GOOD EARTH EMPORIUM V CA

This is a petition for review on certiorari of the December 29, 1987 decision * of the Court of Appeals in CA-G.R. No. 11960 entitled
"ROCES-REYES REALTY, INC. vs. HONORABLE JUDGE REGIONAL TRIAL COURT OF MANILA, BRANCH 44, GOOD EARTH
EMPORIUM, INC. and LIM KA PING" reversing the decision of respondent Judge ** of the Regional Trial Court of Manila, Branch 44 in
Civil Case No. 85-30484, which reversed the resolution of the Metropolitan Trial Court Of Manila, Branch 28 in Civil Case No.
09639, *** denying herein petitioners' motion to quash the alias writ of execution issued against them.
As gathered from the records, the antecedent facts of this case, are as follows:
A Lease Contract, dated October 16, 1981, was entered into by and between ROCES-REYES REALTY, INC., as lessor, and GOOD
EARTH EMPORIUM, INC., as lessee, for a term of three years beginning November 1, 1981 and ending October 31, 1984 at a monthly
rental of P65,000.00 (Rollo, p. 32; Annex "C" of Petition). The building which was the subject of the contract of lease is a five-storey
building located at the corner of Rizal Avenue and Bustos Street in Sta. Cruz, Manila.
From March 1983, up to the time the complaint was filed, the lessee had defaulted in the payment of rentals, as a consequence of
which, private respondent ROCES-REYES REALTY, INC., (hereinafter designated as ROCES for brevity) filed on October 14, 1984, an
ejectment case (Unlawful Detainer) against herein petitioners, GOOD EARTH EMPORIUM, INC. and LIM KA PING, hereinafter
designated as GEE, (Rollo, p. 21; Annex "B" of the Petition). After the latter had tendered their responsive pleading, the lower court
(MTC, Manila) on motion of Roces rendered judgment on the pleadings dated April 17, 1984, the dispositive portion of which states:
Judgment is hereby rendered ordering defendants (herein petitioners) and all persons claiming title under him to
vacate the premises and surrender the same to the plaintiffs (herein respondents); ordering the defendants to pay the
plaintiffs the rental of P65,000.00 a month beginning March 1983 up to the time defendants actually vacate the
premises and deliver possession to the plaintiff; to pay attorney's fees in the amount of P5,000.00 and to pay the
costs of this suit. (Rollo, p. 111; Memorandum of Respondents)
On May 16, 1984, Roces filed a motion for execution which was opposed by GEE on May 28, 1984 simultaneous with the latter's filing
of a Notice of Appeal (Rollo, p. 112, Ibid.). On June 13, 1984, the trial court resolved such motion ruling:
After considering the motion for the issuance of a writ of execution filed by counsel for the plaintiff (herein
respondents) and the opposition filed in relation thereto and finding that the defendant failed to file the necessary
supersedeas bond, this court resolved to grant the same for being meritorious. (Rollo, p. 112)
On June 14, 1984, a writ of execution was issued by the lower court. Meanwhile, the appeal was assigned to the Regional Trial Court
(Manila) Branch XLVI. However, on August 15, 1984, GEE thru counsel filed with the Regional Trial Court of Manila, a motion to
withdraw appeal citing as reason that they are satisfied with the decision of the Metropolitan Trial Court of Manila, Branch XXVIII, which
said court granted in its Order of August 27, 1984 and the records were remanded to the trial court (Rollo, p. 32; CA Decision). Upon
an ex-parte Motion of ROCES, the trial court issued an Alias Writ of Execution dated February 25, 1985 (Rollo, p. 104; Annex "D" of
Petitioner's Memorandum), which was implemented on February 27, 1985. GEE thru counsel filed a motion to quash the writ of
execution and notice of levy and an urgent Ex-parte Supplemental Motion for the issuance of a restraining order, on March 7, and 20,
1985, respectively. On March 21, 1985, the lower court issued a restraining order to the sheriff to hold the execution of the judgment
pending hearing on the motion to quash the writ of execution (Rollo, p. 22; RTC Decision). While said motion was pending resolution,
GEE filed a Petition for Relief from judgment before another court, Regional Trial Court of Manila, Branch IX, which petition was
docketed as Civil Case No. 80-30019, but the petition was dismissed and the injunctive writ issued in connection therewith set aside.
Both parties appealed to the Court of Appeals; GEE on the order of dismissal and Roces on denial of his motion for indemnity, both
docketed as CA-G.R. No. 15873-CV. Going back to the original case, the Metropolitan Trial Court after hearing and disposing some
other incidents, promulgated the questioned Resolution, dated April 8, 1985, the dispositive portion of which reads as follows:
Premises considered, the motion to quash the writ is hereby denied for lack of merit.
The restraining orders issued on March 11 and 23, 1985 are hereby recalled, lifted and set aside. (Rollo, p. 20, MTC
Decision)
GEE appealed and by coincidence. was raffled to the same Court, RTC Branch IX. Roces moved to dismiss the appeal but the Court
denied the motion. On certiorari, the Court of Appeals dismissed Roces' petition and remanded the case to the RTC. Meantime, Branch
IX became vacant and the case was re-raffled to Branch XLIV.

On April 6, 1987, the Regional Trial Court of Manila, finding that the amount of P1 million evidenced by Exhibit "I" and another P1 million
evidenced by the pacto de retro sale instrument (Exhibit "2") were in full satisfaction of the judgment obligation, reversed the decision of
the Municipal Trial Court, the dispositive portion of which reads:
Premises considered, judgment is hereby rendered reversing the Resolution appealed from quashing the writ of
execution and ordering the cancellation of the notice of levy and declaring the judgment debt as having been fully
paid and/or Liquidated. (Rollo, p. 29).
On further appeal, the Court of Appeals reversed the decision of the Regional Trial Court and reinstated the Resolution of the
Metropolitan Trial Court of Manila, the dispositive portion of which is as follows:
WHEREFORE, the judgment appealed from is hereby REVERSED and the Resolution dated April 8, 1985, of the
Metropolitan Trial Court of Manila Branch XXXIII is hereby REINSTATED. No pronouncement as to costs. (Rollo, p.
40).
GEE's Motion for Reconsideration of April 5, 1988 was denied (Rollo, p. 43). Hence, this petition.
The main issue in this case is whether or not there was full satisfaction of the judgment debt in favor of respondent corporation which
would justify the quashing of the Writ of Execution.
A careful study of the common exhibits (Exhibits 1/A and 2/B) shows that nowhere in any of said exhibits was there any writing alluding
to or referring to any settlement between the parties of petitioners' judgment obligation (Rollo, pp. 45-48).
Moreover, there is no indication in the receipt, Exhibit "1", that it was in payment, full or partial, of the judgment obligation. Likewise,
there is no indication in the pacto de retro sale which was drawn in favor of Jesus Marcos Roces and Marcos V. Roces and not the
respondent corporation, that the obligation embodied therein had something to do with petitioners' judgment obligation with respondent
corporation.
Finding that the common exhibit, Exhibit 1/A had been signed by persons other than judgment creditors (Roces-Reyes Realty, Inc.)
coupled with the fact that said exhibit was not even alleged by GEE and Lim Ka Ping in their original motion to quash the alias writ of
execution (Rollo, p. 37) but produced only during the hearing (Ibid.) which production resulted in petitioners having to
claim belatedly that there was an "overpayment" of about half a million pesos (Rollo, pp. 25-27) and remarking on the utter absence of
any writing in Exhibits "1/A" and "2/B" to indicate payment of the judgment debt, respondent Appellate Court correctly concluded that
there was in fact nopayment of the judgment debt. As aptly observed by the said court:
What immediately catches one's attention is the total absence of any writing alluding to or referring to any settlement
between the parties of private respondents' (petitioners') judgment obligation. In moving for the dismissal of the
appeal Lim Ka Ping who was then assisted by counsel simply stated that defendants (herein petitioners) are satisfied
with the decision of the Metropolitan Trial Court (Records of CA, p. 54).
Notably, in private respondents' (petitioners') Motion to Quash the Writ of Execution and Notice of Levy dated March
7, 1985, there is absolutely no reference to the alleged payment of one million pesos as evidenced by Exhibit 1
dated September 20, 1984. As pointed out by petitioner (respondent corporation) this was brought out by Linda
Panutat, Manager of Good Earth only in the course of the latter's testimony. (Rollo, p. 37)
Article 1240 of the Civil Code of the Philippines provides that:
Payment shall be made to the person in whose favor the obligation has been constituted, or his successor in interest,
or any person authorized to receive it.
In the case at bar, the supposed payments were not made to Roces-Reyes Realty, Inc. or to its successor in interest nor is there
positive evidence that the payment was made to a person authorized to receive it. No such proof was submitted but merely inferred by
the Regional Trial Court (Rollo, p. 25) from Marcos Roces having signed the Lease Contract as President which was witnessed by
Jesus Marcos Roces. The latter, however, was no longer President or even an officer of Roces-Reyes Realty, Inc. at the time he
received the money (Exhibit "1") and signed the sale with pacto de retro (Exhibit "2"). He, in fact, denied being in possession of
authority to receive payment for the respondent corporation nor does the receipt show that he signed in the same capacity as he did in
the Lease Contract at a time when he was President for respondent corporation (Rollo, p. 20, MTC decision).

