[G.R. No. L-56047. April 27, 1982.]
THE OVERSEAS BANK OF MANILA, Petitioner, v. THE HONORABLE COURT
OF APPEALS and JULIAN R. CORDERO, Respondents.
Emmanuel Pelaez, Sr. for Petitioner.
Alberto S. Ortiz for Private Respondent.
SYNOPSIS
Respondent Cordero deposited different sums of money with The
Overseas Bank of Manila. Before said deposits could be withdrawn,
the Central Bank passed Resolutions Nos. 1327 and 1263 providing
among others, the suspension of the operations of the said bank.
The Supreme Court however annulled the aforesaid resolutions in
Ramos, Et. Al. v. Central Bank (40 SCRA 565), for which reason,
petitioner bank is ready to accept its liability for the payment to
private respondent of the balance of the principal amount deposited
with it but submits that it is not liable for the interests thereon
during the period that the bank was closed. The judgment of the
trial court as modified by the Court of Appeals ordered TOBM to pay
the aforesaid amount with interest until fully paid. Hence, this
petition.
On review by certiorari, the Supreme Court ruled that respondent
is not entitled to the payment of the interest in question, in line
with Its pronouncements in the following cases: The Overseas Bank
of Manila v. Court of Appeals and Tony D. Tapia, G.R. No. L-49353,
June 11, 1981, (105 SCRA 49) and The Overseas Bank of Manila v.
Vicente Cordero, G.R. No. L-33582, March 30, 1982, which are
materially identical to the one at bar.
Decision under review, reversed.
SYLLABUS
COMMERCIAL LAW; BANKS; TIME DEPOSIT; INTEREST; PAYMENT CEASES
UPON SUSPENSION OF BANKING OPERATIONS BY CENTRAL BANK; CASE AT BAR.
Where petitioner bank does not deny and is ready to accept its
liability for the return or payment to herein private respondent of
the balance of Thirty Thousand (P30,000.00) Pesos of the principal
amount deposited by him but submits that it is not liable for the
interests thereon during the period that Central Banks Resolutions
Nos. 1327 and 1263 were in force and effect and the bank was,
consequently, for all practical purposes under a state of
liquidation, while on the other hand, private respondent maintains,
and the Court of Appeals so held, that in view of the decision of
this Court annulling the mentioned Central Bank resolutions, the
herein petitioner bank was "not legally dead hence, "the ordinary
laws governing the relationship of a time deposit (sic) and the
bank are applicable, the issue thus joined by the parties is
precisely the very same one already resolved in the Overseas Bank
of Manila v. Court of Appeals and Tony D. Tapia, G.R. No. L-49353,
June 11, 1981, 105 SCRA 49 and The Overseas Bank of Manila v.
Vicente Cordero, G.R. No. L-33582, March 30, 1982 to the effect
that" it should be deemed read into every contract of deposit with
a bank that the obligation to pay interest on the deposit ceases
the moment the operation of the bank is completely suspended by the
duly constituted authority, the Central Bank."
D E C I S I O N
BARREDO, J.:
Petition for review of the decision of the Court of Appeals in
its CA-G.R. No. 51339-R, Julian R. Cordero, plaintiff-appellee v.
The Overseas Bank of Manila, Defendant-Appellant, which modified
the judgment of the trial court but nevertheless sentenced herein
petitioner thus:chanroblesvirtual|awlibrary
"WHEREFORE, the judgment appealed from is hereby modified.
Defendant-appellant The Overseas Bank of Manila is hereby ordered
to pay the sum of P30,000.00 with 6% interest per annum from July
20, 1967 until fully paid. In all other respects, the judgment is
affirmed.
"SO ORDERED." (P. 33, Record.)
The background facts hereof are parallel in all material
respects to those in The Overseas Bank of Manila v. Court of
Appeals and Tony D. Tapia, G.R. No. L-49353, June 11, 1981, 105
SCRA 49, and the more recent case of The Overseas Bank of Manila v.
Vicente Cordero, G.R. No. L-33582, March 30, 1982.
Briefly stated, in all these three cases Tapia and the Corderos
deposited, on time basis, different sums of money respectively with
the Overseas Bank of Manila. Before they could withdraw said
deposits, "by Resolution No. 1327 confirmed on August 13, 1968
(Exh. 1-TOBM), the Monetary Board decided, among others, . . .To
affirm the decisions of the Board under its Resolution No. 1263
dated July 30, 1968 prohibiting TOBM from participating in clearing
and Resolution No. 1290 dated August 13, 1968 authorizing the Board
of Directors of TOBM to suspend the operations of the said Bank . .
." The Board also excluded TOBM from clearing as even with the P10
million special fund loan intended to be made available under
Section 90 of Republic Act No. 265 to TOBM, the extremely
distressed financial condition of said Bank will continue to
prevail and that . . . there seem to be no other alternative except
to liquidate the bank under Section 29 of R.A. 265. In another
resolution (Exh. 2-TOBM) the Monetary Board pursuant to Section 29
of Republic Act No. 265 decided to forbid TOBM to do business in
the Philippines; to instruct the Superintendent of Banks to take
such further action as may be necessary pursuant to Section 29 of
Republic Act 265." (P. 25, Record).
Subsequently, however, on October 24, 1971, this Supreme Court
annulled the Central Bank Resolution No. 1263. As stated by the
Court of Appeals in the decision under
review:jgc:chanrobles.com.ph
"The Supreme Court, in Ramos, Et. Al. v. Central Bank of the
Philippines, 1 while recognizing the precarious financial condition
of the defendant-appellant, ruled that a previous commitment of the
Central Bank for the continued operation of, and rehabilitation of,
the OBM (defendant-appellant bank) estopped the Central Bank
through the Monetary Board from liquidating and declaring the bank
insolvent. This commitment is embodied in a Voting Trust Agreement,
executed by the petitioners on November 20, 1967 and prepared by
the attorneys of the Central Bank. Thus the Supreme Court
said:chanrob1es virtual 1aw library
Bearing in mind that the communications Annexes B and G as well
as the voting trust agreement, Annex A, had been prepared by the CB
and the well known rule that ambiguities therein are to be
construed against the party that caused them, the record becomes
clear that, in consideration of the execution of the voting trust
agreement by the petitioner stockholders of OBM, and of the
mortgage or assignment of their personal properties to the CB (Res.
Nos. 2015, 16 October 1967, Annex F Petition), the CB had agreed to
announce its readiness to support the new management, in order to
allay the fear of depositors and creditors. (Annex B), and to stave
off liquidation by providing adequate funds for the rehabilitation,
normalization and stabilization of the OBM, in a manner similar to
what the CB had previously done with the Republic Bank (Petition,
Annex G, ante). While no express terms in the document refer to the
provision of funds by the CB for the purpose, the same is
necessarily implied, for in no other way could it rehabilitate,
normalize and stabilize a distressed bank.
Even in the absence of contract, the record plainly shows that
the CB made express representations to petitioners herein that it
would support the OBM, and avoid its liquidation if the petitioners
would execute (a) the Voting Trust Agreement turning over the
management of OBM to the CB or its nominees, and (b) mortgage or
assign their properties to the Central Bank to cover the overdraft
balance of OBM. The petitioners having complied with these
conditions and parted with value to the profit of the Central Bank
(which thus acquired additional security for its own advances), the
CB may not now renege on its representation and liquidate the OBM,
to the detriment of its stockholders, depositors and other
creditors, under the rule of promissory estoppel (19 Am. Jur.,
pages 657-658, 28 Am. Jur. 2d, 656-657).
"As a result of these findings, the Supreme Court annulled the
Central Banks Resolution Nos. 1263, 1290 and 1333 (that prohibit
the Overseas Bank of Manila to participate in clearing, direct the
suspension of its operations, and ordering liquidation of said
bank) and directed the Central Bank to comply with its obligations
under the Voting Trust Agreement, and further, to desist from
taking action in violation thereof." (Pp. 29-31, Record.)
Under the foregoing facts, petitioner bank does not deny and is
ready to accept its liability for the return or payment to herein
private respondent Julian R. Cordero of the balance of Thirty
Thousand (P30,000.00) Pesos of the principal amount deposited by
him but submits that it is not liable for the interests thereon
during the period that Central Banks Resolution Nos. 1327 and 1263
were in force and effect and the bank was, consequently, for all
practical purposes under a state of liquidation. On the other hand,
private respondent maintains, and the Court of Appeals so held,
that in view of the decision of this Supreme Court annulling the
mentioned Central Banks resolutions, the herein petitioner bank was
"not legally dead", hence "the ordinary laws governing the
relationship of a time deposit (sic?) and the bank are
applicable."cralaw virtua1aw library
The issue thus joined by the parties is precisely the very same
one We already resolved in Tapia and Cordero (Vicente) supra. In
this latest case, Mr. Justice Escolin held for the Court
thus:jgc:chanrobles.com.ph
"Thus, with the principal claim of respondent having been
satisfied, the only remaining issue to be determined is whether
respondent is entitled to (1) interest on his time deposit during
the period that petitioner was closed and (2) to attorneys
fees.
"We find the answer to be in the negative.
"The pronouncement made by this Court, per Justice Barredo, in
the recent case of Overseas Bank of Manila versus Court of Appeals
(105 SCRA 49) is explicit and categorical. We quote:chanrob1es
virtual 1aw library
It is a matter of common knowledge which we take judicial notice
of, that what enables a bank to pay stipulated interest on money
deposited with it is that thru the other aspects of its operation,
it is able to generate funds to cover the payment of such interest.
