First Philippine International Bank v. Court of Appeals
REITERATIONFacts
The Antecedents: Plaintiffs Demetrio Demetria and Jose Janolo sought to purchase 101 hectares of land owned by Producers Bank of the Philippines (now First Philippine International Bank). They negotiated with Mercurio Rivera, Manager of the Bank's Property Management Department. Janolo made a purchase offer of P3.5 million, which the bank, through Rivera, counter-offered at P5.5 million. After further negotiation and a meeting with Senior Vice-President Luis Co, Janolo, through a letter dated September 30, 1987, accepted the P5.5 million offer, citing a discussion on September 28, 1987. The bank, which was under conservatorship since 1984, later repudiated the sale through its Acting Conservator Leonida T. Encarnacion, claiming Rivera's actions were unauthorized. Plaintiffs filed a suit for specific performance with damages. Procedural History: The Regional Trial Court (RTC) ruled in favor of the plaintiffs, declaring a perfected contract to buy and sell and ordering the bank to execute a deed of sale, with damages. The Court of Appeals (CA) modified the RTC decision by eliminating certain damages and reducing others. The bank, Rivera, and Encarnacion appealed to the Supreme Court. During the pendency of the CA proceedings, majority stockholders filed a "derivative suit" to declare the sale unenforceable, which the private respondent argued constituted forum shopping. The Petition: Petitioners (First Philippine International Bank and Mercurio Rivera) sought to set aside the CA decision, raising issues of forum shopping, the existence and enforceability of the contract, the conservator's power to revoke, and alleged reversible errors of fact.
Issue(s)
Was there forum-shopping on the part of petitioner Bank? Was there a perfected contract of sale between the parties? Assuming there was, was the said contract enforceable under the statute of frauds? Did the bank conservator have the unilateral power to repudiate the authority of the bank officers and/or to revoke the said contract? Did the respondent Court commit any reversible error in its findings of facts?
Ruling
The Supreme Court denied the petition, affirmed the Court of Appeals' decision, and reprimanded the petitioner bank for engaging in forum shopping. Dispositive Portion: "WHEREFORE, finding no reversible error in the questioned Decision and Resolution, the Court hereby DENIES the petition. The assailed Decision is AFFIRMED. Moreover, petitioner Bank is REPRIMANDED for engaging in forum-shopping and WARNED that a repetition of the same or similar acts will be dealt with more severely. Costs against petitioners."
Ratio Decidendi
On the issue of forum-shopping: The Court found that the petitioners engaged in forum shopping. The filing of a "derivative suit" by majority stockholders seeking to declare the sale unenforceable, while the original case sought to enforce it, presented an identity of parties (or interests represented), rights asserted, and reliefs sought. The Court emphasized that the corporate veil could not be used to shield a violation of the prohibition against forum shopping, as the ultimate objective in both cases was to enable the bank to escape its obligation to sell the property. The Court noted that while the bank was a defendant in the first case and the plaintiff in the second, its participation in both, by praying for affirmative reliefs and counterclaims in the first, made it a party seeking the same ultimate outcome. The Court concluded that the vexation caused to the courts and parties-litigant by seeking rulings on the same or related causes in different fora, creating the possibility of conflicting decisions, constituted forum shopping. On the perfection of the contract of sale: The Court affirmed the findings of the lower courts that a perfected contract of sale existed. The Court found that the bank, through its officer Mercurio Rivera, had apparent authority to negotiate and enter into such agreements. Rivera's actions, including receiving offers, making counter-offers (P5.5 million), and arranging meetings, were consistent with his position as head of the Property Management Department and were relied upon by the buyers in good faith. The Court applied the doctrine of apparent authority, stating that a bank is liable for the acts of its officers done within the scope of their apparent authority, even if they secretly abuse it. The exchange of letters and the meeting on September 28, 1987, where the P5.5 million price was reiterated, led to the acceptance by the buyers on September 30, 1987, establishing a meeting of the minds on the object and cause. On the enforceability under the statute of frauds: The Court held that the contract was enforceable. While the statute of frauds requires certain contracts to be in writing, the Court found that the letters exchanged between the parties (Janolo's offer, Rivera's counter-offer, and Janolo's acceptance) constituted sufficient memoranda of the perfected contract. Furthermore, the Court invoked Article 1405 of the Civil Code, stating that contracts infringing the statute of frauds are ratified by the failure to object to the presentation of oral evidence to prove them. The Court noted the abundance of oral testimony regarding the reaffirmation of the P5.5 million counter-offer during the meeting with Luis Co, and the petitioners' failure to object to this evidence, thereby waiving any defects under the statute of frauds. On the conservator's power to revoke: The Court ruled that the bank conservator did not have the unilateral power to repudiate a perfected and enforceable contract of sale. While Section 28-A of Republic Act No. 265 grants vast powers to a conservator, these powers are primarily for preserving assets, reorganizing management, and restoring viability. The Court clarified that such powers do not extend to the post-facto repudiation of perfected transactions, as this would violate the non-impairment clause of the Constitution. The conservator's power is to take legal action to assail defective contracts, not to unilaterally revoke valid obligations. The Court also noted that the issue of the conservator's power to revoke was raised for the first time on appeal, which is generally impermissible. On reversible errors of fact: The Court reiterated the principle that findings of fact by the Court of Appeals are generally conclusive and not reviewable by the Supreme Court, barring exceptional circumstances such as grave abuse of discretion or conclusions based on speculation. The Court found that the CA's findings regarding the apparent authority of Rivera, the perfection of the contract, and the credibility of witnesses were supported by substantial evidence and did not fall under any of the exceptions. The Court emphasized that it is not its function to re-evaluate evidence already passed upon by the lower courts, especially when both the RTC and CA reached the same conclusions.
Main Doctrine
A perfected contract of sale, even if not in a formal deed, is enforceable if there is a meeting of the minds on the object and cause, and the bank's officer acted within apparent authority. The corporate veil may be pierced to prevent forum shopping. A conservator's power to revoke actions is limited to those legally defective and cannot unilaterally repudiate perfected contracts.