First Philippine International Bank vs CA

On January 3, 2013
252 SCRA 259 Conflict of Laws Private International Law Origin of Forum Non Conveniens
Producers Bank (now called First Philippine International Bank), which has been under conservatorship since
1984, is 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 Janolo with the Banks manager, Mercurio Rivera. Later however, the Bank, through its conservator,
Leonida Encarnacion, sought the repudiation of the agreement as it alleged that Rivera was not authorized to enter
into such an agreement, hence there was no valid contract of sale. Subsequently, Demetria and Janolo sued
Producers Bank. The 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 court. The trial court denied the motion since the trial has been concluded already and the case is now pending
appeal. Subsequently, Co, assisted by ACCRA law office, filed a separate civil case against Carlos Ejercito as
successor-in-interest (assignee) of Demetria and Janolo seeking to have the purported contract of sale be declared
unenforceable against the Bank. Ejercito et al argued that the second case constitutes forum shopping.
ISSUE: Whether or not there is forum shopping.
HELD: Yes. There is forum shopping because there is identity of interest and parties between the first case and the
second case. There is identity of interest because both cases sought to have the agreement, which involves the same
property, be declared unenforceable as against the Bank. There is identity of parties even though the first case is in
the name of the bank as defendant, and the second case is in the name of Henry Co as plaintiff. There is still forum
shopping here because Henry Co essentially represents the bank. Both cases aim to have the bank escape liability
from the agreement it entered into with Demetria et al.
The Supreme Court also discussed that to combat forum shopping, which originated as a concept in international
law, the principle of forum non conveniens was developed. The doctrine of forum non conveniens provides that 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.
**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.
Facts:

The private respondent own several parcels of land located in Quezon City for which he is the registered owner. He
secured loans from L and R corporations and executed deeds of mortgage over the parcels of land for the security
of the same. Upon the maturity of said loans, the firm initiated an extrajudicial foreclosure of the properties in
question after private respondent failed to pay until maturity. The private respondent filed a complaint for
injunction over the said foreclosure and for redemption of the parcels of land. Two years after the filing of the
petition, private respondent and L and R corporation entered into a compromise agreement that renders the former
to be insured another year for the said properties. Included in the stipulations were the attorneys fees amounting to
Php 100,000.00. The private respondent however, remained to be in turmoil when it came to finances and was
apparently unable to pay and secure the attorneys fees, more so the redemption liability. Relief was discussed by
petitioner and private respondent executed a document to redeem the parcels of land and to register the same to his
name.

Allegations were made by the private respondent claiming the parcels of land to his name but without prior notice,
the properties were already registered under the petitioners name. The private respondent calls for a review and for
the court to act on the said adverse claim by petitioner on said certificates for the properties consolidated by the
redemption price he paid for said properties. The private respondent filed a suit for the annulment of judgment in
the Court of appeals which ruled over the same.
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Issue: whether the petitioner is on solid ground on the reacquisition over the said properties.

Ruling:
By Atty. Canlas' own account, "due to lack of paying capacity of respondent Herrera, no financing entity was
willing to extend him any loan with which to pay the redemption price of his mortgaged properties and petitioner's
P100,000.00 attorney's fees awarded in the Compromise Judgment," a development that should have tempered his
demand for his fees. For obvious reasons, he placed his interests over and above those of his client, in opposition to
his oath to "conduct himself as a lawyer ... with all good fidelity ... to [his] clients." The Court finds the occasion fit
to stress that lawyering is not a moneymaking venture and lawyers are not merchants, a fundamental standard that
has, as a matter of judicial notice, eluded not a few law advocates. The petitioner's efforts partaking of a
shakedown" of his own client are not becoming of a lawyer and certainly, do not speak well of his fealty to his oath
to "delay no man for money."
We are not, however, condoning the private respondent's own shortcomings. In condemning Atty. Canlas
monetarily, we cannot overlook the fact that the private respondent has not settled his liability for payment of the
properties. To hold Atty. Canlas alone liable for damages is to enrich said respondent at the expense of his lawyer.
The parties must then set off their obligations against the other.

