalent of US dollar remittances handled by OJDTC’s partner, Grace Foreign Exchange (Grace), and would be paid back a week later. This arrangement ended in February 2002 when OJDTC and Oscar could no longer pay, leaving an unpaid obligation of US$1.9 million.
Petitioners claimed Oscar induced them to convert this amount into a loan to Grace for its expansion, secured by a Memorandum of Agreement (First MOA) and a Promissory Note referencing a proposed Initial Public Offering (IPO) of Grace. Grace, however, closed in October 2002. When the joint venture and IPO failed, the parties executed a second Memorandum of Agreement (Second MOA) on December 11, 2003, wherein Oscar and OJDTC acknowledged an outstanding obligation of US$1,242,229.77 and promised reimbursement through cash and specific properties.
Petitioners alleged that only some properties were delivered, leaving an unpaid balance of US$1,227,451.26. They further claimed that since April 2002, OJDTC and Oscar had been fraudulently transferring properties to MRI, a family corporation incorporated around that time with insufficient capital, to place assets beyond creditors’ reach. The Regional Trial Court dismissed the complaint for want of cause of action, a decision affirmed by the Court of Appeals.

ISSUE

Whether the Court of Appeals erred in affirming the dismissal of petitioners’ complaint for sum of money and damages.

RULING

The Supreme Court granted the petition in part. The Court held that petitioners sufficiently established a cause of action for sum of money based on the Second MOA, which constituted a written acknowledgment of a debt and a promise to pay. Respondents’ failure to fully comply with the terms of the Second MOA gave rise to a cause of action. The Court found OJDTC and Oscar Jesena jointly and severally liable for the unpaid balance of US$1,227,451.26, with legal interest.
However, the Court found the claim for damages against MRI based on alter ego liability unsubstantiated. The allegations and evidence were insufficient to prove that MRI was a mere instrumentality of OJDTC and Oscar Jesena established to defraud creditors. The claim for rescission of the property transfers to MRI under Article 1381(3) of the Civil Code was also not sufficiently proven, as petitioners failed to establish that the transfers rendered OJDTC and Oscar insolvent or unable to satisfy their obligation. The case was remanded to the trial court for reception of evidence on the exact peso equivalent of the dollar obligation for proper execution.