First Philippine International Bank v. CA Jan 24, 1996 | Panganiban, Panganiban, J. | Unenforceable Unenforceable Contracts-How Contracts-How Ratie Ratie !"rt. 14#$% 14#$% PETITIONERS: FIRST PHILIPPINE INTERNATIONAL INTERNATIONAL BANK For!erl" Pro#$%ers Bank o& the Phil.' an# (ERC)RIO RI*ERA RESPON+ENTS: CA, CARLOS E-ERCITO, in s$stit$tion o& +E(ETRIO +E(ETRIA, an# -OSE -ANOLO S)((AR/: Pro&cers 'an( !now )irst P*ili++ine nternational 'an(%, w*ic* *as been &ner conserators*i+ conserators*i+ since 194, is t*e owner of 6 +arcels of lan. /*e 'an( *a an agree0ent wit* e0etrio e0etria an Jose Janolo for t*e two to +&rc*ase t*e +arcels of lan for a +&rc*ase +rice of P$.$ 0illion +esos. /*e sai agree0ent was 0ae b e0etria an Janolo wit* t*e 'an(3s 0anager, erc&rio Riera. 5ater *oweer, t*e 'an(, t*ro&g* its conserator, 5eonia ncarnacion, ncarnacion, so&g*t t*e re+&iation re+&iation of t*e agree0ent as it allege t*at Riera was not a&t*ori7e to enter into s&c* an agree0ent, *ence t*ere was no ali contract of sale. 8&bse&entl, e0etria an Janolo s&e Pro&cers Pro&cers 'an(. &ring t*e +enenc of t*e +roceeings in t*e C", Henr Co an seeral ot*er stoc(*olers stoc(*olers of t*e 'an( le an action-+&r+ortel a eriatie s&it. 8C a:r0e C" an *el t*at t*ere was a +erfecte contract of sale, )P' co00itte for&0 s*o++ing an t*at t*e contract is enforceable beca&se, t*e ban(3s letters, ta(en toget*er wit* +lainti;3s letter ate 8e+te0ber <#, 19=, constit&te in law a s&:cient 0e0oran&0 of a +erfecte contract of sale. +OCTRINE: Contracts infringing t*e 8tat&te of )ra&s, referre to in >o. 2 of "rticle 14#<, are ratie b t*e fail&re to ob?ect to t*e +resentation of oral eience to +roe t*e sa0e, or b t*e acce+tance of benets &ner t*e0 @"rt. 14#$A
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of 8e+te0ber 1=, 19=. E*at too( +lace was a 0eeting on 8e+te0ber 2, 19= between t*e +lainti;s an 5&is Co, t*e 8FP of efenant ban(. Riera as well as )a?aro, t*e ' lawer, attene t*e 0eeting. /wo as later, or on 8e+te0ber <#, 19=, +lainti; Janolo sent to t*e ban(, t*ro&g* Riera, a letterG Pursuant to our discussion last 28 eptember !"8#$ %e are pleased to in&orm you that %e are acceptin' your ofer &or us to purchase the property at ta. ta. (osa$ )a'una$ )a'una$ &ormerly o%ned o%ned by *yme +n-vestment$ &or a total price o& P, /+0, M+))+1 /+0, 31(, 361 7P5$5$.9.:
Petitioner erc&rio Riera is t*e Hea anager of t*e Pro+ert anage0ent e+art0ent of t*e +etitioner 'an(. Res+onent Carlos ?ercito is t*e assignee of original +lainti;s-a++ellees e0etrio e0etria an Jose Janolo. efenant Pro&cers Pro&cers 'an( of t*e P*ili++ines ac&ire siB +arcels of lan wit* a total area of 1#1 *ectares locate at on Jose, 8ta. Rosa, 5ag&na. /*e +ro+ert &se to be owne b ' nest0ent an eelo+0ent Cor+oration Cor+oration w*ic* *a t*e0 0ortgage wit* t*e ban( as collateral for a loan. /*e original +lainti;s, e0etrio e0etria an Jose D. Janolo, wante to +&rc*ase +&rc*ase t*e +ro+ert +ro+ert an t*&s initiate negotiations for t*at +&r+ose.
