Banking Cases 2

G.R. No.
130439 October 26, 1999

PHILIPPINE VETERANS BANK, et!t!o"er, #$.HONORABLE
NATIONAL LABOR RELATIONS %O&&ISSION, HON.
POTEN%IANO %A'I(ARES, )R., *"+ ,R. TEO,ORI%O V.
&OLINA, re$o"+e"t$.
In this petition for certiorari under Rule 65 of the Rules of Court,
petitioner seeks to set aside the resolution 1 of the National Labor
Relations Commission (NLRC) in NLRC Case No. 5!"#$!#1 and
its order " den%in& the motion for reconsideration thereof.
In 1#'(, petitioner )hilippine *eterans +ank ,as placed under
recei-ership b% the Central +ank (no, +an&ko .entral) ( b% -irtue
of Resolution No. (($ issued b% the /onetar% +oard. )etitioner ,as
subse0uentl% placed under li0uidation on 15 1une 1#'5.
Conse0uentl%, its emplo%ees, includin& pri-ate respondent 2r. 1ose
3eodorico *. /olina (/4LIN5), ,ere terminated from ,ork and
&i-en their respecti-e separation pa% and other benefits. 3o assist in
the li0uidation, some of petitioner6s former emplo%ees ,ere rehired,
amon& them /4LIN5, ,hose re!emplo%ment commenced on 15
1une 1#'5.
4n 11 /a% 1##1, /4LIN5 filed a complaint $ a&ainst Renan *.
.antos, 5 )acifico 7. Cer-antes and 5lfredo L. 2i8on, members of
the li0uidation team. 6 2ocketed as NLRC!NCR Case No. 5!"#$!
#1, the complaint demanded the implementation of 9a&e 4rders
Nos. NCR!1 and NCR!" (hereafter 9.4. 1 and 9.4. ") as ,ell as
moral dama&es and attorne%6s fees in the amount of
)(,.1:,phi1.n;t
In his position paper, /4LIN5 alle&ed that he started ,orkin& for
petitioner as a le&al assistant on 1< /arch 1#<$. 9hen petitioner ,as
placed under li0uidation in 1#'5, he ,as retained as /ana&er II in
the Le&al 2epartment, ,here he continued to recei-e a monthl%
salar% of )(,<5$,6.
/ean,hile, 9.4. 1 took effect on 1 No-ember 1##, prescribin& a
)1<!increase in the dail% ,a&e of emplo%ees ,hose monthl% salar%
did not e=ceed )(,'".'. 4n the other hand, 9.4. ", ,hich became
effecti-e on ' 1anuar% 1##1, mandated a )1"!increase in the dail%
,a&e of emplo%ees ,hose monthl% salar% did not e=ceed )$,(1#.16.
/4LIN5 claimed that his salar% should ha-e been ad>usted in
compliance ,ith said ,a&e orders.
In their position paper, the li0uidation team countered that /4LIN5
,as not entitled to an% salar% increase because he ,as alread%
recei-in& a monthl% salar% of )6,65$.6 broken do,n as follo,s?
)(,<5$.6 as basic compensation, )", as representation and
transportation allo,ance (R535), and a special allo,ance of )#.
In his decision, < Labor 5rbiter )otenciano .. Ca@i8ares, 1r. re>ected
the "6.16 factor used b% the li0uidators in computin& the dail% ,a&e
of /4LIN5, adoptin& instead the factor of A(65 da%s.A
Conse0uentl%, the% ,ere ordered to pa% /4LIN5 )$,1(6.6$ and
)",1# representin& the ,a&e differentials due him under 9.4. 1 and
9.4. ". 3he% ,ere also re0uired to pa% him )1, in moral
dama&es and attorne%6s fees.
4n appeal, the NLRC sustained the labor arbiter6s rulin& after
concludin& that /4LIN5 ,as a re&ular emplo%ee of petitioner ,ith
a basic monthl% salar% of )(,<5$.6 at the time of his dismissal on (1
1anuar% 1##". Be ,as, therefore, entitled to the ,a&e increases
mandated b% the aforesaid ,a&e orders.
In its assailed resolution of < 5pril 1##<, the NLRC decreed thus?
9BCRCD4RC, the respondents Emembers of herein petitioner6s
li0uidation teamF are hereb% directed to pa% the complainant
E/4LIN5F the total sum EsicF of )11",51." broken do,n as
follo,s?
94G NCR!1 H 1!5 )1<.Ida% No-. 1## ! 1an. <, 1##1
94G NCR!" H "!5 )1".Ida% 1an. ', 1##1 ! 1an. (1, 1##"
(2ate of termination)
9a&e 2ifferential?
94G NCR!1 (No-. 1## J 1an. (1, 1##" ! 15 mos.)
)1<. = (65 K 1" L )51<.' = 15 mos. ! )<,<56."
94G NCR!" (1an. ', 1##1 J 1an. (1, 1##" ! 1( mos.)
)1". = (65 K 1" L )(65. = 1( mos. ! )$,<$5.
3otal 9a&e 2ifferential )1",51."
/oral 2ama&es H 5ttorne%6s Dees )1,.
3435L 595R2 )11",51."
.4 4R2CRC2. '
5s /4LIN5 mo-ed for the e=ecution of the NLRC resolution,
petitioner, in turn, mo-ed for its reconsideration. In its order of "<
1une 1##<, the NLRC denied petitioner6s motion, promptin& the latter
to file the instant petition ,ith a pra%er for the issuance of a
temporar% restrainin& order and ,rit of preliminar% in>unction.
In this action, petitioner 0uestions the propriet% of its substitution as
a part%!respondent belo, on the prete=t that it ,as thereb% depri-ed
of its ri&ht to due process. .econd, /4LIN5 ,as alludin& to acts
committed b% the representati-es of the then Central +ank. )etitioner
emphasi8es that he ,as rehired onl% to assist in the li0uidation
process. # In fact, all its emplo%ees ,ere dismissed and &i-en their
correspondin& separation pa% and benefits. 5t that moment, the
emplo%er!emplo%ee relationship bet,een petitioner and /4LIN5
ceased to e=ist. 3hird, petitioner maintains that /4LIN5 is estopped
from claimin& that it continued to be his emplo%er durin& the
rehabilitation period since the admissions in his pleadin&s, one of
,hich is that the li0uidators ,ere his emplo%ers, are bindin& and
conclusi-e.
Nonetheless, petitioner reiterates the ar&uments raised b% the ori&inal
respondents, particularl% that the factor of "6.16 should ha-e been
applied in determinin& /4LIN56s dail% ,a&e. 2oin& so ,ould sho,
that /4LIN56s dail% pa% e=ceeded the minimum ,a&e and,
therefore, ,as be%ond the scope of the ,a&e orders.
)etitioner also a-ers that the a,ard of )1, in moral dama&es
and attorne%6s fees ,as inappropriate since the complaint did not
specif% the same, and it ,as clearl% e=cessi-e, considerin& that the
case ,as decided based on the pleadin&s and ,ithout the benefit of
trial. In fact, /4LIN5 failed to pro-e his claim for both moral
dama&es and attorne%6s fees. C-en if due, the amount far surpassed
an% actual dama&e that /4LIN5 ma% ha-e suffered. In an% e-ent,
moral dama&es ma% onl% be reco-ered in labor cases ,hen the
dismissal is attended b% bad faith or fraud, or ,hen it constitutes an
act oppressi-e to labor or committed in a manner contrar% to &ood
morals, &ood customs or public polic%. /4LIN56s dismissal ,as
made in the ordinar% course of business.
4n the other hand, /4LIN5 primaril% asserts that upon petitioner6s
rehabilitation it assumed all the ri&hts and obli&ations of the
li0uidator, includin& the NLRC6s monetar% a,ard arisin& from the
labor complaint he filed a&ainst the li0uidation team.
3he 4ffice of the .olicitor Meneral supports the NLRC6s findin& that
/4LIN5 ,as entitled to the ,a&e increases because it ,as ne-er
disputed that his salar% of )(,<5$.6 ,as clearl% co-ered b% the
,a&e orders. 3he li0uidators, ho,e-er, used the "6.16 instead of the
(65 factor in computin& his dail% ,a&e. 3he 4.M cites the rulin& of
the National 9a&es Council in its
letter 1 to the )hilippine *eterans +ank Retained Cmplo%ees, ,here
the Council opined that the retained emplo%ees ,ere entitled to the
,a&e increase computed on the basis of (65 da%s. It also a&rees ,ith
the NLRC6s conclusion that /4LIN5 is entitled to moral dama&es
and attorne%6s fees, althou&h the% must be separatel% specified.
Dinall%, the 4.M opines that upon the rehabilitation of petitioner, it
assumed all the assets, liabilities, ri&hts and obli&ations of the
li0uidation team. 3his ,ould include the salaries of the emplo%ees
hired for li0uidation purposes, such as /4LIN5.
In its repl%, petitioner insists that ,hen it ,as placed under
li0uidation, it lost its >uridical personalit%, such that it could no
lon&er enter into contracts or transact business. 5ll its assets and
liabilities ,ere turned o-er to the Central +ank. /4LIN56s
complaint pertained to acts committed durin& li0uidation and so ,as
correctl% filed a&ainst the li0uidation team. Its substitution as part%!
respondent ,as clearl% erroneous.
Bence, the issues to be resol-ed are? (1) 5re 9.4. 1 and 9.4. "
applicable to /4LIN5N (") Is /4LIN5 entitled to moral dama&es
and attorne%6s feesN (() If so, ,ho is liable to pa% /4LIN56s claimsN
9e see no reason to disturb the factual findin& of the labor arbiter,
and affirmed b% the NLRC, that /4LIN56s salar% ,as ,ithin the
co-era&e of the cited ,a&e orders. 9ell!settled is the rule that the
findin&s of fact of 0uasi!>udicial bodies are &enerall% accorded
respect and finalit% ,here the% are supported b% substantial
e-idence. 11 Indeed, /4LIN56s monthl% salar% of )(,<5$.6 ,as
ne-er at issue. 9hat ,as in dispute ,as the computation of his dail%
,a&e.
9.4. 1 e=pressl% states that emplo%ees ha-in& a monthl% salar% of
not more than )(,'".' are entitled to recei-e the mandated ,a&e
increase. 7ndeniabl%, /4LIN5 ,as recei-in& a monthl% salar% of
)(,<5$.6. 3his fact alone lea-es no doubt that he should benefit
from said ,a&e order.
4n the other hand, 9.4. " raised the ceilin& for entitlement to the
,a&e increase. If /4LIN5 ,as co-ered b% the earlier ,a&e order,
,ith more reason should the later ,a&e order appl% to him.
9orth mentionin& is the opinion 1" rendered b% the National 9a&es
Council on the 0uer% of the )hilippines *eterans +ank Retained
Cmplo%ees, on ,hether the% ,ere entitled to a ,a&e increase under
Republic 5ct No. 66$, 1( -i8.?
3he documents attached to %our 0uer% sho, that the +ank has been
consistentl% usin& the factor of (65 da%s in computin& %our
e0ui-alent monthl% salar% prior to its bein& placed under recei-ership
b% the Central +ank. 3his is e-ident in the ,a&e and allo,ance
increases &ranted under pre-ious )residential 2ecrees and 9a&e
4rders, ,hich ,ere &i-en b% the +ank on monthl% basis, i.e., ,here
the rest da%s are un,orked EsicF but paid. 3his is also indicated in the
appointment and ser-ice records of bank personnel ,ho started out
as dail% paid emplo%ees and ,ere e-entuall% promoted as permanent
emplo%ees ,ith fi=ed monthl% salaries. Bo,e-er, ,hen R.5. 66$
,ent into force, the +ank unilaterall% reduced the factor to "6"
instead of maintainin& factor (65 as ,as the practiceIpolic% lon&
before the effecti-it% of the 5ct. 5nd ,hen R.5. 6<"< took effect, the
+ank re-erted to the old practiceIpolic% of usin& factor (65 da%s in
computin& %our e0ui-alent monthl% rate salar%. . . .
/a% ,e add that the old practice of the bank in usin& factor (65 da%s
in a %ear in determinin& %our e0ui-alent monthl% salar% cannot
unilaterall% be chan&ed b% %our emplo%er ,ithout the consent of the
emplo%ees, such practice bein& no, a part of the terms and
conditions of %our emplo%ment. 5n emplo%ment a&reement, ,hether
,ritten or un,ritten, is a bilateral contract and, as such other part%
thereto cannot chan&e or amend the terms thereof ,ithout the
consent of the other part% thereto.
Drom the fore&oin&, it is clear that %ou are entitled to the ,a&e
increase under R.5. 6$$ computed on the basis of (65 paid da%s
and to the correspondin& salar% differentials as a result of the
application of this factor. ECmphasis suppliedF
C-identl%, the use of the (65 factor is bindin& and conclusi-e,
formin& as it did part of the emplo%ment contract. )etitioner can no
lon&er in-oke the "6.16 factor after it -oluntaril% adopted the (65
factor as a polic% e-en prior to its recei-ership. 3o abandon such
polic% and re-ert to its old practice of usin& the "6.16 factor ,ould
be a diminution of a labor benefit, ,hich is prohibited b% the Labor
Code. 1$ It cannot be doubted that the (65 factor fa-ors petitioner6s
emplo%ees, includin& /4LIN5, because it results in a hi&her
determination of their monthl% salar%.
5s to the second issue, ,e a&ree ,ith the NLRC that /4LIN5 is
entitled to moral dama&es and attorne%6s fees. Be ma% ha-e omitted
such claims in his complaint, but he certainl% included them in his
position paper. 9e hold that such alle&ation is sufficient to enable the
complainant to seek an a,ard thereof. 3he complaint bein& pro
forma, /4LIN56s omission to specif% a claim for dama&es does not
bar reco-er% thereof especiall% ,hen, as in this case, such a claim
,as pra%ed for in his position paper. 15
3he NLRC, ho,e-er, did not distin&uish bet,een attorne%6s fees and
moral dama&es in affirmin& the a,ard of )1, to /4LIN5. 9e
hold that a,ards for moral dama&es and attorne%6s fees cannot be
consolidated for the% are different in nature and each must be
separatel% determined. 16 .ince the Labor Code limits attorne%6s fees
to ten percent of the ,a&es a,arded, 1< and the total ,a&e
differential due /4LIN5 ,as computed at )1",51.", onl%
)1,"5.1" should ha-e been a,arded as attorne%6s fees.
/o-in& on to the issue of moral dama&es, the records sho, that
/4LIN5 based his claim on the alle&ed failure of the li0uidation
team to implement the benefits of the ,a&e orders, ,ithout
submittin& an% proof in support thereof. It is basic, ho,e-er, that for
moral dama&es to be a,arded, the claimant must satisfactoril% pro-e
its factual basis and causal connection ,ith the respondent6s acts. 1'
In this, /4LIN5 failed, for ,hich reason the a,ard of moral
dama&es must be deleted.
Dinall%, ,e rule that the pa%ment of /4LIN56s claims de-ol-es
upon petitioner, not the li0uidation team. 9hen a bank is declared
insol-ent and placed under recei-ership, the /onetar% +oard of the
Central +ank determines ,hether to proceed ,ith the li0uidation or
reor&ani8ation of the financiall% distressed bank. 1# 5 recei-er takes
control and possession of the assets of the bank for the benefit of its
creditors " and concurrentl% represents the bank. "1 4n the other
hand, a li0uidator assumes the role of the recei-er upon the
determination b% the /onetar% +oard that the bank can no lon&er
resume business. Bis task is to dispose of all the assets of the bank
and effect partial pa%ments of its obli&ations in accordance ,ith their
le&al priorit%. "" In both recei-ership and li0uidation proceedin&s,
the bank retains its >uridical personalit% not,ithstandin& the closure
of its businessO in fact, the bank ma% e-en be sued. "( Its corporate
e=istence is assumed b% the recei-er or li0uidator. 3he latter,
ho,e-er, acts not onl% for the benefit of the bank, but for the bank6s
creditors as ,ell. "$
In the instant case, petitioner ,as initiall% closed and put under
recei-ership and li0uidation. .ubse0uentl%, its rehabilitation ,as
effected b% -irtue of Republic 5ct No. <16# "5 and /onetar% +oard
Resolution No. ($' dated 1 5pril 1##". Rehabilitation contemplates
a continuance of corporate life and acti-ities in an effort to restore
and reinstate the corporation to its former position of successful
operation and sol-enc%. "6 7pon its rehabilitation, petitioner
assumed the ri&hts and obli&ations of the recei-er and li0uidator.
3his includes /4LIN56s claim for unpaid ,a&es. It must be borne
in mind that all the acts of the recei-er and li0uidator pertain to
petitioner, both ha-in& assumed petitioner6s corporate e=istence.
)etitioner cannot disclaim liabilit% b% ar&uin& that the non!pa%ment
of /4LIN56s >ust ,a&es ,as committed b% the li0uidators durin&
the li0uidation period.
9BCRCD4RC, this case is 2I./I..C2. 3he assailed Resolution of
< 5pril 1##< and 4rder of "< 1une 1##< of the National Labor
Relations in NLRC Case No. 5!"#$!#1 are 5DDIR/C2 ,ith the
/42IDIC53I4N that the a,ard of moral dama&es is deleted and the
a,ard of attorne%6s fees is reduced to 4NC 3B47.5N2 394
B7N2RC2 DID3P H 1"I1 )C.4. ()1,"5.1").1:,phi1.n;t
No pronouncement as to costs.
.4 4R2CRC2.
G.R. No. 1-4..- October 2, 2009
BANGKO SENTRAL NG PILIPINAS &ONETAR/ BOAR,
*"+ %H0%HI 1ONA%IER, )etitioners,
-s.
HON. NINA G. ANTONIO2VALEN(0ELA, !" 3er c**c!t4 *$
Re5!o"*6 Tr!*6 %o7rt )7+5e o8 &*"!6*, Br*"c3 2-9 R0RAL
BANK O1 PARA'A:0E, IN%.9 R0RAL BANK O1 SAN )OSE
;BATANGAS<, IN%.9 R0RAL BANK O1 %AR&EN ;%EB0<,
IN%.9 PILIPINO R0RAL BANK, IN%.9 PHILIPPINE
%O0NTR/SI,E R0RAL BANK, IN%.9 R0RAL BANK O1
%ALATAGAN ;BATANGAS<, IN%. ;"o= ,/NA&I% R0RAL
BANK<9 R0RAL BANK O1 ,ARB%I, IN%.9 R0RAL BANK O1
KANANGA ;LE/TE<, IN%. ;"o= 1IRST INTERSTATE
R0RAL BANK<9 R0RAL BANK O1 BISA/AS &INGLANILLA
;"o= BANK O1 EAST ASIA<9 *"+ SAN PABLO %IT/
,EVELOP&ENT BANK, IN%.,Respondents.
3he Case
3his is a )etition for Re-ie, on Certiorari under Rule $5 ,ith )ra%er
for Issuance of a 3emporar% Restrainin& 4rder (3R4)I9rit of
)reliminar% In>unction, 0uestionin& the 2ecision dated .eptember
(, "'
1
of the Court of 5ppeals (C5) in C5!M.R. .) No. 1(#(5.
3he C5 2ecision upheld the 4rder
"
dated 1une $, "' of the
Re&ional 3rial Court (R3C), +ranch "' in /anila, issuin& ,rits of
preliminar% in>unction in Ci-il Case Nos. '!11#"$(, '!11#"$$, '!
11#"$5, '!11#"$6, '!11#"$<, '!11#"$', '!11#"$#, '!11#"5,
'!11#"51, and '!11#"<(, and the 4rder dated /a% "1, "' that
consolidated the ci-il cases.
3he Dacts
In .eptember of "<, the .uper-ision and C=amination 2epartment
(.C2) of the +an&ko .entral n& )ilipinas (+.)) conducted
e=aminations of the books of the follo,in& banks? Rural +ank of
)ara@a0ue, Inc. (R+)I), Rural +ank of .an 1ose (+atan&as), Inc.,
Rural +ank of Carmen (Cebu), Inc., )ilipino Rural +ank, Inc.,
)hilippine Countr%side Rural +ank, Inc., Rural +ank of Calata&an
(+atan&as), Inc. (no, 2%namic Rural +ank), Rural +ank of 2arbci,
Inc., Rural +ank of Qanan&a (Le%te), Inc. (no, Dirst Interstate Rural
+ank), Rural +ank de +isa%as /in&lanilla (no, +ank of Cast 5sia),
and .an )ablo Cit% 2e-elopment +ank, Inc.
5fter the e=aminations, e=it conferences ,ere held ,ith the officers
or representati-es of the banks ,herein the .C2 e=aminers pro-ided
them ,ith copies of Lists of Dindin&sIC=ceptions containin& the
deficiencies disco-ered durin& the e=aminations. 3hese banks ,ere
then re0uired to comment and to undertake the remedial measures
stated in these lists ,ithin ( da%s from their receipt of the lists,
,hich remedial measures included the infusion of additional capital.
3hou&h the banks claimed that the% made the additional capital
infusions, petitioner Chuchi Donacier, officer!in!char&e of the .C2,
sent separate letters to the +oard of 2irectors of each bank,
informin& them that the .C2 found that the banks failed to carr% out
the re0uired remedial measures. In response, the banks re0uested that
the% be &i-en time to obtain +.) appro-al to amend their 5rticles of
Incorporation, that the% ha-e an opportunit% to seek in-estors. 3he%
re0uested as ,ell that the basis for the capital infusion fi&ures be
disclosed, and noted that none of them had recei-ed the Report of
C=amination (R4C) ,hich finali8es the audit findin&s. 3he% also
re0uested meetin&s ,ith the +.) audit teams to reconcile audit
fi&ures. In response, Donacier reiterated the banksR failure to compl%
,ith the directi-e for additional capital infusions.
4n /a% 1", "', the R+)I filed a complaint for nullification of the
+.) R4C ,ith application for a 3R4 and ,rit of preliminar%
in>unction before the R3C docketed as Ci-il Case No. '!11#"$(
a&ainst Donacier, the +.), 5mado /. 3etan&co, 1r., Romulo L. Neri,
*icente +. *aldepenas, 1r., Raul 5. +oncan, 1uanita 2. 5maton&,
5lfredo C. 5ntonio, and Nell% D. *illafuerte. R+)I pra%ed that
Donacier, her subordinates, a&ents, or an% other person actin& in her
behalf be en>oined from submittin& the R4C or an% similar report to
the /onetar% +oard (/+), or if the R4C had alread% been
submitted, the /+ be en>oined from actin& on the basis of said R4C,
on the alle&ation that the failure to furnish the bank ,ith a cop% of
the R4C -iolated its ri&ht to due process.
3he Rural +ank of .an 1ose (+atan&as), Inc., Rural +ank of Carmen
(Cebu), Inc., )ilipino Rural +ank, Inc., )hilippine Countr%side Rural
+ank, Inc., Rural +ank of Calata&an (+atan&as), Inc., Rural +ank of
2arbci, Inc., Rural +ank of Qanan&a (Le%te), Inc., and Rural +ank
de +isa%as /in&lanilla follo,ed suit, filin& complaints ,ith the R3C
substantiall% similar to that of R+)I, includin& the reliefs pra%ed for,
,hich ,ere raffled to different branches and docketed as Ci-il Cases
Nos. '!11#"$$, '!11#"$5, '!11#"$6, '!11#"$<, '!11#"$', '!
