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1. FIRST PHILIPPINE INTERNATIONAL BANK and MERCURIO RIVERA vs.

CA,
VERSION 1 VERSION 2
FACTS: Producer Bank of the Philippines acquired 6 parcels of land at Laguna. The property used to be owned by BYME Facts: In the course of its banking operations, the defendant Producer Bank of the Philippines acquired 6 parcels of land
Investment and Development Corporation which had them mortgaged with the bank as collateral for a loan. Demetrio with a total area of 101 hectares located at Don Jose, Sta. Rosa, Laguna and covered by TCT No. T-106932 to T-106937.
Demetria and Jose O. Janolo wanted to purchase the property and thus initiated negotiations for that purpose. The property used to be owned by BYME Investment and Development Corporation which hd them mortgaged with the
bank as collateral for a loan. The plaintiff originals, Demetrio Demetria and Jose Janolo wanted to purchase the property
In August 1987, Demetria and Janolo met with Mercurio Rivera, Manager of the Property Management Department of and thus initiated negotiations for that purpose. In the early part of August 1987 said plaintiffs, upon the suggestion of
the Bank to discuss their plan to buy the property. Thereafter, they had a series of letters where parties accepted the BYME investment’s legal counsel, Fajardo met with defendant Mercurio Rivera, manager of the property management
offer of Demetria and Janolo. Later in October, the conservator of the bank (which has been placed under department of the defendant bank. The meeting was held in pursuant to plaintiffs’ plan to buy the property. After the
conservatorship by the Central Bank since 1984) was replaced; and subsequently the proposal of Demetria and Janolo meeting, plaintiff Janolo, following the advice of defendant Rivera made a formal purchase offer to the Bank through a
to buy the properties was under study pursuant to the new conservator’s mandate. After which, a series of demands letter dated August 30,1987. Negotiations took place and an offer price was fixed at P5.5million. During the course of
ensued. the negotiations, the defendant bank was placed under conservatorship and a new conservator was appointed to which
the name has been refused to recognize. A derivative suit has been filed against Rivera for the damages suffered from
ISSUE: WON the conservator may revoke a perfected and enforceable contract. NO. the alleged perfect contract of sale involving the 6 parcels of land.

1. RULING: Section 28-A of Republic Act No. 265 (otherwise known as the Central Bank Act) as follows: Issue: Whether or not a derivative suit may lie involving the bank and its stockholders.
Section 28-A - Whenever, on the basis of a report submitted by the appropriate supervising or examining department, Held: No.
the Monetary Board finds that a bank or a non-bank financial intermediary performing quasi-banking functions is in a 1. An individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he hold stock
state of continuing inability or unwillingness to maintain a state of liquidity deemed adequate to protect the interest of in order to protect or vindicate corporate rights, whenever the officials of the corporation refuse to sue, or are the ones,
depositors and creditors, the Monetary Board may appoint a conservator to take charge of the assets, liabilities, and the to be sued or hold the control of the corporation. In such actions, the suing stockholder is regarded as a nominal party
management of that institution, collect all monies and debts due said institution and exercise all powers necessary to with the corporation as the real party in interest.
preserve the assets of the institution, reorganize the management thereof, and restore its viability. He shall have 2. In the face of the damaging admissions taken from the complaint in the second case, petitioners, quite strangely,
the power to overrule or revoke the actions of the previous management and board of directors of the bank or non- sought to deny that the second case was a derivative suit, reasoning that it was brought not by the minority
bank financial intermediary performing quasi-banking functions, any provision of law to the contrary notwithstanding, shareholders, but by Henry Co. etal. who not only hold or control over 80% of the outstanding capital stock, but also
and such other powers as the Monetary Board shall deem necessary. constitute the majority in the board of directors of petitioners bank. That being so, then they really represent the bank,
so whether they sued derivatively or directly, there is undeniably an identity of interest/entity represented.