On the other hand, Jesus Marcos Roces testified that the amount of P1 million evidenced by the receipt (Exhibit "1") is the payment for
a loan extended by him and Marcos Roces in favor of Lim Ka Ping. The assertion is home by the receipt itself whereby they
acknowledged payment of the loan in their names and in no other capacity.
A corporation has a personality distinct and separate from its individual stockholders or members. Being an officer or stockholder of a
corporation does not make one's property also of the corporation, and vice-versa, for they are separate entities (Traders Royal Bank v.
CA-G.R. No. 78412, September 26, 1989; Cruz v. Dalisay, 152 SCRA 482). Shareowners are in no legal sense the owners of corporate
property (or credits) which is owned by the corporation as a distinct legal person (Concepcion Magsaysay-Labrador v. CA-G.R. No.
58168, December 19, 1989). As a consequence of the separate juridical personality of a corporation, the corporate debt or credit is not
the debt or credit of the stockholder, nor is the stockholder's debt or credit that of the corporation (Prof. Jose Nolledo's "The Corporation
Code of the Philippines, p. 5, 1988 Edition, citing Professor Ballantine).
The absence of a note to evidence the loan is explained by Jesus Marcos Roces who testified that the IOU was subsequently delivered
to private respondents (Rollo, pp. 97-98). Contrary to the Regional Trial Court's premise that it was incumbent upon respondent
corporation to prove that the amount was delivered to the Roces brothers in the payment of the loan in the latter's favor, the delivery of
the amount to and the receipt thereof by the Roces brothers in their names raises the presumption that the said amount was due to
them. There is a disputable presumption that money paid by one to the other was due to the latter (Sec. 5(f) Rule 131, Rules of Court).
It is for GEE and Lim Ka Ping to prove otherwise. In other words, it is for the latter to prove that the payments made were for the
satisfaction of their judgment debt and not vice versa.
The fact that at the time payment was made to the two Roces brothers, GEE was also indebted to respondent corporation for a larger
amount, is not supportive of the Regional Trial Court's conclusions that the payment was in favor of the latter, especially in the case at
bar where the amount was not receipted for by respondent corporation and there is absolutely no indication in the receipt from which it
can be reasonably inferred, that said payment was in satisfaction of the judgment debt. Likewise, no such inference can be made from
the execution of the pacto de retro sale which was not made in favor of respondent corporation but in favor of the two Roces brothers in
their individual capacities without any reference to the judgment obligation in favor of respondent corporation.
In addition, the totality of the amount covered by the receipt (Exhibit "1/A") and that of the sale with pacto de retro(Exhibit "2/B") all in
the sum of P2 million, far exceeds petitioners' judgment obligation in favor of respondent corporation in the sum of P1,560,000.00 by
P440,000.00, which militates against the claim of petitioner that the aforesaid amount (P2M) was in full payment of the judgment
obligation.
Petitioners' explanation that the excess is interest and advance rentals for an extension of the lease contract (Rollo, pp. 25-28) is belied
by the absence of any interest awarded in the case and of any agreement as to the extension of the lease nor was there any such
pretense in the Motion to Quash the Alias Writ of Execution.
Petitioners' averments that the respondent court had gravely abused its discretion in arriving at the assailed factual findings as contrary
to the evidence and applicable decisions of this Honorable Court are therefore, patently unfounded. Respondent court was correct in
stating that it "cannot go beyond what appears in the documents submitted by petitioners themselves (Exhibits "1" and "2") in the
absence of clear and convincing evidence" that would support its claim that the judgment obligation has indeed been fully satisfied
which would warrant the quashal of the Alias Writ of Execution.
It has been an established rule that when the existence of a debt is fully established by the evidence (which has been done in this
case), the burden of proving that it has been extinguished by payment devolves upon the debtor who offers such a defense to the claim
of the plaintiff creditor (herein respondent corporation) (Chua Chienco v. Vargas, 11 Phil. 219; Ramos v. Ledesma, 12 Phil. 656; Pinon v.
De Osorio, 30 Phil. 365). For indeed, it is well-entrenched in Our jurisprudence that each party in a case must prove his own affirmative
allegations by the degree of evidence required by law (Stronghold Insurance Co. v. CA, G.R. No. 83376, May 29,1989; Tai Tong
Chuache & Co. v. Insurance Commission, 158 SCRA 366).
The appellate court cannot, therefore, be said to have gravely abused its discretion in finding lack of convincing and reliable evidence to
establish payment of the judgment obligation as claimed by petitioner. The burden of evidence resting on the petitioners to establish the
facts upon which their action is premised has not been satisfactorily discharged and therefore, they have to bear the consequences.
PREMISES CONSIDERED, the petition is hereby DENIED and the Decision of the Respondent court is hereby AFFIRMED, reinstating
the April 8, 1985 Resolution of the Metropolitan Trial Court of Manila.

CRUZ V DALISAY
In a sworn complaint dated July 23, 1984, Adelio C. Cruz charged Quiterio L. Dalisay, Senior Deputy Sheriff of Manila, with
malfeasance in office, corrupt practices and serious irregularities allegedly committed as follows:
1. Respondent sheriff attached and/or levied the money belonging to complainant Cruz when he was not himself the judgment debtor
in the final judgment of NLRC NCR Case No. 8-12389-91 sought to be enforced but rather the company known as Qualitrans
Limousine Service, Inc., a duly registered corporation; and,
2. Respondent likewise caused the service of the alias writ of execution upon complainant who is a resident of Pasay City, despite
knowledge that his territorial jurisdiction covers Manila only and does not extend to Pasay City.
In his Comments, respondent Dalisay explained that when he garnished complainants cash deposit at the Philtrust bank, he was
merely performing a ministerial duty. While it is true that said writ was addressed to Qualitrans Limousine Service, Inc., yet it is also a
fact that complainant had executed an affidavit before the Pasay City assistant fiscal stating that he is the owner/president of said
corporation and, because of that declaration, the counsel for the plaintiff in the labor case advised him to serve notice of garnishment
on the Philtrust bank.
On November 12, 1984, this case was referred to the Executive Judge of the Regional Trial Court of Manila for investigation, report and
recommendation.
Prior to the termination of the proceedings, however, complainant executed an affidavit of desistance stating that he is no longer
interested in prosecuting the case against respondent Dalisay and that it was just a misunderstanding between them. Upon
respondents motion, the Executive Judge issued an order dated May 29, 1986 recommending the dismissal of the case.
It has been held that the desistance of complainant does not preclude the taking of disciplinary action against respondent. Neither does
it dissuade the Court from imposing the appropriate corrective sanction. One who holds a public position, especially an office directly
connected with the administration of justice and the execution of judgments, must at all times be free from the appearance of
impropriety.1
We hold that respondents actuation in enforcing a judgment against complainant who is not the judgment debtor in the case calls for
disciplinary action. Considering the ministerial nature of his duty in enforcing writs of execution, what is incumbent upon him is to
ensure that only that portion of a decision ordained or decreed in the dispositive part should be the subject of execution. 2 No more, no
less. That the title of the case specifically names complainant as one of the respondents is of no moment as execution must conform to
that directed in the dispositive portion and not in the title of the case.
The tenor of the NLRC judgment and the implementing writ is clear enough. It directed Qualitrans Limousine Service, Inc. to reinstate
the discharged employees and pay them full backwages. Respondent, however, chose to pierce the veil of corporate entity usurping a
power belonging to the court and assumed improvidently that since the complainant is the owner/president of Qualitrans Limousine

Service, Inc., they are one and the same. It is a well-settled doctrine both in law and in equity that as a legal entity, a corporation has a
personality distinct and separate from its individual stockholders or members. The mere fact that one is president of a corporation does
not render the property he owns or possesses the property of the corporation, since the president, as individual, and the corporation are
separate entities.3
Anent the charge that respondent exceeded his territorial jurisdiction, suffice it to say that the writ of execution sought to be
implemented was dated July 9, 1984, or prior to the issuance of Administrative Circular No. 12 which restrains a sheriff from enforcing a
court writ outside his territorial jurisdiction without first notifying in writing and seeking the assistance of the sheriff of the place where
execution shall take place.
ACCORDINGLY, we find Respondent Deputy Sheriff Quiterio L. Dalisay NEGLIGENT in the enforcement of the writ of execution in
NLRC Case-No. 8-12389-91, and a fine equivalent to three [3] months salary is hereby imposed with a stern warning that the
commission of the same or similar offense in the future will merit a heavier penalty. Let a copy of this Resolution be filed in the personal
record of the respondent.

BANK OF AMERICA V CA
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the November 29, 1994 decision of the
Court of Appeals[1] and the April 28, 1995 resolution denying petitioners motion for reconsideration.
The factual background of the case is as follows:
On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for brevity) filed a Complaint [2] before the Regional
Trial Court of Pasig against the Bank of America NT&SA and Bank of America International, Ltd. (defendant banks for brevity) alleging
that: they were engaged in the shipping business; they owned two vessels: Don Aurelio and El Champion, through their wholly-owned
corporations; they deposited their revenues from said business together with other funds with the branches of said banks in the United
Kingdom and Hongkong up to 1979; with their business doing well, the defendant banks induced them to increase the number of their
ships in operation, offering them easy loans to acquire said vessels; [3] thereafter, the defendant banks acquired, through their
(Litonjuas) corporations as the borrowers: (a) El Carrier[4]; (b) El General[5]; (c) El Challenger[6]; and (d) El Conqueror[7]; the vessels were
registered in the names of their corporations; the operation and the funds derived therefrom were placed under the complete and
exclusive control and disposition of the petitioners;[8] and the possession the vessels was also placed by defendant banks in the hands
of persons selected and designated by them (defendant banks).[9]
The Litonjuas claimed that defendant banks as trustees did not fully render an account of all the income derived from the
operation of the vessels as well as of the proceeds of the subsequent foreclosure sale; [10] because of the breach of their fiduciary duties
and/or negligence of the petitioners and/or the persons designated by them in the operation of private respondents six vessels, the
revenues derived from the operation of all the vessels declined drastically; the loans acquired for the purchase of the four additional
vessels then matured and remained unpaid, prompting defendant banks to have all the six vessels, including the two vessels originally
owned by the private respondents, foreclosed and sold at public auction to answer for the obligations incurred for and in behalf of the
operation of the vessels; they (Litonjuas) lost sizeable amounts of their own personal funds equivalent to ten percent (10%) of the
acquisition cost of the four vessels and were left with the unpaid balance of their loans with defendant banks. [11] The Litonjuas prayed
for the accounting of the revenues derived in the operation of the six vessels and of the proceeds of the sale thereof at the foreclosure
proceedings instituted by petitioners; damages for breach of trust; exemplary damages and attorneys fees.[12]
Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and lack of cause of action against them.[13]
On December 3, 1993, the trial court issued an Order denying the Motion to Dismiss, thus:

WHEREFORE, and in view of the foregoing consideration, the Motion to Dismiss is hereby DENIED. The defendant is therefore, given a period of
ten (10) days to file its Answer to the complaint.
SO ORDERED.[14]
Instead of filing an answer the defendant banks went to the Court of Appeals on a Petition for Review on Certiorari [15] which was
aptly treated by the appellate court as a petition for certiorari. They assailed the above-quoted order as well as the subsequent denial
of their Motion for Reconsideration.[16] The appellate court dismissed the petition and denied petitioners Motion for Reconsideration.[17]
Hence, herein petition anchored on the following grounds:
1. RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE FACT THAT THE SEPARATE PERSONALITIES OF THE PRIVATE
RESPONDENTS (MERE STOCKHOLDERS) AND THE FOREIGN CORPORATIONS (THE REAL BORROWERS) CLEARLY SUPPORT,
BEYOND ANY DOUBT, THE PROPOSITION THAT THE PRIVATE RESPONDENTS HAVE NO PERSONALITIES TO SUE.
2. THE RESPONDENT COURT OF APPEALS FAILED TO REALIZE THAT WHILE THE PRINCIPLE OF FORUM NON CONVENIENS IS
NOT MANDATORY, THERE ARE, HOWEVER, SOME GUIDELINES TO FOLLOW IN DETERMINING WHETHER THE CHOICE OF
FORUM SHOULD BE DISTURBED. UNDER THE CIRCUMSTANCES SURROUNDING THE INSTANT CASE, DISMISSAL OF THE
COMPLAINT ON THE GROUND OF FORUM NON-CONVENIENS IS MORE APPROPRIATE AND PROPER.
3. THE PRINCIPLE OF RES JUDICATA IS NOT LIMITED TO FINAL JUDGMENT IN THE PHILIPPINES. IN FACT, THE PENDENCY OF
FOREIGN ACTION MAY BE THE LEGAL BASIS FOR THE DISMISSAL OF THE COMPLAINT FILED BY THE PRIVATE
RESPONDENT. COROLLARY TO THIS, THE RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE FACT THAT PRIVATE
RESPONDENTS ARE GUILTY OF FORUM SHOPPING. [18]
As to the first assigned error: Petitioners argue that the borrowers and the registered owners of the vessels are the foreign
corporations and not private respondents Litonjuas who are mere stockholders; and that the revenues derived from the operations of all
the vessels are deposited in the accounts of the corporations. Hence, petitioners maintain that these foreign corporations are the legal
entities that have the personalities to sue and not herein private respondents; that private respondents, being mere shareholders, have
no claim on the vessels as owners since they merely have an inchoate right to whatever may remain upon the dissolution of the said
foreign corporations and after all creditors have been fully paid and satisfied; [19] and that while private respondents may have allegedly
spent amounts equal to 10% of the acquisition costs of the vessels in question, their 10% however represents their investments as
stockholders in the foreign corporations.[20]
Anent the second assigned error, petitioners posit that while the application of the principle of forum non conveniens is
discretionary on the part of the Court, said discretion is limited by the guidelines pertaining to the private as well as public interest
factors in determining whether plaintiffs choice of forum should be disturbed, as elucidated in Gulf Oil Corp. vs. Gilbert[21] and Piper
Aircraft Co. vs. Reyno,[22] to wit:
Private interest factors include: (a) the relative ease of access to sources of proof; (b) the availability of compulsory process for the attendance of
unwilling witnesses; (c) the cost of obtaining attendance of willing witnesses; or (d) all other practical problems that make trial of a case easy,
expeditious and inexpensive. Public interest factors include: (a) the administrative difficulties flowing from court congestion; (b) the local interest in
having localized controversies decided at home; (c) the avoidance of unnecessary problems in conflict of laws or in the application of foreign law; or
(d) the unfairness of burdening citizens in an unrelated forum with jury duty. [23]
In support of their claim that the local court is not the proper forum, petitioners allege the following:
i)
The Bank of America Branches involved, as clearly mentioned in the Complaint, are based in Hongkong and England. As such, the evidence
and the witnesses are not readily available in the Philippines;
ii)

The loan transactions were obtained, perfected, performed, consummated and partially paid outside the Philippines;

iii) The monies were advanced outside the Philippines. Furthermore, the mortgaged vessels were part of an offshore fleet, not based in the
Philippines;
iv)

All the loans involved were granted to the Private Respondents foreign CORPORATIONS;

v)

The Restructuring Agreements were ALL governed by the laws of England;

vi) The subsequent sales of the mortgaged vessels and the application of the sales proceeds occurred and transpired outside the Philippines, and
the deliveries of the sold mortgaged vessels were likewise made outside the Philippines;
vii) The revenues of the vessels and the proceeds of the sales of these vessels were ALL deposited to the Accounts of the
foreign CORPORATIONS abroad; and
viii) Bank of America International Ltd. is not licensed nor engaged in trade or business in the Philippines. [24]
Petitioners argue further that the loan agreements, security documentation and all subsequent restructuring agreements uniformly,
unconditionally and expressly provided that they will be governed by the laws of England; [25] that Philippine Courts would then have to
apply English law in resolving whatever issues may be presented to it in the event it recognizes and accepts herein case; that it would
then be imposing a significant and unnecessary expense and burden not only upon the parties to the transaction but also to the local
court. Petitioners insist that the inconvenience and difficulty of applying English law with respect to a wholly foreign transaction in a
case pending in the Philippines may be avoided by its dismissal on the ground of forum non conveniens. [26]
Finally, petitioners claim that private respondents have already waived their alleged causes of action in the case at bar for their
refusal to contest the foreign civil cases earlier filed by the petitioners against them in Hongkong and England, to wit:
1.) Civil action in England in its High Court of Justice, Queens Bench Division Commercial Court (1992-Folio No. 2098) against (a) LIBERIAN
TRANSPORT NAVIGATION. SA.; (b) ESHLEY COMPANIA NAVIERA SA., (c) EL CHALLENGER SA; (d) ESPRIONA SHIPPING CO. SA; (e)
PACIFIC NAVIGATOS CORP. SA; (f) EDDIE NAVIGATION CORP. SA; (g) EDUARDO K. LITONJUA & (h) AURELIO K. LITONJUA.
2.) Civil action in England in its High Court of Justice, Queens Bench Division, Commercial Court (1992-Folio No. 2245) against (a) EL
CHALLENGER S.A., (b) ESPRIONA SHIPPING COMPANY S.A., (c) EDUARDO KATIPUNAN LITONJUA and (d) AURELIO KATIPUNAN
LITONJUA.
3.) Civil action in the Supreme Court of Hongkong High Court (Action No. 4039 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b)
EL CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC NAVIGATORS CORPORATION (e) EDDIE NAVIGATION
CORPORATION S.A., (f) LITONJUA CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA, JR., and (h) EDUARDO
KATIPUNAN LITONJUA.
4.) A civil action in the Supreme Court of Hong Kong High Court (Action No. 4040 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A.,
(b) EL CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC NAVIGATORS CORPORATION (e) EDDIE
NAVIGATION CORPORATION S.A., (f) LITONJUA CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA, RJ., and
(h) EDUARDO KATIPUNAN LITONJUA.
and that private respondents alleged cause of action is already barred by the pendency of another action or by litis pendentia as shown
above.[27]
On the other hand, private respondents contend that certain material facts and pleadings are omitted and/or misrepresented in the
present petition for certiorari; that the prefatory statement failed to state that part of the security of the foreign loans were mortgages on
a 39-hectare piece of real estate located in the Philippines; [28] that while the complaint was filed only by the stockholders of the
corporate borrowers, the latter are wholly-owned by the private respondents who are Filipinos and therefore under Philippine laws,
aside from the said corporate borrowers being but their alter-egos, they have interests of their own in the vessels. [29] Private
respondents also argue that the dismissal by the Court of Appeals of the petition for certiorari was justified because there was neither
allegation nor any showing whatsoever by the petitioners that they had no appeal, nor any plain, speedy, and adequate remedy in the
ordinary course of law from the Order of the trial judge denying their Motion to Dismiss; that the remedy available to the petitioners after
their Motion to Dismiss was denied was to file an Answer to the complaint; [30] that as upheld by the Court of Appeals, the decision of the
trial court in not applying the principle of forum non conveniens is in the lawful exercise of its discretion. [31] Finally, private respondents
aver that the statement of petitioners that the doctrine ofres judicata also applies to foreign judgment is merely an opinion advanced by
them and not based on a categorical ruling of this Court; [32] and that herein private respondents did not actually participate in the
proceedings in the foreign courts.[33]
We deny the petition for lack of merit.

It is a well-settled rule that the order denying the motion to dismiss cannot be the subject of petition for certiorari. Petitioners
should have filed an answer to the complaint, proceed to trial and await judgment before making an appeal. As repeatedly held by this
Court:
An order denying a motion to dismiss is interlocutory and cannot be the subject of the extraordinary petition for certiorari or mandamus. The
remedy of the aggrieved party is to file an answer and to interpose as defenses the objections raised in his motion to dismiss, proceed to trial, and in
case of an adverse decision, to elevate the entire case by appeal in due course. xxx Under certain situations, recourse to certiorari or mandamus is
considered appropriate, i.e., (a) when the trial court issued the order without or in excess of jurisdiction; (b) where there is patent grave abuse of
discretion by the trial court; or (c) appeal would not prove to be a speedy and adequate remedy as when an appeal would not promptly relieve a
defendant from the injurious effects of the patently mistaken order maintaining the plaintiffs baseless action and compelling the defendant needlessly
to go through a protracted trial and clogging the court dockets by another futile case. [34]
Records show that the trial court acted within its jurisdiction when it issued the assailed Order denying petitioners motion to
dismiss. Does the denial of the motion to dismiss constitute a patent grave abuse of discretion? Would appeal, under the
circumstances, not prove to be a speedy and adequate remedy? We will resolve said questions in conjunction with the issues raised by
the parties.
First issue. Did the trial court commit grave abuse of discretion in refusing to dismiss the complaint on the ground that plaintiffs
have no cause of action against defendants since plaintiffs are merely stockholders of the corporations which are the registered owners
of the vessels and the borrowers of petitioners?
No. Petitioners argument that private respondents, being mere stockholders of the foreign corporations, have no personalities to
sue, and therefore, the complaint should be dismissed, is untenable. A case is dismissible for lack of personality to sue upon proof that
the plaintiff is not the real party-in-interest. Lack of personality to sue can be used as a ground for a Motion to Dismiss based on the
fact that the complaint, on the face thereof, evidently states no cause of action. [35] In San Lorenzo Village Association, Inc. vs. Court of
Appeals,[36] this Court clarified that a complaint states a cause of action where it contains three essential elements of a cause of action,
namely: (1) the legal right of the plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of the defendant in
violation of said legal right. If these elements are absent, the complaint becomes vulnerable to a motion to dismiss on the ground of
failure to state a cause of action.[37] To emphasize, it is not the lack or absence of cause of action that is a ground for dismissal of the
complaint but rather the fact that the complaint states no cause of action.[38] Failure to state a cause of action refers to the insufficiency
of allegation in the pleading, unlike lack of cause of action which refers to the insufficiency of factual basis for the action. Failure to
state a cause of action may be raised at the earliest stages of an action through a motion to dismiss the complaint, while lack of cause
of action may be raised any time after the questions of fact have been resolved on the basis of stipulations, admissions or evidence
presented.[39]
In the case at bar, the complaint contains the three elements of a cause of action. It alleges that: (1) plaintiffs, herein private
respondents, have the right to demand for an accounting from defendants (herein petitioners), as trustees by reason of the fiduciary
relationship that was created between the parties involving the vessels in question; (2) petitioners have the obligation, as trustees, to
render such an accounting; and (3) petitioners failed to do the same.
Petitioners insist that they do not have any obligation to the private respondents as they are mere stockholders of the corporation;
that the corporate entities have juridical personalities separate and distinct from those of the private respondents. Private respondents
maintain that the corporations are wholly owned by them and prior to the incorporation of such entities, they were clients of petitioners
which induced them to acquire loans from said petitioners to invest on the additional ships.
We agree with private respondents. As held in the San Lorenzo case,[40]
xxx assuming that the allegation of facts constituting plaintiffs cause of action is not as clear and categorical as would otherwise be desired, any
uncertainty thereby arising should be so resolved as to enable a full inquiry into the merits of the action.
As this Court has explained in the San Lorenzo case, such a course, would preclude multiplicity of suits which the law abhors, and
conduce to the definitive determination and termination of the dispute. To do otherwise, that is, to abort the action on account of the
alleged fatal flaws of the complaint would obviously be indecisive and would not end the controversy, since the institution of another
action upon a revised complaint would not be foreclosed.[41]
Second Issue. Should the complaint be dismissed on the ground of forum non-conveniens?

