THIRD DIVISION
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First philippine holdings
corporation, Petitioner, - versus - trans middle
east (Phils.) equities inc.,
Respondent. |
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G.R. No. 179505 Present: Chairperson, CHICO-NAZARIO, VELASCO, JR., NACHURA, and PERALTA, JJ. Promulgated: December 4, 2009 |
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CHICO-NAZARIO, J.:
This Petition for Review under Rule
45 of the Rules of Court seeks to reverse and set aside the
FPHC, formerly known as Meralco Securities
Corporation, which was incorporated in
On
The 6,299,179 shares of common stock
in PCIB are part of the sequestered properties that were allegedly illegally amassed
by Benjamin Romualdez during the twenty-year reign of former President
Ferdinand E. Marcos, and are among the purported ill-gotten wealth sought to be
recovered by the Presidential Commission on Good Government (PCGG) via a civil case docketed as Civil Case
No. 0035 before the Sandiganbayan.
According to FPHC, said shares were
obtained by TMEE through fraud and acts contrary to law, morals, good customs
and public policy.[3] Such
being the case, their acquisition is either voidable or void or unenforceable.
On 28 December 1988, claiming
ownership of said shares as well as the corresponding rights appurtenant to
ownership, FPHC filed before the Sandiganbayan its “Motion for Leave to
Intervene and to Admit Complaint in Intervention” in Civil Case No. 0035. Although the Sandiganbayan denied FPHC’s
motion for intervention, this Court on
On
FPHC disagreed. It maintained that the counting of four (4)
years should commence from the time the intimidation or the defect of consent
ceased, i.e., when former President
Ferdinand E. Marcos was deposed and left the country on
On
FPHC filed a motion for
reconsideration. In support thereof,
FPHC maintained that the sale of the PCIB shares was void ab initio, since the said transaction was allegedly approved by
the dummy board and signed by the dummy officers of FPHC. Since the subject sale contract was null and
void, the action for the declaration of its nullity was imprescriptible.
FPHC alternatively argued that even if
the case were dismissible on the ground of prescription, the rule was that the
facts demonstrating the lapse of the prescriptive period must be apparent in
the complaint. Since its
complaint-in-intervention did not show that there were averments that would
demonstrate the lapse of the prescriptive period, FPHC insisted that trial
should be had before the resolution of the issue of prescription and whether the
governing board of FPHC was so circumstanced that it was impossible for it to
successfully institute an action during the Marcos regime.
According to FPHC, even assuming that
Article 1391 of the Civil Code applied, the four-year prescriptive period
should be reckoned from 26 February 1986, when former President Ferdinand E.
Marcos was deposed from power and left the country, for it was only from that
date onwards that the cause of vitiation of consent, i.e., intimidation, violence and threats, ceased.
In its Resolution dated
Hence, the instant petition.
A contract is void if one of the
essential requisites of contracts under Article 1318 of the New Civil Code is
lacking. Article 1318 provides:
Art. 1318. There is no contract unless the following
requisites concur:
(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.
All these elements must be present to
constitute a valid contract. Consent is essential to the existence of a contract;
and where it is wanting, the contract is non-existent. In a contract
of sale, its perfection is consummated at the moment there is a meeting of the
minds upon the thing that is the object of the contract and upon the price.
Consent is manifested by the meeting of the offer and the acceptance of the
thing and the cause, which are to constitute the contract. To enter into a valid contract of sale, the
parties must have the capacity to do so. Every
person is presumed to be capacitated to enter into a contract until
satisfactory proof to the contrary is presented.[6] The burden of proof is on the individual
asserting a lack of capacity to contract, and this burden has been
characterized as requiring for its satisfaction clear and convincing evidence.
While a corporation is a juridical
person, it cannot act except through its board of directors as a collective
body, which is vested with the power and responsibility to decide whether the
corporation should enter into a contract that will bind the corporation,
subject to the articles of incorporation, by-laws, or relevant provisions of
law.[7] This grant to the board of all corporate powers is explicit
under Section 23 of the Corporation Code, stating: “All corporate powers shall be exercised, and all corporate business shall
be conducted by the board of directors.”
