Ty vs. Banco Filipino Savings and Mortgage Bank

The doctrine of stare decisis et non quieta movere compels adherence to a previously decided principle of law where the facts are substantially the same, regardless of whether the parties and property are the same. Where the Court has once laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases involving substantially the same facts, even if the parties differ.

Banco Filipino Savings and Mortgage Bank sought to acquire real properties as branch sites for its expansion program in 1979. Because the General Banking Act (Republic Act No. 337, Sections 25(a) and 34) limited a bank's real estate holdings to no more than 50% of its capital assets, the bank's Board of Directors decided to "warehouse" some of its existing properties and branch sites. Petitioner Nancy L. Ty, a major stockholder and director of the bank, persuaded two other major stockholders, Pedro Aguirre and Tomas Aguirre, to organize and incorporate Tala Realty Services Corporation to hold and purchase real properties in trust for the bank. This arrangement was the subject of multiple litigations between the parties spanning several years.

Sometime in 1979, Banco Filipino Savings and Mortgage Bank wanted to purchase real properties as new branch sites for its expansion program. Since the General Banking Act limited a bank's real estate holdings to no more than 50% of its capital assets, the respondent's Board of Directors decided to warehouse some of its existing properties and branch sites to allow more flexibility in opening branches and to enable it to acquire new branch sites. The petitioner, a major stockholder and director of the respondent, persuaded two other major stockholders, Pedro Aguirre and his brother Tomas Aguirre, to organize and incorporate Tala Realty Services Corporation to hold and purchase real properties in trust for the respondent. Subsequently, Remedios A. Dupasquier prodded her brother Tomas to endorse to her his shares in Tala Realty, and she registered them in the name of her controlled corporation, Add International Services, Inc. The petitioner, Remedios, and Pedro controlled Tala Realty through their respective nominees.

In implementing their trust agreement, the respondent sold to Tala Realty some of its properties. Tala Realty simultaneously leased to the respondent the properties for 20 years, renewable for another 20 years at the respondent's option, with a right of first refusal in the event Tala Realty decided to sell them. However, in August 1992, Tala Realty repudiated the trust, claimed the titles for itself, and demanded payment of rentals, deposits, and goodwill, with a threat to eject the respondent. Thus, from 1995 to 1996, the respondent filed 17 complaints against Tala Realty, the petitioner, Pedro, Remedios, and their respective nominees for reconveyance of different properties with 17 Regional Trial Courts nationwide, including Civil Case No. 2506-MN before Branch 170 of the RTC of Malabon, subject of the present case.

The petitioner and her co-defendants moved to dismiss the Malabon case for forum shopping and litis pendentia, citing the 16 other civil cases filed in various courts involving the same facts, issues, parties, and reliefs. The Malabon RTC denied the motion to dismiss, finding no commonality in the 16 other civil cases since they involved different causes of action. After the petitioner and her co-defendants filed their respective answers ad cautelam, the petitioner filed a motion to hold proceedings in abeyance, citing the pendency with this Court of G.R. No. 127611 that assailed the denial of their motion to dismiss Civil Case No. 4521 before the Batangas City RTC, and also praying for a writ of prohibition to order the 17 RTC branches and the three CA divisions to desist from further proceeding with the trial of the cases. The Malabon RTC granted the motion to hold proceedings in abeyance.

When the Malabon RTC denied the respondent's motion for reconsideration, the respondent elevated its case to the CA via a Rule 65 petition for certiorari. The CA initially dismissed the petition, but on motion for reconsideration, it modified its ruling, setting aside the RTC's order to hold proceedings in abeyance for mootness, due to this Court's dismissal of G.R. No. 127611 for late filing. Subsequently, the respondent moved for pre-trial. Tala Realty opposed the motion and filed again a motion to suspend proceedings, citing the pendency with this Court of G.R. No. 132703, a petition for certiorari that assailed the CA's affirmance of the dismissal order of the Iloilo City RTC in Civil Case No. 22493. The petitioner filed her separate opposition to the respondent's motion for pre-trial and a motion to hold proceedings in abeyance, stating that after the dismissal of G.R. No. 127611, two other similar petitions had been elevated to this Court: G.R. No. 130184, involving the CA's reversal of the dismissal of Civil Case No. Q-95-24830 in the Quezon City RTC, and G.R. No. 132703. The Malabon RTC granted the motion and again ordered to hold proceedings in abeyance.