2. While admittedly, the Central Bank law gives vast and far-reaching powers to the conservator of a bank, it must be 3. In addition to the many cases, where the corporate fiction has been regarded, we now add the instant case, and
pointed out that such powers must be related to the "(preservation of) the assets of the bank, (the reorganization of) declare herewith that the corporate veil cannot be used to shield an otherwise blatant violation of the prohibition
the management thereof and (the restoration of) its viability." Such powers, enormous and extensive as they are, against forum shopping. Shareholders, whether suing as the majority in direct actions or as the minority in a derivative
cannot extend to the post-facto repudiation of perfected transactions, otherwise they would infringe against the non- suit, cannot be allowed to trifle with court processes particularly where, as in this case, the corporation itself has not
impairment clause of the Constitution. been remiss in vigorously prosecuting or defending corporate causes and in using and applying remedies available to it.
4. To rule otherwise would be to encourage corporate litigants to use their shareholders as fronts to circumvent the
3. Section 28-A merely gives the conservator power to revoke contracts that are, under existing law, deemed to be stringent rules against forum shopping.
defective. Hence, the conservator merely takes the place of a bank's board of directors, so what the board cannot do; 5. From the facts, the official bank price, at any rate, the bank placed its official, Rivera is a position of authority to
the conservator cannot do either. His power is however, not unilateral as he cannot simply repudiate valid obligations of accept offers to buy and negotiate the sale by having the offer officially acted upon by the bank. The bank cannot turn
the Bank. His authority would be only to bring court actions to assail such contracts. around and say, as it now does, that what Rivera states as the bank’s action on the matter is not in fact so. It is a familiar
doctrine, the doctrine of ostensible authority, that if a corporation on knowingly permits one of its officers, or any other
4. In the case, it is not disputed that the bank was under a conservator placed by the Central Bank of the Philippines agent, to do acts within the scope of apparent authority, and thus holds him out to the public as possessing power to do
during the time that the negotiation and perfection of the contract of sale took place. Moreover, there was absolutely those acts, the corporation will, as against any one who has in good faith dealt with the corporation through such agent,
no evidence that the Conservator, at the time the contract was perfected, actually repudiated or overruled said contract he estopped from denying his authority.
of sale. The bank never objected to the sale, what it unilaterally repudiated was—not the contract —but the authority 6. A bank is liable for wrongful acts of its officers done in the interest of the bank or in he course of dealings of the
of Rivera to make a binding offer —and which unarguably came months after the perfection of the contract. officers in their representative capacity but not for acts outside the scope of their authority. A bank holding out its
officers and agents as worthy of confidence will not be permitted to profit by the frauds they my thus be enabled to
5. The conservator’s authority would be only to bring court actions to assail such contracts —as he has already done so perpetrate in the apparent scope of their employment; nor will it be permitted to shrink its responsibility for such fraud
in the instant case. A contrary understanding of the law would simply not be permitted by the Constitution. Neither by even through no benefit may accrue to the bank therefrom. Accordingly, a banking corporation is liable to innocent
common sense. To rule otherwise would be to enable a failing bank to become solvent, at the expense of third parties, third persons where the representation is made in the course of its business by an agent acting within the general scope
by simply getting the conservator to unilaterally revoke all previous dealings which had one way or another or come to of its authority even though, in the particular case, the agent is secretly abusing his authority and attempting to
be considered unfavorable to the Bank, yielding nothing to perfected contractual rights nor vested interests of the third perpetrate fraud upon his principal or some other person, for his own ultimate benefit.
parties who had dealt with the Bank 7. Section 28-A of BP 68 merely gives the conservator power to revoke contracts that are, under existing law, deemed
not to be effective – i.e void, voidable, unenforceable or rescissible. Hence, the conservator merely takes the place of a
bank’s board of directors. What the said board cannot do – such as repudiating a contract validly entered into under the 6. During pendency of case, (BPI) and CBTC were merged. As the surviving corporation and under Section 80(5) of Corp.
doctrine of implied authority – the conservator cannot do either. Code, BPI took over the prosecution and defense of any pending claims, by and against CBTC.