Unless a bank can lend money, engage in international transactions,
acquire foreclosed mortgaged properties or their proceeds and
generally engage in other banking and financing activities, from
which it can derive income, it is inconceivable how it can carry on
as a depository obligated to pay stipulated interest. . . .
Consequently, it should be deemed read into every contract of
deposit with a bank that the obligation to pay interest on the
deposit ceases the moment the operation of the bank is completely
suspended by the duly constituted authority, the Central Bank.
We consider it of trivial consequence that the stoppage of the
banks operations by the Central Bank has been subsequently declared
illegal by the Supreme Court, for before the Courts order, the bank
had no alternative under the law than to obey the orders of the
Central Bank. Whatever be the juridical significance of the
subsequent action of the Supreme Court, the stubborn fact remained
that the petitioner was totally crippled from then on from earning
the income needed to meet its obligations to its depositors. If
such a situation cannot, strictly speaking be legally denominated
as force majeure as maintained by private respondent, We hold it is
a matter of simple equity that it be treated as such.
"And concluding, this Court stated:chanrob1es virtual 1aw
library
Parenthetically, We may add for the guidance of those who might
be concerned and so that the unnecessary litigations may be avoided
from further clogging the dockets of the courts that in the light
of the consideration expounded in the above opinion, the same
formula that exempts petitioner from the payment of interest to its
depositors during the whole period of factual stoppage of its
operations by orders of the Central Bank, modified in effect by the
decision as well as the approval of a formula-of rehabilitation by
this Court, should be, as a matter of consistency, applicable or
followed in respect to all other obligations of petitioner which
could not be paid during the period of its actual complete
closure.
"Neither can respondent Cordero recover attorneys fees. The
trial court found that herein petitioners refusal to pay was not
due to a willful and dishonest refusal to comply with its
obligation but to restrictions imposed by the Central Bank (Record
on Appeal [CA] p. 49). Since respondent did not appeal from this
decision, he is now barred from contesting the same."cralaw
virtua1aw library
We cannot perceive any justifiable ground or reason to depart
from the considerations and judgments in those earlier cases
materially identical to the one at bar. Private respondent has not
adduced any cogent argument which could persuade Us
otherwise.chanrobles lawlibrary : rednad
WHEREFORE, the decision under review is hereby reversed and
petitioner is declared not liable for the interest on private
respondents time deposit in question in accordance with the
previous rulings of this Court above referred to. No costs.
De Castro, Ericta and Escolin, JJ., concur.
Concepcion Jr., and Abad Santos, JJ., are on leave.
G.R. No. L-29119February 28, 1983
CO CHIN LENG, petitioner-appellee, vs.CO CHIN TONG, MACARIO CO
LING and ONG HAI TONG, respondents-appellants.
Jose V. Santos for petitioner-appellee.
Eriberto D. Ignacio for respondent Ong Hai Tong.
Manuel P. Dumatol for respondents Macario Co Ling, et al.
TEEHANKEE, J.:
This is an appeal frm an order of the Court of First Instance of
Manila, Branch IV, directing respondent-appellant Ong Hai Tong or
anyone of the other respondents-appellants in possession of the
owner's duplicate of Transfer Certificate of Title No. 58759 to
surrender the same to the Register of Deeds of Manila within five
(5) days from receipt thereof and authorizing the Register of Deeds
to cancel said owner's duplicate certificate and issue a new one,
in case it is not presented to the court within the time specified
in the order.
Petitioner-appellee is a co-owner of one-tenth (1/10) share of a
property covered by Transfer Certificate of Title No. 587519 of the
Register of Deeds of Manila, with an area of 1,084.20 square
meters. He mortgaged his share to the China Banking Corporation but
the Register of Deeds of Manila refused to register the mortgage
because he could -not present the owner's duplicate copy.
Petitioner-appellee filed a petition with the Court of First
Instance of Manila alleging that the owner's duplicate certificate
of title is in the possession of one of the co-owners, Co Chin
Tong, and that in spite of several demands made of him, he refused
without justifiable reasons to surrender said duplicate copy. Even
the letter of the Register of Deeds of Manila, requesting for the
surrender of the owner's duplicate of title, was ignored for
unknown reasons. Co Chin Leng prayed "that after due notice and
hearing and upon failure of respondents to surrender the Owner's
Duplicate Certificate of Title No. 58759, within five (5) days from
receipt hereof or within a reasonable time thereafter this
Honorable Court may grant, to declare null and void said title and
direct the Register of Deeds of Manila to issue a new one in lieu
thereof, after payment of the fees prescribed by law. "
In the course of the hearing of the petition, Co Chin Tong's
counsel manifested that the questioned document was not in the
possession of his client but in the possession of Ong Hai Tong, a
co-owner. For this reason, Ong Hai Tong was made a co-respondent,
together with Macario Co Ling, the only other remaining
co-owner.
Respondents-appellants Macario Co Ling and Co Chin Tong filed an
opposition alleging that they were not in possession of the owner's
duplicate copy of Transfer Certificate of Title No. 58759. In
asking for the denial of the petition, they further alleged that
the lower court, sitting as a land registration court, had no
jurisdiction over the petition because it partakes of the nature of
a civil case, which should be litigated in a proper civil action;
that there is no provision of law, rule or regulation, authorizing
the lower court, sitting as a land registration court, to declare
null and void a valid title and issue a new one in lieu thereof;
that the petition did not state a cause of action; and that the
remedy prayed for is not the proper remedy under the circumstances,
assuming, without admitting, that the facts alleged were true.
On the other hand, respondent-appellant Ong Hai Tong filed a
separate opposition on grounds that (1) the lower court, as a court
of land registration, has no jurisdiction; (2) the petition and the
reliefs prayed for state no cause of action.
After petitioner-appellee had filed his reply to respondents'
oppositions, the lower court, issued the following order: "Ong Hai
Tong or anyone of the respondents in possession of the owner's
duplicate of Transfer Certificate of Title No. 58759 is hereby
directed to surrender to the Register of Deeds of Manila, within
five (5) days from receipt hereof, said owner's duplicate
certificate. Should respondents fail or refuse to comply with the
terms of this Order within the time specified, the Register of
Deeds is authorized to cancel said owner's copy and issue a new one
in lieu thereof. "
A motion for reconsideration of the order was filed, but the
court below issued an order denying the motion.
The Court finds no error of law in the granting of the petition
by the lower court based on its findings "that the deed of mortgage
executed by petitioner over his one-tenth share of the property
described in Transfer Certificate of Title No. 58759 could not be
given due course in registration inasmuch as possession of the
owner's duplicate of said title is being withheld by one of the
herein respondents and cannot be produced before the Register of
Deeds as required by Section 55 and 61 of Act No. 496; that the
subject matter of the mortgage contract is limited to the share of
petitioner in the property described in the title and does not in
any way affect the interest and participation of the other
co-owners as evidenced by a copy of the deed of mortgage, Annex
'S-1' that the instant proceeding may be considered as one filed
under the provisions of Section 72 of Act No. 496 by force and
authority of the doctrine laid down in the case of Director of
Lands vs. Heirs of Abadezco, G.R. No. L-36155, promulgated May
8,1934, where the Supreme Court ruled that in the registration of a
mortgage if the owner's duplicate certificate is being withheld or
otherwise could not be presented at the time of registration, the
procedure outlined in Section 72 may be availed of by the
interested party to the end that registration of the deed of
mortgage may be accomplished; that it is indubitable that this
Court, acting as a land registration court, has the authority and
jurisdiction to pass upon all issues raised under the provisions of
Section 72 of Act No. 496 and to enforce its order by suitable
process by force and effect of the provisions of the second
paragraph of Section 112 of the same Act which requires that all
petitions and motions after original registration shall be filed
and entitled in the original case in which the decree of
registration was entered; and considering finally that insofar as
the merits of the issue involved in this case are concerned
respondent Ong Tai Tong has not advanced any valid or justifiable
reason to support her refusal to surrender the owner's duplicate of
Transfer Certificate of Title No. 58759 but has limited herself to
a discussion of the technical or procedural aspects of the remedy
sought by the petitioner and has, furthermore, impliedly admitted
being in possession of said owner's duplicate certificate by her
failure to deny the allegation in the amended petition to that
effect. "
The cited case of Director of Lands vs. Heirs of Pablo Abadezco
et al., properly relied upon by the lower court in its questioned
order duly outlined the procedure a party may take in order that
the registration of any instrument or deed affecting registered
land may be recorded, in case the owner neglects or refuses to
surrender his duplicate certificate of title, as follows:
The provisions of the Land Registration Act relating to
disposition of land after registration, are found in its sections
50, to 99,110 and 111. Section 50 provides that no deed, mortgage,
lease or other voluntary disposition of registered land shall take
effect as a conveyance or bind the land, but shall operate only as
a contract between the parties as evidence of authority to the
register of deeds to effect the registration. The registration of
such voluntary disposition is the operative act which conveys and
binds the land. Under Section 52, such registration shall be
effected by filing with the register of deeds the instrument
creating or transferring or claiming such interest and by a brief
memorandum thereof made by the register of deeds upon the
certificate of title; but, under Section 55, no such memorandum
shall be made unless the owner's duplicate certificate is presented
to the register of deeds.