In the case under consideration, the dispute
centers on the element of consent, which FPHC claimed to be lacking since the
supposed board of directors that composed the FPHC was allegedly a “dummy
board” of Benjamin Romualdez, the members of
which were allegedly installed after the management and control of FPHC were supposedly
fraudulently wrested from its true owners. The Sandiganbayan, however,
differed. It stood pat in its ruling
that the consent by the board of directors, who had the legal capacity to enter
into said contract with a third person, was duly obtained. This Court finds no reason to diverge from the
disquisition of the anti-graft court on this matter:
With
respect to the insistence of FPHC that the Sale of Shares of Stock and Escrow
Agreement executed on May 24, 1984 is void since it was approved by a dummy
board that had no capacity to give consent, it must be stressed that one of the
requisites of a valid contract under Article 1318 of the Civil Code is consent
and the capacity of the parties to give consent. The legal capacity of the parties is an
essential element for the existence of consent.
There is no effective consent in law without the capacity to give such
consent. In other words, legal consent
presupposes capacity. Thus, there is
said to be no consent, and consequently, no contract when the agreement is
entered into by one in behalf of another who has never given him authorization
therefore unless he has by law a right to represent the latter.
Under
Section 23 of B.P. 68, otherwise known as the Corporation Code of the
The
mere allegation of FPHC that the persons who composed the Board of Directors of
FPHC that approved the contract were mere dummies of the Marcos and Romualdez
group does not make the said contract void.
If that allegation of vitiated consent be true so as to incapacitate the
Board from giving its consent freely, the defect if at all only renders the
contract voidable.[8]
Indeed, a reading of the allegations
of FPHC’s Complaint-in-Intervention and Petition for Review unveils the recurrent
and persistent asseveration that fraud or devious financial schemes and
techniques attended the change of control and management of the corporation. It can be seen therefore that the supposed fraud
employed by Benjamin Romualdez and alleged cohorts on the Lopezes constitutes
the root cause of the alleged nullity of the sale of the PCIB shares, thus:
15. Defendants Benjamin (Kokoy) Romualdez and his wife Juliette Gomez Romualdez, acting
by themselves and/or in unlawful concert with defendants Ferdinand E. Marcos
and Imelda R. Marcos, and taking undue advantage of their relationship,
influence and connection with the latter defendant spouse, engaged in devices, schemes and stategems to unjustly enrich
themselves at the expense either of plaintiff and the Filipino people or their
private individual victims. Thus –
They obtained, with the active collaboration of
defendants Senen J. Gabaldon, Mario D. Camacho, Mamerto Nepomuceno, Carlos J.
Valdez, Delia S. Tantuico, Cesar Zalamea, and Atty. Jose F. S. Benzon, Jr. and
his law partners, namely: Edilberto S.
Narciso, jr. and Leonardo C. Cruz; Jose S. Sandejas and his fellow senior
managers of FMMC/FNI Holdings groups such as Leonardo Gamboa, Vicente T. Mills,
jr., Jose M. Mantecon, Abelardo S. Termulo, Rex C. Drillon II and Kurt
Bachmann, jr. – control of the Manila Electric Company (Meralco), Pilipinas
Shell Corporation and the Philippine Commercial International Bank (PCI Bank)
(formerly Philippine Commercial and Industrial Bank) by employing devious financial schemes and techniques (See Part V,
par. 14(a) Second Amended Complaint); formed the Meralco Froundation, Inc.
(MFI) to gain control of the Meralco group of companies upon the false commitment, among others, to free
Eugenio Lopez, Jr. from detention. (Part
V, par. 14(d) Second Amended Complaint); effected, with the active
collaboration of, among others, defendants Edilberto S. Narciso, Jr., Jose F.
S. Bengzon, Jr., Jose Vicente E. Jimenez, Amando V. Faustino, Jr. and Leonardo
C. Cruz, the sale of share holdings of the First Philippine Holdings Corporation
in the Philippine Commercial and Industrial Bank (PCIB) to Trans Middle East
Philippine Equities, Inc., a front organization of defendant Benjamin (Kokoy)
Romualdez, in order to gain control of PCIB with minimum, or negligible
“cash-out” from said defendant. The
manner by which PCIB in effect funded the purchase of shares of its own capital
stock was done in violation of banking laws, rules and regulations (Part V,
par. 14(j) Second Amended Complaint); and at the onset of the present
administration and/or within the week following the February 1986 People’s
revolution, with the support, assistance and collaboration of the aforenamed
lawyers of the Bengzon Law Offices, cleverly hid behind the veil of corporation
entity, the ill-gotten wealth of defendant Benjamin (kooky) Romualdez,
including, among others, the 6,299,177 shares in PCIB registered in the names
of Trans Middle East Philippines, Equities, Inc. and defendant Edilberto S.
