Bank of the Philippine Islands

v.
Carlito Lee
G.R. No. 190144
August 1, 2012

Facts:

The RTC rendered a favorable judgment to Lee as against Trendline, and garnished the
latter’s deposit with Citytrust in satisfaction of the judgment. However, before the deposit was
released to Lee, Citytrust merged with the Bank of Philippine Islands (BPI), with the latter as the
surviving corporation with the agreement that BPI will incur all of Citytrust’s liabilities and
obligations, as if BPI had incurred the liabilities itself. When the judgment became final and
executory, Lee sought to implement the same as against BPI, but the latter denied having
possession, control, and custody of any deposits or properties belonging to Trendline. The RTC
ruled in favor of BPI, for lack of evidence showing that BPI took over the subject accounts, to
which the CA did not agree to. Hence, the petition.

Issue: Whether or not BPI is liable to Lee for the delivery of the deposits of the subject deposit
on account of its merger with Citytrust.

Ruling: Yes.

Upon the merger of Citytrust and BPI, with the latter as the surviving corporation, and
with all the liabilities and obligations of Citytrust transferred to BPI as if it had incurred the
same, BPI undoubtedly became a party interested in sustaining the proceedings, as it stands to
be prejudiced by the outcome of the case. Corollarily, merger of two corporations produces,
among others, the following effects: (a) the constituent corporations shall become a single
corporation which shall be the surviving corporation designated in the plan of merger, (b) the
surviving corporation shall be responsible and liable for all the liabilities and obligations of each
of the constituent corporations in the same manner as if such surviving corporation had itself
incurred such liabilities or obligations, and (c) the rights of creditors or liens upon the property
of any of such constituent corporations shall not be impaired by such merger or consolidation.
Consequently, by virtue of its merger with BPI, the latter as the surviving corporation,
effectively became the garnishee, thus the “virtual party” to the civil case. In sum, although
Citytrust was dissolved, no winding up of its affairs or liquidation of its assets, privileges,
powers and liabilities took place. As the surviving corporation, BPI simply continued the
combined businesses of the two banks and absorbed all the rights, privileges, assets, liabilities
and obligations of Citytrust, including the latter’s obligation over the garnished deposits of the
defendants.