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Republic Planters Bank v. Hon. Enrique A. Agana, SR

A borrower received a loan from a bank partially in the form of money and partially in stock certificates. The borrower later tried to compel the bank to declare dividends on the stock certificates and redeem the shares. The court granted the bank's petition, finding that payment of dividends is not a right but requires consensus, and dividends can only be paid from net earnings or surplus. The judge erred in compelling the bank to redeem the shares and pay dividends without considering the terms of the stock certificate or following the law.

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Teff Quibod
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25 views

Republic Planters Bank v. Hon. Enrique A. Agana, SR

A borrower received a loan from a bank partially in the form of money and partially in stock certificates. The borrower later tried to compel the bank to declare dividends on the stock certificates and redeem the shares. The court granted the bank's petition, finding that payment of dividends is not a right but requires consensus, and dividends can only be paid from net earnings or surplus. The judge erred in compelling the bank to redeem the shares and pay dividends without considering the terms of the stock certificate or following the law.

Uploaded by

Teff Quibod
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Republic Planters Bank v. Hon. Enrique A. Agana, Sr.

FACTS: Robes-Francisco Realty and Development Corporation secured a loan from Republic Planters Bank. Instead
of giving the legal tender totaling to the full amount of the loan, the bank lent such amount partially in the form of
money and partially in the form of stock certificates. Said stock certificates were in the name of private respondent
Adalia F. Robes and Carlos F. Robes, who later on endorsed his shares in favor of Adalia F. Robes. Adalia Robes
then proceeded against the bank and filed a Complaint anchored on her alleged rights to collect dividends under the
preferred shares in question and to have petitioner redeem the same under the terms and conditions of the stock
certificates.
ISSUE: Whether the respondents may compel the petitioner to declare dividends
RULING: Petition GRANTED.
Payment of dividends to a stockholder is not a matter of right but a matter of consensus. "Interest bearing stocks", on
which the corporation agrees absolutely to pay interest before dividends are paid to common stockholders, is legal
only when construed as requiring payment of interest as dividends from net earnings or surplus only. Clearly, the
respondent judge, in compelling the petitioner to redeem the shares in question and to pay the corresponding
dividends, committed grave abuse of discretion amounting to lack or excess of jurisdiction in ignoring both the terms
and conditions specified in the stock certificate, as well as the clear mandate of the law.

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