It is evident, therefore, that, in order that the registration
of any instrument or deed affecting registered land may be made,
the owner's duplicate certificate must be presented to the register
of deeds. What should then be the legal process in case the owner
neglects or refuses to surrender his duplicate certificate? In case
of an absolute sale or transfer of title in fee simple, the party
claiming to be entitled to the registration Of such sale or
transfer, may, under Section 111, file a petition to the court, and
after hearing, the court may order the holder of such certificate
to surrender the same, and direct the entry of a new certificate
upon such surrender. In case of an attachment or other lien or
adverse claim of any description, the register of deeds shall,
under section 72 and within twenty-four hours after the
registration of such attachment, lien or adverse claim, send notice
by mail to the registered owner requesting him to send or produce
his certificate; but if the owner neglects or refuses to comply
within a reasonable time, the register of deeds shall suggest the
fact to the court, and the court, after notice, shall enter an
order requiring the owner to produce his certificate at a time and
place to be named in the order, and may enforce the order by
suitable process. In case of a judgment or decree rendered in an
action to recover the possession of title to real estate or an
interest therein, the court, on application and after due notice,
shall enter an order requiring the owner to produce his
certificate, and may also enforce the order by suitable process.
(Sections 82 and 83).
The Court further expressly declared therein that as in the case
at bar, "in order to give full effect to the purposes of Sections
50, 52 and 55 of the Land Registration Act, in relation to Sections
60 to 63 thereof, the provisions of Section 72 are also applicable
to the registration of a mortgage deed affecting registered
land."
The other point, raised by respondents-appellants questioning
petitioner- appellee's right to constitute a mortgage on his
individual one-tenth share in co-ownership with them on the ground
that they had an agreement requiring the unanimous consent thereto
of all co-owners before the actual partition of the property was
likewise correctly rejected by the lower court, with its ruling in
its order denying reconsideration that "the order sought to be
reconsidered was limited to the issue of whether or not respondents
may be compelled to surrender the owner's duplicate certificate in
order that the deed of mortgage executed by petitioner may be given
due course in registration and that the law and the evidence
presented adequately support the issuance thereof; that in a
proceeding for the surrender of the owner's duplicate in order that
a mortgage may be annotated thereon the court does not pass upon
questions relative to the validity or effect of the mortgage which
can be determined only in an ordinary case before the courts, (and)
does not have the jurisdiction to pass upon the alleged effect or
invalidity ...
ACCORDINGLY, the appealed orders are hereby affirmed, with costs
jointly and severally against respondents-appellants.
Melencio-Herrera Plana, Vasquez, Relova and Gutierrez, Jr., JJ.,
concur.
G.R. No. 150886 February 16, 2007
RURAL BANK OF SAN MIGUEL, INC. and HILARIO P. SORIANO, in his
capacity as majority stockholder in the Rural Bankof San Miguel,
Inc., Petitioners, vs.MONETARY BOARD, BANGKO SENTRAL NG PILIPINAS
and PHILIPPINE DEPOSIT INSURANCE CORPORATION, Respondents.
D E C I S I O N
CORONA, J.:
This is a petition for review on certiorari1 of a decision2 and
resolution3 of the Court of Appeals (CA) dated March 28, 2000 and
November 13, 2001, respectively, in CA-G.R. SP No. 57112.
Petitioner Rural Bank of San Miguel, Inc. (RBSM) was a domestic
corporation engaged in banking. It started operations in 1962 and
by year 2000 had 15 branches in Bulacan.4 Petitioner Hilario P.
Soriano claims to be the majority stockholder of its outstanding
shares of stock.5
On January 21, 2000, respondent Monetary Board (MB), the
governing board of respondent Bangko Sentral ng Pilipinas (BSP),
issued Resolution No. 105 prohibiting RBSM from doing business in
the Philippines, placing it under receivership and designating
respondent Philippine Deposit Insurance Corporation (PDIC) as
receiver:
On the basis of the comptrollership/monitoring report as of
October 31, 1999 as reported by Mr. Wilfredo B. Domo-ong, Director,
Department of Rural Banks, in his memorandum dated January 20,
2000, which report showed that [RBSM] (a) is unable to pay its
liabilities as they become due in the ordinary course of business;
(b) cannot continue in business without involving probable losses
to its depositors and creditors; that the management of the bank
had been accordingly informed of the need to infuse additional
capital to place the bank in a solvent financial condition and was
given adequate time within which to make the required infusion and
that no infusion of adequate fresh capital was made, the Board
decided as follows:
1. To prohibit the bank from doing business in the Philippines
and to place its assets and affairs under receivership in
accordance with Section 30 of [RA 7653];
2. To designate the [PDIC] as receiver of the bank;
xxx xxx xxx6
On January 31, 2000, petitioners filed a petition for certiorari
and prohibition in the Regional Trial Court (RTC) of Malolos,
Branch 22 to nullify and set aside Resolution No. 105.7 However, on
February 7, 2000, petitioners filed a notice of withdrawal in the
RTC and, on the same day, filed a special civil action for
certiorari and prohibition in the CA. On February 8, 2000, the RTC
dismissed the case pursuant to Section 1, Rule 17 of the Rules of
Court.8
The CAs findings of facts were as follows.
To assist its impaired liquidity and operations, the RBSM was
granted emergency loans on different occasions in the aggregate
amount of P375 [million].
As early as November 18, 1998, Land Bank of the Philippines
(LBP) advised RBSM that it will terminate the clearing of RBSMs
checks in view of the latters frequent clearing losses and
continuing failure to replenish its Special Clearing Demand Deposit
with LBP. The BSP interceded with LBP not to terminate the clearing
arrangement of RBSM to protect the interests of RBSMs depositors
and creditors.
After a year, or on November 29, 1999, the LBP informed the BSP
of the termination of the clearing facility of RBSM to take effect
on December 29, 1999, in view of the clearing problems of RBSM.
On December 28, 1999, the MB approved the release of P26.189
[million] which is the last tranche of the P375 million emergency
loan for the sole purpose of servicing and meeting the withdrawals
of its depositors. Of the P26.180 million, xxx P12.6 million xxx
was not used to service withdrawals [and] remains unaccounted for
as admitted by [RBSMs Treasury Officer and Officer-in-Charge of
Treasury]. Instead of servicing withdrawals of depositors, RBSM
paid Forcecollect Professional Solution, Inc. and Surecollect
Professional, Inc., entities which are owned and controlled by
Hilario P. Soriano and other RBSM officers.
On January 4, 2000, RBSM declared a bank holiday. RBSM and all
of its 15 branches were closed from doing business.
Alarmed and disturbed by the unilateral declaration of bank
holiday, [BSP] wanted to examine the books and records of RBSM but
encountered problems.
Meanwhile, on November 10, 1999, RBSMs designated comptroller,
Ms. Zenaida Cabais of the BSP, submitted to the Department of Rural
Banks, BSP, a Comptrollership Report on her findings on the
financial condition and operations of the bank as of October 31,
1999. Another set of findings was submitted by said comptroller
[and] this second report reflected the financial status of RBSM as
of December 31, 1999.
The findings of the comptroller on the financial state of RBSM
as of October 31, 1999 in comparison with the financial condition
as of December 31, 1999 is summed up pertinently as follows:
FINANCIAL CONDITION OF RBSM
As of Oct. 31, 1999As of Dec. 31, 1999Total
obligations/LiabilitiesP1,076,863,000.001,009,898,000.00Realizable
Assets898,588,000.00796,930,000.00Deficit178,275,000.00212,968,000.00Cash
on Hand101,441.547.008,266,450.00Required Capital Infusion
P252,120,000.00
Capital Infusion P5,000,000.00
(On Dec. 20, 1999)Actual Breakdown of Total Obligations:
1) Deposits of 20,000 depositors P578,201,000.00
2) Borrowings from BSP P320,907,000.00
3) Unremitted withholding and gross receipt taxes
P57,403,000.00.9
Based on these comptrollership reports, the director of the
Department of Rural Banks Supervision and Examination Sector,
Wilfredo B. Domo-ong, made a report to the MB dated January 20,
2000.10 The MB, after evaluating and deliberating on the findings
and recommendation of the Department of Rural Banks Supervision and
Examination Sector, issued Resolution No. 105 on January 21,
2000.11 Thereafter, PDIC implemented the closure order and took
over the management of RBSMs assets and affairs.
In their petition12 before the CA, petitioners claimed that
respondents MB and BSP committed grave abuse of discretion in
issuing Resolution No. 105. The petition was dismissed by the CA on
March 28, 2000. It held, among others, that the decision of the MB
to issue Resolution No. 105 was based on the findings and
recommendations of the Department of Rural Banks Supervision and
Examination Sector, the comptroller reports as of October 31, 1999
and December 31, 1999 and the declaration of a bank holiday. Such
could be considered as substantial evidence.13
Pertinently, on June 9, 2000, on the basis of reports prepared
by PDIC stating that RBSM could not resume business with sufficient
assurance of protecting the interest of its depositors, creditors
and the general public, the MB passed Resolution No. 966 directing
PDIC to proceed with the liquidation of RBSM under Section 30 of RA
7653.14
Hence this petition.
It is well-settled that the closure of a bank may be considered
as an exercise of police power.15 The action of the MB on this
matter is final and executory.16 Such exercise may nonetheless be
subject to judicial inquiry and can be set aside if found to be in
excess of jurisdiction or with such grave abuse of discretion as to
amount to lack or excess of jurisdiction.17
Petitioners argue that Resolution No. 105 was bereft of any
basis considering that no complete examination had been conducted
before it was issued. This case essentially boils down to one core
issue: whether Section 30 of RA 7653 (also known as the New Central
Bank Act) and applicable jurisprudence require a current and
complete examination of the bank before it can be closed and placed
under receivership.
Section 30 of RA 7653 provides:
SECTION 30. Proceedings in Receivership and Liquidation.
