First Philippine International Bank v.

Court of Appeals, 252 SCRA 259 (1996) FACTS: In the course of its banking operations Producers Bank of the Philippines acquired six parcels of land which used to be owned by BYMC Investment and Development Corporation which was mortgaged to the bank as collateral for a loan. Demetrio Demetria and Jose Janolo wanted to purchase the property and thus initiated negotiations for that purpose. They met with Mercurio Rivera, manager of the Property Management Department of the bank, who advised them to make formal offer. Janolo following the advice of Rivera made a formal purchase offer, through a letter, for 3P3.5M in cash, which was counter-offered by Rivera, on behalf of the bank, to P5.5M, in which Janolo made an amended offer of P4.250M. There was reply on Janolos last offer, instead they met with Luis Co, Senior Vice-President of the Bank, sticked totheir counter offer of P5.5M, which Janolo et al., accepted after two days. The bank was placed under conservatorship by CB and through a letter, Rivera informed Demetria that their proposal to purchase the property is under study yet by the newly created committee for submission to the Acting Conservator. Series of demands were made by Janolo et al for compliance by the bank with what Janolo et al considered as perfected contract of sale which demands were refused by the bank, and refused to receive tender of payment. Instead the land was advertised for sale. Final demand was made in which acting conservator replied that the bank through the acting Conservator repudiated the authority of Rivera and all his dealings and counter-offer were unauthorized and illegal, and that there was no perfected contract of sale as there was no meeting of minds as to the price. Hence, Janolo et al filed a suit for specific performance against the bank. CA: Ruled that there was perfected contract of sale and conservator has no authority to revoke it. ISSUE:

are contracts which are, under existing law, deemed defective- such as void, voidable, unenforceable or rescissible. Hence, the conservator merely takes place of a banks board of directors. What said board cannot dosuch as repudiating a contract validly entered into under the doctrine of implied authoritythe conservator cannot do either Pacific Banking Corporation vs. CA & Oriental Assurance [GR. No. L-41014 28 November 1988] Facts: An open Fire Policy issued to Paramount Shirt Manufacturing for Php61,000 on the following: stocks, materils, supplies, furniture, fixture, machinery, equipment contained on the 1st to 3rd floors. Insurance is for a year starting 21 OCTOBER 1964. Paramount Shirt is debtor of Pacific Banking amounting to Php800,000. Goods in policy were held in trust by Paramount for Pacific under thrust receipts. Fire broke out on 4 January 1964. Pacific sent letter of demand to Oriental. Insurance Adjuster of Oriental notified Pacific to submit proof of loss pursuant to Policy Condition 11. Pacific did not accede but asked Insurance Adjuster to verify records form Bureau of Customs. Pacific filed for sum of money against Oriental. Oriental alleged that Pacific prematurely filed a suit, for neither filing a formal claim over loss pursuant to policy nor submitting any proof of loss. Trial court decided in favor of Pacific. Decision based on technicality. The defense of lack of proof of loss and defects were raised for the 1st time. (On presentation of evidences by Pacific, it was revealed there was violation of Condition No.3, there were undeclared co-insurances under same property Wellington, Empire, Asian. The only declared coinsurances were Malayan, South Sea, and Victory) CA reversed decision. Concealment of other co-insurances is a misrepresentation and can easily be fraud. Issues: (1) Whether or not unrevealed con-insurances is a violation of Policy Condition No.3 (2) Whether or not there was premature filing of action Held: (1) Yes. Policy Condition 3 provides that the insured must give notice of any insurance already in effect or subsequently be in effect covering same property being insured. Failure to do so, the policy shall be forfeited. Failure to reveal before the loss of the 3 other insurances is a clear misrepresentation or a false declaration. The material fact was asked for but was

Whether or not a conservator has the authority to revoke a perfected contract of sale entered into by the bankthrough its officers before conservatorship. The power of conservator, enormous and extensive as they are, cannot extend to the post-facto repudiation of perfected transactions, otherwise they would infringe the non-impairment clause of the Constitution. What theconservator may revoke

HELD:

not revealed. Representations of facts are the foundations of the contract. Pacific itself provided for the evidences in trial court that proved existence of misrepresentation. (2) Yes. Policy Condition 11 is a sine qua non requirement for maintaining action. It requires that documents necessary to prove and estimate the loss should be included with notice of loss. Pacific failed to submit formal claim of loss with supporting documents but shifted the burden to the insurance company. Failing to submit claim is failure for insurance company to reject claim. Thus, a lack of cause of action to file suit. Furthermore, the mortgage clause in the policy specifically provides that the policy is invalidated by reasons of FRAUD, MISREPRESENTATION and FRAUD. Concealment can easily be fraud or misrepresentation. The insured PARAMOUNT is not entitled to proceeds. Moreso, Pacific as indorsee of policy is not entitled.