11#"$#, '!11#"5, and '!11#"51, respecti-el%.
4n /a% 1(, "', the R3C denied the pra%er for a 3R4 of )ilipino
Rural +ank, Inc. 3he bank filed a motion for reconsideration the ne=t
da%.
4n /a% 1$, "', Donacier and the +.) filed their opposition to the
application for a 3R4 and ,rit of preliminar% in>unction in Ci-il
Case No. '!11#"$( ,ith the R3C. Respondent 1ud&e Nina 5ntonio!
*alen8uela of +ranch "' &ranted R+)IRs pra%er for the issuance of a
3R4.
3he other banks separatel% filed motions for consolidation of their
cases in +ranch "', ,hich motions ,ere &ranted. 1ud&e *alen8uela
set the complaint of Rural +ank of .an 1ose (+atan&as), Inc. for
hearin& on /a% 15, "'. )etitioners assailed the -alidit% of the
consolidation of the nine cases before the R3C, alle&in& that the
court had alread% pre>ud&ed the case b% the earlier issuance of a 3R4
in Ci-il Case No. '!11#"$(, and mo-ed for the inhibition of
respondent >ud&e. )etitioners filed a motion for reconsideration
re&ardin& the consolidation of the sub>ect cases.
4n /a% 16, "', .an )ablo Cit% 2e-elopment +ank, Inc. filed a
similar complaint a&ainst the same defendants ,ith the R3C, and this
,as docketed as Ci-il Case No. '!11#"<( that ,as later on
consolidated ,ith Ci-il Case No. '!11#"$(. )etitioners filed an
7r&ent /otion to LiftI2issol-e the 3R4 and an 4pposition to the
earlier motion for reconsideration of )ilipino Rural +ank, Inc.
4n /a% 1#, "', 1ud&e *alen8uela issued an 4rder &rantin& the
pra%er for the issuance of 3R4s for the other se-en cases
consolidated ,ith Ci-il Case No. '!11#"$(. 4n /a% "1, "',
1ud&e *alen8uela issued an 4rder den%in& petitionersR motion for
reconsideration re&ardin& the consolidation of cases in +ranch "'.
4n /a% "", "', 1ud&e *alen8uela &ranted the ur&ent motion for
reconsideration of )ilipino Rural +ank, Inc. and issued a 3R4
similar to the ones earlier issued.
4n /a% "6, "', petitioners filed a /otion to 2ismiss a&ainst all
the complaints (e=cept that of the .an )ablo Cit% 2e-elopment
+ank, Inc.), on the &rounds that the complaints stated no cause of
action and that a condition precedent for filin& the cases had not been
complied ,ith. 4n /a% "#, "', a hearin& ,as conducted on the
application for a 3R4 and for a ,rit of preliminar% in>unction of .an
)ablo Cit% 2e-elopment +ank, Inc.
3he Rulin& of the R3C
5fter the parties filed their respecti-e memoranda, the R3C, on 1une
$, "', ruled that the banks ,ere entitled to the ,rits of preliminar%
in>unction pra%ed for. It held that it had been the practice of the .C2
to pro-ide the R4Cs to the banks before submission to the /+. It
further held that as the banks are the sub>ects of e=aminations, the%
are entitled to copies of the R4Cs. 3he denial b% petitioners of the
banksR re0uests for copies of the R4Cs ,as held to be a denial of the
banksR ri&ht to due process.
3he dispositi-e portion of the R3CRs order reads?
9BCRCD4RC, the Court rules as follo,s?
1) Re? Ci-il Case No. '!11#"$(. )ursuant to Rule 5', .ection $(b)
of the Re-ised Rules of Court, plaintiff Rural +ank of )arana0ue Inc.
is directed to post a bond e=ecuted to the defendants, in the amount
of )5,. to the effect that the plaintiff ,ill pa% to the
defendants all dama&es ,hich the% ma% sustain b% reason of the
in>unction if the Court should finall% decide that the plaintiff ,as not
entitled thereto. 5fter postin& of the bond and appro-al thereof, let a
,rit of preliminar% in>unction be issued to en>oin and restrain the
defendants from submittin& the Report of C=amination or an% other
similar report prepared in connection ,ith the e=amination
conducted on the plaintiff, to the /onetar% +oard. In case such a
Report on C=amination EsicF or an% other similar report prepared in
connection ,ith the e=amination conducted on the plaintiff has been
submitted to the /onetar% +oard, the latter and its members (i.e.
defendants 3etan&co, Neri, *aldepenas, +oncan, 5maton&, 5ntonio,
and *illafuerte) are en>oined and restrained from actin& on the basis
of said report.
") Re? Ci-il Case No. '!11#"$$. )ursuant to Rule 5', .ection $(b)
of the Re-ised Rules of Court, plaintiff Rural +ank of .an 1ose
(+atan&as), Inc. is directed to post a bond e=ecuted to the defendants,
in the amount of )5,. to the effect that the plaintiff ,ill pa%
to the defendants all dama&es ,hich the% ma% sustain b% reason of
the in>unction if the Court should finall% decide that the plaintiff ,as
not entitled thereto. 5fter postin& of the bond and appro-al thereof,
let a ,rit of preliminar% in>unction be issued to en>oin and restrain
the defendants from submittin& the Report of C=amination or an%
other similar report prepared in connection ,ith the e=amination
of said report.
() Re? Ci-il Case No. '!11#"$5. )ursuant to Rule 5', .ection $(b)
of the Re-ised Rules of Court, plaintiff Rural +ank of Carmen
(Cebu), Inc. is directed to post a bond e=ecuted to the defendants, in
the amount of )5,. to the effect that the plaintiff ,ill pa% to
the defendants all dama&es ,hich the% ma% sustain b% reason of the
of said report.
$) Re? Ci-il Case No. '!11#"$6. )ursuant to Rule 5', .ection $(b)
of the Re-ised Rules of Court, plaintiff )ilipino Rural +ank Inc. is
directed to post a bond e=ecuted to the defendants, in the amount of
)5,. to the effect that the plaintiff ,ill pa% to the defendants
all dama&es ,hich the% ma% sustain b% reason of the in>unction if the
Court should finall% decide that the plaintiff ,as not entitled thereto.
5fter postin& of the bond and appro-al thereof, let a ,rit of
preliminar% in>unction be issued to en>oin and restrain the defendants
from submittin& the Report of C=amination or an% other similar
report prepared in connection ,ith the e=amination conducted on the
plaintiff, to the /onetar% +oard. In case such a Report on
C=amination EsicF or an% other similar report prepared in connection
,ith the e=amination conducted on the plaintiff has been submitted
to the /onetar% +oard, the latter and its members (i.e. defendants
3etan&co, Neri, *aldepenas, +oncan, 5maton&, 5ntonio, and
*illafuerte) are en>oined and restrained from actin& on the basis of
said report.
5) Re? Ci-il Case No. '!11#"$<. )ursuant to Rule 5', .ection $(b)
of the Re-ised Rules of Court, plaintiff )hilippine Countr%side Rural
+ank Inc. is directed to post a bond e=ecuted to the defendants, in the
amount of )5,. to the effect that the plaintiff ,ill pa% to the
of said report.
6) Re? Ci-il Case No. '!11#"$'. )ursuant to Rule 5', .ection $(b)
of the Re-ised Rules of Court, plaintiff 2%namic +ank Inc. (Rural
+ank of Calata&an) is directed to post a bond e=ecuted to the
defendants, in the amount of )5,. to the effect that the
plaintiff ,ill pa% to the defendants all dama&es ,hich the% ma%
sustain b% reason of the in>unction if the Court should finall% decide
that the plaintiff ,as not entitled thereto. 5fter postin& of the bond
and appro-al thereof, let a ,rit of preliminar% in>unction be issued to
en>oin and restrain the defendants from submittin& the Report of
C=amination or an% other similar report prepared in connection ,ith
the e=amination conducted on the plaintiff, to the /onetar% +oard.
In case such a Report on C=amination EsicF or an% other similar
plaintiff has been submitted to the /onetar% +oard, the latter and its
members (i.e. defendants 3etan&co, Neri, *aldepenas, +oncan,
5maton&, 5ntonio, and *illafuerte) are en>oined and restrained from
actin& on the basis of said report.
<) Re? Ci-il Case No. '!11#"$#. )ursuant to Rule 5', .ection $(b)
of the Re-ised Rules of Court, plaintiff Rural +ank of 25R+CI, Inc.
is directed to post a bond e=ecuted to the defendants, in the amount
of )5,. to the effect that the plaintiff ,ill pa% to the
of said report.
') Re? Ci-il Case No. '!11#"5. )ursuant to Rule 5', .ection $(b)
of the Re-ised Rules of Court, plaintiff Rural +ank of Qanan&a Inc.
(Dirst Intestate +ank), is directed to post a bond e=ecuted to the
defendants, in the amount of )5,. to the effect that the
plaintiff ,ill pa% to the defendants all dama&es ,hich the% ma%
sustain b% reason of the in>unction if the Court should finall% decide
that the plaintiff ,as not entitled thereto. 5fter postin& of the bond
and appro-al thereof, let a ,rit of preliminar% in>unction be issued to
en>oin and restrain the defendants from submittin& the Report of
C=amination or an% other similar report prepared in connection ,ith
the e=amination conducted on the plaintiff, to the /onetar% +oard.
In case such a Report on C=amination EsicF or an% other similar
plaintiff has been submitted to the /onetar% +oard, the latter and its
members (i.e. defendants 3etan&co, Neri, *aldepenas, +oncan,
5maton&, 5ntonio, and *illafuerte) are en>oined and restrained from
actin& on the basis of said report.
#) Re? Ci-il Case No. '!11#"51. )ursuant to Rule 5', .ection $(b)
of the Re-ised Rules of Court, plaintiff +anco Rural 2e +isa%as
/in&lanilla (Cebu) Inc. (+ank of Cast 5sia) is directed to post a
bond e=ecuted to the defendants, in the amount of )5,. to the
effect that the plaintiff ,ill pa% to the defendants all dama&es ,hich
the% ma% sustain b% reason of the in>unction if the Court should
finall% decide that the plaintiff ,as not entitled thereto. 5fter postin&
of the bond and appro-al thereof, let a ,rit of preliminar% in>unction
be issued to en>oin and restrain the defendants from submittin& the
Report of C=amination or an% other similar report prepared in
connection ,ith the e=amination conducted on the plaintiff, to the
/onetar% +oard. In case such a Report on C=amination EsicF or an%
other similar report prepared in connection ,ith the e=amination
conducted on the plaintiff has been submitted to the /onetar% +oard,
the latter and its members (i.e. defendants 3etan&co, Neri,
*aldepenas, +oncan, 5maton&, 5ntonio, and *illafuerte) are
en>oined and restrained from actin& on the basis of said report.
1) Re? Ci-il Case No. '!11#"<(. )ursuant to Rule 5', .ection $(b)
of the Re-ised Rules of Court, plaintiff .an )ablo Cit% 2e-elopment
+ank, Inc. is directed to post a bond e=ecuted to the defendants, in
the amount of )5,. to the effect that the plaintiff ,ill pa% to
the defendants all dama&es ,hich the% ma% sustain b% reason of the
of said report.
(
3he Rulin& of the C5
)etitioners then brou&ht the matter to the C5 -ia a petition for
certiorari under Rule 65 claimin& &ra-e abuse of discretion on the
part of 1ud&e *alen8uela ,hen she issued the orders dated /a% "1,
"' and 1une $, "'.
3he C5 ruled that the R3C committed no &ra-e abuse of discretion
,hen it ordered the issuance of a ,rit of preliminar% in>unction and
,hen it ordered the consolidation of the 1 cases.
It held that petitioners should ha-e first filed a motion for
reconsideration of the assailed orders, and failed to >ustif% ,h% the%
resorted to a special ci-il action of certiorari instead.
3he C5 also found that aside from the technical aspect, there ,as no
&ra-e abuse of discretion on the part of the R3C, and if there ,as a
mistake in the assessment of e-idence b% the trial court, that should
be characteri8ed as an error of >ud&ment, and should be correctable
-ia appeal.
3he C5 held that the principles of fairness and transparenc% dictate
that the respondent banks are entitled to copies of the R4C.
Re&ardin& the consolidation of the 1 cases, the C5 found that there
,as a similarit% of facts, reliefs sou&ht, issues raised, defendants, and
that plaintiffs and defendants ,ere represented b% the same sets of
counsels. It found that the >oint trial of these cases ,ould pre>udice
an% substantial ri&ht of petitioners.
Dindin& that no &ra-e abuse of discretion attended the issuance of the
orders b% the R3C, the C5 denied the petition.
4n No-ember "$, "', a 3R4 ,as issued b% this Court, restrainin&
the C5, R3C, and respondents from implementin& and enforcin& the
C5 2ecision dated .eptember (, "' in C5!M.R. .) No. 1(#(5.
$
+% reason of the 3R4 issued b% this Court, the .C2 ,as able to
submit their R4Cs to the /+. 3he /+ then prohibited the
respondent banks from transactin& business and placed them under
recei-ership under .ection 5( of Republic 5ct No. (R5) '<#1
5
and
.ec. ( of R5
<65(
6
throu&h /+ Resolution No. 1616 dated 2ecember #, "'O
Resolution Nos. 16(< and 16(' dated 2ecember 11, "'O
Resolution Nos. 16$<, 16$', and 16$# dated 2ecember 1", "'O
Resolution Nos. 165" and 165( dated 2ecember 16, "'O and
Resolution Nos. 16#" and 16#5 dated 2ecember 1#, "', ,ith the
)hilippine 2eposit Insurance Corporation as the appointed recei-er.
No, ,e resol-e the main petition.
Mrounds in .upport of )etition
I. 3BC B4N4R5+LC C47R3 4D 5))C5L. MR5*CLP CRRC2
IN N43 DIN2INM 3B53 3BC IN17NC3I4N I..7C2 +P 3BC
RCMI4N5L 3RI5L C47R3 *I4L53C2 .CC3I4N "5 4D 3BC
NC9 CCN3R5L +5NQ 5C3 5N2 CDDCC3I*CLP
B5N2C7DDC2 3BC +5NMQ4 .CN3R5L DR4/
2I.CB5RMINM I3. D7NC3I4N. 34 3BC MRC53 5N2
IRRC)5R5+LC 25/5MC 4D 3BC C47N3RPR. +5NQINM
.P.3C/O
II. 3BC B4N4R5+LC C47R3 4D 5))C5L. MR5*CLP CRRC2
IN DIN2INM 3B53 RC.)4N2CN3. 5RC CN3I3LC2 34 +C
D7RNI.BC2 C4)IC. 4D 3BCIR RC.)CC3I*C
R4Cs +CD4RC 3BC .5/C I. .7+/I33C2 34 3BC
/4NC35RP +45R2 IN *IC9 4D 3BC )RINCI)LC. 4D
D5IRNC.. 5N2 3R5N.)5RCNCP 2C.)I3C L5CQ 4D
CS)RC.. )R4*I.I4N IN 3BC NC9 CCN3R5L +5NQ 5C3
RCT7IRINM +.) 34 24 3BC .5/C
III. 3BC B4N4R5+LC C47R3 4D 5))C5L. MR5*CLP CRRC2
IN 2C)5R3INM DR4/ 9CLL!C.35+LI.BC2 )RCCC)3. 4D
L59 5N2 17RI.)R72CNCC
5. 3BC CSCC)3I4N. CI3C2 +P )C3I3I4NCR 17.3IDIC2
RC.4R3 34 )C3I3I4N D4R CCR3I4R5RI 7N2CR R7LC 65
IN.3C52 4D DIR.3 DILINM 5 /43I4N D4R
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95. /52C IN 733CR 2I.RCM5R2 4D 3BC )RINCI)LC 4D
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52/INI.3R53I*C RC/C2P
C. 3BC I..75NCC 4D 5 9RI3 4D )RCLI/IN5RP
IN17NC3I4N +P 3BC RCMI4N5L 3RI5L C47R3 95. N43
4NLP I/)R4)CR +73 5/47N3C2 34 MR5*C 5+7.C 4D
2I.CRC3I4N
<
4ur Rulin&
3he petition is meritorious.
In Lim -. Court of 5ppeals it ,as stated?
3he re0uisites for preliminar% in>uncti-e relief are? (a) the in-asion
of ri&ht sou&ht to be protected is material and substantialO (b) the
ri&ht of the complainant is clear and unmistakableO and (c) there is an
ur&ent and paramount necessit% for the ,rit to pre-ent serious
dama&e.
5s such, a ,rit of preliminar% in>unction ma% be issued onl% upon
clear sho,in& of an actual e=istin& ri&ht to be protected durin& the
pendenc% of the principal action. 3he t,in re0uirements of a -alid
in>unction are the e=istence of a ri&ht and its actual or threatened
-iolations. 3hus, to be entitled to an in>uncti-e ,rit, the ri&ht to be
protected and the -iolation a&ainst that ri&ht must be sho,n.
'
3hese re0uirements are absent in the present case.
In &rantin& the ,rits of preliminar% in>unction, the trial court held
that the submission of the R4Cs to the /+ before the respondent
banks ,ould -iolate the ri&ht to due process of said banks.
3his is erroneous.
3he respondent banks ha-e failed to sho, that the% are entitled to
copies of the R4Cs. 3he% can point to no pro-ision of la,, no
section in the procedures of the +.) that sho,s that the +.) is
re0uired to &i-e them copies of the R4Cs. .ec. "' of R5 <65(, or the
Ne, Central +ank 5ct, ,hich &o-erns e=aminations of bankin&
institutions, pro-ides that the R4C shall be submitted to the /+O the
bank e=amined is not mentioned as a recipient of the R4C.
3he respondent banks cannot claim a -iolation of their ri&ht to due
process if the% are not pro-ided ,ith copies of the R4Cs. 3he same
R4Cs are based on the lists of findin&sIe=ceptions containin& the
deficiencies found b% the .C2 e=aminers ,hen the% e=amined the
books of the respondent banks. 5s found b% the R3C, these lists of
findin&sIe=ceptions ,ere furnished to the officers or representati-es
of the respondent banks, and the respondent banks ,ere re0uired to
comment and to undertake remedial measures stated in said lists.
2espite these instructions, respondent banks failed to compl% ,ith
the .C2Rs directi-e.
Respondent banks are alread% a,are of ,hat is re0uired of them b%
the +.), and cannot claim -iolation of their ri&ht to due process
simpl% because the% are not furnished ,ith copies of the R4Cs.
Respondent banks ,ere held b% the C5 to be entitled to copies of the
R4Cs prior to or simultaneousl% ,ith their submission to the /+, on
the principles of fairness and transparenc%. Durther, the C5 held that
if the contents of the R4Cs are essentiall% the same as those of the
lists of findin&sIe=ceptions pro-ided to said banks, there is no reason
not to &i-e copies of the R4Cs to the banks. 3his is a fla,ed
conclusion, since if the banks are alread% a,are of the contents of the
R4Cs, the% cannot sa% that fairness and transparenc% are not present.
If sanctions are to be imposed upon the respondent banks, the% are
alread% ,ell a,are of the reasons for the sanctions, ha-in& been
informed -ia the lists of findin&sIe=ceptions, demolishin& that
particular ar&ument. 3he R4Cs ,ould then be superfluities to the
respondent banks, and should not be the basis for a ,rit of
preliminar% in>unction. 5lso, the reliance of the R3C on +anco
Dilipino -. /onetar% +oard
#
is misplaced. 3he petitioner in that case
,as held to be entitled to anne=es of the .uper-ision and
C=amination .ectorRs reports, as it alread% had a cop% of the reports
themsel-es. It ,as not the sub>ect of the case ,hether or not the
petitioner ,as entitled to a cop% of the reports. 5nd the rulin& ,as
made after the petitioner bank ,as ordered closed, and it ,as
allo,ed to be supplied ,ith anne=es of the reports in order to better
prepare its defense. In this instance, at the time the respondent banks
re0uested copies of the R4Cs, no action had %et been taken b% the
/+ ,ith re&ard to imposin& sanctions upon said banks.
3he issuance b% the R3C of ,rits of preliminar% in>unction is an
un,arranted interference ,ith the po,ers of the /+. .ecs. "# and (
of R5 <65(
1
refer to the appointment of a conser-ator or a recei-er
for a bank, ,hich is a po,er of the /+ for ,hich the% need the
R4Cs done b% the super-isin& or e=aminin& department. 3he ,rits
of preliminar% in>unction issued b% the trial court hinder the /+
from fulfillin& its function under the la,. 3he actions of the /+
under .ecs. "# and ( of R5 <65( Ama% not be restrained or set aside
b% the court e=cept on petition forcertiorari on the &round that the
action taken ,as in e=cess of >urisdiction or ,ith such &ra-e abuse of
discretion as to amount to lack or e=cess of >urisdiction.A 3he ,rits
of preliminar% in>unction order are precisel% ,hat cannot be done
under the la, b% pre-entin& the /+ from takin& action under either
.ec. "# or .ec. ( of R5 <65(.
5s to the third re0uirement, the respondent banks ha-e sho,n no
necessit% for the ,rit of preliminar% in>unction to pre-ent serious
dama&e. 3he serious dama&e contemplated b% the trial court ,as the
possibilit% of the imposition of sanctions upon respondent banks,
e-en the sanction of closure. 7nder the la,, the sanction of closure
could be imposed upon a bank b% the +.) e-en ,ithout notice and
hearin&. 3he apparent lack of procedural due process ,ould not
result in the in-alidit% of action b% the /+. 3his ,as the rulin& in
Central +ank of the )hilippines -. Court of 5ppeals.
11
3his Aclose
no,, hear laterA scheme is &rounded on practical and le&al
considerations to pre-ent un,arranted dissipation of the bankRs
assets and as a -alid e=ercise of police po,er to protect the
depositors, creditors, stockholders, and the &eneral public. 3he ,rit
of preliminar% in>unction cannot, thus, pre-ent the /+ from takin&
action, b% pre-entin& the submission of the R4Cs and ,orse, b%
pre-entin& the /+ from actin& on such R4Cs.
3he trial court re0uired the /+ to respect the respondent banksR ri&ht
to due process b% allo,in& the respondent banks to -ie, the R4Cs
and act upon them to forestall an% sanctions the /+ mi&ht impose.
.uch procedure has no basis in la, and does in fact -iolate the Aclose
no,, hear laterA doctrine. 9e held in Rural +ank of .an /i&uel, Inc.
-. /onetar% +oard, +an&ko .entral n& )ilipinas?
It is ,ell!settled that the closure of a bank ma% be considered as an
e=ercise of police po,er. 3he action of the /+ on this matter is final
and e=ecutor%. .uch e=ercise ma% nonetheless be sub>ect to >udicial
in0uir% and can be set aside if found to be in e=cess of >urisdiction or
,ith such &ra-e abuse of discretion as to amount to lack or e=cess of
>urisdiction.