Whenever, upon report of the head of the supervising or examining
department, the Monetary Board finds that a bank or quasi-bank:
(a) is unable to pay its liabilities as they become due in the
ordinary course of business: Provided, That this shall not include
inability to pay caused by extraordinary demands induced by
financial panic in the banking community;
(b) has insufficient realizable assets, as determined by the
[BSP] to meet its liabilities; or
(c) cannot continue in business without involving probable
losses to its depositors or creditors; or
(d) has willfully violated a cease and desist order under
Section 37 that has become final, involving acts or transactions
which amount to fraud or a dissipation of the assets of the
institution; in which cases, the Monetary Board may summarily and
without need for prior hearing forbid the institution from doing
business in the Philippines and designate the Philippine Deposit
Insurance Corporation as receiver of the banking institution.
xxx xxx xxx
The actions of the Monetary Board taken under this section or
under Section 29 of this Act shall be final and executory, and may
not be restrained or set aside by the court except on petition for
certiorari on the ground that the action taken was in excess of
jurisdiction or with such grave abuse of discretion as to amount to
lack or excess of jurisdiction. The petition for certiorari may
only be filed by the stockholders of record representing the
majority of the capital stock within ten (10) days from receipt by
the board of directors of the institution of the order directing
receivership, liquidation or conservatorship. (Emphasis
supplied)
xxx xxx xxx
Petitioners contend that there must be a current, thorough and
complete examination before a bank can be closed under Section 30
of RA 7653. They argue that this section should be harmonized with
Sections 25 and 28 of the same law:
SECTION 25. Supervision and Examination. The [BSP] shall have
supervision over, and conduct periodic or special examinations of,
banking institutions and quasi-banks, including their subsidiaries
and affiliates engaged in allied activities.
xxx xxx xxx
SECTION 28. Examination and Fees. The supervising and examining
department head, personally or by deputy, shall examine the books
of every banking institution once in every twelve (12) months, and
at such other time as the Monetary Board by an affirmative vote of
five (5) members may deem expedient and to make a report on the
same to the Monetary Board: Provided that there shall be an
interval of at least twelve (12) months between annual
examinations. (Emphasis supplied)
xxx xxx xxx
According to the petitioners, it is clear from these provisions
that the "report of the supervising or examining department"
required under Section 30 refers to the report on the examination
of the bank which, under Section 28, must be made to the MB after
the supervising or examining head conducts an examination mandated
by Sections 25 and 28.18 They cite Banco Filipino Savings &
Mortgage Bank v. Monetary Board, Central Bank of the Philippines19
wherein the Court ruled:
There is no question that under Section 29 of the Central Bank
Act, the following are the mandatory requirements to be complied
with before a bank found to be insolvent is ordered closed and
forbidden to do business in the Philippines: Firstly, an
examination shall be conducted by the head of the appropriate
supervising or examining department or his examiners or agents into
the condition of the bank; secondly, it shall be disclosed in the
examination that the condition of the bank is one of insolvency, or
that its continuance in business would involve probable loss to its
depositors or creditors; thirdly, the department head concerned
shall inform the Monetary Board in writing, of the facts; and
lastly, the Monetary Board shall find the statements of the
department head to be true.20 (Emphasis supplied)
Petitioners assert that an examination is necessary and not a
mere report, otherwise the decision to close a bank would be
arbitrary.
Respondents counter that RA 7653 merely requires a report of the
head of the supervising or examining department. They maintain that
the term "report" under Section 30 and the word "examination" used
in Section 29 of the old law are not synonymous. "Examination"
connotes in-depth analysis, evaluation, inquiry or investigation
while "report" connotes a simple disclosure or narration of facts
for informative purposes.21
Petitioners contention has no merit. Banco Filipino and other
cases petitioners cited22 were decided using Section 29 of the old
law (RA 265):
SECTION 29. Proceedings upon insolvency. Whenever, upon
examination by the head of the appropriate supervising or examining
department or his examiners or agents into the condition of any
bank or non-bank financial intermediary performing quasi-banking
functions, it shall be disclosed that the condition of the same is
one of insolvency, or that its continuance in business would
involve probable loss to its depositors or creditors, it shall be
the duty of the department head concerned forthwith, in writing, to
inform the Monetary Board of the facts. The Board may, upon finding
the statements of the department head to be true, forbid the
institution to do business in the Philippines and designate an
official of the Central Bank or a person of recognized competence
in banking or finance, as receiver to immediately take charge of
its assets and liabilities, as expeditiously as possible collect
and gather all the assets and administer the same for the benefits
of its creditors, and represent the bank personally or through
counsel as he may retain in all actions or proceedings for or
against the institution, exercising all the powers necessary for
these purposes including, but not limited to, bringing and
foreclosing mortgages in the name of the bank or non-bank financial
intermediary performing quasi-banking functions. (Emphasis
supplied)
xxx xxx xxx
Thus in Banco Filipino, we ruled that an "examination
[conducted] by the head of the appropriate supervising or examining
department or his examiners or agents into the condition of the
bank"23 is necessary before the MB can order its closure.
However, RA 265, including Section 29 thereof, was expressly
repealed by RA 7653 which took effect in 1993. Resolution No. 105
was issued on January 21, 2000. Hence, petitioners reliance on
Banco Filipino which was decided under RA 265 was misplaced.
In RA 7653, only a "report of the head of the supervising or
examining department" is necessary. It is an established rule in
statutory construction that where the words of a statute are clear,
plain and free from ambiguity, it must be given its literal meaning
and applied without attempted interpretation:24
This plain meaning rule or verba legis derived from the maxim
index animi sermo est (speech is the index of intention) rests on
the valid presumption that the words employed by the legislature in
a statute correctly express its intention or will and preclude the
court from construing it differently. The legislature is presumed
to know the meaning of the words, to have used words advisedly, and
to have expressed its intent by use of such words as are found in
the statute. Verba legis non est recedendum, or from the words of a
statute there should be no departure.25
The word "report" has a definite and unambiguous meaning which
is clearly different from "examination." A report, as a noun, may
be defined as "something that gives information" or "a usually
detailed account or statement."26 On the other hand, an examination
is "a search, investigation or scrutiny."27
This Court cannot look for or impose another meaning on the term
"report" or to construe it as synonymous with "examination." From
the words used in Section 30, it is clear that RA 7653 no longer
requires that an examination be made before the MB can issue a
closure order. We cannot make it a requirement in the absence of
legal basis.
Indeed, the court may consider the spirit and reason of the
statute, where a literal meaning would lead to absurdity,
contradiction, injustice, or would defeat the clear purpose of the
lawmakers.28 However, these problems are not present here. Using
the literal meaning of "report" does not lead to absurdity,
contradiction or injustice. Neither does it defeat the intent of
the legislators. The purpose of the law is to make the closure of a
bank summary and expeditious in order to protect public interest.
This is also why prior notice and hearing are no longer required
before a bank can be closed.29
Laying down the requisites for the closure of a bank under the
law is the prerogative of the legislature and what its wisdom
dictates. The lawmakers could have easily retained the word
"examination" (and in the process also preserved the jurisprudence
attached to it) but they did not and instead opted to use the word
"report." The insistence on an examination is not sanctioned by RA
7653 and we would be guilty of judicial legislation were we to make
it a requirement when such is not supported by the language of the
law.
What is being raised here as grave abuse of discretion on the
part of the respondents was the lack of an examination and not the
supposed arbitrariness with which the conclusions of the director
of the Department of Rural Banks Supervision and Examination Sector
had been reached in the report which became the basis of Resolution
No. 105.1awphi1.net
The absence of an examination before the closure of RBSM did not
mean that there was no basis for the closure order. Needless to
say, the decision of the MB and BSP, like any other administrative
body, must have something to support itself and its findings of
fact must be supported by substantial evidence. But it is clear
under RA 7653 that the basis need not arise from an examination as
required in the old law.
We thus rule that the MB had sufficient basis to arrive at a
sound conclusion that there were grounds that would justify RBSMs
closure. It relied on the report of Mr. Domo-ong, the head of the
supervising or examining department, with the findings that: (1)
RBSM was unable to pay its liabilities as they became due in the
ordinary course of business and (2) that it could not continue in
business without incurring probable losses to its depositors and
creditors.30 The report was a 50-page memorandum detailing the
facts supporting those grounds, an extensive chronology of events
revealing the multitude of problems which faced RBSM and the
recommendations based on those findings.
In short, MB and BSP complied with all the requirements of RA
7653. By relying on a report before placing a bank under
receivership, the MB and BSP did not only follow the letter of the
law, they were also faithful to its spirit, which was to act
expeditiously. Accordingly, the issuance of Resolution No. 105 was
untainted with arbitrariness.
Having dispensed with the issue decisive of this case, it
becomes unnecessary to resolve the other minor issues raised.31
WHEREFORE, the petition is hereby DENIED. The March 28, 2000
decision and November 13, 2001 resolution of the Court of Appeals
in CA-G.R. SP No. 57112 are AFFIRMED.
G.R. No. 115849 January 24, 1996
FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers Bank of
the Philippines) and MERCURIO RIVERA, petitioners, vs.COURT OF
APPEALS, CARLOS EJERCITO, in substitution of DEMETRIO DEMETRIA, and
JOSE JANOLO, respondents.