No. The doctrine of forum non-conveniens, literally meaning the forum is inconvenient, emerged in private international law to
deter the practice of global forum shopping, [42] that is to prevent non-resident litigants from choosing the forum or place wherein to bring
their suit for malicious reasons, such as to secure procedural advantages, to annoy and harass the defendant, to avoid
overcrowded dockets, or to select a more friendly venue. Under this doctrine, 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.[43]
Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely upon the facts of the particular
case and is addressed to the sound discretion of the trial court. [44] In the case of Communication Materials and Design, Inc. vs. Court of
Appeals,[45] this Court held that xxx [a] Philippine Court may assume jurisdiction over the case if it chooses to do so; provided, that the
following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine
Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely to have
power to enforce its decision.[46] Evidently, all these requisites are present in the instant case.
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals,[47] that the doctrine of forum non
conveniens should not be used as a ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include said
doctrine as a ground. This Court further ruled that while it is within the discretion of the trial court to abstain from assuming jurisdiction
on this ground, it should do so only after vital facts are established, to determine whether special circumstances require the courts
desistance; and that the propriety of dismissing a case based on this principle of forum non conveniens requires a factual
determination, hence it is more properly considered a matter of defense.[48]
Third issue. Are private respondents guilty of forum shopping because of the pendency of foreign action?
No. Forum shopping exists where the elements of litis pendentia are present and where a final judgment in one case will amount
to res judicata in the other.[49] Parenthetically, for litis pendentia to be a ground for the dismissal of an action there must be: (a) identity of
the parties or at least such as to represent the same interest in both actions; (b) identity of rights asserted and relief prayed for, the
relief being founded on the same acts; and (c) the identity in the two cases should be such that the judgment which may be rendered in
one would, regardless of which party is successful, amount to res judicata in the other.[50]
In case at bar, not all the requirements for litis pendentia are present. While there may be identity of parties, notwithstanding the
presence of other respondents,[51] as well as the reversal in positions of plaintiffs and defendants [52], still the other requirements
necessary for litis pendentia were not shown by petitioner. It merely mentioned that civil cases were filed in Hongkong and England
without however showing the identity of rights asserted and the reliefs sought for as well as the presence of the elements of res
judicata should one of the cases be adjudged.
As the Court of Appeals aptly observed:
xxx [T]he petitioners, by simply enumerating the civil actions instituted abroad involving the parties herein xxx, failed to provide this Court with
relevant and clear specifications that would show the presence of the above-quoted elements or requisites for res judicata. While it is true that the
petitioners in their motion for reconsideration (CA Rollo, p. 72), after enumerating the various civil actions instituted abroad, did aver that Copies of
the foreign judgments are hereto attached and made integral parts hereof as Annexes B, C, D and E, they failed, wittingly or inadvertently, to
include a single foreign judgment in their pleadings submitted to this Court as annexes to their petition. How then could We have been expected to
rule on this issue even if We were to hold that foreign judgments could be the basis for the application of the aforementioned principle of res
judicata?[53]
Consequently, both courts correctly denied the dismissal of herein subject complaint.
WHEREFORE, the petition is DENIED for lack of merit.

AVONDALE V CA
This special civil action for certiorari seeks to set aside the decision of the National Labor Relations Commission, dated August 31,
1994, in NLRC CA 005068-93, for allegedly having been rendered with grave abuse of discretion.
Private respondents were employees of petitioner Avon Dale Garments, Inc. and its predecessor-in-interest, Avon Dale Shirt Factory.
Following a dispute brought about by the rotation of workers, a compromise agreement was entered into between petitioner and private
respondents wherein the latter were terminated from service and given their corresponding separation pay.
However, upon refusal of the petitioner to include in the computation of private respondents' separation pay the period during which the
latter were employed by Avon Dale Shirt Factory, private respondents filed a complaint with the labor arbiter claiming a deficiency in
their separation pay (docketed as NLRC-NCR-00-02-00810-93). According to private respondents, their previous employment with
petitioner's predecessor-in-interest, Avon Dale Shirt Factory, should be credited in computing their separation pay considering that Avon
Dale Shirt factory was not dissolved and they were not in turn hired as new employees by Avon Dale Garments, Inc.
In its decision dated May 14, 1993, the labor arbiter dismissed private respondents' complaint and held that Avon Dale Shirt Factory
and Avon Dale Garments, Inc. are not one and the same entity as the former was in fact dissolved on December 27, 1978, when it filed
its Articles of Dissolution with the Securities and Exchange Commission. 1
Private respondents appealed to the NLRC and the latter reversed the decision of the labor arbiter after finding that upon dissolution of
Avon Dale Shirt Factory, Inc., there was no showing that its terminated employees, as creditors insofar as their separation pay were
concerned, were ever paid. Thus, petitioner Avon Dale Garments, Inc., as successor-in-interest, was held liable for private respondents'
unpaid claim. 2
The instant petition is now brought before us by petitioner Avon Dale Garments, Inc., anchored on the sole ground that, as a separate
and distinct entity, it should not be held liable for private respondents' separation pay from Avon Dale Shirt Factory.
Pending resolution of the instant petition, counsel for private respondents, instead of filing a comment to the petition, filed a
Manifestation indicating that the parties have already reached an amicable settlement on December 27, 1994, wherein private
respondents were paid their corresponding separation pay, after which, they executed a waiver and quitclaim. 3 It appeared however,
upon verification by the Office of the Solicitor General, that the aforementioned compromise agreement was executed between the
parties without the knowledge and participation of the NLRC. 4
The established rule is that compromise agreements involving labor standard cases, like the one entered into by the parties herein,
must be reduced in writing and signed in the presence of the Regional Director or his duly authorized representative. Otherwise, they
are not deemed to be duly executed. 5 For this reason, the compromise agreement submitted by private respondents' counsel cannot
be recognized by this court for being improperly executed.
Nevertheless, we find the petition to be without merit as the assailed decision is in complete accord with the law and evidence on
record.
Petitioner failed to establish that Avon Dale Garments, Inc., is a separate and distinct entity from Avon Dale Shirt Factory, absent any
showing that there was indeed an actual closure and cessation of the operations of the latter. The mere filing of the Articles of
Dissolution with the Securities and Exchange Commission, without more, is not enough to support the conclusion that actual dissolution
of an entity in fact took place.
On the contrary, the prevailing circumstances in this case indicated that petitioner company is not distinct from its predecessor Avon
Dale Shirt Factory, but in fact merely continued the operations of the latter under the same owners, the same business venture, at same
address 6, and even continued to hire the same employees (herein private respondents).

Thus, conformably with established jurisprudence, the two entities cannot be deemed as separate and distinct where there is a showing
that one is merely the continuation of the other. 7 In fact, even a change in the corporate name does not make a new corporation,
whether effected by a special act or under a general law, it has no effect on the identity of the corporation, or on its property, rights, or
liabilities. 8 Respondent NLRC therefore, did not commit any grave abuse of discretion in holding that petitioner should likewise include
private respondents' employment with Avon Dale Shirt Factory in computing private respondents' separation pay as petitioner failed to
substantiate its claim that it is a distinct entity.
ACCORDINGLY, the instant petition is hereby DISMISSED.

CONCEPT BUILDERS V CA
The corporate mask may be lifted and the corporate veil may be pierced when a corporation is just but the alter ego of a person or
of another corporation. Where badges of fraud exist; where public convenience is defeated; where a wrong is sought to be justified
thereby, the corporate fiction or the notion of legal entity should come to naught. The law in these instances will regard the corporation
as a mere association of persons and, in case of two corporations, merge them into one.
Thus, where a sister corporation is used as a shield to evade a corporations subsidiary liability for damages, the corporation may
not be heard to say that it has a personality separate and distinct from the other corporation. The piercing of the corporate veil comes
into play.
This special civil action ostensibly raises the question of whether the National Labor Relations Commission committed grave
abuse of discretion when it issued a break-open order to the sheriff to be enforced against personal property found in the premises of
petitioners sister company.
Petitioner Concept Builders, Inc., a domestic corporation, with principal office at 355 Maysan Road, Valenzuela, Metro Manila, is
engaged in the construction business. Private respondents were employed by said company as laborers, carpenters and riggers.
On November, 1981, private respondents were served individual written notices of termination of employment by petitioner,
effective on November 30, 1981. It was stated in the individual notices that their contracts of employment had expired and the project
in which they were hired had been completed.
Public respondent found it to be, the fact, however, that at the time of the termination of private respondents employment, the
project in which they were hired had not yet been finished and completed. Petitioner had to engage the services of sub-contractors
whose workers performed the functions of private respondents.
Aggrieved, private respondents filed a complaint for illegal dismissal, unfair labor practice and non-payment of their legal holiday
pay, overtime pay and thirteenth-month pay against petitioner.
On December 19, 1984, the Labor Arbiter rendered judgment 1 ordering petitioner to reinstate private respondents and to pay them
back wages equivalent to one year or three hundred working days.
On November 27, 1985, the National Labor Relations Commission (NLRC) dismissed the motion for reconsideration filed by
petitioner on the ground that the said decision had already become final and executory.2
On October 16, 1986, the NLRC Research and Information Department made the finding that private respondents backwages
amounted to P199,800.00.3
On October 29, 1986, the Labor Arbiter issued a writ of execution directing the sheriff to execute the Decision, dated December
19, 1984. The writ was partially satisfied through garnishment of sums from petitioners debtor, the Metropolitan Waterworks and
Sewerage Authority, in the amount of P81,385.34. Said amount was turned over to the cashier of the NLRC.
On February 1, 1989, an Alias Writ of Execution was issued by the Labor Arbiter directing the sheriff to collect from herein
petitioner the sum of P117,414.76, representing the balance of the judgment award, and to reinstate private respondents to their former
positions.

