First Philippine International Bank vs CA Case Digest GR 115849 January 24, 1996 252 SCRA 259

First Philippine International Bank vs. CA Case Digest

GR 115849 ; January 24, 1996 ; 252 SCRA 259

DOCTRINE/S:

Conflict of Laws

a)Principle of forum non conveniens - provides that a court, in conflicts of law cases, may refuse impositions on its jurisdiction where it is not the most “convenient” or available forum and the parties are not precluded from seeking remedies elsewhere.

Corporation Law

a) Essence of a derivative suit:

An individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he holds stock in order to protect or vindicate corporate rights, whenever the officials of the corporation refuse to sue, or are the ones to be sued or hold the control of the corporation. In such actions, the suing stockholder is regarded as a nominal party, with the corporation as the real party in interest. (Gamboa v. Victoriano, 90 SCRA 40, 47 [1979]; emphasis supplied).

Remedial Law

a) Meaning of Forum Shoppng

Forum-shopping – exist whenever, as a result of an adverse opinion in one forum, a party seeks a favorable opinion (other than by appeal or certiorari) in another.

b) Elements of Forum shopping

Forum shopping exists where the elements of litis pendentia are present namely:

(1) Identity of parties, or at least such parties as represent the same interests in both actions,

(2) Identity of rights asserted and relief prayed for,

(3) The relief being founded on the same facts, 

(4) Identity on the two preceding particulars is such that any judgment rendered in the other action, will, regardless of which party is successful, amount to res adjudicata in the action under consideration.

c) Petition for review under Rule 45 of the Rules of Court

GR: Supreme Court can only review question of law)

Exceptions (Instances questions of fact can be reviewed by the SC):

finding grounded entirely on speculation, surmises or conjectures; when the inference made is manifestly absurd, mistaken or impossible; when there is grave abuse of discretion in the appreciation of facts; when the judgment is premised on a misapprehension of facts; when the findings went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee (Chua Tiong Tay vs. Court of Appeals and Goldrock Construction and Development Corp).

Sales

a) Requisites of a valid and perfected contract (Article 1318 of the Civil Code):

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established.

Banking Law

a) Doctrine of "apparent authority"(with special reference to banks)

- A bank is liable for wrongful acts of its officers done in the interests of the bank or in the course of dealings of the officers in their representative capacity but not for acts outside the scope of their authority

Reason: Banks have a fiduciary relationship with the public and their stability depends on the confidence of the people in their honesty and efficiency. Such faith will be eroded where banks do not exercise strict care in the selection and supervision of its employees, resulting in prejudice to their depositors.

FACTS: The Bank has been under conservatorship since 1984. It is the owner of 6 parcels of land. The Bank had an agreement with Demetria to purchase the parcels of land. The said agreement was made by Demetria with the Bank’s manager, Rivera. Thereafter, they had a series of letters consisting of offers, counter-offers and acceptance of the counter- offer by Demetria. Later however, the Bank, through its conservator, Encarnacion, sought the repudiation of the agreement as it alleged that Rivera was not authorized to enter into such an agreement. Hence there was no valid contract of sale. Subsequently, Demetria sued the Bank. The RTC ruled in favor of Demetria. The Bank filed an appeal with the Court of Appeals.

Meanwhile, Henry Co, who holds 80% shares of stocks with the said Bank, filed a motion for intervention with the trial court which was denied since the trial has been concluded already and the case is now pending appeal. Subsequently, Henry Co, filed a separate civil case against Ejercito as successor-in-interest (assignee) of Demetria seeking to have the purported contract of sale be declared unenforceable against the Bank. Ejercito argued that the second case constitutes forum shopping since it was barred by litis pendentia by virtue of the case then pending in the Court of Appeals. But petitioners explain that there is no forum-shopping because in the “First Case” from which this proceeding arose, the Bank was impleaded as a defendant, whereas in the “Second Case” it was the plaintiff.

