G.R. No. 125167 - Producers Bank of the Philippines vs. Bank of the Philippine Islands

Producers Bank of the Philippines, Antonio M. Perry, and Tristan Catindig served as petitioners.
Bank of the Philippine Islands and the Court of Appeals served as respondents.

On August 15, 1980, Dewey Dee, Donald Dee, Emmanuel Cu, Michael Barreto, and Angelito Lagos executed in favor of Ayala Investment & Development Corporation (AIDC) a deed of pledge covering their shares of stock in Producers Bank of the Philippines.
Under the deed of pledge, the pledgors delivered by way of pledge unto AIDC, its successors and assigns, all their rights, title and interest over their shares of stock in Producers Bank.
The pledge secured the full payment of the obligation of Continental Manufacturing Corporation, in the amount of P4,500,000.00.

On January 13, 1981, AIDC notified Producers Bank, through its corporate secretary, of the pledge and requested it to record the pledge in its books.
By letter dated January 13, 1981, Producers Bank refused to record the pledge in its books on the ground that the shares were not registered in the names of the persons named in the pledge arrangement.
When AIDC inquired why the shares were not registered in the names of the persons named therein, Producers Bank replied that it unilaterally appropriated in its favor all the shareholdings of the pledgees.

On January 23, 1981, AIDC declared Continental Manufacturing Corporation’s total obligation of P4,500,000.00 due and demandable on January 28, 1981.
The pledgors were notified that if the full amount was not paid on said date, AIDC would cause the sale of the pledged shares at a public auction.
On January 28, 1981, the obligation was not paid.
Upon prior notice, AIDC proceeded with a public auction sale held before Notary Public Ramoncito C. Mison.
The first public auction sale was scheduled on January 29, 1981, at 10:00 a.m. at the office of AIDC.
No bidders appeared at the first auction sale, and the auction sale was adjourned.
A second public auction sale was scheduled on February 5, 1981, at 10:00 a.m., at AIDC’s principal offices at the 5th Floor, Makati Stock Exchange Building, Ayala Avenue, Makati City.
Again, no bidders appeared at the second auction sale.

Because no bidders appeared, AIDC appropriated all the shares of stock pledged in its favor.
AIDC executed an acquittance of the pledgor’s obligation.
Having acquired all the shares of stock of Dewey Dee, Donald Dee, Emmanuel Cu, Michael Barretto, and Angelito Lagos, AIDC requested Producers Bank on February 8, 1981 to cancel the certificates of stock registered in their names.
AIDC also requested that Producers Bank issue corresponding certificates of stock in the name of AIDC for a total of 42,176 shares.
Producers Bank refused, through its corporate secretary, to issue the corresponding certificates in AIDC’s name.

SEC petition and the Court of Appeals’ and Supreme Court’s rulings on SEC jurisdiction

Because of the refusal, on February 13, 1981, AIDC filed with the Securities and Exchange Commission (SEC) a petition for the issuance of certificates of stock.
The SEC ordered Producers Bank to cancel the certificates of stock of Dewey Dee and others, and to issue new certificates upon presentation of the existing certificates.
On September 2, 1987, the Court of Appeals set aside the SEC decision on the ground that the ...(Subscriber-Only)

Whether petitioners’ complaint filed with the trial court was barred by prescription of action.