1"
3he respondent banks cannotJthrou&h seekin& a ,rit of preliminar%
in>unction b% appealin& to lack of due process, in a roundabout
mannerJ pre-ent their closure b% the /+. 3heir remed%, as stated,
is a subse0uent one, ,hich ,ill determine ,hether the closure of the
bank ,as attended b% &ra-e abuse of discretion. 1udicial re-ie,
enters the picture onl% after the /+ has taken actionO it cannot
pre-ent such action b% the /+. 3he threat of the imposition of
sanctions, e-en that of closure, does not -iolate their ri&ht to due
process, and cannot be the basis for a ,rit of preliminar% in>unction.
3he Aclose no,, hear laterA doctrine has alread% been >ustified as a
measure for the protection of the public interest. .,ift action is
called for on the part of the +.) ,hen it finds that a bank is in dire
straits. 7nless ade0uate and determined efforts are taken b% the
&o-ernment a&ainst distressed and mismana&ed banks, public faith in
the bankin& s%stem is certain to deteriorate to the pre>udice of the
national econom% itself, not to mention the losses suffered b% the
bank depositors, creditors, and stockholders, ,ho all deser-e the
protection of the &o-ernment.
1(
3he respondent banks ha-e failed to sho, their entitlement to the
,rit of preliminar% in>unction. It must be emphasi8ed that an
application for in>uncti-e relief is construed strictl% a&ainst the
pleader.
1$
3he respondent banks cannot rel% on a simple appeal to
procedural due process to pro-e entitlement. 3he re0uirements for
the issuance of the ,rit ha-e not been pro-ed. No in-asion of the
ri&hts of respondent banks has been sho,n, nor is their ri&ht to
copies of the R4Cs clear and unmistakable. 3here is also no
necessit% for the ,rit to pre-ent serious dama&e. Indeed the issuance
of the ,rit of preliminar% in>unction tramples upon the po,ers of the
/+ and pre-ents it from fulfillin& its functions. 3here is no ri&ht that
the ,rit of preliminar% in>unction ,ould protect in this particular
case. In the absence of a clear le&al ri&ht, the issuance of the
in>uncti-e ,rit constitutes &ra-e abuse of discretion.
15
In the absence
of proof of a le&al ri&ht and the in>ur% sustained b% the plaintiff, an
order for the issuance of a ,rit of preliminar% in>unction ,ill be
nullified.
16
Courts are hereb% reminded to take &reater care in issuin& in>uncti-e
relief to liti&ants, that it ,ould not -iolate an% la,. 3he &rant of a
preliminar% in>unction in a case rests on the sound discretion of the
court ,ith the ca-eat that it should be made ,ith &reat
caution.
1<
3hus, the issuance of the ,rit of preliminar% in>unction
must ha-e basis in and be in accordance ,ith la,. 5ll told, ,hile the
&rant or denial of an in>unction &enerall% rests on the sound
discretion of the lo,er court, this Court ma% and should inter-ene in
a clear case of abuse.
1'
9BCRCD4RC, the petition is hereb% MR5N3C2. 3he assailed C5
2ecision dated .eptember (, "' in C5!M.R. .) No. 1(#(5 is
hereb% RC*CR.C2. 3he assailed order and ,rit of preliminar%
in>unction of respondent 1ud&e *alen8uela in Ci-il Case Nos. '!
11#"$(, '!11#"$$, '!11#"$5, '!11#"$6, '!11#"$<, '!11#"$',
'!11#"$#, '!11#"5, '!11#"51, and '!11#"<( are hereb%
declared N7LL and *4I2.
.4 4R2CRC2.
G.R. No. 1.643- )*"7*r4 24, 2011
PHILIPPINE ,EPOSIT INS0RAN%E %ORPORATION
;P,I%<, )etitioner,
-s.
PHILIPPINE %O0NTR/SI,E R0RAL BANK, IN%., R0RAL
BANK O1 %AR&EN ;%EB0<, IN%., BANK O1 EAST ASIA
;&INGLANILLA, %EB0<, IN%., *"+ PILIPINO R0RAL BANK
;%EB0<, IN%., Respondents.
3his is a petition for re-ie, on certiorari under Rule $5 of the Rules
of Court filed b% the )hilippine 2eposit Insurance
Corporation (PDIC) assailin& the .eptember 1', "6 2ecision of
the Court of 5ppeals!Cebu (CA-Cebu), ,hich &ranted the petition for
in>unction filed b% respondents )hilippine Countr%side Rural +ank,
Inc.(PCRBI), Rural +ank of Carmen (Cebu), Inc. (RBCI), +ank of
Cast 5sia (/in&lanilla, Cebu), Inc. (BEAI), and )ilipino Rural +ank
(Cebu), Inc. (PRBI), all collecti-el% referred to as A+anks.A 3he
dispositi-e portion of the C5!Cebu decision reads?
>HERE1ORE, in -ie, of all the fore&oin& premises, the petition
for in>unction is hereb% GRANTE,. 3he respondent )2IC is
restrained from further conductin& in-esti&ations or e=amination on
petitioners!banks ,ithout the re0uisite appro-al from the /onetar%
+oard.
SO OR,ERE,.
1
In a resolution dated 1anuar% "5, "<, the C5!Cebu denied
petitionerRs motion for reconsideration for Alack of merit.A
"
THE 1A%TS
4n /arch #, "5, the +oard of 2irectors of the )2IC (PDIC
Board) adopted Resolution No. "5!(!("
(
appro-in& the conduct
of an in-esti&ation, in accordance ,ith .ection #(b!1) of Republic
5ct (R.A.) No. (5#1, as amended, on the basis of the Reports of
C=amination of the +an&ko .entral n& )ilipinas (BSP) on ten (1)
banks, four ($) of ,hich are respondents in this petition for re-ie,.
3he said resolution also created a .pecial In-esti&ation 3eam to
conduct the said in-esti&ation, ,ith the authorit% to administer oaths,
to e=amine, take and preser-e testimon% of an% person relatin& to the
sub>ect of the in-esti&ation, and to e=amine pertinent bank records.
4n /a% "5, "5, the )2IC +oard adopted another resolution,
Resolution No. "5!5!56,
$
appro-in& the conduct of an
in-esti&ation on )CR+I based on a Complaint!5ffida-it filed b% a
corporate depositor, the )hilippine .chool of Cntrepreneurship and
/ana&ement (PSEMI) throu&h its president, 1acinto L. 1amero.
4n 1une (, "5, in accordance ,ith the t,o )2IC +oard
resolutions, then )2IC )resident and Chief C=ecuti-e 4fficer
Ricardo /. 3an issued the Notice of In-esti&ation
5
to the )resident or
3he Bi&hest Rankin& 4fficer of )CR+I.
4n 1une <, "5, the )2IC In-esti&ation 3eam personall% ser-ed the
Notice of In-esti&ation on )CR+I at its Bead 4ffice in )a>o, Lapu!
Lapu Cit%.
6
5ccordin& to )2IC, in the course of its in-esti&ation, )CR+I ,as
found to ha-e &ranted loans to certain indi-iduals, ,hich ,ere settled
b% ,a% of dacion of properties. 3hese properties, ho,e-er, had
alread% been pre-iousl% foreclosed and consolidated under the names
of )R+I, +C5I and R+CI.
<
4n 1une 15, "5, )2IC issued similar notices of in-esti&ation to
)R+I
'
and +C5I.
#
3he notices stated that the in-esti&ation ,as to be conducted
pursuant to .ection # (b!1) of the )2IC Charter and upon authorit%
of )2IC +oard Resolution No. "5!(!(" authori8in& the t,el-e
(1") named representati-es of )2IC to conduct the in-esti&ation.
1
3he in-esti&ation ,as sou&ht because the +anks ,ere found to be
amon& the ten (1) banks collecti-el% kno,n as ALe&ac% +anks.A
3he Reports of Meneral and .pecial C=aminations of the +.) as of
1une (, "$, disclosed, amon& others, that the Le&ac% +anks ,ere
commonl% o,ned andIor controlled b% Le&ac% )lans Inc. (now
Legacy Consoidated Pans! Inc.), and Celso Manca%co delos 5n&les,
1r. and his famil%.
11
3he notice of in-esti&ation ,as ser-ed on )R+I the ne=t da%, 1une
16, "5.
1"
4n 1une "5, "5, a separate notice of in-esti&ation
1(
,as ser-ed on
R+CI. 3he latter pro-ided the )2IC In-esti&ation 3eam ,ith
certified copies of the loan documents the% had re0uested, until its
president recei-ed an order directin& him not to allo, the
in-esti&ation.
1$
.ubse0uentl%, )R+I and +C5I refused entr% to their bank premises
and access to their records and documents b% the )2IC In-esti&ation
3eam, upon ad-ice of their respecti-e counsels.
15
4n 1une 16 and 1<, "5, 5tt%. *ictoria M. Noel (Atty. "oe) of the
3ion&son H 5ntenor Cru8 La, 4ffice sent letters to the
)2IC
16
informin& it of her le&al ad-ice to )CR+I and +C5I not to
submit to )2IC in-esti&ation on the &round that its in-esti&ator%
po,er pursuant to .ection #(b!1) of R.5. No. (5#1, as amended (An
Act Estabis#ing $#e P#ii%%ine De%osit Insurance Cor%oration!
De&ining Its Powers And Duties And 'or (t#er Pur%oses), cannot be
differentiated from the e=amination po,ers accorded to )2IC under
.ection ', para&raph ' of the same la,, under ,hich, prior appro-al
from the /onetar% +oard is re0uired.
4n 1une 1<, "5, )2IC Meneral Counsel Romeo /. /endo8a sent
a repl% to 5tt%. Noel statin& that A)2ICRs in-esti&ation po,er, as
distin&uished from the e=amination po,er of the )2IC under .ection
' of the same la,, does not need prior appro-al of the /onetar%
+oard.A
1<
)2IC then ur&ed )R+I and +C5I Anot to impede the
conduct of )2ICRs in-esti&ationA as the same Aconstitutes a -iolation
of the )2IC Charter for ,hich )R+I and +C5I ma% be held
criminall% andIor administrati-el% liable.A
1'
4n 1une "< and "', "5, the +anks, throu&h counsel, sou&ht further
clarification from )2IC on its source of authorit% to conduct the
impendin& in-esti&ations and re0uested that )2IC refrain from
proceedin& ,ith the in-esti&ations.
1#
.imultaneousl%, the +anks ,rote to the /onetar% +oard re0uestin& a
clarification on the parameters of )2ICRs po,er of
in-esti&ationIe=amination o-er the +anks and for an issuance of a
directi-e to )2IC not to pursue the in-esti&ations pendin& the
re0uested clarification.
"
4n 1une "', "5, )R+I and +C5I a&ain recei-ed letters from )2IC,
dated 1une "$, "5, ,hich appeared to be final demands on them to
allo, its in-esti&ation.
"1
)R+I and +C5I replied that letters of
clarification had been sent to )2IC and the /onetar%
+oard.
""
)endin& action on such re0uests, )2IC ,as re0uested to
refrain from proceedin& ,ith the in-esti&ation.
"(
Not,ithstandin&, on 1ul% 11, "5, the +anks recei-ed a letter, dated
1ul% ', "5, from the )2IC Meneral Counsel reiteratin& its position
that prior /onetar% +oard appro-al ,as not a pre!re0uisite to
)2ICRs e=ercise of its in-esti&ati-e po,er.
"$
Not in conformit%, on 1ul% "', "5, the +anks filed a Petition &or
Decaratory Reie& wit# a Prayer &or t#e Issuance o& a $R( and)or
*rit o& Prei+inary In,unction (R$C Petition) before the Re&ional
3rial Court of /akati (R$C-Ma-ati) ,hich ,as docketed as Ci-il
Case No. 5!6#<.
"5
In the R3C )etition, the +anks pra%ed for a >ud&ment interpretin&
.ection #(b!1) of the )2IC Charter, as amended, to re0uire prior
/onetar% +oard appro-al before )2IC could e=ercise its
in-esti&ationIe=amination po,er o-er the +anks.
"6
)2IC filed a motion to dismiss alle&in& that the R3C had no
>urisdiction o-er the said petition since a breach had alread% been
committed b% the +anks ,hen the% recei-ed the notices of
in-esti&ation, and because )2IC need not secure prior /onetar%
+oard appro-al since Ae=aminationA and Ain-esti&ationA are t,o
different terms.
"<
Later, the +anks ,ithdre, their application for a temporar%
restrainin& order ($R() reasonin& that lo,er courts cannot issue
in>unctions a&ainst )2IC. 3hus, the +anks instituted a petition for
in>unction ,ith application for 3R4 andIor )reliminar%
In>unction (CA-Mania %etition) before the Court of 5ppeals!
/anila (CA-Mania). 3he case ,as docketed as C5!M.R. .) No.
#1('.
"'
C-en before the C5!/anila could rule on the application for a 3R4
andIor ,rit of preliminar% in>unction, the R3C!/akati dismissed the
petition on the &round that there alread% e=isted a breach of la, that
isolated the case from the >urisdiction of the trial court.
"#
3he +anks filed a motion for reconsideration but it ,as denied b% the
R3C for lack of merit.
(
4n Debruar% 1, "6, the +anks filed a
notice of appeal
(1
,hich the% later ,ithdre, on Debruar% "', "6.
("
In -ie, of the dismissal of the R3C!/akati petition, the C5!/anila
dismissed the petition for in>unction for bein& moot and academic. In
its 2ecision, dated Debruar% 1, "6,
((
the C5!/anila ,rote?
9hat remained for the petitioners to do ,as to liti&ate o-er the
breach or -iolation b% ordinar% action, as the circumstances ensuin&
from the breach or -iolation ,arrant. 3he ordinar% action ma% either
be in the same case, if the R3C permitted the con-ersion, in ,hich
e-ent the R3C ma% allo, the parties to file such pleadin&s as ma% be
necessar% or proper, pursuant to .ec. 5, Rule 6(O or the petitioners
ma% file another action in the proper court (e.&. includin& the Court
of 5ppeals, should in>unction be amon& the reliefs to be sou&ht)
upon some cause of action that has arisen from the breach or
-iolation.
($
3hereafter, on /arch 1$, "6, the +anks filed their Petition &or
In,unction wit# Prayer &or Prei+inary In,unction
(5
(CA-Cebu
Petition) ,ith the C5!Cebu (CA-Cebu).
4n /arch 15, "6, the C5!Cebu issued a resolution &rantin& the
+ankRs application for a 3R4. 3his en>oined the )2IC, its
representati-es or a&ents or an% other persons or a&enc% assistin&
them or actin& for and in their behalf from conductin&
e=aminationsIin-esti&ations on the +anksR head and branch offices
,ithout securin& the re0uisite appro-al from the /onetar% +oard of
+.).
(6
2urin& the pendenc% of the C5!Cebu petition, )2IC filed ,ith this
Court a Petition &or Certiorari! Pro#ibition and Manda+us wit#
Prayer &or Issuance o& $e+%orary Restraining (rder and)or *rit o&
Prei+inary In,unction under Rule 65 docketed as M.R. No.
1<((<.
(<
It alle&ed that the C5!Cebu committed &ra-e abuse of
discretion amountin& to lack or e=cess of >urisdiction in takin&
co&ni8ance of the +anksR petition, and in issuin& a 3R4 and a ,rit of
preliminar% in>unction.
('
4n 1ul% (1, "6, this Court issued a resolution dismissin& the
petition for certiorari in M.R. No. 1<((<. 3he Resolution reads?
Considerin& the alle&ations, issues and ar&uments adduced in the
petition for certiorari, prohibition and mandamus ,ith pra%er for
preliminar% in>unction andIor restrainin& order dated 1# 1ul% "6,
the Court resol-es to 2I./I.. the petition for failure to sufficientl%
sho, that the 0uestioned resolution of the Court of 5ppeals is tainted
,ith &ra-e abuse of discretion. /oreo-er, the petition failed to
conform ,ith Rule 65 and other related pro-isions of the 1##< Rules
of Ci-il )rocedure, as amended, &o-ernin& petitions for certiorari,
prohibition and mandamus filed ,ith the .upreme Court, since
petitioner failed to submit a -erified statement of material date of
receipt of the assailed resolution dated 16 /a% "6 in accordance
,ith .ection $, Rule 65 in relation to the second para&raph of
.ection (, Rule $6. In an% e-ent, the petition is premature since no
motion for reconsideration of the 0uestioned resolution of the Court
of 5ppeals ,as filed prior to the a-ailment of this special ci-il action
and there are no sufficient alle&ations to brin& the case ,ithin the
reco&ni8ed e=ceptions to this rule.
(#
4n .eptember 1', "6, after both parties had submitted their
respecti-e memoranda, the C5!Cebu rendered a decision &rantin&
the ,rit of preliminar% in>uction,
$
pertinent portions of ,hich read?
E5Ffter under&oin& a series of amendments, the controllin& la, ,ith
respect to )2ICRs po,er to conduct e=amination of banks is!prior
appro-al of the /onetar% +oard is a condition sine .ua non for
)2IC to e=ercise its po,er of e=amination. 3o rule other,ise ,ould
disre&ard the amendator% la, of the )2ICRs charter.
3he Court is not also s,a%ed b% the contention of respondent that
,hat it seeks to conduct is an in-esti&ation and not an e=amination
of petitionersR transactions, hence prior appro-al of the /onetar%
+oard is a mere surplusa&e.
3he ordinar% definition of the ,ords Ae=aminationA and
Ain-esti&ationA ,ould lead one to conclude that both pertain to the
same thin& and there seems to be no fine line differentiatin& one
from the other. +lackRs La, 2ictionar% defines the ,ord
Ain-esti&ateA as Ato e=amine and in0uire into ,ith care and accurac%O
to find out b% careful in0uisitionO e=amination and the ,ord
Ae=aminationA as an in-esti&ation. In CollinRs 2ictionar% of +ankin&
and Dinance, the ,ord Ain-esti&ationA is defined as an Ae=amination
to find out ,hat is ,ron&.A
In the case of Anti-/ra&t League o& t#e P#ii%%ines! Inc. 0s. 1on.
(rtega! et a.!
$1
the .upreme Court usin& +allentineRs La,
2ictionar% defines an Ain-esti&ationA as an in0uir%, >udicial or
other,ise, for the disco-er% or collection of facts concernin& the
matter or matters in-ol-ed. .uch common definitions ,ould sho,
that there is reall% nothin& to distin&uish bet,een these t,o (") terms
as to support the )2IC -ie, differentiatin& .ection # (b!1) from
para&raph ', .ection ' of the )2IC Charter.
In the realm of the )2IC rules, specificall% under .ection ( of )2IC
Re&ulator% Issuance No. ""5!"
$"
Ain-esti&ationA is defined as?
In-esti&ation shall refer to fact!findin& e2a+ination! stud%, in0uir%,
for determinin& ,hether the alle&ations in a complaint or findin&s in
a final report of e=amination ma% properl% be the sub>ect of an
administrati-e, criminal or ci-il action.
Drom the fore&oin& definition alone, it can be easil% deduced that
in-esti&ation and e=amination are s%non%mous terms. .impl% stated,
in-esti&ation encompasses a fact!findin& e=amination. 3hus, it is
inconsistent ,ith the rules if respondent )2IC be (sic) allo,ed to
conduct an in-esti&ation ,ithout the appro-al of the /onetar%
+oard.
/oreo-er, the Court sees that the rationale of the la, in re0uirin& a
(sic) prior appro-al from the /onetar% +oard ,hene-er an
e=amination or in this case an in-esti&ation needs to be conducted b%
the )2IC is ob-iousl% to ensure that there is no o-erlappin& of
efforts, duplication of functions and more importantl% to pro-ide a
check and balance to the other,ise unrestricted po,er of respondent
)2IC to conduct in-esti&ations on banks insured b% it.
9ith the fore&oin& premises, this Court rules that a prior appro-al
from the /onetar% +oard is necessar% before respondent )2IC can
proceed ,ith its in-esti&ations on petitioners!banks.
$(
)2IC mo-ed for reconsideration but it ,as denied in a resolution
dated 1anuar% "5, "<.
$$
Bence, this petition.
THE ISS0ES
I.
>HETHER RESPON,ENT BANKS VIOLATE, THE R0LE
AGAINST 1OR0& SHOPPING >HEN THE/ 1ILE, THE
PETITION 1OR IN)0N%TION BE1ORE THE %O0RT O1
APPEALS2%EB0.
II.
>HETHER THE PRONO0N%E&ENT O1 THE REGIONAL
TRIAL %O0RT O1 &AKATI IN THE PETITION 1OR
,E%LARATOR/ RELIE1 %ONSTIT0TES RES
JUDICATA TO THE PETITION 1OR IN)0N%TION IN THE
%O0RT O1 APPEALS2%EB0.
III.
>HETHER PETITIONER >AS ,EPRIVE, O1 ITS
OPPORT0NIT/ TO BE HEAR, >HEN THE %O0RT O1
APPEALS2%EB0 ISS0E, THE >RIT O1 IN)0N%TION.
IV.
>HETHER THE ISS0ES RAISE, B/ PETITIONERS ARE
THE SA&E ISS0ES RAISE, IN G.R. NO. 1.33.0 >HI%H
>AS EARLIER ,IS&ISSE, B/ THIS %O0RT.
V.
>HETHER THE %O0RT O1 APPEALS ERRE, IN 1IN,ING
THAT PRIOR APPROVAL O1 THE &ONETAR/ BOAR, O1
THE BANGKO SENTRAL NG PILIPINAS IS NE%ESSAR/
BE1ORE THE P,I% &A/ %ON,0%T AN INVESTIGATION
O1 RESPON,ENT BANKS.
THE %O0RT?S R0LING
I 2 Whether respondent banks violated the rule against forum
shopping hen the! filed the petition for in"un#tion before the
Court of Appeals$Cebu%
II 2 Whether the pronoun#ement of the Regional Trial Court of
&akati in the petition for de#larator! relief #onstitutes res "udi#ata
to the petition for in"un#tion in the Court of Appeals$Cebu%
In the recent case of Sa+eer (0ersees Pace+ent Agency! Inc. 0.
Midred R. Santos!
$5
the Court discussed the matter of forum
shoppin&?
Dorum shoppin& is defined as an act of a part%, a&ainst ,hom an
ad-erse >ud&ment or order has been rendered in one forum, of
seekin& and possibl% &ettin& a fa-orable opinion in another forum,
other than b% appeal or special ci-il action for certiorari. It ma% also
be the institution of t,o or more actions or proceedin&s &rounded on
the same cause on the supposition that one or the other court ,ould
make a fa-orable disposition. 3here is forum shoppin& ,here the
elements of itis %endentiaare present, namel%? (a) there is identit% of
parties, or at least such parties as represent the same interest in both
actionsO (b) there is identit% of ri&hts asserted and relief pra%ed for,
the relief bein& founded on the same set of factsO and (c) the identit%
of the t,o precedin& particulars is such that an% >ud&ment rendered
in the pendin& case, re&ardless of ,hich part% is successful, ,ould
amount to res ,udicata in the other. It is e=pressl% prohibited b% this
Court because it trifles ,ith and abuses court processes, de&rades the
administration of >ustice, and con&ests court dockets. 5 ,illful and
deliberate -iolation of the rule a&ainst forum shoppin& is a &round
for summar% dismissal of the case, and ma% also constitute direct
contempt.
