GR 90365; (March, 1991) (Digest)
G.R. No. 90365; March 18, 1991
VICENTE T. TAN, VICTAN & COMPANY, INC., TRANSWORLD INVESTMENT CORPORATION, FIRST INTERNATIONAL INVESTMENT COMPANY, INC., FAR EAST PETROLEUM & MINERALS CORPORATION, and PHILCONTRUST INTERNATIONAL CORPORATION, petitioners, vs. THE HONORABLE COURT OF APPEALS and CENTRAL BANK OF THE PHILIPPINES, respondents.
FACTS
Petitioners, led by Vicente T. Tan, filed a complaint for reconveyance of shares of stock with damages against the Central Bank. They sought to recover shares in Continental Bank, which Tan had assigned to three corporations in 1977 while he was under military detention. The assignments were made in consideration of the assignees assuming the liabilities of Tan and his companies. These assignees subsequently rehabilitated the bank, which reopened as Interbank.
The antecedent events began in 1974 when Tan was arrested. The Central Bank, after finding Continental Bank insolvent, ordered its closure and placed it under receivership on June 24, 1974, pursuant to Section 29 of the Central Bank Act. The petitioners filed their reconveyance case only on January 13, 1987, alleging they were fraudulently divested of their shares due to the bank’s illegal closure.
ISSUE
Whether the Court of Appeals correctly dismissed the complaint on the grounds of prescription, laches, and failure to state a cause of action.
RULING
The Supreme Court reversed the Court of Appeals and reinstated the complaint for trial on the merits. On prescription, the Court held that an action for reconveyance based on an implied or constructive trust prescribes in ten years from the alleged fraudulent conveyance. Since the deeds of assignment were executed in 1977 and the suit was filed in 1987, the ten-year period had not clearly lapsed, making dismissal on this ground premature. Regarding laches, the Court found the delay not inexcusable, noting Tan’s military detention until the end of the former regime, which constituted a circumstance impeding the filing of the suit.
Crucially, on the ground of failure to state a cause of action, the Court emphasized the distinction between a failure to state a cause of action and a failure to prove one. A motion to dismiss based on this ground hypothetically admits the truth of the material allegations in the complaint. The complaint alleged that the execution of the assignments was precipitated by the Central Bank’s illegal closure of the bank. Whether this allegation is true is a matter of evidence to be presented during a full trial. For purposes of the motion to dismiss, these allegations were sufficient to constitute a cause of action for reconveyance. The case was remanded to the Regional Trial Court for further proceedings.