First Philippines International Bank vs. C.A. [G.R. No. 115849. January 24, 1996]

16OCT

Ponente: PANGANIBAN, J.

FACTS:

[D]uring the pendency of the proceedings in the Court of Appeals, Henry Co and several
other stockholders of the Bank (petitioner), through counsel Angara Abello Concepcion
Regala and Cruz, filed an action (Second Case) purportedly a derivative suit with the
Regional Trial Court of Makati, Branch 134 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. 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 plaintiffs act of forum shopping justifies the dismissal of both cases,
with prejudice. Private respondent, in his memorandum, averred that this motion is still
pending in the Makati RTC.

[P]etitioners explain 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 the plaintiff;

xxx

ISSUE:

Whether or not there is forum-shopping on the part of petitioner Bank.

HELD:
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 YES. Petition was denied. Assailed decision was affirmed. Petitioner was reprimanded. Costs
against the petitioner.

RATIO:

[W]here 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 a 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 (or more) complaints
or petitions, and for the imposition of the other sanctions, which are direct contempt of
court, criminal prosecution, and disciplinary action against the erring lawyer.

[W]hat 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 from enforcing or implementing the said sale. Indeed, a final decision in one
would constitute res judicata in the other.

252 SCRA 259 Legal Ethics Forum Shopping

Civil Law Contract of Sale Parties to a Sales Contract
Producers Bank (now called First Philippine International Bank), which has been under
conservatorship since 1984, is 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 Janolo
with the Banks manager, Mercurio Rivera. Later however, the Bank, through its
conservator, Leonida Encarnacion, sought the repudiation of the agreement as it alleged
that Rivera was not authorized to enter into such an agreement, hence there was no valid
contract of sale. Subsequently, Demetria and Janolo sued Producers Bank. The 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 court. The trial court denied the motion since the trial has been
concluded already and the case is now pending appeal. Subsequently, Co, assisted by
ACCRA law office, filed a separate civil case against Demetria and Janolo seeking to have
the purported contract of sale be declared unenforceable against the Bank. Demetria et al
argued that the second case constitutes forum shopping.
ISSUES:
1. Whether or not there is forum shopping.
2. Whether or not there is a perfected contract of sale.
HELD:
1. Yes. There is forum shopping because there is identity of interest and parties between
the first case and the second case. There is identity of interest because both cases sought
to have the agreement, which involves the same property, be declared unenforceable as
against the Bank. There is identity of parties even though the first case is in the name of
the bank as defendant, and the second case is in the name of Henry Co as plaintiff. There is
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 still forum shopping here because Henry Co essentially represents the bank. Both cases
aim to have the bank escape liability from the agreement it entered into with Demetria et
al. The Supreme Court did not lay down any disciplinary action against the ACCRA lawyers
but they were warned that a repetition will be dealt with more severely.

2. Yes. There is a perfected contract of sale because the bank manager, Rivera, entered
into the agreement with apparent authority. This apparent authority has been duly proved
by the evidence presented which showed that in all the dealings and transactions, Rivera
participated actively without the opposition of the conservator. In fact, in the
advertisements and announcements of the bank, Rivera was designated as the go-to guy in
relation to the disposition of the Banks assets.