D E C I S I O N
PANGANIBAN, J.:
In the absence of a formal deed of sale, may commitments given
by bank officers in an exchange of letters and/or in a meeting with
the buyers constitute a perfected and enforceable contract of sale
over 101 hectares of land in Sta. Rosa, Laguna? Does the doctrine
of "apparent authority" apply in this case? If so, may the Central
Bank-appointed conservator of Producers Bank (now First Philippine
International Bank) repudiate such "apparent authority" after said
contract has been deemed perfected? During the pendency of a suit
for specific performance, does the filing of a "derivative suit" by
the majority shareholders and directors of the distressed bank to
prevent the enforcement or implementation of the sale violate the
ban against forum-shopping?
Simply stated, these are the major questions brought before this
Court in the instant Petition for review on certiorari under Rule
45 of the Rules of Court, to set aside the Decision promulgated
January 14, 1994 of the respondent Court of Appeals1 in CA-G.R CV
No. 35756 and the Resolution promulgated June 14, 1994 denying the
motion for reconsideration. The dispositive portion of the said
Decision reads:
WHEREFORE, the decision of the lower court is MODIFIED by the
elimination of the damages awarded under paragraphs 3, 4 and 6 of
its dispositive portion and the reduction of the award in paragraph
5 thereof to P75,000.00, to be assessed against defendant bank. In
all other aspects, said decision is hereby AFFIRMED.
All references to the original plaintiffs in the decision and
its dispositive portion are deemed, herein and hereafter, to
legally refer to the plaintiff-appellee Carlos C. Ejercito.
Costs against appellant bank.
The dispositive portion of the trial court's2 decision dated
July 10, 1991, on the other hand, is as follows:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of the plaintiffs and against the defendants as follows:
1.Declaring the existence of a perfected contract to buy and
sell over the six (6) parcels of land situated at Don Jose, Sta.
Rosa, Laguna with an area of 101 hectares, more or less, covered by
and embraced in Transfer Certificates of Title Nos. T-106932 to
T-106937, inclusive, of the Land Records of Laguna, between the
plaintiffs as buyers and the defendant Producers Bank for an agreed
price of Five and One Half Million (P5,500,000.00) Pesos;
2.Ordering defendant Producers Bank of the Philippines, upon
finality of this decision and receipt from the plaintiffs the
amount of P5.5 Million, to execute in favor of said plaintiffs a
deed of absolute sale over the aforementioned six (6) parcels of
land, and to immediately deliver to the plaintiffs the owner's
copies of T.C.T. Nos. T-106932 to T- 106937, inclusive, for
purposes of registration of the same deed and transfer of the six
(6) titles in the names of the plaintiffs;
3.Ordering the defendants, jointly and severally, to pay
plaintiffs Jose A. Janolo and Demetrio Demetria the sums of
P200,000.00 each in moral damages;
4.Ordering the defendants, jointly and severally, to pay
plaintiffs the sum of P100,000.00 as exemplary damages ;
5.Ordering the defendants, jointly and severally, to pay the
plaintiffs the amount of P400,000.00 for and by way of attorney's
fees;
6.Ordering the defendants to pay the plaintiffs, jointly and
severally, actual and moderate damages in the amount of
P20,000.00;
With costs against the defendants.
After the parties filed their comment, reply, rejoinder,
sur-rejoinder and reply to sur-rejoinder, the petition was given
due course in a Resolution dated January 18, 1995. Thence, the
parties filed their respective memoranda and reply memoranda. The
First Division transferred this case to the Third Division per
resolution dated October 23, 1995. After carefully deliberating on
the aforesaid submissions, the Court assigned the case to the
undersigned ponente for the writing of this Decision.
The Parties
Petitioner First Philippine International Bank (formerly
Producers Bank of the Philippines; petitioner Bank, for brevity) is
a banking institution organized and existing under the laws of the
Republic of the Philippines. Petitioner Mercurio Rivera (petitioner
Rivera, for brevity) is of legal age and was, at all times material
to this case, Head-Manager of the Property Management Department of
the petitioner Bank.
Respondent Carlos Ejercito (respondent Ejercito, for brevity) is
of legal age and is the assignee of original plaintiffs-appellees
Demetrio Demetria and Jose Janolo.
Respondent Court of Appeals is the court which issued the
Decision and Resolution sought to be set aside through this
petition.
The Facts
The facts of this case are summarized in the respondent Court's
Decision3 as follows:
(1)In the course of its banking operations, the defendant
Producer Bank of the Philippines acquired six parcels of land with
a total area of 101 hectares located at Don Jose, Sta. Rose,
Laguna, and covered by Transfer Certificates of Title Nos. T-106932
to T-106937. The property used to be owned by BYME Investment and
Development Corporation which had them mortgaged with the bank as
collateral for a loan. The original plaintiffs, Demetrio Demetria
and Jose O. Janolo, wanted to purchase the property and thus
initiated negotiations for that purpose.
(2)In the early part of August 1987 said plaintiffs, upon the
suggestion of BYME investment's legal counsel, Jose Fajardo, met
with defendant Mercurio Rivera, Manager of the Property Management
Department of the defendant bank. The meeting was held pursuant to
plaintiffs' plan to buy the property (TSN of Jan. 16, 1990, pp.
7-10). After the meeting, plaintiff Janolo, following the advice of
defendant Rivera, made a formal purchase offer to the bank through
a letter dated August 30, 1987 (Exh. "B"), as follows:
August 30, 1987
The Producers Bank of the PhilippinesMakati, Metro Manila
Attn.Mr. Mercurio Q. RiveraManager, Property Management
Dept.
Gentleman:
I have the honor to submit my formal offer to purchase your
properties covered by titles listed hereunder located at Sta. Rosa,
Laguna, with a total area of 101 hectares, more or less.
TCT NO.
AREA
T-106932
113,580 sq. m.
T-106933
70,899 sq. m.
T-106934
52,246 sq. m.
T-106935
96,768 sq. m.
T-106936
187,114 sq. m.
T-106937
481,481 sq. m.
My offer is for PESOS: THREE MILLION FIVE HUNDRED THOUSAND
(P3,500,000.00) PESOS, in cash.
Kindly contact me at Telephone Number 921-1344.
(3) On September 1, 1987, defendant Rivera made on behalf of the
bank a formal reply by letter which is hereunder quoted (Exh.
"C"):
September 1, 1987
JP M-P GUTIERREZ ENTERPRISES142 Charisma St., Doa Andres
IIRosario, Pasig, Metro Manila
Attention: JOSE O. JANOLO
Dear Sir:
Thank you for your letter-offer to buy our six (6) parcels of
acquired lots at Sta. Rosa, Laguna (formerly owned by Byme
Industrial Corp.). Please be informed however that the bank's
counter-offer is at P5.5 million for more than 101 hectares on lot
basis.
We shall be very glad to hear your position on the on the
matter.
Best regards.
(4)On September 17, 1987, plaintiff Janolo, responding to
Rivera's aforequoted reply, wrote (Exh. "D"):
September 17, 1987
Producers BankPaseo de RoxasMakati, Metro Manila
Attention:Mr. Mercurio Rivera
Gentlemen:
In reply to your letter regarding my proposal to purchase your
101-hectare lot located at Sta. Rosa, Laguna, I would like to amend
my previous offer and I now propose to buy the said lot at P4.250
million in CASH..
Hoping that this proposal meets your satisfaction.
(5)There was no reply to Janolo's foregoing letter of September
17, 1987. What took place was a meeting on September 28, 1987
between the plaintiffs and Luis Co, the Senior Vice-President of
defendant bank. Rivera as well as Fajardo, the BYME lawyer,
attended the meeting. Two days later, or on September 30, 1987,
plaintiff Janolo sent to the bank, through Rivera, the following
letter (Exh. "E"):
The Producers Bank of the PhilippinesPaseo de Roxas, MakatiMetro
Manila
Attention: Mr. Mercurio Rivera
Re: 101 Hectares of Landin Sta. Rosa, Laguna
Gentlemen:
Pursuant to our discussion last 28 September 1987, we are
pleased to inform you that we are accepting your offer for us to
purchase the property at Sta. Rosa, Laguna, formerly owned by Byme
Investment, for a total price of PESOS: FIVE MILLION FIVE HUNDRED
THOUSAND (P5,500,000.00).
Thank you.
(6)On October 12, 1987, the conservator of the bank (which has
been placed under conservatorship by the Central Bank since 1984)
was replaced by an Acting Conservator in the person of defendant
Leonida T. Encarnacion. On November 4, 1987, defendant Rivera wrote
plaintiff Demetria the following letter (Exh. "F"):
Attention:Atty. Demetrio Demetria
Dear Sir:
Your proposal to buy the properties the bank foreclosed from
Byme investment Corp. located at Sta. Rosa, Laguna is under study
yet as of this time by the newly created committee for submission
to the newly designated Acting Conservator of the bank.
For your information.
(7)What thereafter transpired was a series of demands by the
plaintiffs for compliance by the bank with what plaintiff
considered as a perfected contract of sale, which demands were in
one form or another refused by the bank. As detailed by the trial
court in its decision, on November 17, 1987, plaintiffs through a
letter to defendant Rivera (Exhibit "G") tendered payment of the
amount of P5.5 million "pursuant to (our) perfected sale
agreement." Defendants refused to receive both the payment and the
letter. Instead, the parcels of land involved in the transaction
were advertised by the bank for sale to any interested buyer (Exh,
"H" and "H-1"). Plaintiffs demanded the execution by the bank of
the documents on what was considered as a "perfected agreement."
Thus:
Mr. Mercurio RiveraManager, Producers BankPaseo de Roxas,
MakatiMetro Manila
Dear Mr. Rivera:
This is in connection with the offer of our client, Mr. Jose O.