$6
1u=taposin& the R3C!/akati, C5!/anila and C5!Cebu petitions,
,hat must be determined here, is ,hether the elements of itis
%endentia are present bet,een and amon& these petitions, i.e.
,hether (a) there is identit% of parties, or at least such parties as
represent the same interest in both actionsO (b) there is identit% of
ri&hts asserted and relief pra%ed for, the relief bein& founded on the
same set of factsO and (c) the identit% of the t,o precedin& particulars
is such that an% >ud&ment rendered in the pendin& case, re&ardless of
,hich part% is successful, ,ould amount to res ,udicata in the other.
3he first element is clearl% present as bet,een the R3C!/akati
petition and the C5!Cebu petition. +oth in-ol-ed the +anks on one
hand, and the )2IC on the other.
3he second and third elements of itis %endentia, ho,e-er, are
patentl% ,antin&. 3he ri&hts asserted and reliefs pra%ed for ,ere
different, thou&h founded on the same set of facts. 3he R3C!/akati
)etition ,as one for declarator% relief ,hile the C5!/anila )etition
,as one for in>unction ,ith a pra%er for preliminar% in>unction.
5 petition for declarator% relief is filed b% an% person interested
under a deed, ,ill, contract or other ,ritten instrument, or ,hose
ri&hts are affected b% a statute, e=ecuti-e order or re&ulation,
ordinance, or an% other &o-ernmental re&ulation, before breach or
-iolation, thereof, to determine an% 0uestion of construction or
-alidit% arisin&, and for a declaration of his ri&hts or duties
thereunder.
$<
In>unction, on the other hand, is Aa >udicial ,rit, process or
proceedin& ,hereb% a part% is directed either to do a particular act, in
,hich case it is called a mandator% in>unction, or to refrain from
doin& a particular act, in ,hich case it is called a prohibitor%
in>unction. 5s a main action, in>unction seeks to permanentl% en>oin
the defendant throu&h a final in>unction issued b% the court and
contained in the >ud&ment.A
$'
Clearl%, there is a marked difference bet,een the reliefs sou&ht under
an action for declarator% relief and an action for in>unction. 9hile an
action for declarator% relief seeks a declaration of ri&hts or duties, or
the determination of an% 0uestion or -alidit% arisin& under a statute,
e=ecuti-e order or re&ulation, ordinance, or an% other &o-ernmental
re&ulation, or under a deed, ,ill, contract or other ,ritten instrument,
under ,hich his ri&hts are affected, and before breach or -iolation,
an action for in>unction ultimatel% seeks to en>oin or to compel a
part% to perform certain acts.
/oreo-er, as stated in the R3C!/akati 2ecision, because the +anks
had alread% breached the pro-isions of la, on ,hich declarator%
>ud&ment ,as bein& sou&ht, it ,as ,ithout >urisdiction to take
co&ni8ance of the same. 5n% >ud&ment rendered in the R3C!/akati
petition ,ould not amount to res ,udicata in the C5!/anila )etition.
3hus, the R3C ,as correct in dismissin& the case, ha-in& been bereft
of >urisdiction to take co&ni8ance of the action for declarator%
>ud&ment.
5s bet,een the C5!/anila and the C5!Cebu petitions, the second
and third elements of itis %endentia are absent. 3he ri&hts asserted
and reliefs pra%ed for ,ere different, althou&h founded on the same
set of facts.
3he C5!/anila )etition is a petition for in>unction ,herein the
+anks pra%ed that?
1) Immediatel% upon filin& of this )etition, a 9rit of
)reliminar% In>unction andIor 3emporar%
Restrainin& 4rder be issued commandin& the
respondent and all its officers, emplo%ees and a&ents
to cease and desist from proceedin& ,ith the
in-esti&ations sou&ht to be conducted on the
petitionersR head and branch offices ,hile the
)etition for 2eclarator% Relief before +ranch 5' of
the /akati Re&ional 3rial Court is pendin&.
") 5fter due proceedin&s, >ud&ment be rendered
declarin& as permanent the 9rit of )reliminar%
In>unction andIor 3emporar% Restrainin& 4rder
pra%ed for abo-e.
4ther e0uitable reliefs are like,ise pra%ed for.
$#
E7nderscorin& suppliedF
3he C5!Cebu )etition, on the other hand, is denominated as a
)etition for In>unction 9ith )ra%er for 9rit of )reliminar% In>unction
andIor Restrainin& 4rder. 3he +anks pra%ed therein that?
1) 7pon filin& of this )etition, a 9rit of )reliminar%
In>unction andIor 3emporar% Restrainin& 4rder be
issued forth,ith, en>oinin& Respondent )2IC and all
its officers, emplo%ees and a&ents to cease and desist
from conductin& e=aminationsIin-esti&ations on
)etitioner +anksR head and branch offices ,ithout
securin& the re0uisite appro-al from the /onetar%
+oard of the +an&ko .entral n& )ilipinas, as
re0uired b% .ec. ', )ara&raph ' of the )2IC Charter,
as amendedO
") 5fter due proceedin&s, >ud&ment be rendered
declarin& as permanent the 9rit of )reliminar%
In>unction andIor 3emporar% Restrainin& 4rder
pra%ed for abo-e.
4ther e0uitable reliefs are like,ise pra%ed for.
5
5s can be &leaned from the abo-e!cited portions of the C5!/anila
and C5!Cebu petitions, the petitions seek different reliefs.
3herefore, as bet,een and amon& the R3C /akati, and the C5!
/anila and C5!Cebu petitions, there is no forum shoppin&.
III 2 Whether petitioner as deprived of its opportunit! to be heard
hen the Court of Appeals$Cebu issued the rit of in"un#tion%
)2IC alle&es that the C5!Cebu, in issuin& the 3R4 in its /arch 15,
"6 Resolution, and subse0uentl%, the preliminar% in>unction in its
/a% 16, "6 Resolution, -iolated the fundamental rule that courts
should a-oid issuin& in>uncti-e relief ,hich ,ould in effect dispose
of the main case ,ithout trial.
51
)2IC ar&ues that a 3R4 is intended
onl% as a restraint until the propriet% of &rantin& a temporar%
in>unction can be determined, and it &oes no further than to preser-e
the status until that determination.
5"
/oreo-er, its purpose is merel%
to suspend proceedin&s until such time ,hen there ma% be an
opportunit% to in0uire ,hether an% in>unction should be &ranted, and
it is not intended to operate as an in>unction %endente ite, and should
not, in effect, determine the issues in-ol-ed before the parties can
ha-e their da% in court, or &i-e an ad-anta&e to either part% b%
proceedin& in the ac0uisition or alteration of the propert% the ri&ht to
,hich is disputed ,hile the hands of the other part% are tied.
5(
4n the other hand, the +anks claim that )2IC ,as &i-en e-er%
opportunit% to present its ar&uments a&ainst the issuance of the
in>unction.
5$
Its acti-e participation in the proceedin&s ne&ates its
assertion that it ,as denied procedural due process in the issuance of
the ,rit of in>unction.
55
Citin&Saonga 0. Court o& A%%eas,
56
the
+anks state that the essence of due process is the reasonable
opportunit% to be heard and to submit e-idence one ma% ha-e in
support of oneRs defense,
5<
and )2IC ,as able to do so.
4n /arch 15, "6, the C5!Cebu issued a resolution &rantin& their
pra%er for a 6!da% 3R4, and re0uirin& )2IC to file its
comment.
5'
3he latter thereafter filed its Comment ad
Cautea+ dated /arch (, "6.
5#
E7nderscorin& oursF
4n /a% 16, "6, the C5!Cebu issued another resolution, this time
&rantin& the pra%er for a preliminar% in>unction and re0uirin& the
parties to file their respecti-e memoranda. )2IC thereafter filed its
memorandum dated 1ul% (1, "6.
6
4n .eptember 1', "6, the C5!Cebu promul&ated its 2ecision
&rantin& the )etition for In>unction.
61
)2IC filed a motion for
reconsideration dated 4ctober 1, "6,
6"
,hich ,as subse0uentl%
denied.
3he essence of procedural due process is found in the reasonable
opportunit% to be heard and submit oneRs e-idence in support of his
defense.
6(
3he Court finds that procedural due process ,as obser-ed
b% the C5!Cebu. 3he parties ,ere afforded e0ual opportunit% to
present their ar&uments. In the absence of an% indication to the
contrar%, the C5!Cebu must be accorded the presumption of
re&ularit% in the performance of their functions. Bo,e-er, as
discussed herein, the matter of ,hether it erred in its conclusion and
issuance of the 3R4, preliminar% in>unction and final in>unction is
another matter alto&ether.
IV @ Whether the issues raised b! petitioner are the same issues
raised in '%R% (o% )*++*, hi#h as earlier dismissed b! this
Court%
In M.R. 1<((<, a petition for certiorari under Rule 65 of the Rules
of Court, )2IC alle&ed that the C5!Cebu committed &ra-e abuse of
discretion amountin& to lack or e=cess of >urisdiction in takin&
co&ni8ance of the +ankRs petition, and in issuin& a 3R4 and a ,rit of
preliminar% in>unction.
6$
In the case at bench, a petition for re-ie, under Rule $5, )2ICRs
core contention is that the C5!Cebu erred in findin& that prior
appro-al of the /onetar% +oard of the +.) is necessar% before it
ma% conduct an in-esti&ation of the +anks.
Clearl% then, the t,o petitions ,ere of different nature raisin&
different issues.
M.R. 1<((< challen&ed the C5!CebuRs ha-in& taken co&ni8ance of
the +ankRs petition and interlocutor% orders on the issuance of a 3R4
and a ,rit of preliminar% in>unction. 3his case, ho,e-er, strikes at
the core of the final decision on the merits of the C5!Cebu, and not
merel% the interlocutor% orders. 9hile both M.R. 1<((< and the
present case ma% ha-e been anchored on the same set of facts, that is,
the refusal of the +anks to allo, )2IC to conduct an in-esti&ation
,ithout the prior consent of the /onetar% +oard, the issues raised in
the t,o petitions are not identical. /oreo-er, the disposal of the first
case does not amount to res ,udicata in this case.
V @ Whether the Court of Appeals$Cebu erred in finding that prior
approval of the &onetar! -oard of the -angko Sentral ng
.ilipinas is ne#essar! before the .DIC ma! #ondu#t an
investigation of respondent banks%
)2IC is of the position that in order for it to e=ercise its po,er of
in-esti&ation, the la, re0uires that?
(a) 3he in-esti&ation is based on a complaint of a
depositor or an% other &o-ernment a&enc%, or on the
report of e=amination of EtheF +an&ko .entral n&
)ilipinas (+.)) andIor )2ICO and,
(b) 3he complaint alle&es, or the +.) andIor )2IC
Report of C=amination contains ad-erse findin&s of,
fraud, irre&ularities or anomalies committed b% the
+ank andIor its directors, officers, emplo%ees or
a&entsO and,
(c) 3he in-esti&ation is upon the authorit% of the
)2IC +oard of 2irectors.
65
It ar&ues that ,hen it commenced its in-esti&ation on the +anks, all
of the aforementioned re0uirements ,ere met. )2IC stresses that its
po,er of e=amination is different from its po,er of in-esti&ation, in
such that the former re0uires prior appro-al of the /onetar% +oard
,hile the latter re0uires merel% the appro-al of the )2IC +oard.
66
It
further claims that the po,er of e=amination cannot be e=ercised
,ithin t,el-e (1") months from the last e=amination conducted,
,hereas the po,er of in-esti&ation is ,ithout limitation as to the
fre0uenc% of its conduct. It states that the purpose of the )2ICRs
po,er of e=amination is merel% to look into the condition of the
bank, ,hereas the po,er of in-esti&ation aims to address fraud,
irre&ularities and anomalies based on complaints from depositors and
other &o-ernment a&encies or upon reports of e=aminations
conducted b% the )2IC itself or b% the +.).
6<
3he +anks, on the other hand, are of the opinion that a holistic
readin& of the )2IC charter sho,s that petitionerRs po,er of
e=amination is s%non%mous ,ith its po,er of in-esti&ation.
6'
3he%
cite, as bases, the la, dictionar% definitions, .ection ', Ci&hth
para&raph
6#
and .ection #(b!1)
<
of the )2IC Charter, and Rule 1,
.ection ((1) of )2IC Re&ulator% Issuance No. "5!", ,hich
defines Ain-esti&ationA as follo,s?
(l) UIn-esti&ationR shall refer to fact!findin& e=amination, stud% or
in0uir% for determinin& ,hether the alle&ations in a complaint or
findin&s in a final report of e=amination ma% properl% be the sub>ect
of an administrati-e, criminal or ci-il action.
3he +anks further cite .ection S65' of the /anual of Re&ulations
for +anks, ,hich states?
.ec. S65' ! C=amination b% the +.). 3he term Ue=aminationR shall,
henceforth, refer to an in-esti&ation of an institution under the
super-isor% authorit% of the +.) to determine compliance ,ith la,s
and re&ulations. It shall include determination that the institution is
conductin& its business on a safe and sound basis. C=amination
re0uires full and comprehensi-e lookin& into the operations and
books of institutions, and shall include, but need not be limited to the
follo,in&?
a. 2etermination of the bankRs sol-enc% and li0uidit%
positionO
b. C-aluation of asset 0ualit% as ,ell as determination of
sufficienc% of -aluation reser-es on loans and other risk
assetsO
c. Re-ie, of all aspects of bank operationsO
d. 5ssessment of risk mana&ement s%stem, includin& the
e-aluation of the effecti-eness of the bank mana&ementRs
o-ersi&ht functions, policies, procedures, internal control and
auditO
e. 5ppraisal of o-erall mana&ement of the bankO
f. Re-ie, of compliance and applicable la,s, rules and
re&ulationsO and an% other acti-ities rele-ant to the abo-e.A
5fter an e-aluation of the respecti-e positions of the parties, the
Court is of the -ie, that the /onetar% +oard appro-al is not re0uired
for )2IC to conduct an in-esti&ation on the +anks.
3he disa&reement stems from the interpretation of these t,o ke%
pro-isions of the )2IC Charter. 3he confusion can be attributed to
the fact that althou&h Ain-esti&ationA and Ae=aminationA are t,o
separate and distinct procedures under the charter of the )2IC and
the +.), the ,ords seem to be used loosel% and interchan&eabl%.
It does not help that indeed these terms are -er% closel% related in a
&eneric sense. Bo,e-er, ,hile Ae=aminationA connotes a mere
&eneric perusal or inspection, Ain-esti&ationA refers to a more
intensi-e scrutin% for a more specific fact!findin& purpose. 3he latter
term is also usuall% associated ,ith proceedin&s conducted prior to
criminal prosecution.
3he )2IC ,as created b% R.5. No. (5#1 on 1une "", 1#6( as an
insurer of deposits in all banks entitled to the benefits of insurance
under the )2IC Charter to promote and safe&uard the interests of the
depositin& public b% ,a% of pro-idin& permanent and continuin&
insurance co-era&e of all insured deposits. It is a &o-ernment
instrumentalit% that operates under the 2epartment of Dinance. Its
primar% purpose is to act as deposit insurer, as a co!re&ulator of
banks, and as recei-er and li0uidator of closed banks.
<1
.ection 1 of the )2IC Charter states?
SE%TION 1. 3here is hereb% created a )hilippine 2eposit Insurance
Corporation hereinafter referred to as the ACorporationA ,hich shall
insure, as herein pro-ided, the deposits of all banks ,hich are
entitled to the benefits of insurance under this 5ct, and ,hich shall
ha-e the po,ers hereinafter &ranted.
3he Corporation shall, as a basic polic%, promote and safe&uard the
interests of the depositin& public b% ,a% of pro-idin& permanent and
continuin& insurance co-era&e on all insured deposits.
.ection 1 of R.5. No. #5<6 further pro-ides? 5n 5ct Increasin& the
/a=imum 2eposit Insurance Co-era&e, and in connection there,ith,
to .tren&then the Re&ulator% and 5dministrati-e 5uthorit%, and
Dinancial Capabilit% of the )hilippine 2eposit Insurance Corporation
()2IC), amendin& for this purpose R.5. No. (5#1, as 5mended,
other,ise kno,n as the )2IC Charter.
SE%TION 1. Statement of State .oli#! and /b"e#tives% ! It is
hereb% declared to be the polic% of the .tate to stren&then the
mandator% deposit insurance co-era&e s%stem to &enerate, preser-e,
maintain faith and confidence in the countr%Rs bankin& s%stem, and
protect it from ille&al schemes and machinations.
3o,ards this end, the &o-ernment must e=tend all means and
mechanisms necessar% for the )hilippine 2eposit Insurance
Corporation to effecti-el% fulfill its -ital task of promotin& and
safe&uardin& the interests of the depositin& public b% ,a% of
pro-idin& permanent and continuin& insurance co-era&e on all
insured deposits, and in helpin& de-elop a sound and stable bankin&
s%stem at all times.34w%#i3
7nder its charter, the )2IC is empo,ered to conduct e=amination of
banks ,ith prior appro-al of the /onetar% +oard?
Ci&hth V 3o conduct e=amination of banks ,ith prior appro-al of the
/onetar% +oard5 Pro0ided, 3hat no e=amination can be conducted
,ithin t,el-e (1") months from the last e=amination date? Pro0ided!
#owe0er, 3hat the Corporation ma%, in coordination ,ith the +an&ko
.entral, conduct a special e=amination as the +oard of 2irectors, b%
an affirmati-e -ote of a ma>orit% of all its members, if there is a
threatened or impendin& closure of a bankO Pro0ided! &urt#er, 3hat,
not,ithstandin& the pro-isions of Republic 5ct No. 1$5, as
amended, Republic 5ct No. 6$"6, as amended, Republic 5ct No.
'<#1, and other la,s, the Corporation andIor the +an&ko .entral,
ma% in0uire into or e=amine deposit accounts and all information
related thereto in case there is a findin& of unsafe or unsound
bankin& practiceO Pro0ided, 3hat to a-oid o-erlappin& of efforts, the
e=amination shall ma=imi8e the efficient use of the rele-ant reports,
information, and findin&s of the +an&ko .entral, ,hich it shall make
a-ailable to the CorporationO (As a+ended by R.A. 6789! 39 August
988:! R.A. 6;<=! 3 >une 9886)
===. E7nderlinin& suppliedF
.ection #(b!1) of the )2IC Charter further pro-ides that the )2IC
+oard shall ha-e the po,er to?
PO>ERS AN, RESPONSIBILITIES AN, PROHIBITIONS
SE%TION 9. AAA
(b) 3he +oard of 2irectors shall appoint e=aminers ,ho shall ha-e
po,er, on behalf of the Corporation to e=amine an% insured bank.
Cach such e=aminer shall ha-e the po,er to make a thorou&h
e=amination of all the affairs of the bank and in doin& so, he shall
ha-e the po,er to administer oaths, to e=amine and take and
preser-e the testimon% of an% of the officers and a&ents thereof, and,
to compel the presentation of books, documents, papers, or records
necessar% in his >ud&ment to ascertain the facts relati-e to the
condition of the bankO and shall make a full and detailed report of the
condition of the bank to the Corporation. 3he +oard of 2irectors in
like manner shall appoint claim a&ents ,ho shall ha-e the po,er to
in-esti&ate and e=amine all claims for insured deposits and
transferred deposits. Cach claim a&ent shall ha-e the po,er to
administer oaths and to e=amine under oath and take and preser-e
testimon% of an% person relatin& to such claim. (As a+ended by E.(.
?68! 8? A%ri 36?7@ R.A. <:88! 37 A%ri 3669)
(b!1) 3he in-esti&ators appointed b% the +oard of 2irectors shall
ha-e the po,er on behalf of the Corporation to conduct
in-esti&ations on frauds, irre&ularities and anomalies committed in
banks, based on reports of e=amination conducted b% the
Corporation and Bang-o Sentra ng Pii%inas or complaints from
depositors or from other &o-ernment a&enc%. Cach such in-esti&ator
shall ha-e the po,er to administer oaths, and to e=amine and take
and preser-e the testimon% of an% person relatin& to the sub>ect of
in-esti&ation. (As added by R.A. 6789! 39 August 988:)
===. E7nderscorin& suppliedF
5s stated abo-e, the charter empo,ers the )2IC to conduct an
in-esti&ation of a bank and to appoint e=aminers ,ho shall ha-e the
po,er to e=amine an% insured bank. .uch in-esti&ators are
authori8ed to conduct in-esti&ations on frauds, irre&ularities and
anomalies committed in banks, based on an e=amination conducted
b% the )2IC and the +.) or on complaints from depositors or from
other &o-ernment a&encies.
3he distinction bet,een the po,er to in-esti&ate and the po,er to
e=amine is emphasi8ed b% the e=istence of t,o separate sets of rules
&o-ernin& the procedure in the conduct of in-esti&ation and
e=amination. Re&ulator% Issuance (RI) No. "5!" or the
)2IC Rues on 'act-'inding In0estigation o& 'raud! Irreguarities
and Ano+aies Co++itted in Ban-s co-ers the procedural
re0uirements of the e=ercise of the )2ICRs po,er of in-esti&ation.
4n the other hand, RI No. "#!5 sets forth the &uidelines for the
conduct of the po,er of e=amination.
3he definitions pro-ided under the t,o aforementioned re&ulator%
issuances elucidate on the distinction bet,een the po,er of
e=amination and the po,er of in-esti&ation.
.ection " of RI No. "5!" states that its co-era&e shall be
applicable to Aall fact!findin& in-esti&ations on fraud, irre&ularities
andIor anomalies committed in banks that are conducted b% )2IC
based on? EaF complaints from depositors or other &o-ernment
a&enciesO andIor EbF final reports of e=aminations of banks conducted
b% the +an&ko .entral n& )ilipinas andIor )2IC.A
3he same issuance states that the Dinal Report of C=amination
<"
is
one of the three pre!re0uisites to the conduct of an in-esti&ation, in
addition to the authori8ation of the )2IC +oard
<(
and a
complaint.
<$
1u=taposin& this pro-ision ,ith .ection #(b!1) of the
)2IC Charter, since an e=amination is e=plicitl% made the basis of a
fact!findin& e=amination, then clearl% e=amination and in-esti&ation
are t,o different proceedin&s. It ,ould ob-iousl% def% lo&ic to make
the result of an Ain-esti&ationA the basis of the same proceedin&.
3hus, RI No. "5!" defines an Ain-esti&ationA as a Afact!findin&
e=amination, stud% or in0uir% for determinin& ,hether the
alle&ations in a complaint or findin&s in a final report of e=amination
ma% properl% be the sub>ect of an administrati-e, criminal or ci-il
action.A
<5
3he +anks cite the dictionar% definitions of Ae=aminationA and
Ain-esti&ationA to >ustif% their conclusion that these terms refer to
one and the same proceedin&. It is temptin& to use these t,o terms
interchan&eabl%, ,hich practice ma% be perfectl% >ustified in a purel%
literar% sense. Indeed, a readin& of the )2IC Charter sho,s that the
t,o terms ha-e been used interchan&eabl% at some point. Bo,e-er,
based on the pro-isions aforecited, the intention of the la,s is clearl%
to differentiate bet,een the process of in-esti&ation and that of
e=amination.