The Bank also argued the following: (1) that there contract of sale was not yet perfected since it lacks cosent since the Bank did not make a counter-offer; (2) that the contract is unenforceable since there is no note, memorandum or writing subscribed by the Bank to evidence such contract; (3) that the conservator has the power to revoke or overrule actions of the management or the board of directors of a bank under Section 28-A of Republic Act No. 265 hence the conservator can revoke the said contract between the Bank and Demetria; and (4) that respondent Court's Decision as "fraught with findings and conclusions which were not only contrary to the evidence on record but have no bases at all" hence questions of fact must be reviewed by SC.

ISSUE/S: 

1) WON there is forum shopping.

2) WON there was a perfected contract.

3) WON the contract is enforceable

4) WON the conservator may revoke a perfected and enforceable contract.

5) WON SC should review questions of fact

HELD: 

1) YES. Forum-shopping is whenever, as a result of an adverse opinion in one forum, a party seeks a favorable opinion (other than by appeal or certiorari) in another. Forum shopping exists where the elements of litis pendentia are present namely: (1) identity of parties, or at least such parties as represent the same interests in both actions, as well as (2) identity of rights asserted and relief prayed for, (3) the relief being founded on the same facts, and the (4) identity on the two preceding particulars is such that any judgment rendered in the other action, will, regardless of which party is successful, amount to res adjudicata in the action under consideration.

In the instant case, there is forum shopping because there exist identity of parties or interests represented, identity of rights or causes and identity of reliefs sought between the first case and the second case. There is identity of parties even though the first case is in the name of the bank as defendant, and the second case is in the name of Henry Co as plaintiff since the rule applies even if the the defendant in the first case becomes the plaintiff in the second case. Furthermore, allegations of the complaint in the Second Case show that the stockholders are bringing a "derivative suit". Being a derivative suit would mean that Henry Co in filing the case is really representing the Bank. So, whether they sued "derivatively" or directly, there is undeniably an identity of interests/entity represented. There is also identity of relief being sought since both cases seeks to enable the petitioner Bank to escape from the obligation to sell the property to respondent.

2) YES. Article 1318 of the Civil Code enumerates the requisites of a valid and perfected contract as follows: "(1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the obligation which is established."

           

In this case, there is consent since there was meeting of the minds between the parties as shown by the fact that the bank made a counter-offer after the Demetria made an offer to them. This counter-offer was accepted by Demetria. The object of the subject contract is the 6 parcels of land. The cause of the obligation for the petitioner bank is the Php 5.5M that Demetria will pay for the land while the cause of the obligation for Demetria is the capacity to own the subject land.

3)  YES.  A contract of sale is binding in whatever form it may have been entered into. Hence, the letters constitute sufficient memoranda — since they include the names of the parties, the terms and conditions of the contract, the price and a description of the property as the object of the contract.

4) NO. Section 28-A of Republic Act No. 265 (otherwise known as the Central Bank Act) merely gives the conservator power to revoke contracts that are, under existing law, deemed to be defective — i.e., void, voidable, unenforceable or rescissible. The contract in this case is a calid one. Hence he cannot simply repudiate valid obligations of the Bank.

Furthermore, the conservator’s powers must be related to the "(preservation of) the assets of the bank, (the reorganization of) the management thereof and (the restoration of) its viability." Such powers cannot extend to the post-facto repudiation of perfected transactions, otherwise they would infringe against the non-impairment clause of the Constitution. Hence, the conservator must exercise his powers without violating the non-impariment clause in the constitution. If the conservator in this case would revoke the valid contract between the Bank and Demetria then such act of the conservator would consist as a violation of the non-impairment clause in the Constitution.

5) NO. The general rule is that the Supreme Court can only review questions of law. This is provided under Rule 45 of the Rules of Court. The exceptions to this rule are as follows: finding grounded entirely on speculation, surmises or conjectures; when the inference made is manifestly absurd, mistaken or impossible; when there is grave abuse of discretion in the appreciation of facts; when the judgment is premised on a misapprehension of facts; when the findings went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee.

In the instant case, it is quite evident that the legal conclusions arrived at from the findings of fact by the lower courts are valid and correct. Hence this Court cannot disturb these findings to fit the conclusion the peititoner Bank is espousing.