Narciso, Jr. which they refused to surrender to the PCGG (Part V, par. 14-q
Second Amended Complaint) despite defendant E. S. Narciso Jr.’s
admission/disclosure that the beneficial owner of said shares is defendant
Benjamin (Kokoy) Romualdez (Part V, par. 17-a Second Amended Complaint).[9]
31.
The PCGG
discovered and the
Undoubtedly, the entirety of the allegations
in the complaint-in-intervention makes up a case of a voidable contract of sale
- not a void one.
These circumstances surrounding the
questioned transaction fit in with what Article 1390 of the Civil Code contemplates
as voidable contracts, viz:
Art. 1390. The following contracts are voidable or
annullable, even though there may have been no damage to the contracting
parties:
x x x x
(2) Those where the consent is vitiated by mistake,
violence, intimidation, undue influence, or fraud.
Thus, contracts where consent is
given through fraud, are voidable or annullable. These are not void ab initio since voidable or anullable contracts are existent,
valid, and binding, although they can be annulled because of want of capacity
or the vitiated consent of one of the parties.
However, before such annulment, they are considered effective and
obligatory between parties. [11]
While FPHC’s complaint prayed for the
declaration of nullity of the disputed sale transaction, such prayer does not
determine the nature of the action at hand. It is the material allegations of fact in the
complaint, not the legal conclusion made therein or the prayer that determines
the nature of the case.[12] As ruled by this Court, it is the body and not
the caption or the prayer of the complaint that determines the nature of the
action.[13]
As the complaint-in-intervention
substantially alleged that the contract was voidable, the four-year
prescriptive period under Art. 1391 of the New Civil Code will apply.
Unyielding, FPHC invites this Court’s
attention to the applicability of the Islamic
Directorate of the Philippines v. Court of Appeals[14]
to the instant controversy.
In Islamic Directorate, there were several groups claiming to be the
legitimate board of trustees of Islamic Directorate of the Philippines (IDP). Two groups, the Carpizo Group and the Abbas
Group, separately contended that they were the lawful board of trustees of IDP.
This dispute reached the Securities and
Exchange Commission (SEC). The SEC,
however, ruled that the election of both groups as IDP board members was null
and void. This declaration became final
since none of them bothered to question the SEC ruling. Subsequently, despite its lack of authority, the
Carpizo Group sold two parcels of land belonging to IDP. This sale was assailed by the Tamano Group as
null and void. This Court sustained the
stance of the Tamano Group and went on to explain that the questioned
transaction was null and void because the Carpizo Group was bereft of any
authority to bind IDP in any kind of transaction including the sale of the IDP
property. The sale was therefore null
and void ab initio, because the
consent of IDP was absolutely absent.
The pivotal fact that separates the
instant case from Islamic Directorate
is that in the latter, the properties were alienated by an unauthorized body,
the Carpizo Group, whose election was previously voided by the SEC; while in
the former, the disposition of the disputed shares were sold by a legitimate
and authorized corporate officers, absent any declaration by the SEC or by any
court or tribunal against its legitimacy. Not a single stockholder even bothered to
question the election of the then board of directors of FPHC, much less
objected to the disputed sale. This
being the situation, Islamic Directorate
finds no application in the instant case.
Also unavailing is FPHC’s insistence
that the issue of prescription cannot be resolved on the basis of its complaint
as the facts establishing prescription do not appear on the face thereof.
A complaint may be dismissed when the
facts establishing prescription are apparent in the complaint or from the
records.[15] In Gicano
v. Gegato,[16]
this Court held that:
[T]rial courts have authority and
discretion to dismiss an action on the ground of prescription when the parties'
pleadings or other facts on record show it to be indeed time-barred; (Francisco v. Robles, Feb. 15, 1954; Sison v.
McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan. 28, 1961; Cordova v. Cordova,
Jan. 14, 1958; Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529; Sinaon v.
Sorongan, 136 SCRA 408); and it may do so on the basis of a motion to dismiss,
or an answer which sets up such ground as an affirmative defense; or even if
the ground is alleged after judgment on the merits, as in a motion for
reconsideration; or even if the defense has not been asserted at all, as where
no statement thereof is found in the pleadings; or where a defendant has been
declared in default. What is essential
only, to repeat, is that the facts demonstrating the lapse of the prescriptive
period be otherwise sufficiently and satisfactorily apparent on the record;
either in the averments of the plaintiff's complaint, or otherwise established
by the evidence.