In "#, to clarif% procedural matters, )2IC released RI No. "#!5
or the Rules and Re&ulations on C=amination of +anks. .ection "
thereof differentiated bet,een the t,o t%pes of e=amination as
follo,s?
Sect!o" 2. T4e$ o8 EA*B!"*t!o"
a. Reguar E2a+ination ! 5n e=amination conducted
independentl% or >ointl% ,ith the +.). It re0uires theprior
appro-al of the )2IC +oard of 2irectors and the /onetar%
+oard (/+). It ma% be conducted onl% after an inter-al of at
least t,el-e (1") months from the closin& date of the last
Re&ular C=amination.
b. S%ecia E2a+ination V 5n e=amination conducted at an%
time in coordination ,ith the +.), b% an affirmati-e -ote of
a ma>orit% of all the members of the )2IC +oard of
2irectors, ,ithout need of prior /+ appro-al, if there is a
threatened or impendin& bank closure as determined b% the
)2IC +oard of 2irectors. E7nderscorin& suppliedF
.ection ( of RI No. "#!5 pro-ides for the &eneral scope of the
)2IC e=amination?
Sect!o" 3. Scoe o8 EA*B!"*t!o"
3he e=amination shall include, but need not be limited to, the
follo,in&?
a. 2etermination of the bankRs sol-enc% and li0uidit%
positionO
b. C-aluation of asset 0ualit% as ,ell as determination of
sufficienc% of -aluation reser-es on loans and other risk
assetsO
c. Re-ie, of all aspects of bank operationsO
d. 5ssessment of risk mana&ement s%stem, includin& the
e-aluation of the effecti-eness of the bank mana&ementRs
o-ersi&ht functions, policies, procedures, internal control and
auditO
e. 5ppraisal of o-erall mana&ement of the bankO
f. Re-ie, of compliance ,ith applicable bankin& la,s, and
rules and re&ulations, includin& )2IC issuancesO
&. Dollo,!throu&h of specific e=ceptionsI -iolations noted
durin& a pre-ious e=aminationO and
h. 5n% other acti-it% rele-ant to the abo-e.
Rule ", .ection 1 of )2IC RI No. "5!" or the PDIC Rues on
'act-'inding In0estigation o& 'raud! Irreguarities and Ano+aies
Co++itted in Ban-s pro-ides for the scope of fact!findin&
in-esti&ations as follo,s?
SE%TION 1. Scoe o8 t3e I"#e$t!5*t!o".
Dact!findin& In-esti&ations shall be limited to the particular acts or
omissions sub>ect of a complaint or a Dinal Report of C=amination.
Drom the abo-e!cited pro-isions, it is clear that the process of
e=amination co-ers a ,ider scope than that of in-esti&ation.
C=amination in-ol-es an e-aluation of the current status of a bank
and determines its compliance ,ith the set standards re&ardin&
sol-enc%, li0uidit%, asset -aluation, operations, s%stems,
mana&ement, and compliance ,ith bankin& la,s, rules and
re&ulations.
In-esti&ation, on the other hand, is conducted based on specific
findin&s of certain acts or omissions ,hich are sub>ect of a complaint
or a Dinal Report of C=amination.
Clearl%, in-esti&ation does not in-ol-e a &eneral e-aluation of the
status of a bank.34w%#i3 5n in-esti&ation 8eroes in on specific acts
and omissions unco-ered -ia an e=amination, or ,hich are cited in a
complaint.
5n e=amination entails a re-ie, of essentiall% all the functions and
facets of a bank and its operation. It necessitates porin& throu&h
-oluminous documents, and re0uires a detailed e-aluation thereof.
.uch a process then in-ol-es an intrusion into a bankRs records.
In contrast, althou&h it also in-ol-es a detailed e-aluation, an
in-esti&ation centers on specific acts of omissions and, thus, re0uires
a less in-asi-e assessment.
3he practical >ustification for not re0uirin& the /onetar% +oard
appro-al to conduct an in-esti&ation of banks is the administrati-e
hurdles and paper,ork it entails, and the correspondent time to
complete those additional steps or re0uirements. 5s in other t%pes of
in-esti&ation, time is al,a%s of essence, and it is prudent to e=pedite
the proceedin&s if an accurate conclusion is to be arri-ed at, as an
in-esti&ation is onl% as precise as the e-idence on ,hich it is based.
3he promptness ,ith ,hich such e-idence is &athered is al,a%s of
utmost importance because e-idence, documentar% e-idence in
particular, is remarkabl% fun&ible. 5 )2IC in-esti&ation is conducted
to AdetermineEeF ,hether the alle&ations in a complaint or findin&s in
a final report of e=amination ma% properl% be the sub>ect of an
administrati-e, criminal or ci-il action.A
<6
In other ,ords, an
in-esti&ation is based on reports of e=amination and an e=amination
is conducted ,ith prior /onetar% +oard appro-al. 3herefore, it
,ould be unnecessar% to secure a separate appro-al for the conduct
of an in-esti&ation. .uch ,ould merel% prolon& the process and
pro-ide unscrupulous indi-iduals the opportunit% to co-er their
tracks.
Indeed, ,hile in a literar% sense, the t,o terms ma% be used
interchan&eabl%, under the )2IC Charter, e=amination and
in-esti&ation refer to t,o different processes. 3o reiterate, an
e=amination of banks re0uires the prior consent of the /onetar%
+oard, ,hereas an in-esti&ation based on an e=amination report,
does not.
>HERE1ORE, the petition is GRANTE,. 3he 2ecision and
Resolution of the Court of 5ppeals in C5 M.R. CC+ .). No. 155,
dated .eptember 1', "6 and
G.R. No. L23-42. &*rc3 12, 19.C
%ENTRAL BANK O1 THE PHILIPPINES *$ L!D7!+*tor o8 t3e
1I,ELIT/ SAVINGS BANK, petitioner,
-s.
HONORABLE )0,GE )ES0S P. &OR1E, *$ Pre$!+!"5 )7+5e
o8 Br*"c3 EIII, %o7rt o8 1!r$t I"$t*"ce o8 &*"!6*, So7$e$
A0G0STO *"+ A,ELAI,A PA,ILLA *"+ So7$e$ &AR%ELA
*"+ )OB ELI(ES,respondents.
3his case in-ol-es the 0uestion of ,hether a final >ud&ment for the
pa%ment of a time deposit in a sa-in&s bank ,hich >ud&ment ,as
obtained after the bank ,as declared insol-ent, is a preferred claim
a&ainst the bank. 3he 0uestion arises under the follo,in& facts?
4n Debruar% 1',1#6# the /onetar% +oard found the Didelit% .a-in&s
+ank to be insol-ent. 3he +oard directed the .uperintendent of
+anks to take char&e of its assets, forbade it to do business and
instructed the Central +ank Le&al Counsel to take le&al actions
(Resolution No. (5).
4n 2ecember #, 1#6# the +oard in-ol-ed to seek the court6s assistant
and super-ision in the li0uidation of the ban 3he resolution
implemented onl% on 1anuar% "5, 1#<", ,hen his Central +ank of the
)hilippines filed the correspondin& petition for assistance and
super-ision in the Court of Dirst Instance of /anila (Ci-il Case No.
'65 assi&ned to +ranch SIII).
)rior to the institution of the li0uidation proceedin& but after the
declaration of insol-enc%, or, specificall%, sometime in Marc#! 36<3,
the spouses 1ob Cli8es and /arcela ). Cli8es filed a complaint in the
Court of Dirst Instance of /anila a&ainst the Didelit% .a-in&s +ank
for the reco-er% of the sum of )5, 5'$ as the balance of their time
deposits (Ci-il Case No. '"5" assi&ned to +ranch I).
In the >ud&ment rendered in that case on 2ecember 1(, 1#<" the
Didelit% .a-in&s +ank ,as ordered to pa% the Cli8es spouses the sum
of )5,5'$ plus accumulated interest.
In another case, assi&ned to +ranch SSS of the Court of Dirst
Instance of /anila, the spouses 5u&usta 5. )adilla and 5delaida
)adilla secured on 5pril 1$, 1#<" a >ud&ment a&ainst the Didelit%
.a-in&s +ank for the sums of )', as the balance of their time
deposits, plus interests, )<, as moral and e=emplar% dama&es
and )#,6 as attorne%6s fees (Ci-il Case No. '$" ,here the action
,as filed on .eptember 6, 1#<1).
In its orders of 5u&ust ", 1#<( and Debruar% "5, 1#<$, the lo,er
court (+ranch SIII ha-in& co&ni8ance of the li0uidation proceedin&),
upon motions of the Cli8es and )adilla spouses and o-er the
opposition of the Central +ank, directed the latter as li0uidator, to
pa% their time deposits as %re&erred ,udg+ents! e0idenced by &ina
,udg+ents! ,ithin the meanin& of article ""$$(1$)(b) of the Ci-il
Code, if there are enou&h funds in the li0uidator6s custod% in e=cess
of the credits more preferred under section ( of the Central +ank
La, in relation to articles ""$$ and ""51 of the Ci-il Code.
Drom the said order, the Central +ank appealed to this Court
b% certiorari. It contends that the final >ud&ments secured b% the
Cli8es and )adilla spouses do not en>o% an% preference because (a)
the% ,ere rendered after the Didelit% .a-in&s +ank ,as declared
insol-ent and (b) under the charter of the Central +ank and the
Meneral +ankin& La,, no final >ud&ment can be -alidl% obtained
a&ainst an insol-ent bank.
Republic 5ct No. "65 pro-ides?tAB.CD#.w4C
.CC. "#. Proceeding u%on inso0ency.J9hene-er upon
e=amination b% the .uperintendent or his e=aminers or a&ents into
the condition of an% bankin& institution, it shall be disclosed that the
condition of the same is one of insol-enc%, or that its continuance in
business ,ould in-ol-e probable loss to its depositors or creditors, it
shall be the dut% of the .uperintendent forth,ith, in ,ritin& to
inform the /onetar% +oard of the facts, and the +oard, upon findin&
the statements of the .uperintendent to be true, shall forth,ith forbid
the institution to do business in the )hilippines and shall take char&e
of its assets and proceeds accordin& to la,.
3he /onetar% +oard shall thereupon determine ,ithin thirt% da%s
,hether the institution ma% be reor&ani8ed or other,ise placed in
such a condition so that it ma% be permitted to resume business ,ith
safet% to its creditors and shall prescribe the conditions under ,hich
such resumption of business shall take place. In such case the
e=penses and fees in the administration of the institution shall be
determined b% the +oard and shall be paid to the Central +ank out of
the assets of such bankin& institution.
5t an% time ,ithin ten da%s after the /onetar% +oard has taken
char&e of the assets of an% bankin& institution, such institution ma%
appl% to the Court of Dirst Instance for an order re0uirin& the
/onetar% +oard to sho, cause ,h% it should not be en>oined from
continuin& such char&e of its assets, and the court ma% direct the
+oard to refrain from further proceedin&s and to surrender char&e of
its assets.
If the /onetar% +oard shall determine that the bankin& institution
cannot resume business ,ith safet% to its creditors, it shall, b% the
4ffice of the .olicitor Meneral, file a petition in the Court of Dirst
Instance recitin& the proceedin&s ,hich ha-e been taken and pra%in&
the assistance and super-ision of the court in the li0uidation of the
affairs of the same. 3he .uperintendent shall thereafter, upon order
of the /onetar% +oard and under the super-ision of the court and
,ith all con-enient speed, con-ert the assets of the bankin&
institution to mone%.
.CC. (. Distribution o& assets.JIn case of li0uidation of a bankin&
institution, after pa%ment of the costs of the proceedin&s, includin&
reasonable e=penses and fees of the Central +ank to be allo,ed b%
the court, the Central +ank shall pa% the debts of such institution,
under the order of the court, in accordance ,ith their le&al priorit%.
3he Meneral +ankin& 5ct, Republic 5ct No. ((<, pro-ides?tAB.
CD#.w4C
.CC. '5. 5n% director or officer of an% bankin& institution ,ho
recei-es or permits or causes to be recei-ed in said bank an% deposit,
or ,ho pa%s out or permits or causes to be paid out an% funds of said
bank, or ,ho transfers or permits or causes to be transferred an%
securities or propert% of said bank, after said bank becomes
insol-ent, shall be punished b% fine of not less than one thousand nor
more than ten thousand pesos and b% imprisonment for not less than
t,o nor more than ten %ears.
3he Ci-il Code pro-ides?tAB.CD#.w4C
5R3. ""(<. Insol-enc% shall be &o-erned b% special la,s insofar as
the% are not inconsistent ,ith this Code. (n)
5R3. ""$$. 9ith reference to other propert%, real and personal, of
the debtor, the follo,in& claims or credits shall be preferred in the
order named?
=== === ===
(1$) Credits ,hich, ,ithout special pri-ile&e, appear in (a) a public
instrumentO or (b) in a final >ud&ment, if the% ha-e been the sub>ect
of liti&ation. 3hese credits shall ha-e preference amon& themsel-es
in the order of priorit% of the dates of the instruments and of the
>ud&ments, respecti-el%. (1#"$a)
5R3. ""51. 3hose credits ,hich do not en>o% an% preference ,ith
respect to specific propert%, and those ,hich en>o% preference, as to
the amount not paid, shall be satisfied accordin& to the follo,in&
rules?
(1) In the order established in article ""$$O
(") Common credits referred to in article ""$5 shall be paid %ro
rata re&ardless of dates. (1#"#a)
3he trial court or, to be e=act, the li0uidation court noted that there is
no pro-ision in the charter of the Central +ank in the Meneral
+ankin& La, (Republic 5cts Nos. "65 and ((<, respecti-el%) ,hich
suspends or abates ci-il actions a&ainst an insol-ent bank pendin& in
courts other than the li0uidation court. It reasoned out that, because
such actions are not suspended, >ud&ments a&ainst insol-ent banks
could be considered as preferred credits under article ""$$(1$)(b) of
the Ci-il Code. It further noted that, in contrast ,ith the Central 5ct,
section 1' of the Insol-enc% La, pro-ides that upon the issuance b%
the court of an order declarin& a person insol-ent Aall ci-il
proceedin&s a&ainst the said insol-ent shall be sta%ed.A
3he li0uidation court directed the Central +ank to honor the ,rits of
e=ecution issued b% +ranches I and SSS for the enforcement of the
>ud&ments obtained b% the Cli8es and )adilla spouses. It su&&ested
that, after satisfaction of the >ud&ment the Central +ank, as
li0uidator, should include said >ud&ments in the list of preferred
credits contained in the A)ro>ect of 2istributionA A,ith the notation
Aalread% paidA A
4n the other hand, the Central +ank ar&ues that after the /onetar%
+oard has declared that a bank is insol-ent and has ordered it to
cease operations, the +oard becomes the trustee of its assets Afor the
e0ual benefit of all the creditors, includin& the depositorsA. 3he
Central +ank cites the rulin& that Athe assets of an insol-ent bankin&
institution are held in trust for the e0ual benefit of all creditors, and
after its insol-enc%, one cannot obtain an ad-anta&e or a preference
o-er another b% an attachment, e=ecution or other,iseA (Rohr -s.
.tanton 3rust H .a-in&s +ank, <6 /ont. "$', "$5 )ac. #$<).
3he stand of the Central +ank is that all depositors and creditors of
the insol-ent bank should file their actions ,ith the li0uidation court.
In support of that -ie, it cites the pro-ision that the Insol-enc% La,
does not appl% to banks (last sentence, sec. 5" of 5ct No. 1#56).
It also in-okes the pro-ision penali8in& a director officer of a bank
,ho disburses, or allo,s disbursement, of the funds of the bank after
it becomes insol-ent (.ec. '5, Meneral +ankin& 5ct, Republic 5ct
No. ((<). It cites the rulin& that Aa creditor of an insol-ent state bank
in the hands of a li0uidator ,ho reco-ered a >ud&ment a&ainst it is
not entitled to a preference for (b%) the mere fact that he is a
>ud&ment creditorA (3homas B. +ri&&s H .ons, Inc. -s. 5llen, "< N.
Carolina 1, 1<5 .. C. '(', +ra-er Li0uidation of Dinancial
Institutions, p. #"").
It should be noted that fi=ed, sa-in&s, and current deposits of mone%
in banks and similar institutions are not true deposits. 3he% are
considered simple loans and, as such, are not preferred credits (5rt.
1#', Ci-il CodeO In re Li0uidation of /ercantile +ank of China?
3an 3ion& 3ick -s. 5merican 5pothecaries Co., 65 )hil. $1$O )acific
Coast +iscuit Co. -s. Chinese Mrocers 5ssociation, 65 )hil. (<5O
Dletcher 5merican National +ank -s. 5n& Chen& Lian, 65 )hil. ('5O
)acific Commercial Co. -s. 5merican 5pothecaries Co., 65 )hil.
$"#O Mopoco Mrocer% -s. )acific Coast +iscuit Co., 65 )hil. $$().
3he afore0uoted section "# of the Central +ank6s charter e=plicitl%
pro-ides that ,hen a bank is found to be insol-ent, the /onetar%
+oard shall forbid it to do business and shall take char&e of its assets.
3he +oard in its Resolution No. (5 dated Debruar% 1',1#6# banned
the Didelit% .a-in&s +ank from doin& business. It took char&e of the
bank6s assets. C-identl%, one purpose in prohibitin& the insol-ent
bank from doin& business is to pre-ent some depositors from ha-in&
an undue or fraudulent preference o-er other creditors and
depositors.
3hat purpose ,ould be nullified if, as in this case, after the bank is
declared insol-ent, suits b% some depositors could be maintained and
>ud&ments ,ould be rendered for the pa%ment of their deposits and
then such >ud&ments ,ould be considered preferred credits under
article ""$$ (1$) (b) of the Ci-il Code.
9e are of the opinion that such >ud&ments cannot be considered
preferred and that article ""$$(1$)(b) does not appl% to >ud&ments
for the pa%ment of the deposits in an insol-ent sa-in&s bank ,hich
,ere obtained after the declaration of insol-enc%.
5 contrar% rule or practice ,ould be producti-e of in>ustice, mischief
and confusion. 3o reco&ni8e such >ud&ments as entitled to priorit%
,ould mean that depositors in insol-ent banks, after learnin& that the
bank is insol-ent as sho,n b% the fact that it can no lon&er pa%
,ithdra,als or that it has closed its doors or has been en>oined b% the
/onetar% +oard from doin& business, ,ould rush to the courts to
secure >ud&ments for the pa%ment of their deposits.
In such an e-entualit%, the courts ,ould be s,amped ,ith suits of
that character. .ome of the >ud&ments ,ould be default >ud&ments.
2epositors armed ,ith such >ud&ments ,ould pester the li0uidation
court ,ith claims for preference on the basis of article ""$$(1$)(b).
Less alert depositors ,ould be pre>udiced. 3hat ine0uitable situation
could not ha-e been contemplated b% the framers of section "#.
3he Ro#r case (su%ra) supplies some illumination on the disposition
of the instant case. It appears in that case that the .tanton 3rust H
.a-in&s +ank of Mreat Dalls closed its doors to business on 1ul% #,
1#"(. 4n No-ember <,1#"$ the bank (then alread% under li0uidation)
issued to 9illiam Rohr a certificate statin& that he ,as entitled to
claim from the bank W1,1#1.<" and that he ,as entitled to di-idends
thereon. Later, Rohr sued the bank for the pa%ment of his claim. 3he
bank demurred to the complaint. 3he trial court sustained the
demurrer. Rohr appealed. In affirmin& the order sustainin& the
demurrer, the .upreme Court of /ontana said?tAB.CD#.w4C
3he &eneral principle of e0uit% that the assets of an insol-ent are to
he distributed ratabl% amon& &eneral creditors applies ,ith full force
to the distribution of the assets of a bank. 5 &eneral depositor of a
bank is merel% a &eneral creditor, and, as such, is not entitled to an%
preference or priorit% o-er other &eneral creditors.
3he assets of a bank in process of li0uidation are held in trust for the
e0ual benefit of all creditors, and one cannot be permitted to obtain
an ad-anta&e or preference o-er another b% an attachment, e=ecution
or other,ise. 5 disputed claim of a creditor ma% be ad>udicated, but
those ,hose claims are reco&ni8ed and admitted ma% not
successfull% maintain action thereon. .o to permit ,ould defeat the
-er% purpose of the li0uidation of a bank ,hether bein& -oluntaril%
accomplished or throu&h the inter-ention of a recei-er.
=== === ===
3he a-ailable assets of such a bank are held in trust, and so
conser-ed that each depositor or other creditor shall recei-e pa%ment
or di-idend accordin& to the amount of his debt, and that none of
e0ual class shall recei-e an% ad-anta&e or preference o-er another.
5nd ,ith respect to a national bank under -oluntar% li0uidation, the
court noted in the Ro#r case that the assets of such a bank Abecome a
trust fund, to be administered for the benefit of all creditors pro rata
and, ,hile the bank retains its corporate e=istence, and ma% be sued,
the effect of a >ud&ment obtained a&ainst it b% a creditor is onl% to &i2
t#e a+ount o& debt. 1e can ac.uire no ien w#ic# wi gi0e #i+ any
%re&erence or ad0antage o0er ot#er genera creditors. ("$5 )ac.
"$#). F
Considerin& that the deposits in 0uestion, in their inception, ,ere not
preferred credits, it does not seem lo&ical and >ust that the% should be
raised to the cate&or% of preferred credits simpl% because the
depositors, takin& ad-anta&e of the lon& inter-al bet,een the
declaration of insol-enc% and the filin& of the petition for >udicial
assistance and super-ision, ,ere able to secure >ud&ments for the
pa%ment of their time deposits.
3he >udicial declaration that the said deposits ,ere pa%able to the
depositors, as indisputabl% the% ,ere due, could not ha-e &i-en the
Cli8es and )adilla spouses a priorit% o-er the other depositors ,hose
deposits ,ere like,ise indisputabl% due and o,in& from the
insol-ent bank but ,ho did not ,ant to incur liti&ation e=penses in
securin& a >ud&ment for the pa%ment of the deposits.
3he circumstance that the Didelit% .a-in&s +ank, ha-in& stopped
operations since Debruar% 1#, 1#6#, ,as forbidden to do business
(and that ban ,ould include the pa%ment of time deposits) implies
that suits for the pa%ment of such deposits ,ere prohibited. 9hat
,as directl% prohibited should not be encompassed indirectl%. (.ee
/aurello -s. +road,a% +ank H 3rust Co. of )aterson 1<6 5tl. (#1,
11$ N.1.L. 16<).
It is note,orth% that in the trial court6s order of 4ctober (, 1#<",
,hich contains the +ank Li0uidation Rules and Re&ulations, it
indicated in step III the procedure for processin& the claims a&ainst
the insol-ent bank. In .tep I*, the court directed the Central +ank, as
li0uidator, to submit a )ro>ect of 2istribution ,hich should include
Aa list of the preferred credits to be paid in full in the order of
priorities established in 5rticles ""$1, ""$", ""$(, ""$6 and ""$<A
of the Ci-il Code (note that article ""$$ ,as not mentioned). 3here
is no co&ent reason ,h% the Cli8es and )adilla spouses should not
adhere to the procedure outlined in the said rules and re&ulations.