Six years later, the Malabon RTC directed the parties' counsels to inform it of the status of the pending cases. In her compliance, the petitioner summarized this Court's rulings in the consolidated cases of G.R. Nos. 130184 and 139166, and in G.R. No. 132703, and reported on the other cases involving the same parties decided by this Court, as well as other related cases. On the other hand, the respondent filed its compliance with motion to revive proceedings, citing the Court's consolidated decision in G.R. Nos. 130184 and 139166, and the decisions in G.R. Nos. 144700, 167255, and 144705, commonly holding that there existed no forum shopping, litis pendentia, and res judicata among the respondent's reconveyance cases pending in the other courts of justice. In her comment to the respondent's motion to revive proceedings, the petitioner argued that the proceedings should not be revived since all the reconveyance cases are grounded on the same theory of implied trust which this Court in G.R. No. 137533 found void for being illegal as it was a scheme to circumvent the 50% limitation on real estate holdings under the General Banking Act. Tala Realty, on the other hand, pointed out that it was the court's prerogative to suspend or not its proceedings pending the resolution of issues by another court, in order to avoid multiplicity of suits and prevent vexatious litigations.

In its May 6, 2008 order, the RTC granted the respondent's motion to revive proceedings, noting that res judicata is not applicable since there are independent causes of action for each of the properties sought to be recovered. When the RTC denied the petitioner's motion for reconsideration, she elevated her case to the CA via a Rule 65 petition for certiorari, assailing the RTC orders. In its March 31, 2009 decision, the CA affirmed the RTC's orders, noting that res judicata does not apply since the issue of validity or enforceability of the trust agreement was raised in an ejectment case, not an action involving title or ownership, citing the Court's pronouncement in G.R. No. 144705 that G.R. No. 137533 does not put to rest all pending litigations involving the issues of ownership between the parties since it involved only an issue of de facto possession. When the CA denied her motion for reconsideration, the petitioner filed the present petition.

• Stare Decisis: The petitioner argued that the CA erred in refusing to apply G.R. No. 137533 under the principle of res judicata by conclusiveness of judgment and stare decisis, and in ignoring the November 26, 2007 minute resolution in G.R. No. 177865 and the April 7, 2009 consolidated decision in G.R. Nos. 130088, 131469, 155171, 155201, and 166608 that reiterated the Court's pronouncement in G.R. No. 137533.

• Estoppel: The respondent submitted that the petitioner is estopped from amending the issues since she never raised the pendency of the consolidated cases of G.R. Nos. 130088, 131469, 155171, 155201, and 166608 in her CA petition, which was based only on the Court's rulings in G.R. No. 137533 and G.R. No. 177865.

• Stare Decisis: Whether the Court's ruling in G.R. No. 137533 applies as stare decisis to the present case.

• Stare Decisis: Yes. The Court's ruling in G.R. No. 137533, as reiterated in G.R. Nos. 130088, 131469, 155171, 155201, and 166608, is binding and applicable to the present case under the doctrine of stare decisis et non quieta movere. The basic facts of the present case and those of the prior cases are the same, and the present action for reconveyance cannot prosper.

• Stare Decisis: The Court noted that the case at bar presented the same issue that the Court already resolved on April 7, 2009 in G.R. Nos. 130088, 131469, 155171, 155201, and 166608, wherein the Court applied its November 22, 2002 decision in G.R. No. 137533, one of several ejectment cases filed by Tala Realty against the respondent arising from the same trust agreement. In G.R. No. 137533, the Court ruled that the implied trust "warehousing agreement" was inexistent and void for being contrary to law, since the bank used it to circumvent the real property holdings limit under Sections 25(a) and 34 of the General Banking Act. The Court quoted the ruling that "where the purchase is made in violation of an existing statute and in evasion of its express provision, no trust can result in favor of the party who is guilty of the fraud," and that the bank could not demand reconveyance based on its alleged implied trust relationship with Tala. The Court also quoted the holding that the Bank and Tala were in pari delicto, thus no affirmative relief should be given to one against the other, and that the clean hands doctrine would not allow the creation or use of a juridical relation such as a trust to subvert the law. The Court explained that under stare decisis, when it has once laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases where facts are substantially the same, regardless of whether the parties and property are the same. The doctrine is based upon the legal principle or rule involved, not upon the judgment, and differs from res judicata, which is based upon the judgment. The Court stressed that the basic facts of the present case and those of G.R. No. 137533 and G.R. Nos. 130088, 131469, 155171, 155201, and 166608 are the same, and it was the Court's duty to apply the previous rulings to the present case. Once a case has been decided one way, any other case involving exactly the same point at issue should be decided in the same manner.