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n t*e earl +art of "&g&st 19= sai +lainti;s, &+on t*e s&ggestion of ' nest0ents legal co&nsel, Jose )a?aro, 0et wit* efenant erc&rio erc&rio Riera, anager of t*e efenant ban(. "fter t*e 0eeting, +lainti; Janolo, following t*e aice of Riera, 0ae a for0al +&rc*ase o;er to t*e ban( t*ro&g* a letter ate "&g&st <#, 19=. His o;er is <.$4 . Dn 8e+te0ber 1, 19=, Riera 0ae on be*alf of t*e ban( a for0al re+l b letter w*ic* state t*at the bank’s counter-ofer is at P5.5M. Janolo amended his previous ofer and proposed to buy buy the said lot at P4.25M in cash. /*ere was no re+l re+l to Janolo3s Janolo3s foregoing foregoing letter
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Dn Dctober 12, 19=, t*e conserator of t*e ban( !w*ic* *as been +lace &ner conserators*i+ b t*e Central 'an( since 194% was re+lace b an "cting Conserator in t*e +erson of efenant 5eonia /. ncarnacion. Dn >oe0ber 4, 19=, efenant Riera wrote +lainti; e0etria t*at *is +ro+osal to buy the properties. is under study yet as o& this time time by the ne%ly created committee &or submission to the ne%ly desi'nated 6ctin' ;onservator o& the bank. E*at t*ereafter trans+ire was a series of e0ans b t*e +lainti;s for co0+liance b t*e ban( wit* w*at +lainti; consiere as a +erfecte contract of sale, w*ic* e0ans were in one for0 or anot*er ref&se b t*e ban(.
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Dn >oe0ber 1=, 19=, +lainti;s t*ro&g* a letter to efenant tenere +a0ent of t*e a0o&nt of P$.$ 0illion +&rs&ant to t*e +erfecte sale agree0ent. efenants ref&se to receie bot* t*e +a0ent an t*e letter. nstea, t*e +arcels of lan inole in t*e transaction were aertise b t*e ban( for sale to an intereste b&er. Plainti;s for0all e0ane t*e eBec&tion b t*e ban( of t*e oc&0ents on w*at was consiere as a +erfecte agree0ent.
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efenant ban(, t*ro&g* Riera, ac(nowlege recei+t of t*e foregoing letter an state t*at sai letter *as been referre to t*e o:ce of t*e Conserator for +ro+er is+osition. Howeer, no res+onse ca0e fro0 t*e "cting Conserator. Dn ece0ber 14, 19=, t*e +lainti;s 0ae a secon tener of +a0ent t*is ti0e t*ro&g* t*e "cting Conserator, efenant ncarnacion. Plainti;3s letter reasG : /*e foregoing letter rew no res+onse for 0ore t*an fo&r 0ont*s. /*en, on a <, 19, +lainti;, t*ro&g* co&nsel, 0ae a nal e0an for co0+liance b t*e ban( wit* its obligations &ner t*e consiere +erfecte contract of sale. n a re+l letter ate a 12, 19, t*e efenants t*ro&g* "cting Conserator ncarnacion re+&iate t*e a&t*orit of efenant Riera an clai0e t*at *is ealings wit* t*e +lainti;s, +artic&larl *is co&nter-o;er of P$.$ illion are &na&t*ori7e or illegal. Dn t*at basis, t*e efenants ?&stie t*e ref&sal of t*e teners of +a0ent an t*e nonco0+liance wit* t*e obligations &ner w*at t*e +lainti;s consiere to be a +erfecte contract of sale. On (a" 01, 0233, plainti4s 5le# a s$it &or spe%i5% per&or!an%e 6ith #a!a7es a7ainst the ank, its (ana7er Rivera an# A%tin7 Conservator En%arna%ion . /*e basis of t*e s&it was t*at t*e transaction *a wit* t*e ban( res<e in a +erfecte contract of sale. /*e efenants too( t*e +osition t*at t*ere was no s&c* +erfecte sale beca&se t*e efenant Riera is not a&t*ori7e to sell t*e +ro+ert, an t*at t*ere was no 0eeting of t*e 0ins as to t*e +rice.