Janolo, to purchase your 101-hectare lot located in Sta. Rosa,
Laguna, and which are covered by TCT No. T-106932 to 106937.
From the documents at hand, it appears that your counter-offer
dated September 1, 1987 of this same lot in the amount of P5.5
million was accepted by our client thru a letter dated September
30, 1987 and was received by you on October 5, 1987.
In view of the above circumstances, we believe that an agreement
has been perfected. We were also informed that despite repeated
follow-up to consummate the purchase, you now refuse to honor your
commitment. Instead, you have advertised for sale the same lot to
others.
In behalf of our client, therefore, we are making this formal
demand upon you to consummate and execute the necessary
actions/documentation within three (3) days from your receipt
hereof. We are ready to remit the agreed amount of P5.5 million at
your advice. Otherwise, we shall be constrained to file the
necessary court action to protect the interest of our client.
We trust that you will be guided accordingly.
(8)Defendant bank, through defendant Rivera, acknowledged
receipt of the foregoing letter and stated, in its communication of
December 2, 1987 (Exh. "I"), that said letter has been "referred .
. . to the office of our Conservator for proper disposition"
However, no response came from the Acting Conservator. On December
14, 1987, the plaintiffs made a second tender of payment (Exh. "L"
and "L-1"), this time through the Acting Conservator, defendant
Encarnacion. Plaintiffs' letter reads:
PRODUCERS BANK OFTHE PHILIPPINESPaseo de Roxas,Makati, Metro
Manila
Attn.:Atty. NIDA ENCARNACIONCentral Bank Conservator
We are sending you herewith, in - behalf of our client, Mr. JOSE
O. JANOLO, MBTC Check No. 258387 in the amount of P5.5 million as
our agreed purchase price of the 101-hectare lot covered by TCT
Nos. 106932, 106933, 106934, 106935, 106936 and 106937 and
registered under Producers Bank.
This is in connection with the perfected agreement consequent
from your offer of P5.5 Million as the purchase price of the said
lots. Please inform us of the date of documentation of the sale
immediately.
Kindly acknowledge receipt of our payment.
(9)The foregoing letter drew no response for more than four
months. Then, on May 3, 1988, plaintiff, through counsel, made a
final demand for compliance by the bank with its obligations under
the considered perfected contract of sale (Exhibit "N"). As
recounted by the trial court (Original Record, p. 656), in a reply
letter dated May 12, 1988 (Annex "4" of defendant's answer to
amended complaint), the defendants through Acting Conservator
Encarnacion repudiated the authority of defendant Rivera and
claimed that his dealings with the plaintiffs, particularly his
counter-offer of P5.5 Million are unauthorized or illegal. On that
basis, the defendants justified the refusal of the tenders of
payment and the non-compliance with the obligations under what the
plaintiffs considered to be a perfected contract of sale.
(10)On May 16, 1988, plaintiffs filed a suit for specific
performance with damages against the bank, its Manager Rivers and
Acting Conservator Encarnacion. The basis of the suit was that the
transaction had with the bank resulted in a perfected contract of
sale, The defendants took the position that there was no such
perfected sale because the defendant Rivera is not authorized to
sell the property, and that there was no meeting of the minds as to
the price.
On March 14, 1991, Henry L. Co (the brother of Luis Co), through
counsel Sycip Salazar Hernandez and Gatmaitan, filed a motion to
intervene in the trial court, alleging that as owner of 80% of the
Bank's outstanding shares of stock, he had a substantial interest
in resisting the complaint. On July 8, 1991, the trial court issued
an order denying the motion to intervene on the ground that it was
filed after trial had already been concluded. It also denied a
motion for reconsideration filed thereafter. From the trial court's
decision, the Bank, petitioner Rivera and conservator Encarnacion
appealed to the Court of Appeals which subsequently affirmed with
modification the said judgment. Henry Co did not appeal the denial
of his motion for intervention.
In the course of the proceedings in the respondent Court, Carlos
Ejercito was substituted in place of Demetria and Janolo, in view
of the assignment of the latters' rights in the matter in
litigation to said private respondent.
On July 11, 1992, during the pendency of the proceedings in the
Court of Appeals, Henry Co and several other stockholders of the
Bank, through counsel Angara Abello Concepcion Regala and Cruz,
filed an action (hereafter, the "Second Case") purportedly a
"derivative suit" with the Regional Trial Court of Makati, Branch
134, docketed as Civil Case No. 92-1606, against Encarnacion,
Demetria and Janolo "to declare any perfected sale of the property
as unenforceable and to stop Ejercito from enforcing or
implementing the sale"4 In his answer, Janolo argued that the
Second Case was barred by litis pendentia by virtue of the case
then pending in the Court of Appeals. During the pre-trial
conference in the Second Case, plaintiffs filed a Motion for Leave
of Court to Dismiss the Case Without Prejudice. "Private respondent
opposed this motion on the ground, among others, that plaintiff's
act of forum shopping justifies the dismissal of both cases, with
prejudice."5 Private respondent, in his memorandum, averred that
this motion is still pending in the Makati RTC.
In their Petition6 and Memorandum7, petitioners summarized their
position as follows:
I.
The Court of Appeals erred in declaring that a contract of sale
was perfected between Ejercito (in substitution of Demetria and
Janolo) and the bank.
II.
The Court of Appeals erred in declaring the existence of an
enforceable contract of sale between the parties.
III.
The Court of Appeals erred in declaring that the conservator
does not have the power to overrule or revoke acts of previous
management.
IV.
The findings and conclusions of the Court of Appeals do not
conform to the evidence on record.
On the other hand, petitioners prayed for dismissal of the
instant suit on the ground8 that:
I.
Petitioners have engaged in forum shopping.
II.
The factual findings and conclusions of the Court of Appeals are
supported by the evidence on record and may no longer be questioned
in this case.
III.
The Court of Appeals correctly held that there was a perfected
contract between Demetria and Janolo (substituted by; respondent
Ejercito) and the bank.
IV.
The Court of Appeals has correctly held that the conservator,
apart from being estopped from repudiating the agency and the
contract, has no authority to revoke the contract of sale.
The Issues
From the foregoing positions of the parties, the issues in this
case may be summed up as follows:
1)Was there forum-shopping on the part of petitioner Bank?
2)Was there a perfected contract of sale between the
parties?
3)Assuming there was, was the said contract enforceable under
the statute of frauds?
4)Did the bank conservator have the unilateral power to
repudiate the authority of the bank officers and/or to revoke the
said contract?
5)Did the respondent Court commit any reversible error in its
findings of facts?
The First Issue: Was There Forum-Shopping?
In order to prevent the vexations of multiple petitions and
actions, the Supreme Court promulgated Revised Circular No. 28-91
requiring that a party "must certify under oath . . . [that] (a) he
has not (t)heretofore commenced any other action or proceeding
involving the same issues in the Supreme Court, the Court of
Appeals, or any other tribunal or agency; (b) to the best of his
knowledge, no such action or proceeding is pending" in said courts
or agencies. A violation of the said circular entails sanctions
that include the summary dismissal of the multiple petitions or
complaints. To be sure, petitioners have included a
VERIFICATION/CERTIFICATION in their Petition stating "for the
record(,) the pendency of Civil Case No. 92-1606 before the
Regional Trial Court of Makati, Branch 134, involving a derivative
suit filed by stockholders of petitioner Bank against the
conservator and other defendants but which is the subject of a
pending Motion to Dismiss Without Prejudice.9
Private respondent Ejercito vigorously argues that in spite of
this verification, petitioners are guilty of actual forum shopping
because the instant petition pending before this Court involves
"identical parties or interests represented, rights asserted and
reliefs sought (as that) currently pending before the Regional
Trial Court, Makati Branch 134 in the Second Case. In fact, the
issues in the two cases are so interwined that a judgement or
resolution in either case will constitute res judicata in the
other." 10
On the other hand, petitioners explain 11 that there is no
forum-shopping because:
1)In the earlier or "First Case" from which this proceeding
arose, the Bank was impleaded as a defendant, whereas in the
"Second Case" (assuming the Bank is the real party in interest in a
derivative suit), it was plaintiff;
2)"The derivative suit is not properly a suit for and in behalf
of the corporation under the circumstances";
3)Although the CERTIFICATION/VERIFICATION (supra) signed by the
Bank president and attached to the Petition identifies the action
as a "derivative suit," it "does not mean that it is one" and
"(t)hat is a legal question for the courts to decide";
4)Petitioners did not hide the Second Case at they mentioned it
in the said VERIFICATION/CERTIFICATION.
We rule for private respondent.
To begin with, forum-shopping originated as a concept in private
international law.12, where non-resident litigants are given the
option to choose the forum or place wherein to bring their suit for
various reasons or excuses, including to secure procedural
advantages, to annoy and harass the defendant, to avoid overcrowded
dockets, or to select a more friendly venue. To combat these less
than honorable excuses, the principle of forum non conveniens was
developed whereby a court, in conflicts of law cases, may refuse
impositions on its jurisdiction where it is not the most
"convenient" or available forum and the parties are not precluded
from seeking remedies elsewhere.
In this light, Black's Law Dictionary 13 says that forum
shopping "occurs when a party attempts to have his action tried in
a particular court or jurisdiction where he feels he will receive
the most favorable judgment or verdict." Hence, according to Words
and Phrases14, "a litigant is open to the charge of "forum
shopping" whenever he chooses a forum with slight connection to
factual circumstances surrounding his suit, and litigants should be
encouraged to attempt to settle their differences without imposing
undue expenses and vexatious situations on the courts".