9BCRCD4RC, the lo,er court6s orders of 5u&ust ", 1#<( and
Debruar% "5, 1#<$ are re-ersed and set aside. No costs.
.4 4R2CRC2.
G.R. No. 11C-49 )*"7*r4 24, 1996
1IRST PHILIPPINE INTERNATIONAL BANK ;1orBer64
Pro+7cer$ B*"G o8 t3e P3!6!!"e$< *"+ &ER%0RIO
RIVERA, petitioners,
-s.
%O0RT O1 APPEALS, %ARLOS E)ER%ITO, !" $7b$t!t7t!o" o8
,E&ETRIO ,E&ETRIA, *"+ )OSE )ANOLO,respondents.
In the absence of a formal deed of sale, ma% commitments &i-en b%
bank officers in an e=chan&e of letters andIor in a meetin& ,ith the
bu%ers constitute a perfected and enforceable contract of sale o-er
11 hectares of land in .ta. Rosa, La&unaN 2oes the doctrine of
Aapparent authorit%A appl% in this caseN If so, ma% the Central +ank!
appointed conser-ator of )roducers +ank (no, Dirst )hilippine
International +ank) repudiate such Aapparent authorit%A after said
contract has been deemed perfectedN 2urin& the pendenc% of a suit
for specific performance, does the filin& of a Aderi-ati-e suitA b% the
ma>orit% shareholders and directors of the distressed bank to pre-ent
the enforcement or implementation of the sale -iolate the ban a&ainst
forum!shoppin&N
.impl% stated, these are the ma>or 0uestions brou&ht before this
Court in the instant )etition for re-ie, oncertiorari under Rule $5 of
the Rules of Court, to set aside the 2ecision promul&ated 1anuar% 1$,
1##$ of the respondent Court of 5ppeals
1
in C5!M.R C* No. (5<56
and the Resolution promul&ated 1une 1$, 1##$ den%in& the motion
for reconsideration. 3he dispositi-e portion of the said 2ecision
reads?
9BCRCD4RC, the decision of the lo,er court is
/42IDIC2 b% the elimination of the dama&es a,arded
under para&raphs (, $ and 6 of its dispositi-e portion and the
reduction of the a,ard in para&raph 5 thereof to )<5,.,
to be assessed a&ainst defendant bank. In all other aspects,
said decision is hereb% 5DDIR/C2.
5ll references to the ori&inal plaintiffs in the decision and its
dispositi-e portion are deemed, herein and hereafter, to
le&all% refer to the plaintiff!appellee Carlos C. C>ercito.
Costs a&ainst appellant bank.
3he dispositi-e portion of the trial court6s
"
decision dated 1ul% 1,
1##1, on the other hand, is as follo,s?
9BCRCD4RC, premises considered, >ud&ment is hereb%
rendered in fa-or of the plaintiffs and a&ainst the defendants
as follo,s?
1. 2eclarin& the e=istence of a perfected contract to bu% and
sell o-er the si= (6) parcels of land situated at 2on 1ose, .ta.
Rosa, La&una ,ith an area of 11 hectares, more or less,
co-ered b% and embraced in 3ransfer Certificates of 3itle
Nos. 3!16#(" to 3!16#(<, inclusi-e, of the Land Records
of La&una, bet,een the plaintiffs as bu%ers and the
defendant )roducers +ank for an a&reed price of Di-e and
4ne Balf /illion ()5,5,.) )esosO
". 4rderin& defendant )roducers +ank of the )hilippines,
upon finalit% of this decision and receipt from the plaintiffs
the amount of )5.5 /illion, to e=ecute in fa-or of said
plaintiffs a deed of absolute sale o-er the aforementioned si=
(6) parcels of land, and to immediatel% deli-er to the
plaintiffs the o,ner6s copies of 3.C.3. Nos. 3!16#(" to 3!
16#(<, inclusi-e, for purposes of re&istration of the same
deed and transfer of the si= (6) titles in the names of the
plaintiffsO
(. 4rderin& the defendants, >ointl% and se-erall%, to pa%
plaintiffs 1ose 5. 1anolo and 2emetrio 2emetria the sums of
)",. each in moral dama&esO
$. 4rderin& the defendants, >ointl% and se-erall%, to pa%
plaintiffs the sum of )1,. as e=emplar% dama&es O
5. 4rderin& the defendants, >ointl% and se-erall%, to pa% the
plaintiffs the amount of )$,. for and b% ,a% of
attorne%6s feesO
6. 4rderin& the defendants to pa% the plaintiffs, >ointl% and
se-erall%, actual and moderate dama&es in the amount of
)",.O
9ith costs a&ainst the defendants.
5fter the parties filed their comment, repl%, re>oinder, sur!re>oinder
and repl% to sur!re>oinder, the petition ,as &i-en due course in a
Resolution dated 1anuar% 1', 1##5. 3hence, the parties filed their
respecti-e memoranda and repl% memoranda. 3he Dirst 2i-ision
transferred this case to the 3hird 2i-ision per resolution dated
4ctober "(, 1##5. 5fter carefull% deliberatin& on the aforesaid
submissions, the Court assi&ned the case to the
undersi&ned %onente for the ,ritin& of this 2ecision.
$#e Parties
)etitioner Dirst )hilippine International +ank (formerl% )roducers
+ank of the )hilippinesO petitioner +ank, for bre-it%) is a bankin&
institution or&ani8ed and e=istin& under the la,s of the Republic of
the )hilippines. )etitioner /ercurio Ri-era (petitioner Ri-era, for
bre-it%) is of le&al a&e and ,as, at all times material to this case,
Bead!/ana&er of the )ropert% /ana&ement 2epartment of the
petitioner +ank.
Respondent Carlos C>ercito (respondent C>ercito, for bre-it%) is of
le&al a&e and is the assi&nee of ori&inal plaintiffs!appellees 2emetrio
2emetria and 1ose 1anolo.
Respondent Court of 5ppeals is the court ,hich issued the 2ecision
and Resolution sou&ht to be set aside throu&h this petition.
$#e 'acts
3he facts of this case are summari8ed in the respondent Court6s
2ecision
(
as follo,s?
(1) In the course of its bankin& operations, the defendant
)roducer +ank of the )hilippines ac0uired si= parcels of land
,ith a total area of 11 hectares located at 2on 1ose, .ta.
Rose, La&una, and co-ered b% 3ransfer Certificates of 3itle
Nos. 3!16#(" to 3!16#(<. 3he propert% used to be o,ned
b% +P/C In-estment and 2e-elopment Corporation ,hich
had them mort&a&ed ,ith the bank as collateral for a loan.
3he ori&inal plaintiffs, 2emetrio 2emetria and 1ose 4.
1anolo, ,anted to purchase the propert% and thus initiated
ne&otiations for that purpose.
(") In the earl% part of 5u&ust 1#'< said plaintiffs, upon the
su&&estion of +P/C in-estment6s le&al counsel, 1ose
Da>ardo, met ,ith defendant /ercurio Ri-era, /ana&er of
the )ropert% /ana&ement 2epartment of the defendant
bank. 3he meetin& ,as held pursuant to plaintiffs6 plan to
bu% the propert% (3.N of 1an. 16, 1##, pp. <!1). 5fter the
meetin&, plaintiff 1anolo, follo,in& the ad-ice of defendant
Ri-era, made a formal purchase offer to the bank throu&h a
letter dated 5u&ust (, 1#'< (C=h. A+A), as follo,s?
5u&ust (, 1#'<
3he )roducers +ank of the )hilippines
/akati, /etro /anila
5ttn. Mr. Mercurio E. Ri0era
Manager! Pro%erty Manage+ent De%t.
Mentleman?
I ha-e the honor to submit m% formal offer to purchase %our
properties co-ered b% titles listed hereunder located at .ta.
Rosa, La&una, ,ith a total area of 11 hectares, more or less.
3C3 N4. 5RC5
3!16#(" 11(,5' s0. m.
3!16#(( <,'## s0. m.
3!16#($ 5","$6 s0. m.
3!16#(5 #6,<6' s0. m.
3!16#(6 1'<,11$ s0. m.
3!16#(< $'1,$'1 s0. m.
/% offer is for )C.4.? 3BRCC /ILLI4N DI*C
B7N2RC2 3B47.5N2 ()(,5,.) )C.4., in cash.
Qindl% contact me at 3elephone Number #"1!1($$.
(() 4n .eptember 1, 1#'<, defendant Ri-era made on behalf
of the bank a formal repl% b% letter ,hich is hereunder
0uoted (C=h. ACA)?
.eptember 1, 1#'<
1) /!) M73ICRRCX CN3CR)RI.C.
1$" Charisma .t., 2o@a 5ndres II
Rosario, )asi&, /etro /anila
5ttention? >(SE (. >A"(L(
2ear .ir?
3hank %ou for %our letter!offer to bu% our si= (6) parcels of
ac0uired lots at .ta. Rosa, La&una (formerl% o,ned b% +%me
Industrial Corp.). )lease be informed ho,e-er that the bank6s
counter!offer is at )5.5 million for more than 11 hectares
on lot basis.
9e shall be -er% &lad to hear %our position on the on the
matter.
+est re&ards.
($) 4n .eptember 1<, 1#'<, plaintiff 1anolo, respondin& to
Ri-era6s afore0uoted repl%, ,rote (C=h. A2A)?
.eptember 1<, 1#'<
)roducers +ank
)aseo de Ro=as
5ttention? Mr. Mercurio Ri0era
Mentlemen?
In repl% to %our letter re&ardin& m% proposal to purchase
%our 11!hectare lot located at .ta. Rosa, La&una, I ,ould
like to amend m% pre-ious offer and I no, propose to bu%
the said lot at )$."5 million in C5.B..
Bopin& that this proposal meets %our satisfaction.
(5) 3here ,as no repl% to 1anolo6s fore&oin& letter of
.eptember 1<, 1#'<. 9hat took place ,as a meetin& on
.eptember "', 1#'< bet,een the plaintiffs and Luis Co, the
.enior *ice!)resident of defendant bank. Ri-era as ,ell as
Da>ardo, the +P/C la,%er, attended the meetin&. 3,o da%s
later, or on .eptember (, 1#'<, plaintiff 1anolo sent to the
bank, throu&h Ri-era, the follo,in& letter (C=h. ACA)?
3he )roducers +ank of the )hilippines
)aseo de Ro=as, /akati
/etro /anila
5ttention? /r. /ercurio Ri-era
Re? 11 Bectares of Land
in .ta. Rosa, La&una
Mentlemen?
)ursuant to our discussion last "' .eptember 1#'<, ,e are
pleased to inform %ou that ,e are acceptin& %our offer for us
to purchase the propert% at .ta. Rosa, La&una, formerl%
o,ned b% +%me In-estment, for a total price of )C.4.?
DI*C /ILLI4N DI*C B7N2RC2 3B47.5N2
()5,5,.).
3hank %ou.
(6) 4n 4ctober 1", 1#'<, the conser-ator of the bank (,hich
has been placed under conser-atorship b% the Central +ank
since 1#'$) ,as replaced b% an 5ctin& Conser-ator in the
person of defendant Leonida 3. Cncarnacion. 4n No-ember
$, 1#'<, defendant Ri-era ,rote plaintiff 2emetria the
follo,in& letter (C=h. ADA)?
5ttention? 5tt%. 2emetrio 2emetria
2ear .ir?
Pour proposal to bu% the properties the bank foreclosed from
+%me in-estment Corp. located at .ta. Rosa, La&una is
under stud% %et as of this time b% the ne,l% created
committee for submission to the ne,l% desi&nated 5ctin&
Conser-ator of the bank.
Dor %our information.
(<) 9hat thereafter transpired ,as a series of demands b% the
plaintiffs for compliance b% the bank ,ith ,hat plaintiff
considered as a perfected contract of sale, ,hich demands
,ere in one form or another refused b% the bank. 5s detailed
b% the trial court in its decision, on No-ember 1<, 1#'<,
plaintiffs throu&h a letter to defendant Ri-era (C=hibit AMA)
tendered pa%ment of the amount of )5.5 million Apursuant to
(our) perfected sale a&reement.A 2efendants refused to
recei-e both the pa%ment and the letter. Instead, the parcels
of land in-ol-ed in the transaction ,ere ad-ertised b% the
bank for sale to an% interested bu%er (C=h, ABA and AB!1A).
)laintiffs demanded the e=ecution b% the bank of the
documents on ,hat ,as considered as a Aperfected
a&reement.A 3hus?
/r. /ercurio Ri-era
/ana&er, )roducers +ank
)aseo de Ro=as, /akati
/etro /anila
2ear /r. Ri-era?
3his is in connection ,ith the offer of our client, /r. 1ose 4.
1anolo, to purchase %our 11!hectare lot located in .ta. Rosa,
La&una, and ,hich are co-ered b% 3C3 No. 3!16#(" to
16#(<.
Drom the documents at hand, it appears that %our counter!
offer dated .eptember 1, 1#'< of this same lot in the amount
of )5.5 million ,as accepted b% our client thru a letter dated
.eptember (, 1#'< and ,as recei-ed b% %ou on 4ctober 5,
1#'<.
In -ie, of the abo-e circumstances, ,e belie-e that an
a&reement has been perfected. 9e ,ere also informed that
despite repeated follo,!up to consummate the purchase, %ou
no, refuse to honor %our commitment. Instead, %ou ha-e
ad-ertised for sale the same lot to others.
In behalf of our client, therefore, ,e are makin& this formal
demand upon %ou to consummate and e=ecute the necessar%
actionsIdocumentation ,ithin three (() da%s from %our
receipt hereof. 9e are read% to remit the a&reed amount of
)5.5 million at %our ad-ice. 4ther,ise, ,e shall be
constrained to file the necessar% court action to protect the
interest of our client.
9e trust that %ou ,ill be &uided accordin&l%.
(') 2efendant bank, throu&h defendant Ri-era,
ackno,led&ed receipt of the fore&oin& letter and stated, in its
communication of 2ecember ", 1#'< (C=h. AIA), that said
letter has been Areferred . . . to the office of our Conser-ator
for proper dispositionA Bo,e-er, no response came from the
5ctin& Conser-ator. 4n 2ecember 1$, 1#'<, the plaintiffs
made a second tender of pa%ment (C=h. ALA and AL!1A), this
time throu&h the 5ctin& Conser-ator, defendant
Cncarnacion. )laintiffs6 letter reads?
)R427CCR. +5NQ 4D
3BC )BILI))INC.
)aseo de Ro=as,
5ttn.? 5tt%. NI25 CNC5RN5CI4N
Centra Ban- Conser0ator
9e are sendin& %ou here,ith, in ! behalf of our client, /r.
14.C 4. 15N4L4, /+3C Check No. "5'('< in the amount
of )5.5 million as our a&reed purchase price of the 11!
hectare lot co-ered b% 3C3 Nos. 16#(", 16#((, 16#($,
16#(5, 16#(6 and 16#(< and re&istered under )roducers
+ank.
3his is in connection ,ith the perfected a&reement
conse0uent from %our offer of )5.5 /illion as the purchase
price of the said lots. )lease inform us of the date of
documentation of the sale immediatel%.
Qindl% ackno,led&e receipt of our pa%ment.
(#) 3he fore&oin& letter dre, no response for more than four
months. 3hen, on /a% (, 1#'', plaintiff, throu&h counsel,
made a final demand for compliance b% the bank ,ith its
obli&ations under the considered perfected contract of sale
(C=hibit ANA). 5s recounted b% the trial court (4ri&inal
Record, p. 656), in a repl% letter dated /a% 1", 1#'' (5nne=
A$A of defendant6s ans,er to amended complaint), the
defendants throu&h 5ctin& Conser-ator Cncarnacion
repudiated the authorit% of defendant Ri-era and claimed
that his dealin&s ,ith the plaintiffs, particularl% his counter!
offer of )5.5 /illion are unauthori8ed or ille&al. 4n that
basis, the defendants >ustified the refusal of the tenders of
pa%ment and the non!compliance ,ith the obli&ations under
,hat the plaintiffs considered to be a perfected contract of
sale.
(1) 4n /a% 16, 1#'', plaintiffs filed a suit for specific
performance ,ith dama&es a&ainst the bank, its /ana&er
Ri-ers and 5ctin& Conser-ator Cncarnacion. 3he basis of the
suit ,as that the transaction had ,ith the bank resulted in a
perfected contract of sale, 3he defendants took the position
that there ,as no such perfected sale because the defendant
Ri-era is not authori8ed to sell the propert%, and that there
,as no meetin& of the minds as to the price.
4n /arch 1$, 1##1, Benr% L. Co (the brother of Luis Co),
throu&h counsel .%cip .ala8ar Bernande8 and Matmaitan,
filed a motion to inter-ene in the trial court, alle&in& that as
o,ner of 'Y of the +ank6s outstandin& shares of stock, he
had a substantial interest in resistin& the complaint. 4n 1ul%
', 1##1, the trial court issued an order den%in& the motion to
inter-ene on the &round that it ,as filed after trial had
alread% been concluded. It also denied a motion for
reconsideration filed thereafter. Drom the trial court6s
decision, the +ank, petitioner Ri-era and conser-ator
Cncarnacion appealed to the Court of 5ppeals ,hich
subse0uentl% affirmed ,ith modification the said >ud&ment.
Benr% Co did not appeal the denial of his motion for
inter-ention.
In the course of the proceedin&s in the respondent Court, Carlos
C>ercito ,as substituted in place of 2emetria and 1anolo, in -ie, of
the assi&nment of the latters6 ri&hts in the matter in liti&ation to said
pri-ate respondent.
4n 1ul% 11, 1##", durin& the pendenc% of the proceedin&s in the
Court of 5ppeals, Benr% Co and se-eral other stockholders of the
+ank, throu&h counsel 5n&ara 5bello Concepcion Re&ala and Cru8,
filed an action (hereafter, the A.econd CaseA) J purportedl% a
Aderi-ati-e suitA J ,ith the Re&ional 3rial Court of /akati, +ranch
1($, docketed as Ci-il Case No. #"!166, a&ainst Cncarnacion,
2emetria and 1anolo Ato declare an% perfected sale of the propert% as
unenforceable and to stop C>ercito from enforcin& or implementin&
the saleA
$
In his ans,er, 1anolo ar&ued that the .econd Case ,as
barred b% itis %endentia b% -irtue of the case then pendin& in the
Court of 5ppeals. 2urin& the pre!trial conference in the .econd
Case, plaintiffs filed a /otion for Lea-e of Court to 2ismiss the
Case 9ithout )re>udice. A)ri-ate respondent opposed this motion on
the &round, amon& others, that plaintiff6s act of forum shoppin&
>ustifies the dismissal of both cases, ,ith pre>udice.A
5
)ri-ate
respondent, in his memorandum, a-erred that this motion is still
pendin& in the /akati R3C.
In their )etition
6
and /emorandum
<
, petitioners summari8ed their
position as follo,s?
I.
3he Court of 5ppeals erred in declarin& that a contract of
sale ,as perfected bet,een C>ercito (in substitution of
2emetria and 1anolo) and the bank.
II.
3he Court of 5ppeals erred in declarin& the e=istence of an
enforceable contract of sale bet,een the parties.
III.
3he Court of 5ppeals erred in declarin& that the conser-ator
does not ha-e the po,er to o-errule or re-oke acts of
pre-ious mana&ement.
I*.
3he findin&s and conclusions of the Court of 5ppeals do not
conform to the e-idence on record.
4n the other hand, petitioners pra%ed for dismissal of the instant suit
on the &round
'
that?
I.
)etitioners ha-e en&a&ed in forum shoppin&.
II.
3he factual findin&s and conclusions of the Court of 5ppeals
are supported b% the e-idence on record and ma% no lon&er
be 0uestioned in this case.
III.
3he Court of 5ppeals correctl% held that there ,as a
perfected contract bet,een 2emetria and 1anolo (substituted
b%O respondent C>ercito) and the bank.
I*.
3he Court of 5ppeals has correctl% held that the conser-ator,
apart from bein& estopped from repudiatin& the a&enc% and
the contract, has no authorit% to re-oke the contract of sale.
$#e Issues
Drom the fore&oin& positions of the parties, the issues in this case
ma% be summed up as follo,s?
1) 9as there forum!shoppin& on the part of petitioner +ankN
") 9as there a perfected contract of sale bet,een the partiesN
() 5ssumin& there ,as, ,as the said contract enforceable
under the statute of fraudsN
$) 2id the bank conser-ator ha-e the unilateral po,er to
repudiate the authorit% of the bank officers andIor to re-oke
the said contractN
5) 2id the respondent Court commit an% re-ersible error in
its findin&s of factsN
$#e 'irst Issue5 *as $#ere 'oru+-S#o%%ingF
In order to pre-ent the -e=ations of multiple petitions and actions,
the .upreme Court promul&ated Re-ised Circular No. "'!#1
re0uirin& that a part% Amust certif% under oath . . . EthatF (a) he has
not (t)heretofore commenced an% other action or proceedin&
in-ol-in& the same issues in the .upreme Court, the Court of
5ppeals, or an% other tribunal or a&enc%O (b) to the best of his
kno,led&e, no such action or proceedin& is pendin&A in said courts
or a&encies. 5 -iolation of the said circular entails sanctions that
include the summar% dismissal of the multiple petitions or
complaints. 3o be sure, petitioners ha-e included a
*CRIDIC53I4NICCR3IDIC53I4N in their )etition statin& Afor the
record(,) the pendenc% of Ci-il Case No. #"!166 before the
Re&ional 3rial Court of /akati, +ranch 1($, in-ol-in&
a deri0ati0e suit filed b% stockholders of petitioner +ank a&ainst the
conser-ator and other defendants but ,hich is the sub>ect of a
pendin& /otion to 2ismiss 9ithout )re>udice.
#
)ri-ate respondent C>ercito -i&orousl% ar&ues that in spite of this
-erification, petitioners are &uilt% of actual forum shoppin& because
the instant petition pendin& before this Court in-ol-es Aidentical
parties or interests represented, ri&hts asserted and reliefs sou&ht (as
that) currentl% pendin& before the Re&ional 3rial Court, /akati
+ranch 1($ in the .econd Case. In fact, the issues in the t,o cases
are so inter,ined that a >ud&ement or resolution in either case ,ill
constitute res ,udicata in the other.A
1
4n the other hand, petitioners e=plain
11
that there is no forum!
shoppin& because?
1) In the earlier or ADirst CaseA from ,hich this proceedin&
arose, the +ank ,as impleaded as a de&endant, ,hereas in
the A.econd CaseA (assumin& the +ank is the real part% in
interest in a deri-ati-e suit), it ,as%ainti&&@
") A3he deri-ati-e suit is not properl% a suit for and in behalf
of the corporation under the circumstancesAO
() 5lthou&h the CCR3IDIC53I4NI*CRIDIC53I4N (su%ra)
si&ned b% the +ank president and attached to the )etition
identifies the action as a Aderi-ati-e suit,A it Adoes not mean
that it is oneA and A(t)hat is a le&al 0uestion for the courts to
decideAO
$) )etitioners did not hide the .econd Case at the%
mentioned it in the said *CRIDIC53I4NICCR3IDIC53I4N.
