G.R. No. 90365 - Tan vs. Court of Appeals

The case involves petitioners Vicente T. Tan, VicTan & Company, Inc., Transworld Investment Corporation, First International Investment Company, Inc., Far East Petroleum & Minerals Corporation, and Philcontrust International Corporation filing an action for both reconveyance of shares and damages against the Central Bank of the Philippines.
The controversy relates to shares of stock originally held in Continental Bank which were subsequently assigned to three corporations – Executive Consultants, Inc., Orobel Property Management, Inc., and Antolum International Trading Corporation – amid allegations of fraud and irregular transactions.

On June 15, 1974, respondent Vicente T. Tan was arrested by military authorities under an ASSO due to alleged irregular transactions at Continental Bank, though at that time he was not serving as a director or officer of the bank.
Despite the arrest of Tan and three vice-presidents of Continental Bank, the bank’s chairman and president continued to operate the institution.
With a possible bank run looming, Continental Bank requested an emergency loan. The Monetary Board approved the loan on June 21, 1974, subject to verification of the bank’s assets.
On June 24, 1974, following a report by the Director of the Department of Commercial and Savings Banks indicating insolvency (assets shortfall of P67.260 million), the petitioner (in its capacity related to the department) ordered the closure of Continental Bank and placed it under receivership pursuant to Section 29 of Republic Act No. 265.
A final report on August 12, 1974 reinforced the finding of insolvency but suggested that the bank might reorganize under new management if infused with fresh capital.

While detained, Tan executed several agreements on February 2, 1977; May 12, 1977; and July 5, 1977, transferring 359,615 shares of Continental Bank stock and other properties to the three aforementioned corporations in consideration of assuming liabilities and obligations.
The assignees rehabilitated Continental Bank, leading to its reopening in 1977 under a new name – International Corporate Bank (Interbank) – and with a change in management.
In support of the rehabilitation, Tan communicated his consent to the new arrangement on July 5, 1977, confirming that he and his controlled corporations had no objection to the reopening.

On January 13, 1987, after a lapse of more than 12 years since the closure of Continental Bank, private respondents (Tan and co-petitioners) filed the action for reconveyance of shares, damages, and a restraining order.
Petitioner Central Bank later filed a Motion to Dismiss on grounds of prescription (or statutory limitation) and laches, asserting both that there was no cause of action for reconveyance and that any claim for damages was time-barred.
The trial court denied the motion to dismiss in its Order dated May 15, 1987, holding that the allegations met the sufficiency requirements and that prescription had not set in, at least as per the claims based on an implied or constructive trust.
The respondent Court of Appeals, however, reversed the trial court ruling, holding that the claims were time-barred under both Section 29 of Republic Act No. 265 and Article 1146 of the Civil Code, and that the complaint failed to state a viable cause of action against the Central Bank.

Petitioners allege that they were fraudulently divested of their shares in Continental Bank through assignments executed during Tan’s detention and under the martial law regime.
The complaint asserts that the execution of the assignments not only facilitated the closure and later rehabilitation of the bank but also constituted a basis for a cause of action based on the doctrine of constructive trust.
Petitioners claim that, beyond the reconveyance of shares, the Central Bank should be held liable for moral damages, including attorney’s fees and litigation expenses, due to the alleged abusive acts in handling the bank’s closure and subsequent transfers.
They further argue that the period of detention under martial law should be considered a force majeure (fuerza mayor), effectively tolling the prescription period under Article 1154 of the Civil Code.

Whether the petitioners’ action for damages against the Central Bank is barred by prescription under Section 29 of Republic Act No. 265.
Assuming that the prescription under Section 29 does not apply, whether the claim for damages is time-barred under Article 1146 of the Civil Code (which provides a four-year limitation period for tort actions).

Whether the complaint states a valid cause of action against the Central Bank for the reconveyance of the petitioners’ shareholdings in the former Continental Bank based on the doctrine of constructive trust.
The contention centers on whether the Central Bank can be held liable as an "indirect owner" (or trustee) of the shares, given that the shares had been assigned to other corporations.

Whether the period during which petitioners were detained under martial law constitutes a force majeure event which interrupted or tolled the running of the prescribed period for bringing an action (as provided under Article 1154 of the Civil Code).