In the Philippines, forum shopping has acquired a connotation
encompassing not only a choice of venues, as it was originally
understood in conflicts of laws, but also to a choice of remedies.
As to the first (choice of venues), the Rules of Court, for
example, allow a plaintiff to commence personal actions "where the
defendant or any of the defendants resides or may be found, or
where the plaintiff or any of the plaintiffs resides, at the
election of the plaintiff" (Rule 4, Sec, 2 [b]). As to remedies,
aggrieved parties, for example, are given a choice of pursuing
civil liabilities independently of the criminal, arising from the
same set of facts. A passenger of a public utility vehicle involved
in a vehicular accident may sue on culpa contractual, culpa
aquiliana or culpa criminal each remedy being available
independently of the others although he cannot recover more than
once.
In either of these situations (choice of venue or choice of
remedy), the litigant actually shops for a forum of his action,
This was the original concept of the term forum shopping.
Eventually, however, instead of actually making a choice of the
forum of their actions, litigants, through the encouragement of
their lawyers, file their actions in all available courts, or
invoke all relevant remedies simultaneously. This practice had not
only resulted to (sic) conflicting adjudications among different
courts and consequent confusion enimical (sic) to an orderly
administration of justice. It had created extreme inconvenience to
some of the parties to the action.
Thus, "forum shopping" had acquired a different concept which is
unethical professional legal practice. And this necessitated or had
given rise to the formulation of rules and canons discouraging or
altogether prohibiting the practice. 15
What therefore originally started both in conflicts of laws and
in our domestic law as a legitimate device for solving problems has
been abused and mis-used to assure scheming litigants of dubious
reliefs.
To avoid or minimize this unethical practice of subverting
justice, the Supreme Court, as already mentioned, promulgated
Circular 28-91. And even before that, the Court had prescribed it
in the Interim Rules and Guidelines issued on January 11, 1983 and
had struck down in several cases 16 the inveterate use of this
insidious malpractice. Forum shopping as "the filing of repetitious
suits in different courts" has been condemned by Justice Andres R.
Narvasa (now Chief Justice) in Minister of Natural Resources, et
al., vs. Heirs of Orval Hughes, et al., "as a reprehensible
manipulation of court processes and proceedings . . ." 17 when does
forum shopping take place?
There is forum-shopping whenever, as a result of an adverse
opinion in one forum, a party seeks a favorable opinion (other than
by appeal or certiorari) in another. The principle applies not only
with respect to suits filed in the courts but also in connection
with litigations commenced in the courts while an administrative
proceeding is pending, as in this case, in order to defeat
administrative processes and in anticipation of an unfavorable
administrative ruling and a favorable court ruling. This is
specially so, as in this case, where the court in which the second
suit was brought, has no jurisdiction.18
The test for determining whether a party violated the rule
against forum shopping has been laid dawn in the 1986 case of Buan
vs. Lopez 19, also by Chief Justice Narvasa, and that is, forum
shopping exists where the elements of litis pendentia are present
or where a final judgment in one case will amount to res judicata
in the other, as follows:
There thus exists between the action before this Court and RTC
Case No. 86-36563 identity of parties, or at least such parties as
represent the same interests in both actions, as well as identity
of rights asserted and relief prayed for, the relief being founded
on the same facts, and the identity on the two preceding
particulars is such that any judgment rendered in the other action,
will, regardless of which party is successful, amount to res
adjudicata in the action under consideration: all the requisites,
in fine, of auter action pendant.
xxx xxx xxx
As already observed, there is between the action at bar and RTC
Case No. 86-36563, an identity as regards parties, or interests
represented, rights asserted and relief sought, as well as basis
thereof, to a degree sufficient to give rise to the ground for
dismissal known as auter action pendant or lis pendens. That same
identity puts into operation the sanction of twin dismissals just
mentioned. The application of this sanction will prevent any
further delay in the settlement of the controversy which might
ensue from attempts to seek reconsideration of or to appeal from
the Order of the Regional Trial Court in Civil Case No. 86-36563
promulgated on July 15, 1986, which dismissed the petition upon
grounds which appear persuasive.
Consequently, where a litigant (or one representing the same
interest or person) sues the same party against whom another action
or actions for the alleged violation of the same right and the
enforcement of the same relief is/are still pending, the defense of
litis pendencia in one case is bar to the others; and, a final
judgment in one would constitute res judicata and thus would cause
the dismissal of the rest. In either case, forum shopping could be
cited by the other party as a ground to ask for summary dismissal
of the two 20 (or more) complaints or petitions, and for imposition
of the other sanctions, which are direct contempt of court,
criminal prosecution, and disciplinary action against the erring
lawyer.
Applying the foregoing principles in the case before us and
comparing it with the Second Case, it is obvious that there exist
identity of parties or interests represented, identity of rights or
causes and identity of reliefs sought.
Very simply stated, the original complaint in the court a quo
which gave rise to the instant petition was filed by the buyer
(herein private respondent and his predecessors-in-interest)
against the seller (herein petitioners) to enforce the alleged
perfected sale of real estate. On the other hand, the complaint 21
in the Second Case seeks to declare such purported sale involving
the same real property "as unenforceable as against the Bank",
which is the petitioner herein. In other words, in the Second Case,
the majority stockholders, in representation of the Bank, are
seeking to accomplish what the Bank itself failed to do in the
original case in the trial court. In brief, the objective or the
relief being sought, though worded differently, is the same,
namely, to enable the petitioner Bank to escape from the obligation
to sell the property to respondent. In Danville Maritime, Inc. vs.
Commission on Audit. 22, this Court ruled that the filing by a
party of two apparently different actions, but with the same
objective, constituted forum shopping:
In the attempt to make the two actions appear to be different,
petitioner impleaded different respondents therein PNOC in the case
before the lower court and the COA in the case before this Court
and sought what seems to be different reliefs. Petitioner asks this
Court to set aside the questioned letter-directive of the COA dated
October 10, 1988 and to direct said body to approve the Memorandum
of Agreement entered into by and between the PNOC and petitioner,
while in the complaint before the lower court petitioner seeks to
enjoin the PNOC from conducting a rebidding and from selling to
other parties the vessel "T/T Andres Bonifacio", and for an
extension of time for it to comply with the paragraph 1 of the
memorandum of agreement and damages. One can see that although the
relief prayed for in the two (2) actions are ostensibly different,
the ultimate objective in both actions is the same, that is,
approval of the sale of vessel in favor of petitioner and to
overturn the letter-directive of the COA of October 10, 1988
disapproving the sale. (emphasis supplied).
In an earlier case 23 but with the same logic and vigor, we
held:
In other words, the filing by the petitioners of the instant
special civil action for certiorari and prohibition in this Court
despite the pendency of their action in the Makati Regional Trial
Court, is a species of forum-shopping. Both actions unquestionably
involve the same transactions, the same essential facts and
circumstances. The petitioners' claim of absence of identity simply
because the PCGG had not been impleaded in the RTC suit, and the
suit did not involve certain acts which transpired after its
commencement, is specious. In the RTC action, as in the action
before this Court, the validity of the contract to purchase and
sell of September 1, 1986, i.e., whether or not it had been
efficaciously rescinded, and the propriety of implementing the same
(by paying the pledgee banks the amount of their loans, obtaining
the release of the pledged shares, etc.) were the basic issues. So,
too, the relief was the same: the prevention of such implementation
and/or the restoration of the status quo ante. When the acts sought
to be restrained took place anyway despite the issuance by the
Trial Court of a temporary restraining order, the RTC suit did not
become functus oficio. It remained an effective vehicle for
obtention of relief; and petitioners' remedy in the premises was
plain and patent: the filing of an amended and supplemental
pleading in the RTC suit, so as to include the PCGG as defendant
and seek nullification of the acts sought to be enjoined but
nonetheless done. The remedy was certainly not the institution of
another action in another forum based on essentially the same
facts, The adoption of this latter recourse renders the petitioners
amenable to disciplinary action and both their actions, in this
Court as well as in the Court a quo, dismissible.
In the instant case before us, there is also identity of
parties, or at least, of interests represented. Although the
plaintiffs in the Second Case (Henry L. Co. et al.) are not name
parties in the First Case, they represent the same interest and
entity, namely, petitioner Bank, because:
Firstly, they are not suing in their personal capacities, for
they have no direct personal interest in the matter in controversy.
They are not principally or even subsidiarily liable; much less are
they direct parties in the assailed contract of sale; and
Secondly, the allegations of the complaint in the Second Case
show that the stockholders are bringing a "derivative suit". In the
caption itself, petitioners claim to have brought suit "for and in
behalf of the Producers Bank of the Philippines" 24. Indeed, this
is the very essence of a derivative suit:
An individual stockholder is permitted to institute a derivative
suit on behalf of the corporation wherein he holdsstock in order to
protect or vindicate corporate rights, whenever the officials of
the corporation refuse to sue, or are the ones to be sued or hold
the control of the corporation. In such actions, the suing
stockholder is regarded as a nominal party, with the corporation as
the real party in interest. (Gamboa v. Victoriano, 90 SCRA 40, 47
[1979]; emphasis supplied).
In the face of the damaging admissions taken from the complaint
in the Second Case, petitioners, quite strangely, sought to deny
that the Second Case was a derivative suit, reasoning that it was
brought, not by the minority shareholders, but by Henry Co et al.,
who not only own, hold or control over 80% of the outstanding
capital stock, but also constitute the majority in the Board of
Directors of petitioner Bank. That being so, then they really
represent the Bank. So, whether they sued "derivatively" or
directly, there is undeniably an identity of interests/entity
represented.