9e rule for pri-ate respondent.
3o be&in ,ith, forum!shoppin& ori&inated as a concept in pri-ate
international la,.
1"
, ,here non!resident liti&ants are &i-en the option
to choose the forum or place ,herein to brin& their suit for -arious
reasons or e=cuses, includin& to secure procedural ad-anta&es, to
anno% and harass the defendant, to a-oid o-ercro,ded dockets, or to
select a more friendl% -enue. 3o combat these less than honorable
e=cuses, the principle of &oru+ non con0eniens ,as de-eloped
,hereb% a court, in conflicts of la, cases, ma% refuse impositions on
its >urisdiction ,here it is not the most Acon-enientA or a-ailable
forum and the parties are not precluded from seekin& remedies
else,here.
In this li&ht, Bac-Gs Law Dictionary
1(
sa%s that forum shoppin&
Aoccurs ,hen a part% attempts to ha-e his action tried in a particular
court or >urisdiction ,here he feels he ,ill recei-e the most fa-orable
>ud&ment or -erdict.A Bence, accordin& to *ords and P#rases
1$
, Aa
liti&ant is open to the char&e of Aforum shoppin&A ,hene-er he
chooses a forum ,ith sli&ht connection to factual circumstances
surroundin& his suit, and liti&ants should be encoura&ed to attempt to
settle their differences ,ithout imposin& undue e=penses and
-e=atious situations on the courtsA.
In the )hilippines, forum shoppin& has ac0uired a connotation
encompassin& not onl% a choice of -enues, as it ,as ori&inall%
understood in conflicts of la,s, but also to a choice of remedies. 5s
to the first (choice of -enues), the Rules of Court, for e=ample, allo,
a plaintiff to commence personal actions A,here the defendant or an%
of the defendants resides or ma% be found, or ,here the plaintiff or
an% of the plaintiffs resides, at the election of the plaintiffA (Rule $,
.ec, " EbF). 5s to remedies, a&&rie-ed parties, for e=ample, are &i-en
a choice of pursuin& ci-il liabilities independentl% of the criminal,
arisin& from the same set of facts. 5 passen&er of a public utilit%
-ehicle in-ol-ed in a -ehicular accident ma% sue on cu%a
contractua! cu%a a.uiiana or cu%a cri+ina J each remed% bein&
a-ailable independentl% of the others J althou&h he cannot reco-er
more than once.
In either of these situations (choice of -enue or choice of
remed%), the liti&ant actuall% s#o%s &or a &oru+ of his action,
3his ,as the ori&inal concept of the term forum shoppin&.
C-entuall%, ho,e-er, instead of actuall% makin& a choice of
the forum of their actions, liti&ants, throu&h the
encoura&ement of their la,%ers, file their actions in all
a-ailable courts, or in-oke all rele-ant remedies
simultaneousl%. 3his practice had not onl% resulted to (sic)
conflictin& ad>udications amon& different courts and
conse0uent confusion enimical (sic) to an orderl%
administration of >ustice. It had created e=treme
incon-enience to some of the parties to the action.
3hus, Aforum shoppin&A had ac0uired a different concept J
,hich is unethical professional le&al practice. 5nd this
necessitated or had &i-en rise to the formulation of rules and
canons discoura&in& or alto&ether prohibitin& the practice.
15
9hat therefore ori&inall% started both in conflicts of la,s and in our
domestic la, as a le&itimate de-ice for sol-in& problems has been
abused and mis!used to assure schemin& liti&ants of dubious reliefs.
3o a-oid or minimi8e this unethical practice of sub-ertin& >ustice, the
.upreme Court, as alread% mentioned, promul&ated Circular "'!#1.
5nd e-en before that, the Court had prescribed it in the Interim Rules
and Muidelines issued on 1anuar% 11, 1#'( and had struck do,n in
se-eral cases
16
the in-eterate use of this insidious malpractice.
Dorum shoppin& as Athe filin& of repetitious suits in different courtsA
has been condemned b% 1ustice 5ndres R. Nar-asa (no, Chief
1ustice) in Minister o& "atura Resources! et a.! 0s. 1eirs o& (r0a
1ug#es! et a.!Aas a reprehensible manipulation of court processes
and proceedin&s . . .A
1<
,hen does forum shoppin& take placeN
3here is forum!shoppin& ,hene-er, as a result of an ad-erse
opinion in one forum, a part% seeks a fa-orable opinion
(other than b% appeal or certiorari) in another. 3he principle
applies not onl% ,ith respect to suits filed in the courts but
also in connection ,ith liti&ations commenced in the courts
,hile an administrati-e proceedin& is pendin&, as in this
case, in order to defeat administrati-e processes and in
anticipation of an unfa-orable administrati-e rulin& and a
fa-orable court rulin&. 3his is speciall% so, as in this case,
,here the court in ,hich the second suit ,as brou&ht, has no
>urisdiction.
1'
3he test for determinin& ,hether a part% -iolated the rule a&ainst
forum shoppin& has been laid da,n in the 1#'6 case of +uan -s.
Lope8
1#
, also b% Chief 1ustice Nar-asa, and that is, forum shoppin&
e=ists ,here the elements ofitis %endentia are present or ,here a
final >ud&ment in one case ,ill amount to res ,udicata in the other, as
follo,s?
3here thus e=ists bet,een the action before this Court and
R3C Case No. '6!(656( identit% of parties, or at least such
parties as represent the same interests in both actions, as ,ell
as identit% of ri&hts asserted and relief pra%ed for, the relief
bein& founded on the same facts, and the identit% on the t,o
precedin& particulars is such that an% >ud&ment rendered in
the other action, ,ill, re&ardless of ,hich part% is successful,
amount to res ad,udicata in the action under consideration?
all the re0uisites, in fine, of auter action %endant.
=== === ===
5s alread% obser-ed, there is bet,een the action at bar and
R3C Case No. '6!(656(, an identit% as re&ards parties, or
interests represented, ri&hts asserted and relief sou&ht, as
,ell as basis thereof, to a de&ree sufficient to &i-e rise to the
&round for dismissal kno,n as auter action %endant or is
%endens. 3hat same identit% puts into operation the sanction
of t,in dismissals >ust mentioned. 3he application of this
sanction ,ill pre-ent an% further dela% in the settlement of
the contro-ers% ,hich mi&ht ensue from attempts to seek
reconsideration of or to appeal from the 4rder of the
Re&ional 3rial Court in Ci-il Case No. '6!(656(
promul&ated on 1ul% 15, 1#'6, ,hich dismissed the petition
upon &rounds ,hich appear persuasi-e.
Conse0uentl%, ,here a liti&ant (or one representin& the same interest
or person) sues the same part% a&ainst ,hom another action or
actions for the alle&ed -iolation of the same ri&ht and the
enforcement of the same relief isIare still pendin&, the defense
of itis %endencia in one case is bar to the othersO and, a final
>ud&ment in one ,ould constitute res ,udicata and thus ,ould cause
the dismissal of the rest. In either case, forum shoppin& could be
cited b% the other part% as a &round to ask for summar% dismissal of
the t,o
"
(or more) complaints or petitions, and for imposition of the
other sanctions, ,hich are direct contempt of court, criminal
prosecution, and disciplinar% action a&ainst the errin& la,%er.
5ppl%in& the fore&oin& principles in the case before us and
comparin& it ,ith the .econd Case, it is ob-ious that there e=ist
identit% of parties or interests represented, identit% of ri&hts or causes
and identit% of reliefs sou&ht.
*er% simpl% stated, the ori&inal complaint in the court a .uo ,hich
&a-e rise to the instant petition ,as filed b% the bu%er (herein pri-ate
respondent and his predecessors!in!interest) a&ainst the seller (herein
petitioners) to enforce the alle&ed perfected sale of real estate. 4n the
other hand, the complaint
"1
in the .econd Case seeks to declare such
purported sale in-ol-in& the same real propert% Aas unenforceable as
a&ainst the +ankA, ,hich is the petitioner herein. In other ,ords, in
the .econd Case, the ma>orit% stockholders, in representation of the
+ank, are seekin& to accomplish ,hat the +ank itself failed to do in
the ori&inal case in the trial court. In brief, the ob>ecti-e or the relief
bein& sou&ht, thou&h ,orded differentl%, is the same, namel%, to
enable the petitioner +ank to escape from the obli&ation to sell the
propert% to respondent. In 2an-ille /aritime, Inc. -s. Commission
on 5udit.
""
, this Court ruled that the filin& b% a part% of t,o
apparentl% different actions, but ,ith the sa+e ob,ecti0e!constituted
forum shoppin&?
In the attempt to make the t,o actions appear to be different,
petitioner impleaded different respondents therein J )N4C
in the case before the lo,er court and the C45 in the case
before this Court and sou&ht ,hat seems to be different
reliefs. )etitioner asks this Court to set aside the 0uestioned
letter!directi-e of the C45 dated 4ctober 1, 1#'' and to
direct said bod% to appro-e the /emorandum of 5&reement
entered into b% and bet,een the )N4C and petitioner, ,hile
in the complaint before the lo,er court petitioner seeks to
en>oin the )N4C from conductin& a rebiddin& and from
sellin& to other parties the -essel A3I3 5ndres +onifacioA,
and for an e=tension of time for it to compl% ,ith the
para&raph 1 of the memorandum of a&reement and
dama&es. (ne can see t#at at#oug# t#e reie& %rayed &or in
t#e two (9) actions are ostensiby di&&erent! t#e uti+ate
ob,ecti0e in bot# actions is t#e sa+e! t#at is! a%%ro0a o& t#e
sae o& 0esse in &a0or o& %etitioner and to o0erturn t#e
etter-directi0e o& t#e C(A o& (ctober 38! 36?? disa%%ro0ing
t#e sae. (emphasis supplied).
In an earlier case
"(
but ,ith the same lo&ic and -i&or, ,e held?
In other ,ords, the filin& b% the petitioners of the instant
special ci-il action for certiorari and prohibition in this
Court despite the pendenc% of their action in the /akati
Re&ional 3rial Court, is a species of forum!shoppin&. +oth
actions un0uestionabl% in-ol-e the same transactions, the
same essential facts and circumstances. 3he petitioners6
claim of absence of identit% simpl% because the )CMM had
not been impleaded in the R3C suit, and the suit did not
in-ol-e certain acts ,hich transpired after its
commencement, is specious. In the R3C action, as in the
action before this Court, the -alidit% of the contract to
purchase and sell of .eptember 1, 1#'6, i.e., ,hether or not
it had been efficaciousl% rescinded, and the propriet% of
implementin& the same (b% pa%in& the pled&ee banks the
amount of their loans, obtainin& the release of the pled&ed
shares, etc.) ,ere the basic issues. .o, too, the relief ,as the
same? the pre-ention of such implementation andIor the
restoration of the status .uo ante. 9hen the acts sou&ht to be
restrained took place an%,a% despite the issuance b% the
3rial Court of a temporar% restrainin& order, the R3C suit did
not become &unctus o&icio. It remained an effecti-e -ehicle
for obtention of reliefO and petitioners6 remed% in the
premises ,as plain and patent? the filin& of an amended and
supplemental pleadin& in the R3C suit, so as to include the
)CMM as defendant and seek nullification of the acts sou&ht
to be en>oined but nonetheless done. 3he remed% ,as
certainl% not the institution of another action in another
forum based on essentiall% the same facts, 3he adoption of
this latter recourse renders the petitioners amenable to
disciplinar% action and both their actions, in this Court as
,ell as in the Court a .uo, dismissible.
In the instant case before us, there is also identit% of parties, or at
least, of interests represented. 5lthou&h the plaintiffs in the .econd
Case (Benr% L. Co. et al.) are not name parties in the Dirst Case, the%
represent the same interest and entit%, namel%, petitioner +ank,
because?
'irsty, the% are not suin& in their personal capacities, for the% ha-e
no direct personal interest in the matter in contro-ers%. 3he% are not
principall% or e-en subsidiaril% liableO much less are the% direct
parties in the assailed contract of saleO and
Secondy, the alle&ations of the complaint in the .econd Case sho,
that the stockholders are brin&in& a Aderi-ati-e suitA. In the caption
itself, petitioners claim to ha-e brou&ht suit Afor and in behalf of the
)roducers +ank of the )hilippinesA
"$
. Indeed, this is the -er% essence
of a deri-ati-e suit?
5n indi-idual stockholder is permitted to institute a
deri-ati-e suit on behalf of the corporation ,herein he
holdsstock in order to protect or -indicate corporate
ri&hts, w#ene0er t#e o&&icias o& t#e cor%oration re&use to
sue, or are the ones to be sued or hold the control of the
corporation. In such actions, the suin& stockholder is
re&arded as a nominal part%, wit# t#e cor%oration as t#e rea
%arty in interest. (Mamboa -. *ictoriano, # .CR5 $, $<
E1#<#FO emphasis supplied).
In the face of the dama&in& admissions taken from the complaint in
the .econd Case, petitioners, 0uite stran&el%, sou&ht to den% that the
.econd Case ,as a deri-ati-e suit, reasonin& that it ,as brou&ht, not
by t#e +inority s#are#oders, but b% Benr% Co et al., ,ho not onl%
o,n, hold or control o-er 'Y of the outstandin& capital stock, but
also constitute the ma>orit% in the +oard of 2irectors of petitioner
+ank. 3hat bein& so, then the% reall% represent the +ank. .o, ,hether
the% sued Aderi-ati-el%A or directl%, there is undeniabl% an identit% of
interestsIentit% represented.
)etitioner also tried to seek refu&e in the corporate fiction that the
personalit% 4f the +ank is separate and distinct from its
shareholders. +ut the rulin&s of this Court are consistent? A9hen the
fiction is ur&ed as a means of perpetratin& a fraud or an ille&al act or
as a -ehicle for the e-asion of an e=istin& obli&ation, the
circum-ention of statutes, the achie-ement or perfection of a
monopol% or &enerall% the perpetration of kna-er% or crime, the -eil
,ith ,hich the la, co-ers and isolates the corporation from the
members or stockholders ,ho compose it ,ill be lifted to allo, for
its consideration merel% as an a&&re&ation of indi-iduals.A
"5
In addition to the man% cases
"6
,here the corporate fiction has been
disre&arded, ,e no, add the instant case, and declare here,ith that
the corporate -eil cannot be used to shield an other,ise blatant
-iolation of the prohibition a&ainst forum!shoppin&. .hareholders,
,hether suin& as the ma>orit% in direct actions or as the minorit% in a
deri-ati-e suit, cannot be allo,ed to trifle ,ith court processes,
particularl% ,here, as in this case, the corporation itself has not been
remiss in -i&orousl% prosecutin& or defendin& corporate causes and
in usin& and appl%in& remedies a-ailable to it. 3o rule other,ise
,ould be to encoura&e corporate liti&ants to use their shareholders as
fronts to circum-ent the strin&ent rules a&ainst forum shoppin&.
Dinall%, petitioner +ank ar&ued that there cannot be an% forum
shoppin&, e-en assumin& arguendo that there is identit% of parties,
causes of action and reliefs sou&ht, Abecause it (the +ank) ,as the
defendant in the (first) case ,hile it ,as the plaintiff in the other
(.econd Case)A,citin& as authorit% Hictronics Co+%uters! Inc.!
0s. Regiona $ria Court! Branc# =7! Ma-ati! etc. et a.,
"<
,here
Court held?
3he rule has not been e=tended to a defendant ,ho, for
reasons kno,n onl% to him, commences a ne, action a&ainst
the plaintiff J instead o& &iing a res%onsi0e %eading in t#e
ot#er case J settin& forth therein, as causes of action,
specific denials, special and affirmati-e defenses or e-en
counterclaims, 3hus, *elha&en6s and Qin&6s motion to
dismiss Ci-il Case No. #1!"6# b% no means ne&ates the
char&e of forum!shoppin& as such did not e=ist in the first
place. (emphasis supplied)
)etitioner pointed out that since it ,as merel% the defendant in the
ori&inal case, it could not ha-e chosen the forum in said case.
Respondent, on the other hand, replied that there is a difference in
factual settin& bet,een Hictronics and the present suit. In the former,
as underscored in the abo-e!0uoted Court rulin&, the defendants did
not file an%res%onsi0e %eading in the first case. In other ,ords, the%
did not make an% denial or raise an% defense or counter!claim therein
In the case before us ho,e-er, petitioners filed a responsi-e pleadin&
to the complaint J as a result of ,hich, the issues ,ere >oined.
Indeed, b% pra%in& for affirmati-e reliefs and interposin& counterV
claims in their responsi-e pleadin&s, the petitioners became plaintiffs
themsel-es in the ori&inal case, &i-in& unto themsel-es the -er%
remedies the% repeated in the .econd Case.
7ltimatel%, ,hat is trul% important to consider in determinin&
,hether forum!shoppin& e=ists or not is the -e=ation caused the
courts and parties!liti&ant b% a part% ,ho asks different courts andIor
administrati-e a&encies to rule on the same or related causes andIor
to &rant the same or substantiall% the same reliefs, in the process
creatin& the possibilit% of conflictin& decisions bein& rendered b% the
different &ora upon the same issue. In this case, this is e=actl% the
problem? a decision reco&ni8in& the perfection and directin& the
enforcement of the contract of sale ,ill directl% conflict ,ith a
possible decision in the .econd Case barrin& the parties front
enforcin& or implementin& the said sale. Indeed, a final decision in
one ,ould constitute res ,udicata in the other
"'
.
3he fore&oin& conclusion findin& the e=istence of forum!shoppin&
not,ithstandin&, the onl% sanction possible no, is the dismissal of
both cases ,ith pre>udice, as the other sanctions cannot be imposed
because petitioners6 present counsel entered their appearance onl%
durin& the proceedin&s in this Court, and the )etition6s
*CRIDIC53I4NICCR3IDIC53I4N contained sufficient alle&ations
as to the pendenc% of the .econd Case to sho, &ood faith in
obser-in& Circular "'!#1. 3he La,%ers ,ho filed the .econd Case
are not before usO thus the rudiments of due process pre-ent us
from +otu %ro%io imposin& disciplinar% measures a&ainst them in
this 2ecision. Bo,e-er, petitioners themsel-es (and particularl%
Benr% Co, et al.) as liti&ants are admonished to strictl% follo, the
rules a&ainst forum!shoppin& and not to trifle ,ith court proceedin&s
and processes 3he% are ,arned that a repetition of the same ,ill be
dealt ,ith more se-erel%.
Ba-in& said that, let it be emphasi8ed that this petition should be
dismissed not merel% because of forum!shoppin& but also because of
the substanti-e issues raised, as ,ill be discussed shortl%.
$#e Second Issue5 *as $#e Contract Per&ectedF
3he respondent Court correctl% treated the 0uestion of ,hether or not
there ,as, on the basis of the facts established, a perfected contract
of sale as the ultimate issue. Boldin& that a -alid contract has been
established, respondent Court stated?
3here is no dispute that the ob>ect of the transaction is that
propert% o,ned b% the defendant bank as ac0uired assets
consistin& of si= (6) parcels of land specificall% identified
under 3ransfer Certificates of 3itle Nos. 3!16#(" to 3!
16#(<. It is like,ise be%ond ca-il that the bank intended to
sell the propert%. 5s testified to b% the +ank6s 2eput%
Conser-ator, 1ose Cntereso, the bank ,as lookin& for bu%ers
of the propert%. It is definite that the plaintiffs ,anted to
purchase the propert% and it ,as precisel% for this purpose
that the% met ,ith defendant Ri-era, /ana&er of the
)ropert% /ana&ement 2epartment of the defendant bank, in
earl% 5u&ust 1#'<. 3he procedure in the sale of ac0uired
assets as ,ell as the nature and scope of the authorit% of
Ri-era on the matter is clearl% delineated in the testimon% of
Ri-era himself, ,hich testimon% ,as relied upon b% both the
bank and b% Ri-era in their appeal briefs. 3hus (3.N of 1ul%
(, 1##. pp. 1#!")?
5? 3he procedure runs this ,a%? 5c0uired assets ,as
turned o-er to me and then I published it in the form
of an inter!office memorandum distributed to all
branches that these are ac0uired assets for sale. I ,as
instructed to ad-ertise ac0uired assets for sale so on
that basis, I ha-e to entertain offerO to accept offer,
formal offer and upon ha-in& been offered, I present
it to the Committee. I pro-ide the Committee ,ith
necessar% information about the propert% such as
ori&inal loan of the borro,er, bid price durin& the
foreclosure, total claim of the bank, the appraised
-alue at the time the propert% is bein& offered for
sale and then the information ,hich are relati-e to
the e-aluation of the bank to bu% ,hich the
Committee considers and it is the Committee that
e-aluate as a&ainst the e=posure of the bank and it is
also the Committee that submit to the Conser-ator
for final appro-al and once appro-ed, ,e ha-e to
e=ecute the deed of sale and it is the Conser-ator
that si&n the deed of sale, sir.
3he plaintiffs, therefore, at that meetin& of 5u&ust 1#'<
re&ardin& their purpose of bu%in& the propert%, dealt ,ith
and talked to the ri&ht person. Necessaril%, the a&enda ,as
the price of the propert%, and plaintiffs ,ere dealin& ,ith the
bank official authori8ed to entertain offers, to accept offers
and to present the offer to the Committee before ,hich the
said official is authori8ed to discuss information relati-e to
price determination. Necessaril%, too, it bein& inherent in his
authorit%, Ri-era is the officer from ,hom official
information re&ardin& the price, as determined b% the
Committee and appro-ed b% the Conser-ator, can be had.
5nd Ri-era confirmed his authorit% ,hen he talked ,ith the
plaintiff in 5u&ust 1#'<. 3he testimon% of plaintiff 2emetria
is clear on this point (3.N of /a% (1,1##, pp. "<!"')?
T? 9hen %ou ,ent to the )roducers +ank and talked
,ith /r. /ercurio Ri-era, did %ou ask him point!
blank his authorit% to sell an% propert%N
5? No, sir. Not point blank althou&h it came from
him, (9)hen I asked him ho, lon& it ,ould take
because he ,as sa%in& that the matter of pricin& ,ill
be passed upon b% the committee. 5nd ,hen I asked
him ho, lon& it ,ill take for the committee to
decide and he said the committee meets e-er% ,eek.
If I am not mistaken 9ednesda% and in about t,o
,eek6s (sic) time, in effect ,hat he ,as sa%in& he
,as not the one ,ho ,as to decide. +ut he ,ould
refer it to the committee and he ,ould rela% the
decision of the committee to me.
T J )lease ans,er the 0uestion.
5 J Be did not sa% that he had the authorit% (.) +ut
he said he ,ould refer the matter to the committee
and he ,ould rela% the decision to me and he did
>ust like that.
A)arentheticall%, the Committee referred to ,as the )ast 2ue
Committee of ,hich Luis Co ,as the Bead, ,ith 1ose
Cntereso as one of the members.