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Dn arc* 14, 1991, Henr 5. Co !bro of 5&is Co% le a 0otion to interene in t*e trial co&rt, alleging t*at as owner of #I of t*e 'an(s o&tstaning s*ares of stoc(, *e *a a s&bstantial interest in resisting t*e co0+laint. Co&rt enie. n t*e co&rse of t*e +roceeings in t*e res+onent Co&rt, Carlos ?ercito was s&bstit&te in +lace of e0etria an Janolo. Dn J&l 11, 1992, &ring t*e +enenc of t*e +roceeings in t*e C", Henr Co an seeral ot*er stoc(*olers of t*e 'an(, t*ro&g* co&nsel "ngara "bello Conce+cion Regala an Cr&7, le an action herea&ter, the Se%on# Case' -+&r+ortel a eriatie s&it - wit* t*e R/C of a(ati against ncarnacion, e0etria an Janolo to eclare an +erfecte sale of t*e +ro+ert as &nenforceable an to sto+ ?ercito fro0 enforcing or i0+le0enting t*e sale. n *is answer, Janolo arg&e t*at t*e 8econ Case was barre b litis pendentia b irt&e of t*e case t*en +ening in t*e Co&rt of "++eals. C" r&le in faor of res+onents, orering )P', &+on nalit of t*is ecision an recei+t fro0 t*e +lainti;s t*e a0o&nt of P$.$ illion, to eBec&te in faor of sai +lainti;s a ee of absol&te sale an elier t*e /C/s. )P' to +a 0oral, eBe0+lar, act&al an 0oerate a0ages as well as attorne3s fees.
R)LIN8: 9HEREFORE, ning no reersible error in t*e &estione ecision an Resol&tion, t*e Co&rt *ereb >8 t*e +etition. /*e assaile ecision is "))R. oreoer, +etitioner 'an( is RPR"> for engaging in for&0-s*o++ing an E"R> t*at a re+etition of t*e sa0e or si0ilar acts will be ealt wit* 0ore seerel. Costs against +etitioners. ISS)ESRATIO: 0. 9ON there 6as &or$!;shoppin7 on the part o& petitioner Bank< /ES •
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"++ling t*e foregoing +rinci+les in t*e case before &s an co0+aring it wit* t*e 8econ Case, it is obio&s t*at t*ere eBist ientit of +arties or interests re+resente, ientit of rig*ts or ca&ses an ientit of reliefs so&g*t. n brief, t*e ob?ectie or t*e relief being so&g*t, t*o&g* wore i;erentl, is t*e sa0e, na0el, to enable t*e +etitioner 'an( to esca+e fro0 t*e obligation to sell t*e +ro+ert to res+onent. n t*e instant case before &s, t*ere is also ientit of +arties, or at least, of interests
re+resente. "lt*o&g* t*e +lainti;s in t*e 8econ Case !Henr Co. et al.% are not na0e +arties in t*e )irst Case, t*e re+resent t*e sa0e interest an entit, na0el, +etitioner 'an(, beca&seG o
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/*e are not s&ing in t*eir +ersonal ca+acities, for t*e *ae no irect +ersonal interest in t*e 0atter in controers. n t*e ca+tion itself, +etitioners clai0 to *ae bro&g*t s&it for an in be*alf of t*e Pro&cers 'an( of t*e P*ili++ines. "n inii&al stoc(*oler is +er0itte to instit&te a eriatie s&it on be*alf of t*e cor+oration w*erein *e *ols stoc( in orer to +rotect or inicate cor+orate rig*ts, w*eneer t*e o:cials of t*e cor+oration ref&se to s&e, or are t*e ones to be s&e or *ol t*e control of t*e cor+oration. n s&c* actions, t*e s&ing stoc(*oler is regare as a no0inal +art, wit* t*e cor+oration as t*e real +art in interest.