7. RTC against BPI
8. IAC deleted actual damages and reduced the other awards; reduced to P105,000 the P465,000 damage-award of TC
VERSION 3 "; ruled that mistake committed by new accounts teller of BPI constituted "serious" negligence; it cannot absolve BPI
from liability even on assumption of honest mistake on its part, because of embarrassment that even an honest mistake
Producers Bank (now called First Philippine International Bank), which has been under conservatorship since 1984, is can cause its depositors.
the owner of 6 parcels of land. The Bank had an agreement with Demetrio Demetria and Jose Janolo for the two to
purchase the parcels of land for a purchase price of P5.5 million pesos. The said agreement was made by Demetria and ISSUE 1: W/n there’s improper venue= No.
Janolo with the Bank’s manager, Mercurio Rivera. Later however, the Bank, through its conservator, Leonida SC: 1. personal actions may be filed in RTC of province where defendant or any of the defendants resides or may be
Encarnacion, sought the repudiation of the agreement as it alleged that Rivera was not authorized to enter into such an found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff
agreement, hence there was no valid contract of sale. Subsequently, Demetria and Janolo sued Producers Bank. The -there’s ample proof that residence of PR is Porac, Pampanga
regional trial court ruled in favor of Demetria et al. The Bank filed an appeal with the Court of Appeals.
Meanwhile, Henry Co, who holds 80% shares of stocks with the said Bank, filed a motion for intervention with the trial ISSUE 2: W/n CA is correct in awarding moral and exemplary damages, and attorney's fees
court. The trial court denied the motion since the trial has been concluded already and the case is now pending appeal. SC:1. No merit in BPI’s argument that it should not be considered negligent, much less held liable for damages on
Subsequently, Co, assisted by ACCRA law office, filed a separate civil case against Demetria and Janolo seeking to have account of inadvertence of its bank employee for Art.1173 of the Civil Code only requires it to exercise the diligence of a
the purported contract of sale be declared unenforceable against the Bank. Demetria et al argued that the second case good father of a family.
constitutes forum shopping. 2. In Simex case, SC ruled the fiduciary nature of relationship between bank and its depositors; depositor expects the
ISSUES: bank to treat his account with the utmost fidelity, whether such account consists only of a few hundred pesos or of
1. Whether or not there is forum shopping. millions. The bank must record every single transaction accurately, down to the last centavo, and as promptly as
2. Whether or not there is a perfected contract of sale. possible; dishonor of a check w/o good reason, can cause the depositor not a little embarrassment if not also financial
HELD: loss and perhaps even civil and criminal litigation.
1. Yes. There is forum shopping because there is identity of interest and parties between the first case and the - as a business affected w/public interest and because of nature of its functions, bank is under obligation to treat the
second case. There is identity of interest because both cases sought to have the agreement, which involves accounts of its depositors w/ meticulous care, always having in mind the fiduciary nature of their relationship
the same property, be declared unenforceable as against the Bank. There is identity of parties even though 3. Bank is not expected to be infallible but must bear the blame for not discovering the mistake of its teller despite the
the first case is in the name of the bank as defendant, and the second case is in the name of Henry Co as established procedure requiring the papers and bank books to pass through a battery of bank personnel whose duty it is
plaintiff. There is still forum shopping here because Henry Co essentially represents the bank. Both cases aim to check and countercheck them for possible errors.
to have the bank escape liability from the agreement it entered into with Demetria et al. The Supreme Court 4. Employees tasked to do that did not perform their duties with due care, as may be gathered from the testimony of
did not lay down any disciplinary action against the ACCRA lawyers but they were warned that a repetition the bank's lone witness , Antonio Enciso, who casually declared that "the approving officer does not have to see the
will be dealt with more severely. account numbers and all those things.