On July 13, 1989, the sheriff issued a report stating that he tried to serve the alias writ of execution on petitioner through the
security guard on duty but the service was refused on the ground that petitioner no longer occupied the premises.
On September 26, 1986, upon motion of private respondents, the Labor Arbiter issued a second alias writ of execution.
The said writ had not been enforced by the special sheriff because, as stated in his progress report, dated November 2, 1989:
1. All the employees inside petitioners premises at 355 Maysan Road, Valenzuela, Metro Manila, claimed that they were employees of Hydro Pipes
Philippines, Inc. (HPPI) and not by respondent;
2. Levy was made upon personal properties he found in the premises;
3. Security guards with high-powered guns prevented him from removing the properties he had levied upon. 4
The said special sheriff recommended that a break-open order be issued to enable him to enter petitioners premises so that he
could proceed with the public auction sale of the aforesaid personal properties on November 7, 1989.
On November 6, 1989, a certain Dennis Cuyegkeng filed a third-party claim with the Labor Arbiter alleging that the properties
sought to be levied upon by the sheriff were owned by Hydro (Phils.), Inc. (HPPI) of which he is the Vice-President.
On November 23, 1989, private respondents filed a Motion for Issuance of a Break-Open Order, alleging that HPPI and
petitioner corporation were owned by the same incorporator! stockholders. They also alleged that petitioner temporarily suspended its
business operations in order to evade its legal obligations to them and that private respondents were willing to post an indemnity bond
to answer for any damages which petitioner and HPPI may suffer because of the issuance of the break-open order.
In support of their claim against HPPI, private respondents presented duly certified copies of the General Informations Sheet,
dated May 15, 1987, submitted by petitioner to the Securities and Exchange Commission (SEC) and the General Information Sheet,
dated May 15, 1987, submitted by HPPI to the Securities and Exchange Commission.
The General Information Sheet submitted by the petitioner1 revealed the following:
1.

Breakdown of Subscribed Capital

Name of Stockholder Amount Subscribed

HPPI

P6,999,500.00

Antonio W. Lim
Dennis S. Cuyegkeng
Elisa C. Lim

2,900,000.00
300.00
100,000.00

Teodulo R. Dino

100.00

Virgilio O. Casino

100.00

2.

Board of Directors

Antonio W. Lim
Dennis S. Cuyegkeng
Elisa C. Lim
Teodulo R. Dino

Chairman
Member
Member
Member

Virgilio O. Casino
3.

Member

Corporate Officers

Antonio W. Lim
Dennis S. Cuyegkeng

President
Assistant to the President

Elisa 0. Lim

Treasurer

Virgilio O. Casino

Corporate Secretary

4.

Principal Office

355 Maysan Road

Valenzuela, Metro Manila.5
On the other hand, the General Information Sheet of HPPI revealed the following:
1.

Breakdown of Subscribed Capital

Name of Stockholder Amount Subscribed

Antonio W. Lim

P400,000.00

Elisa C. Lim

57,700.00

AWL Trading

455,000.00

Dennis S. Cuyegkeng

40,100.00

Teodulo R. Dino

100.00

Virgilio O. Casino

100.00

2.

Board of Directors

Antonio W. Lim

Chairman

Elisa C. Lim

Member

Dennis S. Cuyegkeng

Member

Virgilio O. Casino

Member

Teodulo R. Dino

Member

3. Corporate Officers
Antonio W. Lim
Dennis S. Cuyegkeng
Elisa O. Lim

President
Assistant to the President
Treasurer

Virgilio O. Casino

Corporate Secretary

4. Principal Office
355 Maysan Road, Valenzuela, Metro Manila.6
On February 1, 1990, HPPI filed an Opposition to private respondents motion for issuance of a break-open order, contending that
HPPI is a corporation which is separate and distinct from petitioner. HPPI also alleged that the two corporations are engaged in two
different kinds of businesses, i.e., HPPI is a manufacturing firm while petitioner was then engaged in construction.
On March 2, 1990, the Labor Arbiter issued an Order which denied private respondents motion for break-open order.
Private respondents then appealed to the NLRC. On April 23, 1992, the NLRC set aside the order of the Labor Arbiter, issued a
break-open order and directed private respondents to file a bond. Thereafter, it directed the sheriff to proceed with the auction sale of
the properties already levied upon. It dismissed the third-party claim for lack of merit.
Petitioner moved for reconsideration but the motion was denied by the NLRC in a Resolution, dated December 3, 1992.
Hence, the resort to the present petition.
Petitioner alleges that the NLRC committed grave abuse of discretion when it ordered the execution of its decision despite a thirdparty claim on the levied property. Petitioner further contends, that the doctrine of piercing the corporate veil should not have been
applied, in this case, in the absence of any showing that it created HPPI in order to evade its liability to private respondents. It also
contends that HPPI is engaged in the manufacture and sale of steel, concrete and iron pipes, a business which is distinct and separate
from petitioners construction business. Hence, it is of no consequence that petitioner and HPPI shared the same premises, the same
President and the same set of officers and subscribers.7
We find petitioners contention to be unmeritorious.
It is a fundamental principle of corporation law that a corporation is an entity separate and distinct from its stockholders and from
other corporations to which it may be connected.8 But, this separate and distinct personality of a corporation is merely a fiction created
by law for convenience and to promote justice.9 So, when the notion of separate juridical personality is used to defeat public
convenience, justify wrong, protect fraud or defend crime, or is used as a device to defeat the labor laws, 10 this separate personality of
the corporation may be disregarded or the veil of corporate fiction pierced. 11 This is true likewise when the corporation is merely an
adjunct, a business conduit or an alter ego of another corporation.12
The conditions under which the juridical entity may be disregarded vary according to the peculiar facts and circumstances of each
case. No hard and fast rule can be accurately laid down, but certainly, there are some probative factors of identity that will justify the
application of the doctrine of piercing the corporate veil, to wit:
1.

Stock ownership by one or common ownership of both corporations.

2.

Identity of directors and officers.

3.

The manner of keeping corporate books and records.

4.

Methods of conducting the business.13

The SEC en banc explained the instrumentality rule which the courts have applied in disregarding the separate juridical
personality of corporations as follows:
Where one corporation is so organized and controlled and its affairs are conducted so that it is, in fact, a mere instrumentality or adjunct of the
other, the fiction of the corporate entity of the instrumentality may be disregarded. The control necessary to invoke the rule is not majority or even
complete stock control but such domination of finances, policies and practices that the controlled corporation has, so to speak, no separate mind,
will or existence of its own, and is but a conduit for its principal. It must be kept in mind that the control must be shown to have been exercised at the
time the acts complained of took place. Moreover, the control and breach of duty must proximately cause the injury or unjust loss for which the
complaint is made.

The test in determining the applicability of the doctrine of piercing the veil of corporate fiction is as follows:
1. Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect
to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own;
2. Such control must have been used by the defendant to commit fraud or wrong, to perpetuate the violation of a statutory or other positive legal duty,
or dishonest and unjust act in contravention of plaintiffs legal rights; and
3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.
The absence of any one of these elements prevents piercing the corporate veil. in applying the instrumentality or alter ego doctrine, the courts
are concerned with reality and not form, with how the corporation operated and the individual defendants relationship to that operation. 14
Thus, the question of whether a corporation is a mere alter ego, a mere sheet or paper corporation, a sham or a subterfuge is
purely one of fact.15
In this case, the NLRC noted that, while petitioner claimed that it ceased its business operations on April 29, 1986, it filed an
Information Sheet with the Securities and Exchange Commission on May 15, 1987, stating that its office address is at 355 Maysan
Road, Valenzuela, Metro Manila. On the other hand, HPPI, the third-party claimant, submitted on the same day, a similar information
sheet stating that its office address is at 355 Maysan Road, Valenzuela, Metro Manila.
Furthermore, the NLRC stated that:
Both information sheets were filed by the same Virgilio O. Casino as the corporate secretary of both corporations. It would also not be amiss to
note that both corporations had the samepresident, the same board of directors, the same corporate officers, and substantially the same subscribers.
From the foregoing, it appears that, among other things, the respondent (herein petitioner) and the third-party claimant shared the same address
and/or premises. Under this circumstances, (sic) it cannot be said that the property levied upon by the sheriff were not of respondents. 16
Clearly, petitioner ceased its business operations in order to evade the payment to private respondents of backwages and to bar
their reinstatement to their former positions. HPPI is obviously a business conduit of petitioner corporation and its emergence was
skillfully orchestrated to avoid the financial liability that already attached to petitioner corporation.
The facts in this case are analogous to Claparols v. Court of Industrial Relations17 where we had the occasion to rule:
Respondent courts findings that indeed the Claparols Steel and Nail Plant, which ceased operation of June 30, 1957, was SUCCEEDED by the
Claparols Steel Corporation effective the next day, July 1, 1957, up to December 7, 1962, when the latter finally ceased to operate, were not disputed
by petitioner. it is very clear that the latter corporation was a continuation and successor of the first entity x x x. Both predecessors and successor
were owned and controlled by petitioner Eduardo Claparols and there was no break in the succession and continuity of the same business. This
avoiding-the-liability scheme is very patent, considering that 90% of the subscribed shares of stock of the Claparols Steel Corporation (the second
corporation) was owned by respondent x x x Claparols himself, and all the assets of the dissolved Claparols Steel and Nail Plant were turned over to
the emerging Claparols Steel Corporation.
It is very obvious that the second corporation seeks the protective shield of a corporate fiction whose veil in the present case
could, and should, be pierced as it was deliberately and maliciously designed to evade its financial obligation to its employees.
In view of the failure of the sheriff, in the case at bar, to effect a levy upon the property subject of the execution, private
respondents had no other recourse but to apply for a break-open order after the third-party claim of HPPI was dismissed for lack of
merit by the NLRC. This is in consonance with Section 3, Rule VII of the NLRC Manual of Execution of Judgment which provides that:
Should the losing party, his agent or representative, refuse or prohibit the Sheriff or his representative entry to the place where the property subject
of execution is located or kept, the judgment creditor may apply to the Commission or Labor Arbiter concerned for a break-open order.
Furthermore, our perusal of the records shows that the twin requirements of due notice and hearing were complied with. Petitioner
and the third-party claimant were given the opportunity to submit evidence in support of their claim.
Hence, the NLRC did not commit any grave abuse of discretion when it affirmed the break-open order issued by the Labor Arbiter.

Finally, we do not find any reason to disturb the rule that factual findings of quasi-judicial agencies supported by substantial
evidence are binding on this Court and are entitled to great respect, in the absence of showing of grave abuse of a discretion.18
WHEREFORE, the petition is DISMISSED and the assailed resolutions of the NLRC, dated April 23, 1992 and December 3, 1992,
are AFFIRMED.
SO ORDERED.

FIRST PHIL INTENATIONAL BANK V CA

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 Appeals[1] 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 plaintiffappellee Carlos C. Ejercito.
Costs against appellant bank.
The dispositive portion of the trial courts[2] 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 owners 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 P 200,000.00 each in moral
damages;
4. Ordering the defendants, jointly and severally, to pay plaintiffs the sum of P 100,000.00 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 attorneys 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 Courts Decision,[3] 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. Rosa, 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 fora 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 Investments 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 Philippines
Makati, Metro Manila
Attn.

Mr. Mercurio Q. Rivera

Manager, Property Management Dept.