in a +osition of a&t*orit to acce+t o;ers to b& an negotiate t*e sale b *aing t*e o;er o:ciall acte &+on b t*e ban(. /*e ban( cannot t&rn aro&n an later sa, as it now oes, t*at w*at Riera states as t*e ban(s action on t*e 0atter is not in fact so. t is a fa0iliar octrine, t*e octrine of ostensible a&t*orit •
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=. 9ON there 6as a per&e%te# %ontra%t o& sale et6een the parties< /ES •
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"rticle 1<1 of t*e Ciil Coe en&0erates t*e re&isites of a ali an +erfecte contract as followsG !1% Consent of t*e contracting +arties !2% Db?ect certain w*ic* is t*e s&b?ect 0atter of t*e contract !<% Ca&se of t*e obligation w*ic* is establis*e. /*e < are +resent in t*is case /*e +roce&re in t*e sale of ac&ire assets as well as t*e nat&re an sco+e of t*e a&t*orit of Riera on t*e 0atter is clearl elineate in t*e testi0on of Riera *i0self, w*ic* testi0on was relie &+on b bot* t*e ban( an b Riera in t*eir a++eal briefs. /*e +lainti;s, t*erefore, at t*at 0eeting of "&g&st 19= regaring t*eir +&r+ose of b&ing t*e +ro+ert, ealt wit* an tal(e to t*e rig*t +erson. >ecessaril, t*e agena was t*e +rice of t*e +ro+ert, an +lainti;s were ealing wit* t*e ban( o:cial a&t*ori7e to entertain o;ers, to acce+t o;ers an to +resent t*e o;er to t*e Co00ittee before w*ic* t*e sai o:cial is a&t*ori7e to isc&ss infor0ation relatie to +rice eter0ination. >ecessaril, too, it being in*erent in *is a&t*orit, Riera is t*e o:cer fro0 w*o0 o:cial infor0ation regaring t*e +rice, as eter0ine b t*e Co00ittee an a++roe b t*e Conserator, can be *a. "n Riera conr0e *is a&t*orit w*en *e tal(e wit* t*e +lainti; in "&g&st 19=. "t an rate, t*e ban( +lace its o:cial, Riera,
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/*e a&t*orit of a cor+orate o:cer in ealing wit* t*ir +ersons 0a be act&al or a++arent. )ro0 t*e eience fo&n b res+onent Co&rt, it is obio&s t*at +etitioner Riera *as a++arent or i0+lie a&t*orit to act for t*e 'an( in t*e 0atter of selling its ac&ire assets. nee, we see no reason to ist&rb t*e lower co&rts !bot* t*e R/C an t*e C"% co00on ning t*at +riate res+onents eience is 0ore in (ee+ing wit* tr&t* an logic - t*at &ring t*e 0eeting on 8e+te0ber 2, 19=, 5&is Co an Riera conr0e t*at t*e P$.$ 0illion +rice *as been +asse &+on b t*e Co00ittee an co&l no longer be lowere Hence, ass&0ing ar'uendo t*at t*e co&ntero;er of P4.2$ 0illion eBting&is*e t*e o;er of P$.$ 0illion, 5&is Co3s reiteration of t*e sai P$.$ 0illion +rice &ring t*e8e+te0ber 2, 19= 0eeting revived t*e sai o;er. "n b irt&e of t*e 8e+te0ber <#, 19= letter acce+ting t*is revived o;er, t*ere was a 0eeting of t*e 0ins, as t*e acce+tance in sai letter was absol&te an &n&alie. /a(en toget*er, t*e fact&al nings of t*e res+onent Co&rt +oint to an i0+lie a0ission on t*e +art of t*e +etitioners t*at t*e written o;er 0ae on 8e+te0ber 1, 19= was carrie t*ro&g* &ring t*e 0eeting of 8e+te0ber 2, 19=. /*is is t*e concl&sion consistent wit* *&0an eB+erience, tr&t* an goo fait*
>. ?RELE*ANT TO THE TOPIC @ 9ON the %ontra%t is en&or%eale $n#er the stat$te o& &ra$#s; /ES •
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"ccoring to )P', ass&0ing t*at 5&is Co or Riera i rela a erbal o;er to sell at P$.$ 0illion &ring t*e 0eeting of 2 8e+te0ber 19=, an it was t*is erbal o;er t*at e0etria an Janolo acce+te wit* t*eir letter of <# 8e+te0ber 19=, t*e contract +ro&ce t*ereb wo&l be &nenforceable b action t*ere being no note, 0e0oran&0 or writing s&bscribe b t*e 'an( to eience s&c* contract. 8tate si0+l, t*e ban(3s letters, ta(en toget*er wit* +lainti;3s letter ate 8e+te0ber <#, 19=, %onstit$te in la6 a s$%ient