Here, the pleadings filed before the
anti-graft court are replete with averments and proof that PCIB shares of stock
were sold on 24 May 1984, and that FPHC filed its complaint-in-intervention on
28 December 1988. From the execution of
the sale to the filing of the complaint, it is readily apparent that four years
and seven months had lapsed. Certainly
the complaint was filed beyond the four-year prescriptive period.
FPHC, however, contends that the four-year
prescriptive period should be reckoned from
This
argument is unconvincing. Based on
FPHC’s Petition for Review and its Complaint-in-Intervention, the ground relied
upon by petitioner is fraud. FPHC’s petition partly reads:
PCIBank shares were obtained xxx by
means of fraud and acts contrary to law, morals and public policy x x x.[17]
In its Complaint-in-Intervention, it
is alleged:
32.
Said sale,
is therefore, void or voidable on said ground, in addition to having been obtained fraudulently with
the connivance of defendant Kokoy Romualdez’s dummy directors and officers in
plaintiff-intervenors’ Board and Executive Committee, in breach of their
fiduciary obligations to plaintiff-intervenor and its stockholders under the
Corporation Code. x x x.[18]
Under Article 1391 of the Civil Code,
a suit for the annulment of a voidable contract on account of fraud shall be filed
within four years from the discovery of the same, thus:
Article
1391. An action for annulment shall be brought within four years.
This
period shall begin: In case of intimidation, violence or undue influence, from
the time the defect of the consent ceases.
In
case of mistake or fraud, from the time
of the discovery of the same.
Here, from the time the questioned
sale transaction on
Be that as it may, the Locsin’s mistrust of the courts
and of judicial processes is no excuse
for their non-observance of the prescriptive period set down by law.
If indeed the subject transaction
was, to Lopezes’ point of view, questionable, the Lopezes would have at least
exerted a token effort to assail the validity of the transaction, which they
did not. Instead of immediately availing
themselves of the courts to retrieve said shares, the Lopezes gave them up
without a fight and discounted judicial recourse, as they looked upon the
judiciary with indifference and distrust.
This attitude is certainly inconsistent with that of a person who
strongly believes in the veracity of his proprietary rights.
Based on the foregoing, the
Sandiganbayan need not go through trial on the merits to determine whether the
fact of prescription has set in. As
already said earlier, the Sandiganbayan has the authority and discretion to
dismiss an action on the ground of prescription on the basis of a motion to
dismiss alone. Moreover, FPHC cannot
successfully claim that it was denied due process, since the motion to dismiss
was set for hearing; and the parties, including FPHC, were given all the
opportunities to be heard through their numerous pleadings and counter-pleadings
filed before the Sandiganbayan.
In fine, this Court, defers to the
findings of the Sandiganbayan, there being no cogent reason to veer away from
such findings.
WHEREFORE, the
instant petition is DENIED. The
Resolutions of the Sandiganbayan dated
|
|
MINITA V. CHICO-NAZARIOAssociate Justice |
RENATO C. CORONA
Associate Justice
Chairperson
Associate Justice
Associate Justice
DIOSDADO M. PERALTA
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
RENATO
C. CORONA
Associate Justice
Chairperson,
Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S.
PUNO
Chief Justice
[1] Penned by Associate Justice Teresita V. Diaz-Baldos with Associate Justices Ma. Cristina G. Cortes-Estrada and Roland B. Jurado,concurring. Rollo, pp. 41-52.
[2] http://www.fphc.com/AboutFphc.php?ArticleID=12,
[3] Rollo, p. 17, FPHC’s Petition For Review.
[4] 323 Phil. 36 (1996).
[5] G.R. No. 132864,
[6] Vitalista v. Perez, G.R. No. 164147,
[7] Associated Bank v. Pronstroller, G.R. No. 148444,
[8] Rollo, pp. 57-59.
[9] Records, pp. 5161-5163.
[10] Records, p. 5174.
[11] Metropolitan Waterworks and Sewerage Sytem v. Court of Appeals, 357 Phil. 966, 978 (1998).
[12] Sandel v. Court of Appeals, 330 Phil. 653, 660-661 (1996).
[13]
[14] 338 Phil. 970 (1997).
[15] Gicano
v. Gegato, G.R. No. L-63575,
[16]
[17] Rollo, p. 17.
[18] Records, p. 5174.
[19] G.R. No. 132864,