Gentlemen:
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
T-106933
T-106934
T-106935
T-106936
T-106937

113,580
70,899
52,246
96,768
187,114
481,481

sq.m.
sq.m.
sq.m.
sq.m.
sq.m.
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
J-P M-P GUTIERREZ ENTERPRISES
142 Charisma St., Doa Andres II
Rosario, Pasig, Metro Manila
Attention:

JOSE O. JANOLO Dear Sir:

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 banks 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 matter.
Best regards.

(4)On September 17, 1987, plaintiff Janolo, responding to Riveras aforequoted reply, wrote (Exh.
September 17, 1987
Producers Bank
Paseo de Roxas
Makati, 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 Janolos 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 Philippines
Paseo de Roxas, Makati
Metro Manila
Attention:

Mr. Mercurio Rivera

Re:

101 Hectares of Land in 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 In-vestment, 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 (Exhs. 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 Rivera
Manager, Producers Bank
Paseo de Roxas, Makati
Metro 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 x x x 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 (Exhs. L and L-1), this time through the Acting
Conservator, defendant Encarnacion. Plaintiffs letter reads:
PRODUCERS BANK OF
THE PHILIPPINES
Paseo de Roxas,
Makati, Metro Manila
Attn.:

Atty. NIDA ENCARNACION Central Bank Conservator

Gentlemen:

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 defendants 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 Rivera 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 Banks 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 courts 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 plaintiffs 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 Petition[6] and Memorandum,[7] 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, private respondents prayed for dismissal of the instant suit on the ground[8] 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 x x x [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 intertwined that a judgment 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 the 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 as 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, Blacks 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
Phrases,[14] 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
expense 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 misused 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 proscribed 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 x x x. [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 down 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 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[20] (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.
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, the 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. (italics 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 becomefunctus oflcio. 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 holds 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. (Gamboa v. Victoriano, 90 SCRA
40, 47 [1979]; italics 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 the 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, Velhagens and Kings 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. (italics 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 counter-claims 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 from
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 Petitions 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 forumshopping 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 Banks 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
weeks (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 banks internal procedure
in the matter of the sale of banks 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 banks 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 Riveras 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 it
was merely quoted to start negotiations regarding the 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 banks
submission on this point does not inspire belief. Both Co and 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 banks decision will be relayed to plaintiffs. From the facts, the amount of P5.5 Million has a definite significance. It is the
official bank price. At any rate, the bank placed its official, Rivera, in 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 later 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 knowingly permits one of its officers, or
any other agent, to do acts within the scope of an 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
(Francisco v. GSIS, 7 SCRA 577, 583-584; PNB v. Court of Appeals, 94 SCRA 357, 369-370; Prudential Bank v. Court of Appeals, G.R. No. 103957,
June 14, 1993).[29]
Article 1318 of the Civil Code enumerates the requisites of a valid and perfected contract as follows: (1) Consent of the
contracting parties; (2) Object certain which is the subject matter of the contract; (3)
Cause of the obligation which is established.
There is no dispute on requisite no. 2. The object of the questioned contract consists of the six (6) parcels of land in Sta. Rosa,
Laguna with an aggregate area of about 101 hectares, more or less, and covered by Transfer Certificates of Title Nos. T-106932 to T106937. There is, however, a dispute on the first and third requisites.
Petitioners allege that there is no counter-offer made by the Bank, and any supposed counter-offer which Rivera (or Co) may
have made is unauthorized. Since there was no counter-offer by the Bank, there was nothing for Ejercito (in substitution of Demetria
and Janolo) to accept.[30] They disputed the factual basis of the respondent Courts findings that there was an offer made by Janolo for
P3.5 million, to which the Bank counter-offered P5.5 million. We have perused the evidence but cannot find fault with the said Courts
findings of fact. Verily, in a petition under Rule 45 such as this, errors of fact -if there be any - are, as a rule, not reviewable. The mere
fact that respondent Court (and the trial court as well) chose to believe the evidence presented by respondent more than that presented
by petitioners is not by itself a reversible error. in fact, such findings merit serious consideration by this Court, particularly where, as in
this case, said courts carefully and meticulously discussed their findings. This is basic.
Be that as it may, and in addition to the foregoing disquisitions by the Court of Appeals, let us review the question of Riveras
authority to act and petitioners allegations that the P5.5 million counter-offer was extinguished by the P4.25 million revised offer of
Janolo. Here, there are questions of law which could be drawn from the factual findings of the respondent Court. They also delve into
the contractual elements of consent and cause.
The authority of a corporate officer in dealing with third persons may be actual or apparent. The doctrine of apparent authority,
with special reference to banks, was laid out in Prudential Bank vs. Court of Appeals,[31] where it was held that:
Conformably, we have declared in countless decisions that the principal is liable for obligations contracted by the agent. The agents apparent
representation yields to the principals true representation and the contract is considered as entered into between the principal and the third person
(citing National Food Authority vs. Intermediate Appellate Court, 184 SCRA 166).
A bank is liable for wrongful acts of its officers done in the interests of the bank or in the course of dealings of the officers in their representative
capacity but not for acts outside the scope of their authority (9 C.J.S., p. 417). A bank holding out its officers and agents as worthy of confidence will
not be permitted to profit by the frauds they may thus be enabled to perpetrate in the apparent scope of their employment; nor will it be permitted to
shirk its responsibility for such frauds, even though no benefit may accrue to the bank therefrom (10 Am Jur 2d, p. 114). 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 his authority even though, in the particular case, the agent is secretly abusing his authority and attempting to perpetrate a fraud upon his
principal or some other person, for his own ultimate benefit (McIntosh v. Dakota Trust Co., 52 ND 752, 204 NW 818, 40 ALR 1021).
Application of these principles is especially necessary because banks have a fiduciary relationship with the public and their stability depends on the
confidence of the people in their honesty and efficiency. Such faith will be eroded where banks do not exercise strict care in the selection and
supervision of its employees, resulting in prejudice to their depositors.
From the evidence found by respondent Court, it is obvious that petitioner Rivera has apparent or implied authority to act for the
Bank in the matter of selling its acquired assets. This evidence includes the following:
(a) The petition itself in par. II-1 (p. 3) states that Rivera was at all times material to this case, Manager of the Property Management Department of
the Bank. By his own admission, Rivera was already the person in charge of the Banks acquired assets (TSN, August 6, 1990, pp. 8-9);
(b) As observed by respondent Court, the land was definitely being sold by the Bank. And during the initial meeting between the buyers and Rivera,
the latter suggested that the buyers offer should be no less than P3.3 million (TSN, April 26, 1990, pp. 16-17);

(c) Rivera received the buyers letter dated August 30, 1987 offering P3.5 million (TSN, 30 July 1990, p. 11);
(d) Rivera signed the letter dated September 1, 1987 offering to sell the property for P5.5 million (TSN, July 30, p. 11);
(e) Rivera received the letter dated September 17, 1987 containing the buyers proposal to buy the property for P4.25 million (TSN, July 30, 1990, p.
12);
(f)

Rivera, in a telephone conversation, confirmed that the P5.5 million was the final price of the Bank (TSN, January 16, 1990, p. 18);

(g) Rivera arranged the meeting between the buyers and Luis Co on September 28, 1987, during which the Banks offer of P5.5 million was
confirmed by Rivera (TSN, April 26, 1990, pp. 34-35). At said meeting, Co, a major shareholder and officer of the Bank, confirmed Riveras
statement as to the finality of the Banks counter-offer of P5.5 million (TSN, January 16, 1990, p. 21; TSN, April 26, 1990, p. 35);
(h) In its newspaper advertisements and announcements, the Bank referred to Rivera as the officer acting for the Bank in relation to parties
interested in buying assets owned/acquired by the Bank. In fact, Rivera was the officer mentioned in the Banks advertisements offering for sale the
property in question (cf. Exhs. S and S-I).
In the very recent case of Limketkai Sons Milling, Inc. vs. Court of Appeals, et al., [32] the Court, through Justice Jose A. R. Melo,
affirmed the doctrine of apparent authority as it held that the apparent authority of the officer of the Bank of P.I. in charge of acquired
assets is borne out by similar circumstances surrounding his dealings with buyers.
To be sure, petitioners attempted to repudiate Riveras apparent authority through documents and testimony which seek to
establish Riveras actual authority. These pieces of evidence, however, are inherently weak as they consist of Riveras self-serving
testimony and various inter-office memoranda that purport to show his limited actual authority, of which private respondent cannot be
charged with knowledge. In any event, since the issue is apparent authority, the existence of which is borne out by the respondent
Courts findings, the evidence of actual authority is immaterial insofar as the liability of a corporation is concerned.[33]
Petitioners also argued that since Demetria and Janolo were experienced lawyers and their law firm had once acted for the Bank
in three criminal cases, they should be charged with actual knowledge of Riveras limited authority. But the Court of Appeals in its
Decision (p. 12) had already made a factual finding that the buyers had no notice of Riveras actual authority prior to the sale. In fact,
the Bank has not shown that they acted as its counsel in respect to any acquired assets; on the other hand, respondent has proven that
Demetria and Janolo merely associated with a loose aggrupation of lawyers (not a professional partnership), one of whose members
(Atty. Susana Parker) acted in said criminal cases.
Petitioners also alleged that Demetrias and Janolos P4.25 million counter-offer in the letter dated September 17,
1987 extinguished the Banks offer of P5.5 million.[34] They disputed the respondent Courts finding that there was a meeting of minds
when on 30 September 1987 Demetria and Janolo through Annex L (letter dated September 30, 1987) accepted Riveras counter
offer of P5.5 million under Annex J (letter dated September 17, 1987), citing the late Justice Paras, [35] Art. 1319 of the Civil
Code[36] and related Supreme Court rulings starting with Beaumont vs. Prieto.[37]
However, the above-cited authorities and precedents cannot apply in the instant case because, as found by the respondent Court
which reviewed the testimonies on this point, what was accepted by Janolo in his letter dated September 30, 1987 was the Banks
offer of P5.5 million as confirmed and reiterated to Demetria and Atty. Jose Fajardo by Rivera and Co during their meeting on
September 28, 1987. Note that the said letter of September 30, 1987 begins with (p)ursuant to our discussion last 28 September 1987
x x x.
Petitioners insist that the respondent Court should have believed the testimonies of Rivera and Co that the September 28,
1987 meeting was meant to have the offerors improve on their position of P5.5 million. [38] However, both the trial court and the Court of
Appeals found petitioners testimonial evidence not credible, and we find no basis for changing this finding of fact.
Indeed, we see no reason to disturb the lower courts (both the RTC and the CA) common finding that private respondents
evidence is more in keeping with truth and logic - that during the meeting on September 28, 1987, Luis Co and Rivera confirmed that
the P5.5 million price has been passed upon by the Committee and could no longer be lowered (TSN of April 27, 1990, pp. 3435).[39] Hence, assuming arguendo that the counter-offer of P4.25 million extinguished the offer of P5.5 million, Luis Cos reiteration of
the said P5.5 million price during the September 28, 1987 meeting revived the said offer. And by virtue of the September 30, 1987 letter
accepting this revived offer, there was a meeting of the minds, as the acceptance in said letter was absolute and unqualified.
We note that the Banks repudiation, through Conservator Encarnacion, of Riveras authority and action, particularly the latters
counter-offer of P5.5 million, as being unauthorized and illegal came only on May 12, 1988 or more than seven (7) months after
Janolos acceptance. Such delay, and the absence of any circumstance which might have justifiably prevented the Bank from acting
earlier, clearly characterizes the repudiation as nothing more than a last-minute attempt on the Banks part to get out of a binding
contractual obligation.
Taken together, the factual findings of the respondent Court point to an implied admission on the part of the petitioners that the
written offer made on September 1, 1987was carried through during the meeting of September 28, 1987. This is the conclusion
consistent with human experience, truth and good faith.
It also bears noting that this issue of extinguishment of the Banks offer of P5.5 million was raised for the first time on appeal and
should thus be disregarded.

