Far East Bank v. Court of Appeals
G.R. No. 123569 (April 1, 1996)
Facts:
Pacific Banking Corporation (PBC) was placed under receivership by the Central Bank of the Philippines on July 5, 1985, and subsequently entered liquidation. Following this, banks were invited to submit proposals for the purchase of PBC's assets. On November 14, 1985, Far East Bank and Trust Company (FEBTC) submitted a formal offer to purchase all of PBC's assets. A Memorandum of Agreement (MOA) was executed among FEBTC as the buyer, PBC through its liquidator as the seller, and the Central Bank.
On December 18, 1986, the Regional Trial Court (RTC) of Manila approved the Purchase Agreement based on the earlier MOA. FEBTC claimed to have complied with its obligations under both the MOA and the Purchase Agreement and requested the liquidator to execute the necessary deeds of sale for PBC's fixed assets located in various branches across the Philippines. However, the liquidator consistently refused to execute these deeds and instead offered the assets for bidding to third parties.
On July 5, 1993, FEBTC filed a motion with the RTC to compel the liquidator to execute the deeds of sale, along with an application for a preliminary injunction and/or temporary restraining order to prevent the liquidator from selling the assets to other buyers. The RTC initially issued a temporary restraining order but later denied the application for a writ of preliminary injunction. FEBTC then appealed to the Court of Appeals, which also denied the application for injunction.
Legal Issues:
The primary legal issue was whether FEBTC was entitled to the injunctive relief it sought against the liquidator of PBC. This involved determining if FEBTC had acquired ownership of the disputed fixed assets and whether the assets were collateralized with the Central Bank, as claimed by the liquidator.
Arguments:
FEBTC argued that it had fulfilled all conditions and obligations under the MOA and the Purchase Agreement, thereby acquiring a clear right over the fixed assets. It contended that the liquidator's refusal to execute the deeds of sale jeopardized its rights.
Conversely, the liquidator argued that FEBTC had not acquired ownership of the fixed assets because they were submitted as collateral to the Central Bank. The liquidator pointed to Section 1(a) of the MOA, which explicitly excluded assets that were collateralized with the Central Bank from the purchase agreement.
Court's Decision and Legal Reasoning:
The Supreme Court ruled against FEBTC, affirming the decision of the Court of Appeals. The Court found that the issue of whether the fixed assets were collateralized with the Central Bank was a question of fact, which is not typically subject to review under Rule 45 of the Revised Rules of Court. The trial court had determined that the assets in question were indeed collateralized, and this factual finding was upheld.
The Court emphasized that the trial court's findings of fact are generally respected and binding unless there are significant overlooked facts that could alter the outcome. The Court also noted that FEBTC did not meet the grounds for issuing a preliminary injunction as outlined in Section 3, Rule 58 of the Rules of Court.
Significant Legal Principles Established:
Nature of Injunctive Relief: The ruling clarified the requirements for obtaining a preliminary injunction, emphasizing that the applicant must demonstrate entitlement to the relief sought and that the actions of the defendant would likely cause injustice.
Distinction Between Questions of Fact and Law: The case underscored the principle that the Supreme Court does not resolve questions of fact, which are the purview of lower courts, and that factual findings are generally binding unless significant errors are demonstrated.
Exclusion of Collateralized Assets: The decision reinforced the legal principle that assets pledged as collateral are excluded from transactions unless explicitly stated otherwise in the agreement.