G.R. No. 115849 - 1st Philippine International Bank vs. Court of Appeals

Case Summary (G.R. No. 115849)

Petitioners

– First Philippine International Bank (formerly Producers Bank of the Philippines), a banking institution under Philippine law
– Mercurio Q. Rivera, Head Manager of the bank’s Property Management Department

Respondents

– Carlos Ejercito, assignee of original plaintiffs Demetrio Demetria and Jose Janolo
– Court of Appeals, Third Division, whose January 14, 1994 decision and June 14, 1994 resolution are challenged

Key Dates

– August 30, 1987: Janolo’s formal offer to buy at ₱3.5 million
– September 1, 1987: Rivera’s counter-offer at ₱5.5 million
– September 17, 1987: Janolo’s revised offer of ₱4.25 million
– September 28 and 30, 1987: Meeting with Senior VP Luis Co and Janolo’s acceptance of ₱5.5 million
– November 17 and December 14, 1987: Two separate tenders of payment refused by the bank
– May 16, 1988: Suit for specific performance filed in RTC Makati, Branch 59
– July 10, 1991: Trial court decision declaring a perfected contract and awarding specific performance plus damages
– January 14, 1994: Court of Appeals decision modifying but affirming trial court (CA-G.R. CV No. 35756)
– June 14, 1994: CA resolution denying reconsideration
– October 23, 1995: SC transfer to Third Division
– January 24, 1996: SC decision

Applicable Law

– 1987 Constitution (non-impairment of contracts)
– Civil Code articles 1318 (contract requisites), 1319 (offer and acceptance), 1403(2) (statute of frauds), 1405 (waiver by failure to object)
– Republic Act No. 265, Sec. 28-A (powers of Central Bank conservator)
– Rules of Court, Rule 45 (petition for review), Circular No. 28-91 (prohibition of forum-shopping)

Facts of the Transaction

Producers Bank foreclosed on six parcels in Laguna and sought buyers. In early August 1987, Demetria and Janolo met Rivera, who explained that offers would be submitted to an internal “Past Due Committee” and then to the conservator. They thereafter exchanged letters: an offer of ₱3.5 million (Aug. 30) and a bank counter-offer of ₱5.5 million (Sept. 1).

Course of Negotiations and Correspondence

Janolo amended his offer to ₱4.25 million on September 17, 1987. No immediate reply was received. On September 28, Demetria, Janolo, Rivera and BYME counsel Jose Fajardo met Luis Co; two days later Janolo accepted the bank’s ₱5.5 million price by letter dated September 30, 1987.

Bank’s Refusal and Action by Conservator

An Acting Conservator replaced the incumbent on October 12, 1987. Plaintiffs tendered payment on November 17 and December 14, 1987, both of which the bank refused, instead advertising the lands for sale. A final demand was made May 3, 1988. On May 12, 1988, Conservator Leonida Encarnacion repudiated Rivera’s authority and declined the tender.

Trial Court Proceedings and Decision

Plaintiffs filed suit for specific performance and damages on May 16, 1988. RTC Makati Branch 59 (July 10, 1991) found a perfected contract of sale, ordered the bank to execute a deed upon receipt of ₱5.5 million, and awarded moral, exemplary, attorney’s fees and moderate damages.

Court of Appeals Proceedings and Decision

The Court of Appeals (Jan. 14, 1994) modified the damage awards but affirmed the existence and enforceability of the perfected contract of sale. It held that the bank officer’s letters and plaintiffs’ acceptance constituted a sufficient memorandum and that the bank was estopped from denying Rivera’s apparent authority.

Supreme Court Petition under Rule 45

Petitioners sought certiorari relief to set aside the CA decision, arguing (i) no perfected contract, (ii) statute of frauds violation, (iii) conservator’s power to revoke, (iv) factual misappreciation, and (v) that respondents engaged in forum-shopping by filing a derivative suit in RTC Makati Branch 134 to invalidate the sale.

Issues Presented

Did petitioners commit forum-shopping?
Was a perfected contract of sale established?
Is the contract enforceable given the statute of frauds?
Could the bank conservator unilaterally repudiate the contract?
Are the CA’s factual findings reviewable for reversible error?

Forum-Shopping Analysis

The SC applied Circular 28-91 and the doctrine of lis pendens (Buan v. Lopez). The derivative suit by majority shareholders on behalf of the bank involved identical parties or interests, causes and reliefs sought. A final judgment in one case would bar relief in the other. Petitioners’ verification revealing the pendency of Branch 134 was insufficient. Both cases were dismissed with prejudice, and petitioners were reprimanded for forum-shopping.

Perfection of the Contract of Sale

Under Civil Code Art. 1318, the requisites—consent, object, cause—were met. Offer and acceptance were established through (i) Rivera’s letter of Sept. 1, 1987, (ii) plaintiffs’ acceptance on Sept. 30, 1987, and (iii) antecedent correspondence tracing from Aug. 30. The trial court and CA credited the unqualified acceptance and found a meeting of minds.

Doctrine of Apparent Authority

The SC reaffirmed that a bank is bound by acts of its officers within apparent authority (Prudential Bank v. CA). Rivera was held out as authorized to negotiate and accept offers, evidenced by his role, correspondence, meeting conduct, and public advertisements. The