• Stare decisis et non quieta movere — Meaning "to adhere to precedents, and not to unsettle things which are established." When the Court has once laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases where facts are substantially the same, regardless of whether the parties and property are the same. The doctrine is based upon the legal principle or rule involved, not upon the judgment, and differs from res judicata, which is based upon the judgment. It is a policy grounded on the necessity for securing certainty and stability of judicial decisions. The Court applied this doctrine to dismiss the reconveyance action because the same issue — the validity of the implied trust "warehousing agreement" — had already been resolved against the bank in prior cases.

• Implied trust void for being contrary to law — Where a purchase is made in violation of an existing statute and in evasion of its express provision, no trust can result in favor of the party who is guilty of the fraud. The Court applied this principle to hold that the bank's implied trust "warehousing agreement" with Tala Realty was inexistent and void because it was a scheme to circumvent the 50% limitation on real estate holdings under the General Banking Act.

• In pari delicto / Clean hands doctrine — The Bank and Tala were in pari delicto, thus no affirmative relief should be given to one against the other. The clean hands doctrine will not allow the creation or the use of a juridical relation such as a trust to subvert, directly or indirectly, the law. Neither party came to court with clean hands; neither will obtain relief from the court as the one who seeks equity and justice must come to court with clean hands.

• "An implied trust could not have been formed between the Bank and Tala as this Court has held that 'where the purchase is made in violation of an existing statute and in evasion of its express provision, no trust can result in favor of the party who is guilty of the fraud.'" — This passage states the controlling principle that an implied trust cannot arise from a transaction that violates an existing statute, which was the basis for declaring the warehousing agreement void.

• "The Bank and Tala are in pari delicto, thus, no affirmative relief should be given to one against the other. The Bank should not be allowed to dispute the sale of its lands to Tala nor should Tala be allowed to further collect rent from the Bank. The clean hands doctrine will not allow the creation or the use of a juridical relation such as a trust to subvert, directly or indirectly, the law." — This passage articulates the in pari delicto and clean hands doctrines that bar both parties from obtaining relief from the courts.

• "Stare decisis simply means that for the sake of certainty, a conclusion reached in one case should be applied to those that follow if the facts are substantially the same, even though the parties may be different. It proceeds from the first principle of justice that, absent any powerful countervailing considerations, like cases ought to be decided alike." — This passage defines the doctrine of stare decisis and explains its policy basis, which the Court applied to dismiss the present reconveyance action.

• Tala Realty Services Corp. vs. Banco Filipino Savings and Mortgage Bank, 441 Phil. 1 (2002) (G.R. No. 137533) — Controlling precedent. The Court's November 22, 2002 decision declared the implied trust "warehousing agreement" void for being contrary to law, and was applied as stare decisis to the present case.

• Tala Realty Services Corporation vs. Court of Appeals, April 7, 2009, 584 SCRA 63 (G.R. Nos. 130088, 131469, 155171, 155201, and 166608) — Followed. The April 7, 2009 consolidated decision reiterated the Court's pronouncement in G.R. No. 137533 and was likewise applied as a precedent to the present case.

• Confederation of Sugar Producers Association, Inc. vs. Department of Agrarian Reform, G.R. No. 169514, March 30, 2007, 519 SCRA 582 — Cited for the definition of stare decisis et non quieta movere and the policy grounds for the doctrine.

• Manila Electric Company, Inc. vs. Lualhati, G.R. Nos. 166769 and 166818, December 6, 2006, 510 SCRA 455 — Cited for the principle that once a case has been decided one way, any other case involving exactly the same point at issue should be decided in the same manner.

• Commissioner of Internal Revenue vs. Trustworthy Pawnshop, Inc., 522 Phil. 497 (2006) — Cited alongside Manila Electric Company for the same principle regarding stare decisis.

• Section 25(a), Republic Act No. 337 (General Banking Act) — The provision limiting a bank's real estate holdings to no more than 50% of its capital assets. The Court found that the bank's "warehousing agreement" with Tala Realty was a scheme to circumvent this limitation, rendering the implied trust void.

• Section 34, Republic Act No. 337 (General Banking Act) — Cited together with Section 25(a) as the statutory basis for the real property holdings limit that the bank sought to avoid through the warehousing arrangement.

• Rule 45, 1997 Rules of Civil Procedure — The procedural basis for the petition for review on certiorari filed by the petitioner.

• Rule 65, 1997 Rules of Civil Procedure — The procedural basis for the respondent's and petitioner's petitions for certiorari before the Court of Appeals.

Carpio, J. (Senior Associate Justice, Chairperson), Perez, J., Sereno, J., and Reyes, J. concurred in the decision.