G.R. No. 183308 Case Digest

G.R. No. 183308, April 25, 2012

Insular Investment and Trust Corporation, petitioner

vs Capital One Equities Corp., and Planters Development Bank, respondents

Ponente: Mendoza

Facts:

Insular and Capital One and Planters are regularly engaged in trading, sale and purchase of Philippine treasury bills. Then on May 10, 1994, Capital One wrote a letter to Insular demanding the physical delivery of the treasury bills which the Capital one purchased.

Then on July 1, 1994, the 3 companies entered into a tripartite agreement whrein Planters assigned to Insular, which in turn assigned to Capital one, bills with the total value of P50million. But despite the repeated demands, Planters failed to deliver the balance worth of bills making Capital one likewise unable to deliver the remaining bills to Insular.

RTC: the trial court ordered (a) IITC to pay COEC P17,056,608.00 with interest at the rate of 6% from June 10, 1994 until full payment and (b) PDB to pay IITC P136,790,000.00 with interest at the rate of 6% from March 21, 1995 until full payment.

CA: CA affirmed the RTC finding that IITC was not a mere conduit but rather a direct seller to COEC of the treasury bills. The CA, however, absolved PDB from any liability, ruling that because PDB was not involved in the transactions between IITC and COEC, IITC should have alleged and proved that PDB sold treasury bills to IITC.

Hence, this petition.

Issues: (1) Whether IITC acted as a conduit in the transaction between COEC and PDB; (2) Whether COEC can set-off its obligation to IITC as against the latter’s obligation to it; and (3) Whether PDB has the obligation to deliver treasury bills to IITC.

Held:

Petition is meritorious.

(1) IITC did not act as conduit

Petitioner IITC insists that the issue of whether it acted as a conduit is a question of law which can properly be the subject of a petition for review before this Court.  Because the parties already entered into a stipulation of facts and documents, the facts are no longer at issue; rather, the court must now determine the applicable law based on the admitted facts, thereby making it a question of law.  Even assuming that the determination of IITC’s role in the two transactions is a pure question of fact, it falls under the exceptions when the Court may decide to review a question of fact.

(2) The issue raised by IITC is factual in nature as it requires the Court to delve into the records and review the evidence presented by the parties to determine the validity of the findings of both the RTC and the CA as to IITC’s role in the transactions in question.  These are purely factual issues which this Court cannot review.Well-established is the principle that factual findings of the trial court, when adopted and confirmed by the Court of Appeals, are binding and conclusive on this Court and will generally not be reviewed on appeal.

Petition partially granted.