Petitioner also tried to seek refuge in the corporate fiction
that the personality Of the Bank is separate and distinct from its
shareholders. But the rulings of this Court are consistent: "When
the fiction is urged as a means of perpetrating a fraud or an
illegal act or as a vehicle for the evasion of an existing
obligation, the circumvention of statutes, the achievement or
perfection of a monopoly or generally the perpetration of knavery
or crime, the veil with which the law covers and isolates the
corporation from the members or stockholders who compose it will be
lifted to allow for its consideration merely as an aggregation of
individuals." 25
In addition to the many cases 26 where the corporate fiction has
been disregarded, we now add the instant case, and declare herewith
that the corporate veil cannot be used to shield an otherwise
blatant violation of the prohibition against forum-shopping.
Shareholders, whether suing as the majority in direct actions or as
the minority in a derivative suit, cannot be allowed to trifle with
court processes, particularly where, as in this case, the
corporation itself has not been remiss in vigorously prosecuting or
defending corporate causes and in using and applying remedies
available to it. To rule otherwise would be to encourage corporate
litigants to use their shareholders as fronts to circumvent the
stringent rules against forum shopping.
Finally, petitioner Bank argued that there cannot be any forum
shopping, even assuming arguendo that there is identity of parties,
causes of action and reliefs sought, "because it (the Bank) was the
defendant in the (first) case while it was the plaintiff in the
other (Second Case)",citing as authority Victronics Computers,
Inc., vs. Regional Trial Court, Branch 63, Makati, etc. et al., 27
where Court held:
The rule has not been extended to a defendant who, for reasons
known only to him, commences a new action against the plaintiff
instead of filing a responsive pleading in the other case setting
forth therein, as causes of action, specific denials, special and
affirmative defenses or even counterclaims, Thus, Velhagen's and
King's motion to dismiss Civil Case No. 91-2069 by no means negates
the charge of forum-shopping as such did not exist in the first
place. (emphasis supplied)
Petitioner pointed out that since it was merely the defendant in
the original case, it could not have chosen the forum in said
case.
Respondent, on the other hand, replied that there is a
difference in factual setting between Victronics and the present
suit. In the former, as underscored in the above-quoted Court
ruling, the defendants did not file any responsive pleading in the
first case. In other words, they did not make any denial or raise
any defense or counter-claim therein In the case before us however,
petitioners filed a responsive pleading to the complaint as a
result of which, the issues were joined.
Indeed, by praying for affirmative reliefs and interposing
counterclaims in their responsive pleadings, the petitioners became
plaintiffs themselves in the original case, giving unto themselves
the very remedies they repeated in the Second Case.
Ultimately, what is truly important to consider in determining
whether forum-shopping exists or not is the vexation caused the
courts and parties-litigant by a party who asks different courts
and/or administrative agencies to rule on the same or related
causes and/or to grant the same or substantially the same reliefs,
in the process creating the possibility of conflicting decisions
being rendered by the different fora upon the same issue. In this
case, this is exactly the problem: a decision recognizing the
perfection and directing the enforcement of the contract of sale
will directly conflict with a possible decision in the Second Case
barring the parties front enforcing or implementing the said sale.
Indeed, a final decision in one would constitute res judicata in
the other 28.
The foregoing conclusion finding the existence of forum-shopping
notwithstanding, the only sanction possible now is the dismissal of
both cases with prejudice, as the other sanctions cannot be imposed
because petitioners' present counsel entered their appearance only
during the proceedings in this Court, and the Petition's
VERIFICATION/CERTIFICATION contained sufficient allegations as to
the pendency of the Second Case to show good faith in observing
Circular 28-91. The Lawyers who filed the Second Case are not
before us; thus the rudiments of due process prevent us from motu
propio imposing disciplinary measures against them in this
Decision. However, petitioners themselves (and particularly Henry
Co, et al.) as litigants are admonished to strictly follow the
rules against forum-shopping and not to trifle with court
proceedings and processes They are warned that a repetition of the
same will be dealt with more severely.
Having said that, let it be emphasized that this petition should
be dismissed not merely because of forum-shopping but also because
of the substantive issues raised, as will be discussed shortly.
The Second Issue: Was The Contract Perfected?
The respondent Court correctly treated the question of whether
or not there was, on the basis of the facts established, a
perfected contract of sale as the ultimate issue. Holding that a
valid contract has been established, respondent Court stated:
There is no dispute that the object of the transaction is that
property owned by the defendant bank as acquired assets consisting
of six (6) parcels of land specifically identified under Transfer
Certificates of Title Nos. T-106932 to T-106937. It is likewise
beyond cavil that the bank intended to sell the property. As
testified to by the Bank's Deputy Conservator, Jose Entereso, the
bank was looking for buyers of the property. It is definite that
the plaintiffs wanted to purchase the property and it was precisely
for this purpose that they met with defendant Rivera, Manager of
the Property Management Department of the defendant bank, in early
August 1987. The procedure in the sale of acquired assets as well
as the nature and scope of the authority of Rivera on the matter is
clearly delineated in the testimony of Rivera himself, which
testimony was relied upon by both the bank and by Rivera in their
appeal briefs. Thus (TSN of July 30, 1990. pp. 19-20):
A:The procedure runs this way: Acquired assets was turned over
to me and then I published it in the form of an inter-office
memorandum distributed to all branches that these are acquired
assets for sale. I was instructed to advertise acquired assets for
sale so on that basis, I have to entertain offer; to accept offer,
formal offer and upon having been offered, I present it to the
Committee. I provide the Committee with necessary information about
the property such as original loan of the borrower, bid price
during the foreclosure, total claim of the bank, the appraised
value at the time the property is being offered for sale and then
the information which are relative to the evaluation of the bank to
buy which the Committee considers and it is the Committee that
evaluate as against the exposure of the bank and it is also the
Committee that submit to the Conservator for final approval and
once approved, we have to execute the deed of sale and it is the
Conservator that sign the deed of sale, sir.
The plaintiffs, therefore, at that meeting of August 1987
regarding their purpose of buying the property, dealt with and
talked to the right person. Necessarily, the agenda was the price
of the property, and plaintiffs were dealing with the bank official
authorized to entertain offers, to accept offers and to present the
offer to the Committee before which the said official is authorized
to discuss information relative to price determination.
Necessarily, too, it being inherent in his authority, Rivera is the
officer from whom official information regarding the price, as
determined by the Committee and approved by the Conservator, can be
had. And Rivera confirmed his authority when he talked with the
plaintiff in August 1987. The testimony of plaintiff Demetria is
clear on this point (TSN of May 31,1990, pp. 27-28):
Q:When you went to the Producers Bank and talked with Mr.
Mercurio Rivera, did you ask him point-blank his authority to sell
any property?
A:No, sir. Not point blank although it came from him, (W)hen I
asked him how long it would take because he was saying that the
matter of pricing will be passed upon by the committee. And when I
asked him how long it will take for the committee to decide and he
said the committee meets every week. If I am not mistaken Wednesday
and in about two week's (sic) time, in effect what he was saying he
was not the one who was to decide. But he would refer it to the
committee and he would relay the decision of the committee to
me.
Q Please answer the question.
A He did not say that he had the authority (.) But he said he
would refer the matter to the committee and he would relay the
decision to me and he did just like that.
"Parenthetically, the Committee referred to was the Past Due
Committee of which Luis Co was the Head, with Jose Entereso as one
of the members.
What transpired after the meeting of early August 1987 are
consistent with the authority and the duties of Rivera and the
bank's internal procedure in the matter of the sale of bank's
assets. As advised by Rivera, the plaintiffs made a formal offer by
a letter dated August 20, 1987 stating that they would buy at the
price of P3.5 Million in cash. The letter was for the attention of
Mercurio Rivera who was tasked to convey and accept such offers.
Considering an aspect of the official duty of Rivera as some sort
of intermediary between the plaintiffs-buyers with their proposed
buying price on one hand, and the bank Committee, the Conservator
and ultimately the bank itself with the set price on the other, and
considering further the discussion of price at the meeting of
August resulting in a formal offer of P3.5 Million in cash, there
can be no other logical conclusion than that when, on September 1,
1987, Rivera informed plaintiffs by letter that "the bank's
counter-offer is at P5.5 Million for more than 101 hectares on lot
basis," such counter-offer price had been determined by the Past
Due Committee and approved by the Conservator after Rivera had duly
presented plaintiffs' offer for discussion by the Committee of such
matters as original loan of borrower, bid price during foreclosure,
total claim of the bank, and market value. Tersely put, under the
established facts, the price of P5.5 Million was, as clearly worded
in Rivera's letter (Exh. "E"), the official and definitive price at
which the bank was selling the property.
There were averments by defendants below, as well as before this
Court, that the P5.5 Million price was not discussed by the
Committee and that price. As correctly characterized by the trial
court, this is not credible. The testimonies of Luis Co and Jose
Entereso on this point are at best equivocal and considering the
gratuitous and self-serving character of these declarations, the
bank's submission on this point does not inspire belief. Both Co ad
Entereso, as members of the Past Due Committee of the bank, claim
that the offer of the plaintiff was never discussed by the
Committee. In the same vein, both Co and Entereso openly admit that
they seldom attend the meetings of the Committee. It is important
to note that negotiations on the price had started in early August
and the plaintiffs had already offered an amount as purchase price,
having been made to understand by Rivera, the official in charge of
the negotiation, that the price will be submitted for approval by
the bank and that the bank's decision will be relayed