142. Tan vs CA & PARTIES: ISSUE: WON Tan has a cause of action against the Central Bank?

Central Bank of Petitioner: Vicente Tan who sought to recover shares of

the Philippines stocks owned by him & his associates in Continental Bank RULING: NO. Aside from the fact that Tan’s action has already
which he has assigned to three corporations: Executive prescribed, he has no cause of action against the Central Bank for it is
Art. 540. Only the Consultants, Inc., Orabel Property Management, Inc. & not the owner of Continental Bank (International Corporate Bank)
possession acquired Antolum International Trading Corporation - It is true that the Central Bank is alleged to be the "indirect
and enjoyed in the owner," arising from certain loans supposedly facilitated by
concept of owner the Bank that enabled yet two other companies, the National
can serve as a title HOW THE CASE STARTED: Development Company and the American Express Bank, to
for acquiring Guys mej malabo pagkakasulat ng case but what happened acquire about ninety-nine percent of International Corporate
dominion.  was Tan was arrested by the officers. He then assigned shares Bank, subject to the conditionality that any transfer of shares
of stock of CB to his associates. Although at the same time, shall be approved by the Central Bank.
because of the Bank’s Insolvency, Central Bank by virtue of - Clearly, however, if the Central Bank were "owner" — which
R.A. No. 265, Sec. 29: an officer of the Cental Bank must be as we shall see, it is not — it is "owner" only because it is
designated to immediately take charge of its assets & preserving its money exposure to the National
liabilities (constructive trust). Hence, Tan filed this suit for Development Corporation and the American Express
reconveyance. However by the time of the commencement of Bank.
this suit, the control of Continental Bank has already passed - It is not "owner" for reconveyance purposes, that is, as the
from one person/company to another. Central Bank was then trustee holding shares acquired by fraud or mistake. To say
claiming that there’s no cause of action against them. now that it is holding those shares as such a trustee, that is,
as a result of the takeover of 'Continental Bank by the Disini
FACTS: companies, in spite of the fact that based on the records the
On June 15, 1974, Tan was arrested by the military bank now pertains to the NDC and American Express, is a
authorities pursuant to the Arrest, Search & Seizure mere conclusion of fact of the petitioners, the plaintiffs in the
Order (ASSO) issued by the then Secretary of National trial court.
Defense on the basis of criminal charges filed against - The fact that the parties had stipulated that any transfer of
him before the PC Criminal Investigation Service for the the Interbank shares by the National Development Company
alleged irregular transactions at Continental Bank (CB). shall be "subject to prior CB approval" does not make the
- At the time of the arrest, Tan was neither a director Central Bank the owner. We said, it is a simple
nor officer of said bank. However, he was one of the conditionality prescribed by the Central Bank in order
Principal Stockholders of CB.. to protect its money, a conditionality that is prescribed
- The Bank however continued its operations. in many loans.
- Soon thereafter, because of a possible bank run as a - It is not as if the arrangement had allowed the Central Bank to
result of the arrest, the officers of CB requested an hold the Interbank shares in question and had left the
emergency loan to meet pending withdrawals of National Development Company to act as a front.
depositors which then resulted in the declaration of
the Bank’s Insolvency. FALLO: WHEREFORE, the petition is DENIED. The Complaint in Civil
- On the basis of the Bank’s Insolvency, Petitioner Case No. 15707 of the Regional Trial Court, Branch 134, Makati, Metro
(CENTRAL BANK) ordered the closure of Continental Manila, is hereby DISMISSED.
Bank effective June 24, 1974 & designated the Director
of its Department of Commercial & Savings Banks as NOTES:
receiver with instructions to take charge of the bank’s The rule anent prescription on recovery of movables (shares of stock
asset pursuant to Sec. 29 of R.A. No. 265. in this case) is expressed in Article 1140 of the Civil Code, which we
While under detention, Tan executed certain quote:
agreements on February 2, 1977, May 12, 1977 and July
5, 1977 transferring & assigning 259,615 shares of Art. 1140. Actions to recover movables shall prescribe eight
stock in Continental Bank, as well as other properties years from the time the possession thereof is lost, unless the
belonging to him & his affiliate firms to Executive possessor had acquired the ownership by prescription for a
Consultants, Inc., Orobel Property Management, Inc. less period, according to article 1132, and without prejudice
and Antolum International Trading Corporation in to the provisions of articles 559, 1505, and 1133.
consideration of the assumption by these assignees of
the liabilities & obligations of Tan & his companies. As it provides, Article 1140 is subject to the provisions of Articles
- The assignees of Tan & his companies rehabilitated 1132 and 1133 of the Code, governing acquisitive prescription, in
Continental Bank & in support thereof, Tan wrote relation to Articles 559 and 1505 thereof.
Central Bank certifying on his own behalf of the
corporations owned & controlled by him, that they Under Article 1132:
have no objection to the reopening & rehabilitation of
CB under its new name, International Corporate Art. 1132. The ownership of movables prescribes through
Bank or Interbank. uninterrupted possession for four years in good faith.
- Interbank reopened in 1977 & since then operated as
a banking institution with controlling ownership. The ownership of personal property also prescribes through
On January 13, 1987, after the lapse of more than 12 uninterrupted possession for eight years, without need of any
years, private respondents (TAN) filed the present case other condition.
of reconveyance of shares of stock with damages &
restraining order. With regard to the right of the owner to recover personal
- Petitioner (CENTRAL BANK) filed a Motion to Dismiss property lost or of which he has been illegally deprived, as
on the grounds of prescription & that Tan have no well as with respect to movables acquired in a public sale,
cause of action against them for the Bank is now under fair, or market, or from a merchant's store the provisions of
the control of the Disini Company and is barred by the articles 559 and 1505 of this Code shall be observed.
statute of limitations as well as laches.
For purposes of extinctive prescription vis-a-vis movables, we
therefore understand the periods to be:

1. Four years, if the possessor is in good faith;

2. Eight years in all other cases, except where the loss was due
to a crime in which case, the offender can not acquire the
movable by prescription, and an action to recover it from him
is imprescriptible.