Facts:

The case revolves around a legal dispute between Bank of America NT&SA and Bank of America International, Ltd. (petitioners) and Eduardo K. Litonjua, Sr. and Aurelio K. Litonjua (respondents). On May 10, 1993, the Litonjuas initiated a complaint before the Regional Trial Court of Pasig against the banks, alleging that they were engaged in shipping and had incurred loans from the banks to acquire vessels. They originally owned two vessels, "Don Aurelio" and "El Champion," and the banks encouraged them to expand their fleet by acquiring four more vessels: "El Carrier," "El General," "El Challenger," and "El Conqueror," through their corporations. The complaint stated that the banks failed to manage the trusts of the vessels properly, leading to a decrease in income and unpaid loans, which resulted in the foreclosure of the vessels. The Litonjuas sought an accounting of income, damages, and attorney's fees. The ban

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Facts:

Background of the Case

• The petition arises from a complaint filed on May 10, 1993, by Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua against Bank of America NT&SA and Bank of America International, Ltd.
• The Litonjuas, engaged in the shipping business, owned vessels through their wholly-owned corporations. They had deposited revenues and other funds with the defendant banks in the United Kingdom and Hongkong up to 1979.

Vessel Acquisition and Operation

• With the success of their business, the banks induced the Litonjuas to expand by facilitating easy loans to acquire additional vessels.
• The defendant banks, through the Litonjuas’ corporations, acquired four additional vessels—El Carrier, El General, El Challenger, and El Conqueror—registered in the names of these corporations.
• The entire operation, including the management of funds and the disposition of the vessels, was placed under the complete and exclusive control of the defendant banks.

Allegations and Claims

• The Litonjuas contended that as trustees, the banks had breached their fiduciary duties by failing to render a complete accounting of the revenues from the vessels' operations and the proceeds from the foreclosure sale.
• They further alleged that due to the banks’ mismanagement and/or negligence, the revenues declined drastically.
• The rise in unpaid loans led the banks to foreclose and sell all six vessels (including the two originally owned by the Litonjuas), resulting in significant personal losses for the Litonjuas.
• As relief, the Litonjuas prayed for:
• An accounting of the incomes from the vessel operations and the proceeds of the foreclosure sale.
• Damages for breach of trust and negligence, including exemplary damages and attorney’s fees.

Procedural History and Motions

• Defendant banks filed a Motion to Dismiss on the grounds of forum non conveniens and lack of cause of action.
• On December 3, 1993, the trial court denied this motion, ordering the banks to file an answer within ten days.
• Instead of answering, the banks elevated the issue to the Court of Appeals through a petition for review (certiorari), challenging the trial court’s order and the subsequent denial of their motion for reconsideration.

Contentions Raised by Petitioners

• The petitioners argued that the private respondents (the Litonjuas) were mere stockholders of the corporate borrowers and lacked the legal personality to sue, as the corporations were the true parties with rights to the vessels and their revenues.
• They further contended that the complaint should have been dismissed on the basis of forum non conveniens because:
• Most transactions, including the loans, acquisitions, and vessel operations, were conducted outside the Philippines (in Hongkong, England, or in offshore locations).
• The evidentiary sources and witnesses were primarily located abroad, making the local forum inconvenient.
• The governing law for the transactions was English law, which would impose undue burden on the Philippine court.
• Additionally, petitioners raised the issue of res judicata, alleging that pending foreign actions (files in Hongkong and England) barred the Litonjuas from pursuing their claim in the Philippines.

Private Respondents’ Position

• The Litonjuas maintained that despite being stockholders, they formed the real party in interest because:
• Their corporations were wholly owned by them, and they had entered into a fiduciary relationship with the defendant banks.
• They were directly affected by the banks’ control over the funds and the subsequent operation of the vessels.
• They argued that the complaint, in fact, stated a valid cause of action by alleging:
• A legal right to demand an accounting from the banks.
• An obligation incumbent upon the banks as trustees.
• A failure on the part of the banks to render the required accounting.
• The respondents also contended that the trial court’s decision not to dismiss was proper, given that the complaint sufficiently pleaded the three essential elements of a cause of action.

Issue:

• Whether the trial court committed grave abuse of discretion by denying the motion to dismiss on the ground that the private respondents, being mere stockholders, had no cause of action.
• Whether the complaint should be dismissed on the basis of forum non conveniens, considering the predominantly foreign nature of the transactions, witnesses, and governing law.
• Whether the pendency of foreign litigation and the alleged application of res judicata conclusively show that the private respondents engaged in forum shopping.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)