Rural Bank of Milaor v. Ocfemia
REITERATIONFacts
The Antecedents: This case originated from a dispute concerning the sale of five parcels of land. These properties were originally owned by the respondents' grandparents, who mortgaged them, along with two other parcels, to the petitioner, Rural Bank of Milaor (Camarines Sur), Inc. The grandparents were unable to redeem the mortgaged properties, leading to their foreclosure and subsequent transfer of ownership to the bank. The respondents claim that five of these foreclosed parcels were sold to their parents in January 1988 by the bank, as evidenced by a Deed of Sale. However, the bank's refusal to issue a confirmatory board resolution prevented the respondents from registering the property in their names and subsequently mortgaging it for medical expenses. Procedural History: The respondents filed an action for mandamus with damages against the Rural Bank of Milaor. The bank was declared in default for failing to file an answer within the reglementary period. Subsequent motions to set aside the default order and for reconsideration were denied. A certiorari case filed by the bank with the Court of Appeals was also denied and became final. The trial court granted the petition, ordering the bank to issue a board resolution confirming the sale, and awarding damages and attorney's fees. The Court of Appeals affirmed the trial court's decision, and a subsequent motion for reconsideration was denied. The bank then filed a Petition for Review on Certiorari with the Supreme Court, which issued a Temporary Restraining Order pending resolution. The Petition: The petitioner, Rural Bank of Milaor, filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, challenging the decisions of the Court of Appeals and the Regional Trial Court. The bank raised two main issues: (1) the jurisdiction of the Regional Trial Court over an action involving title to real property with an assessed value below P20,000, arguing it should have been filed in a lower court; and (2) whether the board of directors of a rural banking corporation could be compelled to confirm a deed of sale executed by the bank manager without prior board authority. The petitioner argued that the transaction was an ultra vires act of the manager and that the RTC lacked jurisdiction due to the property's assessed value.
Issue(s)
Whether the Regional Trial Court has original jurisdiction over an action involving title to real property with a total assessed value of less than P20,000.00. Whether the board of directors of a rural banking corporation may be compelled to confirm a deed of absolute sale of real property owned by the corporation, which deed of sale was executed by the bank manager without prior authority from the board of directors.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that the RTC has jurisdiction over the case as it was an action for mandamus and not primarily an action involving title to real property. The Court further ruled that the bank manager, Fe S. Tena, had apparent authority to enter into the Deed of Sale, and the bank was estopped from denying her authority due to its own acts and failure to act, as well as its failure to specifically deny the genuineness and due execution of the Deed of Sale under oath. Consequently, the bank was ordered to issue the board resolution confirming the sale.
Ratio Decidendi
On the Jurisdiction of the Regional Trial Court: The Court held that the RTC has original jurisdiction over the case. The petition was primarily an action for mandamus, seeking to compel the bank to issue a board resolution, which is an action incapable of pecuniary estimation and falls within the original jurisdiction of the RTC under Section 21 of BP 129. The respondents did not raise any question involving the title to the property itself, but rather their right to compel the bank to issue a board resolution confirming the Deed of Sale. Therefore, the assessed value of the property was irrelevant to the determination of jurisdiction in this mandamus case. The petitioner's argument that the case should have been filed before a lower court based on the property's assessed value was thus dismissed. On the Authority of the Bank Manager: The Court ruled that the bank manager, Fe S. Tena, had apparent authority to enter into the Deed of Sale. The bank's failure to file an answer specifically denying under oath the genuineness and due execution of the Deed of Sale, a written instrument attached to the petition, meant that the bank admitted these allegations. This admission implies that the bank acknowledged Tena's authority to sign the Deed of Sale on its behalf. Furthermore, the bank's subsequent actions and inactions, such as allowing respondents to occupy the properties and pay taxes, and its failure to categorically deny Tena's authority when approached by the respondents, estopped the bank from questioning her authority. The Court reiterated the principle that a corporation is liable to innocent third persons when its agent acts within the scope of apparent authority, and the corporation will be estopped from denying the agent's authority if it knowingly permits the agent to act as if they possess such power. The bank's persistent refusal to issue the board resolution, despite being fully paid for the property, was deemed unjustifiable.
Main Doctrine
A bank is legally obliged to confirm a transaction, by issuing a board resolution, when its manager has been clothed with apparent authority to sell an acquired asset in the normal course of business, and it has a duty to perform necessary and lawful acts to enable buyers to enjoy the benefits of the contract it had authorized.