This Court in several decisions has repeatedly adhered to the principle that points of law, theories, issues of fact and arguments not adequately
brought to the attention of the trial court need not be, and ordinarily will not be, considered by a reviewing court, as they cannot be raised for the first
time on appeal (Santos vs. IAC, No. 74243, November 14, 1986, 145 SCRA 592).[40]
xxx It is settled jurisprudence that an issue which was neither averred in the complaint nor raised during the trial in the court below cannot be raised
for the first time on appeal as it would be offensive to the basic rules of fair play, justice and due process (Dihiansan vs. CA, 153 SCRA 713
[1987]; Anchuelo vs. IAC, 147 SCRA 434 [1987]; Dulos Realty & Development Corp. vs. CA, 157 SCRA 425 [1988]; Ramos vs. IAC, 175 SCRA 70
[1989]; Gevero vs. IAC, G.R. 77029, August 30, 1990).[41]
Since the issue was not raised in the pleadings as an affirmative defense, private respondent was not given an opportunity in the
trial court to controvert the same through opposing evidence. Indeed, this is a matter of due process. But we passed upon the issue
anyway, if only to avoid deciding the case on purely procedural grounds, and we repeat that, on the basis of the evidence already in the
record and as appreciated by the lower courts, the inevitable conclusion is simply that there was a perfected contract of sale.

The Third Issue:

Is the Contract Enforceable?

The petition alleged:[42]

Even assuming that Luis Co or Rivera did relay a verbal offer to sell at P5.5 million during the meeting of 28 September 1987, and it was this verbal
offer that Demetria and Janolo accepted with their letter of 30 September 1987, the contract produced thereby would be unenforceable by action there being no note, memorandum or writing subscribed by the Bank to evidence such contract. (Please see Article 1403[2], Civil Code.)
Upon the other hand, the respondent Court in its Decision (p. 14) stated:
x x x Of course, the banks letter of September 1, 1987 on the official price and the plaintiffs acceptance of the price on September 30, 1987, are
not, in themselves, formal contracts of sale. They are however clear embodiments of the fact that a contract of sale was perfected between the parties,
such contract being binding in whatever form it may have been entered into (case citations omitted). Stated simply, the banks letter of September 1,
1987, taken together with plaintiffs letter dated September 30, 1987, constitute in law a sufficient memorandum of a perfected contract of sale.
The respondent Court could have added that the written communications commenced not only from September 1, 1987 but from
Janolos August 20, 1987 letter. We agree that, taken together, these letters constitute sufficient memoranda - since they include the
names of the parties, the terms and conditions of the contract, the price and a description of the property as the object of the contract.
But let it be assumed arguendo that the counter-offer during the meeting on September 28, 1987 did constitute a new offer which
was accepted by Janolo on September 30, 1987. Still, the statute of frauds will not apply by reason of the failure of petitioners to object
to oral testimony proving petitioner Banks counter-offer of P5.5 million. Hence, petitioners - by such utter failure to object - are deemed
to have waived any defects of the contract under the statute of frauds, pursuant to Article 1405 of the Civil Code:
Art. 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of Article 1403, are ratified by the failure to object to the presentation of
oral evidence to prove the same, or by the acceptance of benefits under them.
As private respondent pointed out in his Memorandum, oral testimony on the reaffirmation of the counter-offer of P5.5 million is
aplenty -and the silence of petitioners all throughout the presentation makes the evidence binding on them thus:
A - Yes, sir. I think it was September 28, 1987 and I was again present because Atty. Demetria told me to accompany him
and we were able to meet Luis Co at the Bank.
xxx

xxx

xxx

Q - Now, what transpired during this meeting with Luis Co of the Producers Bank?
A - Atty. Demetria asked Mr. Luis Co whether the price could be reduced, sir.
Q - What price?
A - The 5.5 million pesos and Mr. Luis Co said that the amount cited by Mr. Mercurio Rivera is the final price and that is the
price they intends (sic) to have, sir.
Q - What do you mean?
A - That is the amount they want, sir.
Q - What is the reaction of the plaintiff Demetria to Luis Cos statment (sic) that the defendant Riveras counter-offer of 5.5
million was the defendants bank (sic) final offer?
A - He said in a day or two, he will make final acceptance, sir.

Q - What is the response of Mr. Luis Co?

A - He said he will wait for the position of Atty. Demetria, sir.
[Direct testimony of Atty. Jose Fajardo, TSN, January 16, 1990, at pp. 18-21.]
----0---Q - What transpired during that meeting between you and Mr. Luis Co of the defendant Bank?
A - We went straight to the point because he being a busy person, I told him if the amount of P5.5 million could still be
reduced and he said that was already passed upon by the committee. What the bank expects which was contrary to
what Mr. Rivera stated. And he told me that is the final offer of the bank P5.5 million and we should indicate our position
as soon as possible.
Q - What was your response to the answer of Mr. Luis Co?
A - I said that we are going to give him our answer in a few days and he said that was it. Atty. Fajardo and I and Mr.
Mercurio [Rivera] was with us at the time at his office.
Q - For the record, your Honor please, will you tell this Court who was with Mr. Co in his Office
in Producers Bank Building during this meeting?
A - Mr. Co himself, Mr. Rivera, Atty. Fajardo and I.
Q - By Mr. Co you are referring to?
A - Mr. Luis Co.
Q - After this meeting with Mr. Luis Co, did you and your partner accede on (sic) the counter offer by the bank?
A - Yes, sir, we did. Two days thereafter we sent our acceptance to the bank which offer we accepted, the offer of the bank
which is P5.5 million.
[Direct testimony of Atty. Demetria, TSN, 26 April 1990, at pp. 34-36.]
---- 0 ---Q - According to Atty. Demetrio Demetria, the amount of P5.5 million was reached by the Committee and it is not within his
power to reduce this amount. What can you say to that statement that the amount of P5.5 million was reached by the
Committee?
A - It was not discussed by the Committee but it was discussed initially by Luis Co and the group of Atty. Demetrio Demetria
and Atty. Pajardo (sic), in that September 28, 1987 meeting, sir.
[Direct testimony of Mercurio Rivera, TSN, 30 July 1990, pp. 14-15.]

The Fourth Issue: May the Conservator Revoke

the Perfected and Enforceable Contract?
It is not disputed that the petitioner Bank was under a conservator placed by the Central Bank of the Philippines during the time
that the negotiation and perfection of the contract of sale took place. Petitioners energetically contended that the conservator has the
power to revoke or overrule actions of the management or the board of directors of a bank, under Section 28-A of Republic Act No. 265
(otherwise known as the Central Bank Act) as follows:
Whenever, on the basis of a report submitted by the appropriate supervising or examining department, the Monetary Board finds that a bank or a
non-bank financial intermediary performing quasi - banking functions is in a state of continuing inability or unwillingness to maintain a state of
liquidity deemed adequate to protect the interest of depositors and creditors, the Monetary Board may appoint a conservator to take charge of the
assets, liabilities, and the management of that institution, collect all monies and debts due said institution and exercise all powers necessary to
preserve the assets of the institution, reorganize the management thereof, and restore its viability. He shall have the power to overrule or revoke the
actions of the previous management and board of directors of the bank or non-bank financial intermediary performing quasi-banking functions, any
provision of law to the contrary notwithstanding, and such other powers as the Monetary Board shall deem necessary.
In the first place, this issue of the Conservators alleged authority to revoke or repudiate the perfected contract of sale was raised
for the first time in this Petition - as this was not litigated in the trial court or Court of Appeals. As already stated earlier, issues not raised
and/or ventilated in the trial court, let alone in the Court of Appeals, cannot be raised for the first time on appeal as it would be
offensive to the basic rules of fair play, justice and due process.[43]

In the second place, there is absolutely no evidence that the Conservator, at the time the contract was perfected, actually
repudiated or overruled said contract of sale. The Banks acting conservator at the time, Rodolfo Romey, never objected to the sale of
the property to Demetria and Janolo. What petitioners are really referring to is the letter of Conservator Encarnacion, who took over
from Romey after the sale was perfected on September 30, 1987 (Annex V, petition) which unilaterally repudiated - not the contract but the authority of Rivera to make a binding offer - and which unarguably came months after the perfection of the contract. Said letter
dated May 12, 1988 is reproduced hereunder:
May 12, 1988
Atty. Noe C. Zarate
Zarate Carandang Perlas & Ass.
Suite 323 Rufino Building
Ayala Avenue, Makati, Metro Manila
Dear Atty. Zarate:
This pertains to your letter dated May 5, 1988 on behalf of Attys. Janolo and Demetria regarding the six (6) parcels of land located at Sta. Rosa,
Laguna.
We deny that Producers Bank has ever made a legal counter-offer to any of your clients nor perfected a contract to sell and buy with any of them
for the following reasons.
In the Inter-Office Memorandum dated April 25, 1986 addressed to and approved by former Acting Conservator Mr. Andres I. Rustia, Producers
Bank Senior Manager Perfecto M. Pascua detailed the functions of Property Management Department (PMD) staff and officers (Annex A), you will
immediately read that Manager Mr. Mercurio Rivera or any of his subordinates has noauthority, power or right to make any alleged counter-offer. In
short, your lawyer-clients did not deal with the authorized officers of the bank.
Moreover, under Secs. 23 and 36 of the Corporation Code of the Philippines (Batas Pambansa Blg. 68) and Sec. 28-A of the Central Bank Act (Rep.
Act No. 265, as amended), only the Board of Directors/Conservator may authorize the sale of any property of the corporation/bank.
Our records do not show that Mr. Rivera was authorized by the old board or by any of the bank conservators (starting January, 1984) to sell the
aforesaid property to any of your clients. Apparently, what took place were just preliminary discussions/ consultations between him and your clients,
which everyone knows cannot bind the Banks Board or Conservator.
We are, therefore, constrained to refuse any tender of payment by your clients, as the same is patently violative of corporate and banking laws. We
believe that this is more than sufficient legal justification for refusing said alleged tender.
Rest assured that we have nothing personal against your clients. All our acts are official, legal and in accordance with law. We also have no personal
interest in any of the properties of the Bank.
Please be advised accordingly.
Very truly yours,
(Sgd.) Leonida T. Encarnacion
LEONIDA T. ENCARNACION
Acting Conservator
In the third place, while admittedly, the Central Bank law gives vast and far-reaching powers to the conservator of a bank, it must
be pointed out that such powers must be related to the (preservation of) the assets of the bank, (the reorganization of) the
management thereof and (the restoration of) its viability. Such powers, enormous and extensive as they are, cannot extend to the postfacto repudiation of perfected transactions, otherwise they would infringe against the non-impairment clause of the Constitution. [44] If the
legislature itself cannot revoke an existing valid contract, how can it delegate such non-existent powers to the conservator under
Section 28-A of said law?
Obviously, therefore, Section 28-A merely gives the conservator power to revoke contracts that are, under existing law, deemed to
be defective - 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. Ineluctably, his power is not unilateral and he cannot simply repudiate valid obligations of the Bank.
His authority would be only to bring court actions to assail such contracts - as he has already done so in the instant case. A contrary
understanding of the law would simply not be permitted by the Constitution. Neither by common sense. To rule otherwise would be to
enable a failing bank to become solvent, at the expense of third parties, by simply getting the conservator to unilaterally revoke all
previous dealings which had one way or another come to be considered unfavorable to the Bank, yielding nothing to perfected
contractual rights nor vested interests of the third parties who had dealt with the Bank.