3. FIRSTPHILIPPINEINTERNATIONALBANKVSCA(252SCRA259)
4. First Philippine International Bank vs Court of Appeals
252 SCRA 259 [GR No. 115849 January 24, 1996]
5. Facts: In the course of its banking operations, the defendant Producer Bank of the
Philippines acquired 6 parcels of land with a total area of 101 hectares located at Don
Jose, Sta. Rosa, Laguna and covered by TCT No. T-106932 to T-106937. 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 and thus initiated
negotiations for that purpose. In the early part of August 1987 said plaintiffs, upon
the suggestion of BYME investments legal counsel, Fajardo met with defendant
Mercurio Rivera, manager of the property management department of the defendant
bank. The meeting was held in pursuant to plaintiffs plan to buy the property. 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. Negotiations took
place and an offer price was fixed at P5.5million. During the course of 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 the
alleged perfect contract of sale involving the 6 parcels of land.
6. Issue: Whether or not a derivative suit may lie involving the bank and its
stockholders.
7. Held: No. An individual stockholder is permitted to institute a derivative suit on
behalf of the corporation wherein he hold stock 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.
8. 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.
etal. who not only hold or control over 80% of the outstanding capital stock, but also
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.
9. In addition to the many cases, where the corporate fiction has been regarded, 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
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 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.
10. From the facts, the official bank price, at any rte, the bank placed its official,
Rivera is a position of authority to accept offers to buy and negotiate the sale by
having the offer officially acted upon by the bank. The bank cannot turn around and
say, as it now does, that what Rivera states as the banks 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 agent, to do acts
within the scope of apparent authority, and thus holds him out to the public as
possessing power to do those acts, the corporation will, as against any one who has
in good faith dealt with the corporation through such agent, he estopped from
denying his authority.
11. 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 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 perpetrate in the apparent scope of their employment; nor will it be
permitted to shrink its responsibility for such fraud even through no benefit may
accrue to the bank therefrom. Accordingly, a banking corporation is liable to innocent
third persons where the representation is made in the course of its business by an
agent acting within the general scope of its authority even though, in the particular
case, the agent is secretly abusing his authority and attempting to perpetrate fraud
upon his principal or some other person, for his own ultimate benefit.
12. 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
banks board of directors. What the said board cannot do such as repudiating a
contract validly entered into under the doctrine of implied authority the conservator
cannot do either.

First Philippine International Bank vs Court of Appeals

252 SCRA 259 Legal Ethics Forum Shopping

Civil Law Contract of Sale Parties to a Sales Contract

Producers Bank (now called First Philippine International Bank), which has been under
conservatorship since 1984, is 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 Janolo
with the Banks manager, Mercurio Rivera. Later however, the Bank, through its
conservator, Leonida Encarnacion, sought the repudiation of the agreement as it alleged
that Rivera was not authorized to enter into such an agreement, hence there was no valid
contract of sale. Subsequently, Demetria and Janolo sued Producers Bank. The regional trial
court ruled in favor of Demetria et al. The Bank filed an appeal with the Court of Appeals.

5
Meanwhile, Henry Co, who holds 80% shares of stocks with the said Bank, filed a motion for
intervention with the trial court. The trial court denied the motion since the trial has been
concluded already and the case is now pending appeal. Subsequently, Co, assisted by
ACCRA law office, filed a separate civil case against Demetria and Janolo seeking to have
the purported contract of sale be declared unenforceable against the Bank. Demetria et al
argued that the second case constitutes forum shopping.

ISSUES:

1. Whether or not there is forum shopping.

2. Whether or not there is a perfected contract of sale.

HELD:

1. Yes. There is forum shopping because there is identity of interest and parties between
the first case and the second case. There is identity of interest because both cases
sought to have the agreement, which involves the same property, be declared
unenforceable as against the Bank. There is identity of parties even though the first
case is in the name of the bank as defendant, and the second case is in the name of
Henry Co as plaintiff. There is still forum shopping here because Henry Co essentially
represents the bank. Both cases aim to have the bank escape liability from the
agreement it entered into with Demetria et al. The Supreme Court did not lay down
any disciplinary action against the ACCRA lawyers but they were warned that a
repetition will be dealt with more severely.

2. Yes. There is a perfected contract of sale because the bank manager, Rivera, entered
into the agreement with apparent authority. This apparent authority has been duly
proved by the evidence presented which showed that in all the dealings and
transactions, Rivera participated actively without the opposition of the conservator. In
fact, in the advertisements and announcements of the bank, Rivera was designated
as the go-to guy in relation to the disposition of the Banks assets.