2. Yes. There is a perfected contract of sale because the bank manager, Rivera, entered into the agreement with -Those are very petty things for approving manager to look into
apparent authority. This apparent authority has been duly proved by the evidence presented which showed - the incorrect account number that the bank teller wrote on the initial deposit slip for the newly-opened joint current
that in all the dealings and transactions, Rivera participated actively without the opposition of the account of PR, sparked this half-amillion- peso damage suit against the bank.
conservator. In fact, in the advertisements and announcements of the bank, Rivera was designated as the go- 5. While bank's negligence may not have been attended with malice and bad faith, nevertheless, it caused serious
to guy in relation to the disposition of the Bank’s assets. anxiety, embarrassment and humiliation to PR for which they are entitled to recover reasonable moral damages;
reasonable attorney's fees is proper for PR were compelled to litigate to protect their interest, but the absence of malice
and bad faith renders the award of exemplary damages improper
3. BPI vs IAC, PR-sps Arthur and Viviene
1. PR opened a joint current in QC branch of Commercial Bank and Trust Company of the Philippines (CBTC) with an
initial deposit of P2,250. Prior thereto, Arthur had an existing separate personal checking account in the same branch. 4. Metropolitan Bank vs CA
2. When PR opened their joint current account, the "new accounts" teller pulled out from the bank's files the old and
existing signature card Arthur for Current Account as ID and reference. 1. MB- commercial bank w/ branches throughout Phil. and even abroad.
3. By mistake, she placed the old personal account number of Arthur on the deposit slip for the new joint checking 2. Golden Savings and Loan Association (GSLA) was then operating in Calapan, Mindoro
account of PR so that the initial deposit of P2,250 for the joint checking account was miscredited to Arthur's personal 3. Eduardo Gomez opened an account w/ GSLA and deposited over a period of 2 months 38 treasury warrants with a
account. total value of P1,755,228.37, w/c were all drawn by Philippine Fish Marketing Authority and signed by its General
4. PR deposited other amounts in their joint account but when Viviene issued checks, one of the checks was dishonored Manager and counter-signed by its Auditor.
by the bank for insufficient funds and penalty of P20 was deducted from the account 4. On various dates, all warrants were subsequently indorsed by Gloria Castillo as Cashier of GLSA in MB, hence sent for
-bank tried to call up PR at telephone number which they gave in their app. form, but to no avail. clearing by branch office to rincipal office of MB, w/c forwarded them to the Bureau of Treasury for special clearing.
5. PR filed a complaint for damages against CBTC in CFI of Pampanga; CBTC filed MTD for improper venue but was 5. When Gloria Castillo went to Calapan branch several times to ask whether warrants had been cleared, she was told to
denied. wait, hence Gomez was not allowed to withdraw from his account.
6. Later, MB decided to allow GSLA to withdraw from proceeds of warrants. Total withdrawal was P968,000.00.
7. GSLA then allowed Gomez to make withdrawals from his own account. 10. belated notification aggravated MB’s earlier negligence in giving express or at least implied clearance to the treasury
8. MB then informed GSLA that 32 of the warrants had been dishonored by Bureau of Treasury and demanded the warrants and allowing payments therefrom to GSLA
refund by GSLA of the amount it had previously withdrawn, w/c demand was rejected -the supposed reason for the dishonor, to wit, the forgery of the signatures has not been established.
9. MB sued GSLA in RTC Mindoro w/c ruled infav. of GSLA w/c filed MR; RTC modified its decision still infav. of GSLA -Clearly stamped on their face is the word "nonnegotiable; and are payable from particular fund,
10. CA affirmed RTC -The indication of Fund 501 as the source of the payment to be made on the treasury warrants makes the order or
promise to pay "not unconditional" and the warrants themselves non-negotiable.
ISSUE: w/n MB is negligent= YES 11. MB cannot contend that by indorsing warrants in general, GSLA assumed that they were "genuine and in all respects
what they purport to be. The simple reason is that this law is not applicable to the non-negotiable treasury warrants.
SC: 1. MB was indeed negligent in giving GSLA the impression that the treasury warrants had been cleared and that, The indorsement was made by Gloria not for the purpose of guaranteeing the genuineness of the warrants but merely
consequently, it was safe to allow Gomez to withdraw the proceeds thereof from his account with it. to deposit them w/ Metrobank for clearing.