The Fifth Issue:

Were There Reversible Errors of Fact?

Basic is the doctrine that in petitions for review under Rule 45 of the Rules of Court, findings of fact by the Court of Appeals are
not reviewable by the Supreme Court. In Andres vs. Manufacturers Hanover & Trust Corporation,[45] we held:
x x x. The rule regarding questions of fact being raised with this Court in a petition for certiorari under Rule 45 of the Revised Rules of Court has
been stated in Remalante vs. Tibe, G.R. No. 59514, February 25, 1988, 158 SCRA 138, thus:
The rule in this jurisdiction is that only questions of law may be raised in a petition for certiorari under Rule 45 of the Revised Rules of Court. The
jurisdiction of the Supreme Court in cases brought to it from the Court of Appeals is limited to reviewing and revising the errors of law imputed to it,
its findings of the fact being conclusive [Chan vs. Court of Appeals, G.R. No. L-27488, June 30, 1970, 33 SCRA 737, reiterating a long line of
decisions]. This Court has emphatically declared that it is not the function of the Supreme Court to analyze or weigh such evidence all over again,
its jurisdiction being limited to reviewing errors of law that might have been committed by the lower court (Tiongco v. De la Merced, G.R. No. L24426, July 25, 1974, 58 SCRA 89; Corona vs. Court of Appeals, G.R. No. L-62482, April 28, 1983, 121 SCRA 865; Baniqued vs. Court of Appeals,
G.R. No. L-47531, February 20, 1984, 127 SCRA 596). Barring, therefore, a showing that the findings complained of are totally devoid of support
in the record, or that they are so glaringly erroneous as to constitute serious abuse of discretion, such findings must stand, for this Court is not
expected or required to examine or contrast the oral and documentary evidence submitted by the parties [Santa Ana, Jr. vs. Hernandez, G.R. No. L16394,December 17, 1966, 18 SCRA 973] [at pp. 144-145.]
Likewise, in Bernardo vs. Court of Appeals,[46] we held:
The resolution of this petition invites us to closely scrutinize the facts of the case, relating to the sufficiency of evidence and the credibility of
witnesses presented. This Court so held that it is not the function of the Supreme Court to analyze or weigh such evidence all over again. The
Supreme Courts jurisdiction is limited to reviewing errors of law that may have been committed by the lower court. The Supreme Court is not a trier
of facts. x x x
As held in the recent case of Chua Tiong Tay vs. Court of Appeals and Goldrock Construction and Development Corp.:[47]
The Court has consistently held that the factual findings of the trial court, as well as the Court of Appeals, are final and conclusive and may not be
reviewed on appeal. Among the exceptional circumstances where a reassessment of facts found by the lower courts is allowed are when the
conclusion is a finding grounded entirely on speculation, surmises or conjectures; when the inference made is manifestly absurd, mistaken or
impossible; when there is grave abuse of discretion in the appreciation of facts; when the judgment is premised on a misapprehension of facts; when
the findings went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee. After a careful study of
the case at bench, we find none of the above grounds present to justify the re-evaluation of the findings of fact made by the courts below.
In the same vein, the ruling of this Court in the recent case of South Sea Surety and Insurance Company, Inc. vs. Hon. Court of
Appeals, et al.[48] is equally applicable to the present case:
We see no valid reason to discard the factual conclusions of the appellate court. x x x (I)t is not the function of this Court to assess and evaluate all
over again the evidence, testimonial and documentary, adduced by the parties, particularly where, such as here, the findings of both the trial court and
the appellate court on the matter coincide. (italics supplied)
Petitioners, however, assailed the respondent Courts Decision as fraught with findings and conclusions which were not only
contrary to the evidence on record but have no bases at all, specifically the findings that (1) the Banks counter-offer price of P5.5
million had been determined by the past due committee and approved by conservator Romey, after Rivera presented the same
for discussion and (2) the meeting with Co was not to scale down the price and start negotiations anew, but a meeting on the already
determined price of P5.5 million. Hence, citing Philippine National Bank vs. Court of Appeals, [49] petitioners are asking us to review and
reverse such factual findings.
The first point was clearly passed upon by the Court of Appeals,[50] thus:
There can be no other logical conclusion than that when, on September 1, 1987, Rivera informed plaintiffs by letter that the banks 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 x x x. Tersely put, under the established fact, the
price of P5.5 Million was, as clearly worded in Riveras letter (Exh. E), the official and definitive price at which the bank was selling the property.
(p. 11, CA Decision)
xxx

xxx

xxx

xxx. The argument deserves scant consideration. As pointed out by plaintiff, during the meeting of September 28, 1987 between the plaintiffs,
Rivera and Luis Co, the senior vice-president of the bank, where the topic was the possible lowering of the price, the bank official refused it and
confirmed that the P5.5 Million price had been passed upon by the Committee and could no longer be lowered (TSN of April 27, 1990, pp. 34-35)
(p. 15, CA Decision).

The respondent Court did not believe the evidence of the petitioners on this point, characterizing it as not credible and at best
equivocal, and considering the gratuitous and self-serving character of these declarations, the banks submissions on this point do not
inspire belief.
To become credible and unequivocal, petitioners should have presented then Conservator Rodolfo Romey to testify on their
behalf, as he would have been in the best position to establish their thesis. Under the rules on evidence, [51] such suppression gives rise
to the presumption that his testimony would have been adverse, if produced.
The second point was squarely raised in the Court of Appeals, but petitioners evidence was deemed insufficient by both the trial
court and the respondent Court, and instead, it was respondents submissions that were believed and became bases of the conclusions
arrived at.
In fine, it is quite evident that the legal conclusions arrived at from the findings of fact by the lower courts are valid and correct. But
the petitioners are now asking this Court to disturb these findings to fit the conclusion they are espousing. This we cannot do.
To be sure, there are settled exceptions where the Supreme Court may disregard findings of fact by the Court of Appeals. [52] We
have studied both the records and the CA Decision and we find no such exceptions in this case. On the contrary, the findings of the said
Court are supported by a preponderance of competent and credible evidence. The inferences and conclusions are reasonably
based on evidence duly identified in the Decision. Indeed, the appellate court patiently traversed and dissected the issues presented
before it, lending credibility and dependability to its findings. The best that can be said in favor of petitioners on this point is that the
factual findings of respondent Court did not correspond to petitioners claims, but were closer to the evidence as presented in the trial
court by private respondent. But this alone is no reason to reverse or ignore such factual findings, particularly where, as in this case, the
trial court and the appellate court were in common agreement thereon. Indeed, conclusions of fact of a trial judge - as affirmed by the
Court of Appeals - are conclusive upon this Court, absent any serious abuse or evident lack of basis or capriciousness of any kind,
because the trial court is in a better position to observe the demeanor of the witnesses and their courtroom manner as well as to
examine the real evidence presented.

Epilogue
In summary, there are two procedural issues involved - forum-shopping and the raising of issues for the first time on appeal [viz.,
the extinguishment of the Banks offer of P5.5 million and the conservators powers to repudiate contracts entered into by the Banks
officers] - which per se could justify the dismissal of the present case. We did not limit ourselves thereto, but delved as well into the
substantive issues - the perfection of the contract of sale and its enforceability, which required the determination of questions of fact.
While the Supreme Court is not a trier of facts and as a rule we are not required to look into the factual bases of respondent Courts
decisions and resolutions, we did so just the same, if only to find out whether there is reason to disturb any of its factual findings, for we
are only too aware of the depth, magnitude and vigor by which the parties, through their respective eloquent counsel, argued their
positions before this Court.
We are not unmindful of the tenacious plea that the petitioner Bank is operating abnormally under a government-appointed
conservator and there is need to rehabilitate the Bank in order to get it back on its feet x x x as many people depend on (it) for
investments, deposits and well as employment. As of June 1987, the Banks overdraft with the Central Bank had already reached
P1.023 billion x x x and there were (other) offers to buy the subject properties for a substantial amount of money. [53]
While we do not deny our sympathy for this distressed bank, at the same time, the Court cannot emotionally close its eyes to
overriding considerations of substantive and procedural law, like respect for perfected contracts, non-impairment of obligations and
sanctions against forum-shopping, which must be upheld under the rule of law and blind justice.
This Court cannot just gloss over private respondents submission that, while the subject properties may currently command a
much higher price, it is equally true that at the time of the transaction in 1987, the price agreed upon of P5.5 million was reasonable,
considering that the Bank acquired these properties at a foreclosure sale for no more than P 3.5 million. [54] That the Bank procrastinated
and refused to honor its commitment to sell cannot now be used by it to promote its own advantage, to enable it to escape its binding
obligation and to reap the benefits of the increase in land values. To rule in favor of the Bank simply because the property in question
has algebraically accelerated in price during the long period of litigation is to reward lawlessness and delays in the fulfillment of binding
contracts. Certainly, the Court cannot stamp its imprimatur on such outrageous proposition.
WHEREFORE, finding no reversible error in the questioned Decision and Resolution, the Court hereby DENIES the petition. The
assailed Decision is AFFIRMED. Moreover, petitioner Bank is REPRIMANDED for engaging in forum-shopping and WARNED that a
repetition of the same or similar acts will be dealt with more severely. Costs against petitioners.