Ramos v. Court of Appeals
REITERATIONFacts
The Antecedents: On August 14 and 26, 1969, CMS Stock Brokerage, Inc. (CMS) sold 2,650 shares of Benguet Consolidated Corporation to Lopez, Locsin, Ledesma & Co., Inc. (LLL) on a delayed delivery basis of 10 to 20 days. LLL purchased the shares for its clients, including Alfredo C. Ramos. CMS failed to deliver the shares within the agreed period. On January 6, 1970, CMS informed LLL of its intent to deliver the next day, but LLL refused, stating its principals had cancelled their orders. CMS insisted LLL accept delivery. CMS's Clearing House Report indicated disposition of shares in favor of LLL, but LLL refused to acknowledge receipt. CMS deposited the disposal letter with the Office of the Exchange Executive Secretary, marked "Refused acceptance pending decision of the Exchange." The Makati Stock Exchange Board of Governors advised the parties to litigate. Procedural History: CMS filed a complaint for specific performance against LLL in the Court of First Instance of Rizal, seeking to compel LLL to accept the shares and pay P297,650, plus damages and attorney's fees. LLL moved to dismiss, alleging CMS was in pari delicto and in estoppel. LLL impleaded its principals, including Alfredo Ramos, as third-party defendants. Ramos alleged justification for cancellation due to CMS's and LLL's default, denied personal liability as the shares were for Alakor Corporation, and claimed no privity of contract. CMS filed a motion for summary judgment. The trial court rendered a summary judgment in favor of CMS, compelling LLL to accept delivery and pay the price, with interest and attorney's fees. It also ordered the third-party defendants, including Ramos, to reimburse LLL. On appeal, the Court of Appeals affirmed the trial court's decision, except for the awards for damages and attorney's fees, remanding the case for reception of evidence on those claims. The Petition: Petitioner Alfredo C. Ramos sought review, alleging the appellate court erred in rendering a summary judgment, in failing to find CMS had no right to damages against him due to lack of privity, and in refusing to exonerate him from personal liability for orders placed for Alakor Corporation.
Issue(s)
Whether the Court of Appeals erred in rendering a summary judgment. Whether CMS had a right to damages against petitioner Alfredo C. Ramos, considering the alleged lack of privity of contract. Whether petitioner Alfredo C. Ramos should be exonerated from personal liability for the stock orders placed for the account of Alakor Corporation.
Ruling
The petition is without merit. The decision of the Court of Appeals is affirmed.
Ratio Decidendi
On the propriety of summary judgment: The Court held that summary judgment is a procedural device for promptly disposing of actions without a genuine issue as to any material fact. In stock exchange contracts, time is of the essence, and members are bound by the Exchange's Rules and Regulations. Petitioner's contention that the alleged oversight of CMS should be determined in a trial was deemed immaterial. The rules of the Exchange provide a remedy other than rescission when a party fails to deliver. The Court emphasized that mere denials unaccompanied by admissible evidence are insufficient to raise a genuine issue of fact sufficient to defeat a motion for summary judgment. Furthermore, where all the facts are within the judicial knowledge of the Court, summary judgment may be granted as a matter of law. The petitioner's defenses raised pure questions of law, and his claim that Alakor Corporation was the real party in interest was nullified by his admission that he placed the order for himself. On the right to damages and privity of contract: The Court found no merit in the petitioner's contention that CMS had no right to damages against him due to lack of privity. The petitioner placed his order for Benguet shares through LLL, a member of the Exchange, and was therefore indirectly bound by the rules of the Exchange. These rules provided a specific procedure for delayed deliveries, which did not grant the buyer an automatic right to rescind. The petitioner also agreed in a letter-undertaking to hold LLL free from any liability for rejecting the belated tender of shares, which bound him to the transaction. On personal liability for Alakor Corporation's orders: The petitioner's defense that the shares were ordered for Alakor Corporation and not for himself was contradicted by his own admission in his Answer to the Third-Party Complaint. He admitted the material allegations in paragraph 12 of LLL's third-party complaint, which explicitly stated that he (Alfredo C. Ramos) placed the order for himself. His subsequent letter-undertaking further solidified his personal commitment to the transaction.
Main Doctrine
In stock exchange contracts, time is of the essence, and members are bound by the Exchange's Rules and Regulations. A summary judgment is a procedural device for promptly disposing of actions without a genuine issue as to any material fact, and mere denials unaccompanied by admissible evidence are insufficient to defeat such a motion.