Case Digest (G.R. No. 18707) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Citibank, N.A. vs. Hon. Segundino G. Chua et al. (G.R. No. 102300, March 17, 1993), Citibank was a foreign commercial banking corporation licensed to operate in the Philippines. On September 4, 1985, spouses Cresencio and Zenaida Velez entered into a daily arrangement with the bank whereby they would deposit personal checks, have them treated as cash by virtue of manager’s checks, and use those proceeds in other banks to cover the original checks. This continued until March 11, 1986, when the Velezes’ unfunded checks totaling ₱3,095,000 were deposited, and they withdrew ₱3,244,000 in manager’s checks before fleeing. The Velezes sued Citibank for specific performance and damages, alleging that the bank promised an additional ₱5,000,000 credit line which it refused to honor and later reneged on a proposed thirty-month restructuring of their indebtedness. Citibank countered with criminal complaints for bouncing checks and estafa. In the civil action, the trial court scheduled a Case Digest (G.R. No. 18707) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Business Relationship and Underlying Dispute
- Private respondents Cresencio and Zenaida Velez were long-time clients of Citibank’s Cebu branch. They alleged that Citibank offered them a special credit accommodation of ₱5,000,000.00 from September 4, 1985 to March 11, 1986 under an arrangement of reciprocal check purchases and manager’s check issuances. On March 11, 1986, Citibank allegedly refused to honor six checks totaling ₱3,095,000.00 and proposed a 30-month restructuring with interest. The Velezes issued a ₱75,000.00 check as good faith, which Citibank declined, demanding full settlement.
- Citibank’s version was that Velez deposited unfunded personal checks, falsely represented them as fully funded, and withdrew increasing sums via manager’s checks. On March 11, 1986, he deposited ₱3,095,000.00 in bad checks and withdrew ₱3,244,000.00, then absconded, causing the checks to bounce.
- Procedural History
- On March 14, 1986, the Velezes filed Civil Case No. CEB-4751 for specific performance and damages. On August 19, 1986, Citibank filed criminal charges for Bouncing Checks (Batas Pambansa Blg. 22) and estafa.
- Pre-trial in the RTC commenced: Citibank’s counsel presented successive special powers of attorney (by Florencia Tarriela, then William W. Ferguson, then five Citibank employees) to appear and bind the bank. Respondents moved orally to declare Citibank in default for lack of proper representation.
- On August 15, 1990, the RTC declared Citibank in default, citing absence of a Board-approved resolution and lack of SEC-approved by-laws. A motion for reconsideration was denied on December 10, 1990.
- Citibank petitioned the Court of Appeals for certiorari, prohibition, and mandamus; the CA dismissed the petition on June 26, 1991, affirming the default order for lack of valid authority to appear.
- Citibank elevated the case to the Supreme Court via petition for certiorari, prohibition, and mandamus.
Issues:
- Whether a Board of Directors’ resolution is indispensable to grant authority to an agent to represent and bind a corporation in court.
- Whether the by-laws of a foreign corporation, duly submitted to the SEC in applying for license to do business in the Philippines, are effective and need separate SEC approval under Section 46 of the Corporation Code.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)