-W/o such assurance, GSLA would not have allowed the withdrawals; with such assurance, there was no reason not to - It was MB that made the guarantee when it stamped on the back of the warrants: "All prior indorsement and/or lack
allow the withdrawal of endorsements guaranteed
- GLSA might even have incurred liability for its refusal to return the money that to all appearances belonged to the 12. total value of 32 treasury warrants dishonored was P1,754,089.00, from which Gomez was allowed to withdraw
depositor, who could therefore withdraw it any time and for any reason he saw fit. P1,167,500.00 before GSLA was notified of dishonor.
2. It was to secure the clearance of treasury warrants that GLSA deposited them to its account with MB; GSLA had no -The amount he has withdrawn must be charged not to GSLA but to MB w/c must bear the consequences of its own
clearing facilities of its own, hence it relied on MB to determine the validity of warrants through its own services. negligence.
3. proceeds of the warrants were withheld from Gomez until MB allowed GLSA to withdraw them from its own deposit. -But the balance of P586,589.00 should be debited to GSLA, as obviously Gomez can no longer be permitted to
- It was only when MB gave the go-signal that Gomez was finally allowed by GLSA to withdraw them from his own withdraw this amount from his deposit because of the dishonor of the warrants. Gomez has in fact disappeared.
account. -To credit the balance GSLA would unduly enrich it at the expense of MB
4. MB’s argum that GSLA should have exercised more care in checking personal circumstances of Gomez before
accepting his deposit does not hold water.
-It was Gomez who was entrusting the warrants, not GLSA that was extending him a loan; the treasury warrants were
subject to clearing, pending which depositor could not withdraw its proceeds.
- no question of Gomez's identity or of genuineness of his signature as checked by GLSA
-the treasury warrants were dishonored allegedly because of forgery of the signatures of drawers, not of Gomez as
payee or indorser.
5. Clear that GLSA acted with due care and diligence and cannot be faulted for withdrawals it allowed Gomez to make.
6. MB exhibited extraordinary carelessness. The amount involved was not trifling — more than one and a half million
pesos (and this was 1979); no reason why it should not have waited until treasury warrants had been cleared; it would
not have lost a single centavo by waiting.
-despite lack of such clearance and notwithstanding that it had not received a single centavo from proceeds of treasury
warrants, MB it allowed GLSA to withdraw not once but more times
-Its reason was that it was "exasperated/annoyed" over persistent inquiries of Gloria. It "presumed" that warrants had
been cleared simply because of "the lapse of one week
7. MB would invoke the conditions printed on dorsal side of deposit slips through w/c treasury warrants were
deposited” Kindly note that in receiving items on deposit, the bank obligates itself only as depositor's collecting agent,
-According to Metrobank, said conditions shows that it was acting only as a collecting agent for GLSA and give it the
right to "charge back to the depositor's account any amount previously credited, whether or not such item is returned.
-SC: Doubt may be expressed about binding force of conditions, considering that they were imposed by bank
unilaterally, w/o consent of the depositor.
-In stressing that it was acting only as a collecting agent for GLSA, MB seems to be suggesting that as a mere agent it
cannot be liable to the principal.
-Article 1909 of CC provides that agent is responsible not only for fraud, but also for negligence,
8. negligence of MB has been sufficiently established.
- it was the clearance given by MB that assured GSLA that it was already safe to allow Gomez to withdraw the proceeds
of the treasury warrants he had deposited.
9. MB’s argument that it may recover disputed amount if the warrants are not paid for any reason is not acceptable.
-Otherwise, there would have been no need at all for GSLA to deposit the treasury warrants with it for clearance.
-Such a condition is not binding for being arbitrary and unconscionable. And it becomes more so in the case when it is
considered that the supposed dishonor of the warrants was not communicated to GSLA before it made its own payment
to Gomez.

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