Producers Bank of the Philippines v. Bank of the Philippine Islands
REITERATIONFacts
1. The Antecedents: On August 15, 1980, several individuals executed a deed of pledge in favor of Ayala Investment & Development Corporation (AIDC) covering their shares in Producers Bank of the Philippines. This pledge was to secure a P4,500,000.00 obligation of Continental Manufacturing Corporation. AIDC notified Producers Bank of the pledge and requested its registration, but Producers Bank refused, claiming it had appropriated the shares. Following the pledgors' default on January 28, 1981, AIDC conducted two public auction sales for the pledged shares, both of which had no bidders. Consequently, AIDC appropriated the shares and executed an acquittance of the pledgors' obligation. 2. Procedural History: AIDC subsequently requested Producers Bank to cancel the original stock certificates and issue new ones in AIDC's name, which Producers Bank refused. AIDC then filed a petition with the Securities and Exchange Commission (SEC), which ordered Producers Bank to issue the new certificates. However, the Court of Appeals set aside the SEC decision, ruling that the SEC lacked jurisdiction and the action should be filed in regular courts. This decision was affirmed by the Supreme Court. Meanwhile, Bank of the Philippine Islands (BPI), as AIDC's successor-in-interest, filed a complaint for specific performance and damages with the Regional Trial Court (RTC) on February 9, 1989. The RTC dismissed the complaint on January 15, 1991. BPI appealed to the Court of Appeals, which reversed the RTC's dismissal and remanded the case for further proceedings on February 29, 1996. 3. The Petition: The petitioners, Producers Bank, Antonio M. Perry, and Tristan Catindig, have filed this petition for review on certiorari, seeking to overturn the Court of Appeals' decision. The central issue presented to the Supreme Court is whether BPI's cause of action, as AIDC's successor-in-interest, is barred by the statute of limitations. The petitioners argue that the complaint filed by BPI is time-barred, while the Court of Appeals found that the action, based on a written contract (the deed of pledge), falls under a ten-year prescriptive period and was filed within that period, thus not prescribed.
Issue(s)
Whether the complaint filed by BPI for specific performance and damages against Producers Bank is barred by the statute of limitations.
Ruling
The Court of Appeals did not err in ruling that petitioners' cause of action has not prescribed. The petition is denied, and the decision of the Court of Appeals remanding the records of Civil Case No. 89-3128 to the trial court for further proceedings is affirmed.
Ratio Decidendi
On Issue 1: Whether the complaint filed by BPI for specific performance and damages against Producers Bank is barred by the statute of limitations. The nature of an action is determined by the allegations in the complaint. In this case, the petitioners' complaint alleged facts constituting a cause of action based on a written contract, specifically the deed of pledge. According to Article 1144 of the Civil Code, actions based upon a written contract prescribe within ten (10) years. The pledge was executed in August 1980, and Producers Bank refused to register the shares pledged after respondent acquired them. Respondent commenced suit in 1989, which was well within the ten-year prescriptive period from the execution of the pledge in August 1980. Therefore, the Court of Appeals correctly ruled that the cause of action had not prescribed. The trial court erred in dismissing the complaint on the ground of prescription. The appellate court's reversal of the trial court's dismissal was therefore proper, necessitating the remand of the case for further proceedings on the merits of the complaint.
Main Doctrine
The action for specific performance and damages based on a written contract, such as a deed of pledge, prescribes within ten (10) years from the time the cause of action accrues. The filing of the complaint within this period prevents prescription.