!e!oran#$! o& a per&e%te# %ontra%t o& sale, since t*e incl&e t*e na0es of t*e +arties, t*e ter0s an conitions of t*e contract, t*e +rice an a escri+tion of t*e +ro+ert as t*e ob?ect of t*e contract. •
"ss&0ing ar'uendo t*at t*e co&nter-o;er &ring t*e 0eeting on 8e+te0ber 2, 19= i constit&te a new o;er w*ic* was acce+te b Janolo on 8e+te0ber <#, 19=. Still, the stat$te o& &ra$#s 6ill not appl" " reason o& the &ail$re o& petitioners to oe%t to oral testi!on" provin7 petitioner 'an(3s co&nter-o;er of P$.$ 0illion. Hence, +etitioners - b s&c* &tter fail&re to ob?ect - are ee0e to *ae waie an efects of t*e contract &ner t*e stat&te of fra&s, +&rs&ant to Arti%le 0D o& the Civil Co#e: Contracts infringing the Statute of Frauds, referred to in No. 2 of Article 1403, are ratied by the failure to obect to the !resentation of oral e"idence to !ro"e the sa#e, or by the acce!tance of benets under the#
contract was +erfecte, act&all re+&iate or oerr&le sai contract of sale. /*e 'an(s acting conserator at t*e ti0e, Roolfo Ro0e, neer ob?ecte to t*e sale of t*e +ro+ert to e0etria an Janolo. E*at +etitioners are reall referring to is t*e letter of Conserator ncarnacion, w*o too( oer fro0 Ro0e after t*e sale was +erfecte on 8e+te0ber <#, 19= !"nneB F, +etition% w*ic* &nilaterall re+&iate - not t*e contract - b&t t*e a&t*orit of Riera to 0a(e a bining o;er - an w*ic* &narg&abl ca0e 0ont*s after t*e +erfection of t*e contract. 8ai letter ate a 12, 19 is re+ro&ce *ere&nerG •
. 9ON the ank %onservator have the $nilateral po6er to rep$#iate the a$thorit" o& the ank o%ers an#or to revoke the sai# per&e%te# an# en&or%eale %ontra%t; NO •
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n t*e rst +lace, t*is iss&e of t*e Conserators allege a&t*orit to reo(e or re+&iate t*e +erfecte contract of sale was raise for t*e rst ti0e in t*is Petition. ss&es not raise anKor entilate in t*e trial co&rt, let alone in C" cannot be raise for t*e rst ti0e on a++eal n t*e secon +lace, t*ere is absol&tel no eience t*at t*e Conserator, at t*e ti0e t*e • •
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8&c* +owers, enor0o&s an eBtensie as t*e are, cannot eBten to t*e post&acto re+&iation of +erfecte transactions, ot*erwise t*e wo&l infringe against t*e noni0+air0ent cla&se of t*e Constit&tion. f t*e legislat&re itself cannot reo(e an eBisting ali contract, *ow can it elegate s&c* non-eBistent +owers to t*e conserator &ner 8ection 2-" of sai law @R" 26$ !ot*erwise (nown as t*e Central 'an( "ct%AL Dbio&sl, t*erefore, 8ection 2-" 0erel gies t*e conserator +ower to reo(e contracts t*at are, &ner eBisting law, ee0e to be efectie - i.e., oi, oiable, &nenforceable or rescissible. Hence, t*e conserator 0erel ta(es t*e +lace of a ban(3s boar of irectors. E*at t*e sai boar cannot o - s&c* as re+&iating a contract alil entere into &ner t*e octrine of i0+lie a&t*orit - t*e conserator cannot o eit*er. nel&ctabl, *is +ower is not &nilateral an *e cannot si0+l re+&iate ali obligations of t*e 'an(. His a&t*orit wo&l be onl to bring co&rt actions to assail s&c* contracts - as *e *as alrea one so in t*e instant case.
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