Tan v. Central Bank
REITERATIONFacts
1. The Antecedents: The underlying dispute concerns the closure of Continental Bank by the Central Bank of the Philippines in 1974 due to alleged insolvency. At the time of the closure, petitioner Vicente T. Tan was a significant stockholder but not an officer or director. Following his arrest and detention, Tan executed agreements assigning shares in Continental Bank and other properties to three corporations, in exchange for the assumption of his liabilities. These assignees subsequently rehabilitated the bank, which reopened under a new name, International Corporate Bank (Interbank). 2. Procedural History: Petitioners filed a complaint for reconveyance of shares of stock with damages and a restraining order against the Central Bank on January 13, 1987, over twelve years after the bank's closure. The Central Bank filed a motion to dismiss, arguing the action was barred by prescription, laches, and lack of cause of action. The trial court denied this motion, finding the complaint stated a cause of action and that prescription had not yet lapsed. However, the Court of Appeals reversed this decision, ruling that the action was indeed barred by prescription under both Section 29 of Republic Act No. 265 and Article 1146 of the Civil Code, and that the complaint failed to state a cause of action against the Central Bank. 3. The Petition: The petitioners seek review of the Court of Appeals' decision, arguing that their action for reconveyance is not barred by prescription. They contend that the ten-day period under Section 29 of R.A. No. 265 is inapplicable, and that their action is primarily for reconveyance based on constructive trust, not for damages or tort. They also argue that the period of authoritarian rule constituted force majeure, interrupting prescription, and that detention prevented them from filing suit. Furthermore, they assert that the Central Bank, as an indirect owner, is obligated to reconvey the shares. The petition specifically questions whether prescription has set in and if the complaint sufficiently states a cause of action for reconveyance against the Central Bank.
Issue(s)
Whether the action for damages against the Central Bank is barred by prescription under Section 29 of Republic Act No. 265. Whether the action for damages is barred by prescription under Article 1146 of the Civil Code. Whether the action for reconveyance of shares of stock has prescribed. Whether the complaint states a cause of action against the Central Bank for reconveyance.
Ruling
The petition is denied, and the complaint in Civil Case No. 15707 is dismissed. The Court of Appeals did not commit any reversible error.
Ratio Decidendi
On the prescription of the action for damages under Section 29 of R.A. No. 265: The Court found that Section 29 of R.A. No. 265, which provides a ten-day period for a banking institution to apply to the court to enjoin the Monetary Board from taking charge of its assets, was inapplicable. The petitioners were not seeking an injunction against the Monetary Board, which had already relinquished possession of Continental Bank's assets. The bank had reopened under a new name and management, and the Central Bank was no longer involved in its operations. Therefore, the specific provisions of R.A. No. 265 regarding the immediate aftermath of a bank closure were not the basis for the petitioners' claims. On the prescription of the action for damages under Article 1146 of the Civil Code: The Court acknowledged that if the action were considered one for tort or quasi-delict, Article 1146 of the Civil Code, which provides a four-year prescriptive period, would apply. The Court noted that in Allied Banking Corporation vs. Court of Appeals, it held that an action against the Central Bank for tortious interference in closing and liquidating a bank prescribes in four years from the date of closure. However, the Court found that the primary cause of action was for reconveyance, not solely for damages arising from tort. Even if Article 1146 were applicable, the action, filed more than twelve years after the closure, would still have prescribed. The Court also rejected the petitioners' argument that the period of authoritarian rule (September 21, 1972, through February 25, 1986) constituted a fortuitous event that tolled the prescriptive period. While acknowledging that fortuitous events can suspend prescription, the Court declined to make a universal pronouncement that the entire period of authoritarian rule qualified as force majeure. The Court emphasized that claims should be taken on a case-to-case basis. Furthermore, the Court noted that Vicente T. Tan, despite being under detention, actively pursued other legal actions, including filing a civil case and obtaining a temporary restraining order, demonstrating that judicial recourse was not entirely impossible. His co-petitioners also failed to claim any impediment to filing their action. Thus, detention or authoritarian rule was not considered a fortuitous event that interrupted prescription for them. On the prescription of the action for reconveyance: The Court applied Article 1140 of the Civil Code, which states that actions to recover movables prescribe eight years from the time possession is lost. The shares of stock were transferred in 1977. The complaint was filed on January 13, 1987, more than twelve years later. The Court also considered Article 1132, which provides for acquisitive prescription of movables in four years (good faith) or eight years (bad faith). The Court found no basis to consider the loss of shares as due to a crime, which would render the action imprescriptible under Article 1133. Therefore, the eight-year prescriptive period from the loss of possession in 1977 had elapsed. On the cause of action against the Central Bank: The Court found that the complaint failed to state a cause of action against the Central Bank for reconveyance. The shares of stock were assigned to Executive Consultants, Inc., Orobel Property Management, Inc., and Antolum International Trading Corporation, not to the Central Bank. While the Central Bank was alleged to be an "indirect owner" due to loans it facilitated, the Court clarified that this did not make it a trustee holding the shares for reconveyance purposes. The Central Bank's involvement was primarily to protect its financial exposure. The Court cited Bacolod-Murcia Milling Co., Inc. v. First Farmers Milling Co., Inc., emphasizing that a complaint must contain well-pleaded averments of facts, not mere conclusions of law, to establish a cause of action. The petitioners' assertion of the Central Bank being an "indirect owner" for reconveyance purposes was deemed a mere conclusion of fact not supported by sufficient factual allegations.
Main Doctrine
An action for reconveyance of shares of stock, based on a constructive trust arising from alleged fraudulent acquisition, prescribes within eight years from the loss of possession, unless the property was acquired through a crime, in which case the action is imprescriptible. Claims for damages arising from alleged tortious acts of the Central Bank in closing a bank prescribe within four years from the date of closure.