9hat transpired after the meetin& of earl% 5u&ust 1#'< are
consistent ,ith the authorit% and the duties of Ri-era and the
bank6s internal procedure in the matter of the sale of bank6s
assets. 5s ad-ised b% Ri-era, the plaintiffs made a formal
offer b% a letter dated 5u&ust ", 1#'< statin& that the%
,ould bu% at the price of )(.5 /illion in cash. 3he letter ,as
for the attention of /ercurio Ri-era ,ho ,as tasked to
con-e% and accept such offers. Considerin& an aspect of the
official dut% of Ri-era as some sort of intermediar% bet,een
the plaintiffs!bu%ers ,ith their proposed bu%in& price on one
hand, and the bank Committee, the Conser-ator and
ultimatel% the bank itself ,ith the set price on the other, and
considerin& further the discussion of price at the meetin& of
5u&ust resultin& in a formal offer of )(.5 /illion in cash,
there can be no other lo&ical conclusion than that ,hen, on
.eptember 1, 1#'<, Ri-era informed plaintiffs b% letter that
Athe bank6s counter!offer is at )5.5 /illion for more than 11
hectares on lot basis,A such counter!offer price had been
determined b% the )ast 2ue Committee and appro-ed b% the
Conser-ator after Ri-era had dul% presented plaintiffs6 offer
for discussion b% the Committee of such matters as ori&inal
loan of borro,er, bid price durin& foreclosure, total claim of
the bank, and market -alue. 3ersel% put, under the
established facts, the price of )5.5 /illion ,as, as clearl%
,orded in Ri-era6s letter (C=h. ACA), the official and
definiti-e price at ,hich the bank ,as sellin& the propert%.
3here ,ere a-erments b% defendants belo,, as ,ell as before
this Court, that the )5.5 /illion price ,as not discussed b%
the Committee and that price. 5s correctl% characteri8ed b%
the trial court, this is not credible. 3he testimonies of Luis
Co and 1ose Cntereso on this point are at best e0ui-ocal and
considerin& the &ratuitous and self!ser-in& character of these
declarations, the bank6s submission on this point does not
inspire belief. +oth Co ad Cntereso, as members of the )ast
2ue Committee of the bank, claim that the offer of the
plaintiff ,as ne-er discussed b% the Committee. In the same
-ein, both Co and Cntereso openl% admit that the% seldom
attend the meetin&s of the Committee. It is important to note
that ne&otiations on the price had started in earl% 5u&ust and
the plaintiffs had alread% offered an amount as purchase
price, ha-in& been made to understand b% Ri-era, the official
in char&e of the ne&otiation, that the price ,ill be submitted
for appro-al b% the bank and that the bank6s decision ,ill be
rela%ed to plaintiffs. Drom the facts, the official bank price.
5t an% rate, the bank placed its official, Ri-era, in a position
of authorit% to accept offers to bu% and ne&otiate the sale b%
ha-in& the offer officiall% acted upon b% the bank. 3he bank
cannot turn around and later sa%, as it no, does, that ,hat
Ri-era states as the bank6s action on the matter is not in fact
so. It is a familiar doctrine, the doctrine of ostensible
authorit%, that if a corporation kno,in&l% permits one of its
officers, or an% other a&ent, to do acts ,ithin the scope of an
apparent authorit%, and thus holds him out to the public as
possessin& po,er to do those acts, the corporation ,ill, as
a&ainst an% one ,ho has in &ood faith dealt ,ith the
corporation throu&h such a&ent, he estopped from den%in&
his authorit% (Drancisco -. M.I., < .CR5 5<<, 5'(!5'$O
)N+ -. Court of 5ppeals, #$ .CR5 (5<, (6#!(<O )rudential
+ank -. Court of 5ppeals, M.R. No. 1(#5<, 1une 1$,
1##().
"#
5rticle 1(1' of the Ci-il Code enumerates the re0uisites of a -alid
and perfected contract as follo,s? A(1) Consent of the contractin&
partiesO (") 4b>ect certain ,hich is the sub>ect matter of the contractO
(() Cause of the obli&ation ,hich is established.A
3here is no dispute on re0uisite no. ". 3he ob>ect of the 0uestioned
contract consists of the si= (6) parcels of land in .ta. Rosa, La&una
,ith an a&&re&ate area of about 11 hectares, more or less, and
co-ered b% 3ransfer Certificates of 3itle Nos. 3!16#(" to 3!16#(<.
3here is, ho,e-er, a dispute on the first and third re0uisites.
)etitioners alle&e that Athere is no counter!offer made b% the +ank,
and an% supposed counter!offer ,hich Ri-era (or Co) ma% ha-e
made is unauthori8ed. .ince there ,as no counter!offer b% the +ank,
there ,as nothin& for C>ercito (in substitution of 2emetria and
1anolo) to accept.A
(
3he% disputed the factual basis of the
respondent Court6s findin&s that there ,as an offer made b% 1anolo
for )(.5 million, to ,hich the +ank counter!offered )5.5 million. 9e
ha-e perused the e-idence but cannot find fault ,ith the said Court6s
findin&s of fact. *eril%, in a petition under Rule $5 such as this,
errors of fact J if there be an% ! are, as a rule, not re-ie,able. 3he
mere fact that respondent Court (and the trial court as ,ell) chose to
belie-e the e-idence presented b% respondent more than that
presented b% petitioners is not b% itself a re-ersible error. In fact,
such findin&s merit serious consideration b% this Court, particularl%
,here, as in this case, said courts carefull% and meticulousl%
discussed their findin&s. 3his is basic.
+e that as it ma%, and in addition to the fore&oin& dis0uisitions b%
the Court of 5ppeals, let us re-ie, the 0uestion of Ri-era6s authorit%
to act and petitioner6s alle&ations that the )5.5 million counter!offer
,as e=tin&uished b% the )$."5 million re-ised offer of 1anolo. Bere,
there are 0uestions of la, ,hich could be dra,n from the factual
findin&s of the respondent Court. 3he% also del-e into the contractual
elements of consent and cause.
3he authorit% of a corporate officer in dealin& ,ith third persons ma%
be actual or apparent. 3he doctrine of Aapparent authorit%A, ,ith
special reference to banks, ,as laid out in Prudentia Ban- 0s. Court
o& A%%eas
(1
, ,here it ,as held that?
Conformabl%, ,e ha-e declared in countless decisions that
the principal is liable for obli&ations contracted b% the a&ent.
3he a&ent6s apparent representation %ields to the principal6s
true representation and the contract is considered as entered
into bet,een the principal and the third person
(citing National Dood 5uthorit% -s. Intermediate 5ppellate
Court, 1'$ .CR5 166).
5 bank is liable for ,ron&ful acts of its officers done
in the interests of the bank or in the course of
dealin&s of the officers in their representati-e
capacit% but not for acts outside the scape of their
authorit% (# C.1..., p. $1<). 5 bank holdin& out its
officers and a&ents as ,orth% of confidence ,ill not
be permitted to profit b% the frauds the% ma% thus be
enabled to perpetrate in the apparent scope of their
emplo%mentO nor ,ill it be permitted to shirk its
responsibilit% for such frauds e-en thou&h no benefit
ma% accrue to the bank therefrom (1 5m 1ur "d, p.
11$). 5ccordin&l%, a bankin& corporation is liable to
innocent third persons ,here the representation is
made in the course of its business b% an a&ent actin&
,ithin the &eneral scope of his authorit% e-en
thou&h, in the particular case, the a&ent is secretl%
abusin& his authorit% and attemptin& to perpetrate a
fraud upon his principal or some other person, for
his o,n ultimate benefit (/cIntosh -. 2akota 3rust
Co., 5" N2 <5", "$ N9 '1', $ 5LR 1"1).
5pplication of these principles is especiall% necessar%
because banks ha-e a fiduciar% relationship ,ith the public
and their stabilit% depends on the confidence of the people in
their honest% and efficienc%. .uch faith ,ill be eroded ,here
banks do not e=ercise strict care in the selection and
super-ision of its emplo%ees, resultin& in pre>udice to their
depositors.
Drom the e-idence found b% respondent Court, it is ob-ious that
petitioner Ri-era has apparent or implied authorit% to act for the
+ank in the matter of sellin& its ac0uired assets. 3his e-idence
includes the follo,in&?
(a) 3he petition itself in par. II!i (p. () states that Ri-era ,as
Aat all times material to this case, /ana&er of the )ropert%
/ana&ement 2epartment of the +ankA. +% his o,n
admission, Ri-era ,as alread% the person in char&e of the
+ank6s ac0uired assets (3.N, 5u&ust 6, 1##, pp. '!#)O
(b) 5s obser-ed b% respondent Court, the land ,as definitel%
bein& sold b% the +ank. 5nd durin& the initial meetin&
bet,een the bu%ers and Ri-era, the latter su&&ested that the
bu%ers6 offer should be no less than )(.( million (3.N, 5pril
"6, 1##, pp. 16!1<)O
(c) Ri-era recei-ed the bu%ers6 letter dated 5u&ust (, 1#'<
offerin& )(.5 million (3.N, ( 1ul% 1##, p.11)O
(d) Ri-era si&ned the letter dated .eptember 1, 1#'< offerin&
to sell the propert% for )5.5 million (3.N, 1ul% (, p. 11)O
(e) Ri-era recei-ed the letter dated .eptember 1<, 1#'<
containin& the bu%ers6 proposal to bu% the propert% for )$."5
million (3.N, 1ul% (, 1##, p. 1")O
(f) Ri-era, in a telephone con-ersation, confirmed that the
)5.5 million ,as the final price of the +ank (3.N, 1anuar%
16, 1##, p. 1')O
(&) Ri-era arran&ed the meetin& bet,een the bu%ers and Luis
Co on .eptember "', 1##$, durin& ,hich the +ank6s offer of
)5.5 million ,as confirmed b% Ri-era (3.N, 5pril "6, 1##,
pp. ($!(5). 5t said meetin&, Co, a ma>or shareholder and
officer of the +ank, confirmed Ri-era6s statement as to the
finalit% of the +ank6s counter!offer of )5.5 million (3.N,
1anuar% 16, 1##, p. "1O 3.N, 5pril "6, 1##, p. (5)O
(h) In its ne,spaper ad-ertisements and announcements, the
+ank referred to Ri-era as the officer actin& for the +ank in
relation to parties interested in bu%in& assets o,nedIac0uired
b% the +ank. In fact, Ri-era ,as the officer mentioned in the
+ank6s ad-ertisements offerin& for sale the propert% in
0uestion (c&. C=hs. A.A and A.!1A).
In the -er% recent case of Li+-et-ai Sons Miing! Inc. 0s. Court o&
A%%eas! et. a.
("
, the Court, throu&h 1ustice 1ose 5. R. /elo,
affirmed the doctrine of apparent authorit% as it held that the
apparent authorit% of the officer of the +ank of ).I. in char&e of
ac0uired assets is borne out b% similar circumstances surroundin& his
dealin&s ,ith bu%ers.
3o be sure, petitioners attempted to repudiate Ri-era6s apparent
authorit% throu&h documents and testimon% ,hich seek to establish
Ri-era6s actua authorit%. 3hese pieces of e-idence, ho,e-er, are
inherentl% ,eak as the% consist of Ri-era6s self!ser-in& testimon%
and -arious inter!office memoranda that purport to sho, his i+ited
actua aut#ority, of ,hich pri-ate respondent cannot be char&ed ,ith
kno,led&e. In an% e-ent, since the issue is apparent authorit%, the
e=istence of ,hich is borne out b% the respondent Court6s findin&s,
the e-idence of actual authorit% is immaterial insofar as the liabilit%
of a corporation is concerned
((
.
)etitioners also ar&ued that since 2emetria and 1anolo ,ere
e=perienced la,%ers and their Ala, firmA had once acted for the
+ank in three criminal cases, the% should be char&ed ,ith actual
kno,led&e of Ri-era6s limited authorit%. +ut the Court of 5ppeals in
its 2ecision (p. 1") had alread% made a factual findin& that the
bu%ers had no notice of Ri-era6s actual authorit% prior to the sale. In
fact, the +ank has not sho,n that the% acted as its counsel in respect
to an% ac0uired assetsO on the other hand, respondent has pro-en that
2emetria and 1anolo merel% associated ,ith a loose a&&rupation of
la,%ers (not a professional partnership), one of ,hose members
(5tt%. .usana )arker) acted in said criminal cases.
)etitioners also alle&ed that 2emetria6s and 1anolo6s )$."5 million
counter!offer in the letter dated .eptember 1<, 1#'< e2tinguis#ed the
+ank6s offer of )5.5 million
($
.3he% disputed the respondent Court6s
findin& that Athere ,as a meetin& of minds ,hen on ( .eptember
1#'< 2emetria and 1anolo throu&h 5nne= ALA (letter dated
.eptember (, 1#'<) AacceptedA Ri-era6s counter offer of )5.5
million under 5nne= A1A (letter dated .eptember 1<, 1#'<)A,citing the
late 1ustice )aras
(5
, 5rt. 1(1# of the Ci-il Code
(6
and related
.upreme Court rulin&s startin& ,ith +eaumont -s. )rieto
(<
.
Bo,e-er, the abo-e!cited authorities and precedents cannot appl% in
the instant case because, as found b% the respondent Court ,hich
re-ie,ed the testimonies on this point, ,hat ,as AacceptedA b%
1anolo in his letter dated .eptember (, 1#'< ,as the +ank6s offer of
)5.5 million as confirmed and reiterated to 2emetria and 5tt%. 1ose
Da>ardo b% Ri-era and Co durin& their meetin& on .eptember "',
1#'<. Note that the said letter of .eptember (, 1#'< be&ins
,ithA(p)ursuant to our discussion last "' .eptember 1#'< . . .
)etitioners insist that the respondent Court should ha-e belie-ed the
testimonies of Ri-era and Co that the .eptember "', 1#'< meetin&
A,as meant to ha-e the offerors impro-e on their position of )5.5.
million.A
('
Bo,e-er, both the trial court and the Court of 5ppeals
found petitioners6 testimonial e-idence Anot credibleA, and ,e find no
basis for chan&in& this findin& of fact.
Indeed, ,e see no reason to disturb the lo,er courts6 (both the R3C
and the C5) common findin& that pri-ate respondents6 e-idence is
more in keepin& ,ith truth and lo&ic J that durin& the meetin& on
.eptember "', 1#'<, Luis Co and Ri-era Aconfirmed that the )5.5
million price has been passed upon b% the Committee and could no
lon&er be lo,ered (3.N of 5pril "<, 1##, pp. ($!(5)A
(#
. Bence,
assumin& arguendo that the counter!offer of )$."5 million
e=tin&uished the offer of )5.5 million, Luis Co6s reiteration of the
said )5.5 million price durin& the .eptember "', 1#'<
meetin& re0i0ed the said offer. 5nd b% -irtue of the .eptember (,
1#'< letter acceptin& thisre0i0ed offer, there ,as a meetin& of the
minds, as the acceptance in said letter ,as absolute and un0ualified.
9e note that the +ank6s repudiation, throu&h Conser-ator
Cncarnacion, of Ri-era6s authorit% and action, particularl% the latter6s
counter!offer of )5.5 million, as bein& Aunauthori8ed and ille&alA
came onl% on /a% 1", 1#'' or more than se-en (<) months after
1anolo6 acceptance. .uch dela%, and the absence of an% circumstance
,hich mi&ht ha-e >ustifiabl% pre-ented the +ank from actin& earlier,
clearl% characteri8es the repudiation as nothin& more than a last!
minute attempt on the +ank6s part to &et out of a bindin& contractual
obli&ation.
3aken to&ether, the factual findin&s of the respondent Court point to
an implied admission on the part of the petitioners that the ,ritten
offer made on .eptember 1, 1#'< ,as carried throu&h durin& the
meetin& of .eptember "', 1#'<. 3his is the conclusion consistent
,ith human e=perience, truth and &ood faith.
It also bears notin& that this issue of e=tin&uishment of the +ank6s
offer of )5.5 million ,as raised for the first time on appeal and
should thus be disre&arded.
3his Court in se-eral decisions has repeatedl% adhered to the
principle that points of la,, theories, issues of fact and
ar&uments not ade0uatel% brou&ht to the attention of the trial
court need not be, and ordinaril% ,ill not be, considered b% a
re-ie,in& court, as the% cannot be raised for the first time on
appeal (.antos -s. I5C, No. <$"$(, No-ember 1$, 1#'6, 1$5
.CR5 5#").
$
. . . It is settled >urisprudence that an issue ,hich ,as neither
a-erred in the complaint nor raised durin& the trial in the
court belo, cannot be raised for the first time on appeal as it
,ould be offensi-e to the basic rules of fair pla%, >ustice and
due process (2ihiansan -s. C5, 15( .CR5 <1( E1#'<FO
5nchuelo -s. I5C, 1$< .CR5 $($ E1#'<FO 2ulos Realt% H
2e-elopment Corp. -s. C5, 15< .CR5 $"5 E1#''FO Ramos
-s. I5C, 1<5 .CR5 < E1#'#FO Me-ero -s. I5C, M.R. <<"#,
5u&ust (, 1##).
$1
.ince the issue ,as not raised in the pleadin&s as an affirmati-e
defense, pri-ate respondent ,as not &i-en an opportunit% in the trial
court to contro-ert the same throu&h opposin& e-idence. Indeed, this
is a matter of due process. +ut ,e passed upon the issue an%,a%, if
onl% to a-oid decidin& the case on purel% procedural &rounds, and
,e repeat that, on the basis of the e-idence alread% in the record and
as appreciated b% the lo,er courts, the ine-itable conclusion is
simpl% that there ,as a perfected contract of sale.
$#e $#ird Issue? Is t#e Contract En&orceabeF
3he petition alle&ed
$"
?
C-en assumin& that Luis Co or Ri-era did rela% a -erbal
offer to sell at )5.5 million durin& the meetin& of "'
.eptember 1#'<, and it ,as this -erbal offer that 2emetria
and 1anolo accepted ,ith their letter of ( .eptember 1#'<,
the contract produced thereb% ,ould be unenforceable b%
action J there bein& no note, memorandum or ,ritin&
subscribed b% the +ank to e-idence such contract. ()lease
see article 1$(E"F, Ci-il Code.)
7pon the other hand, the respondent Court in its 2ecision (p, 1$)
stated?
. . . 4f course, the bank6s letter of .eptember 1, 1#'< on the
official price and the plaintiffs6 acceptance of the price on
.eptember (, 1#'<, are not, in themsel-es, formal contracts
of sale. 3he% are ho,e-er clear embodiments of the fact that
a contract of sale ,as perfected bet,een the parties, such
contract bein& bindin& in ,hate-er form it ma% ha-e been
entered into (case citations omitted). .tated simpl%, the
banks6 letter of .eptember 1, 1#'<, taken to&ether ,ith
plaintiffs6 letter dated .eptember (, 1#'<, constitute in la,
a sufficient memorandum of a perfected contract of sale.
3he respondent Court could ha-e added that the ,ritten
communications commenced not onl% from .eptember 1, 1#'< but
from 1anolo6s 5u&ust ", 1#'< letter. 9e a&ree that, taken to&ether,
these letters constitute sufficient memoranda J since the% include
the names of the parties, the terms and conditions of the contract, the
price and a description of the propert% as the ob>ect of the contract.
+ut let it be assumed arguendo that the counter!offer durin& the
meetin& on .eptember "', 1#'< did constitute a Ane,A offer ,hich
,as accepted b% 1anolo on .eptember (, 1#'<. .till, the statute of
frauds ,ill not appl% b% reason of the failure of petitioners to ob>ect
to oral testimon% pro-in& petitioner +ank6s counter!offer of )5.5
million. Bence, petitioners J b% such utter failure to ob>ect J are
deemed to ha-e ,ai-ed an% defects of the contract under the statute
of frauds, pursuant to 5rticle 1$5 of the Ci-il Code?
5rt. 1$5. Contracts infrin&in& the .tatute of Drauds,
referred to in No. " of article 1$(, are ratified b% the failure
to ob>ect to the presentation of oral e-idence to pro-e the
same, or b% the acceptance of benefits under them.
5s pri-ate respondent pointed out in his /emorandum, oral
testimon% on the reaffirmation of the counter!offer of )5.5 million is
a plent% J and the silence of petitioners all throu&hout the
presentation makes the e-idence bindin& on them thusO
5 Pes, sir, I think it ,as .eptember "', 1#'< and I ,as a&ain
present because 5tt%. 2emetria told me to accompan% him
,e ,ere able to meet Luis Co at the +ank.
=== === ===
T No,, ,hat transpired durin& this meetin& ,ith Luis Co of
the )roducers +ankN
5 5tt%. 2emetria asked /r. Luis Co ,hether the price could
be reduced, sir.
T 9hat priceN
5 3he 5.5 million pesos and /r. Luis Co said that the
amount cited b% /r. /ercurio Ri-era is the final price and
that is the price the% intends (sic) to ha-e, sir.
T 9hat do %ou meanN.
5 3hat is the amount the% ,ant, sir.
T 9hat is the reaction of the plaintiff 2emetria to Luis Co6s
statement (sic) that the defendant Ri-era6s counter!offer of
5.5 million ,as the defendant6s bank (sic) final offerN
5 Be said in a da% or t,o, he ,ill make final acceptance, sir.
T 9hat is the response of /r. Luis CoN.
5 Be said he ,ill ,ait for the position of 5tt%. 2emetria, sir.
E2irect testimon% of 5tt%. 1ose Da>ardo, 3.N, 1anuar% 16, 1##, at
pp. 1'!"1.F
T 9hat transpired durin& that meetin& bet,een %ou and /r.
Luis Co of the defendant +ankN
5 9e ,ent strai&ht to the point because he bein& a bus%
person, I told him if the amount of )5.5 million could still be
reduced and he said that ,as alread% passed upon b% the
committee. 9hat the bank e=pects ,hich ,as contrar% to
,hat /r. Ri-era stated. 5nd he told me that is the final offer
of the bank )5.5 million and ,e should indicate our position
as soon as possible.
T 9hat ,as %our response to the ans,er of /r. Luis CoN
5 I said that ,e are &oin& to &i-e him our ans,er in a fe,
da%s and he said that ,as it. 5tt%. Da>ardo and I and /r.
/ercurio ERi-eraF ,as ,ith us at the time at his office.
T Dor the record, %our Bonor please, ,ill %ou tell this Court
,ho ,as ,ith /r. Co in his 4ffice in )roducers +ank
+uildin& durin& this meetin&N
5 /r. Co himself, /r. Ri-era, 5tt%. Da>ardo and I.
T +% /r. Co %ou are referrin& toN
5 /r. Luis Co.
T 5fter this meetin& ,ith /r. Luis Co, did %ou and %our
partner accede on (sic) the counter offer b% the bankN
5 Pes, sir, ,e did.N 3,o da%s thereafter ,e sent our
acceptance to the bank ,hich offer ,e accepted, the offer of
the bank ,hich is )5.5 million.
E2irect testimon% of 5tt%. 2emetria, 3.N, "6 5pril 1##, at pp. ($!
(6.F
T 5ccordin& to 5tt%. 2emetrio 2emetria, the amount of )5.5
million ,as reached b% the Committee and it is not ,ithin
his po,er to reduce this amount. 9hat can %ou sa% to that
statement that the amount of )5.5 million ,as reached b% the
CommitteeN
5 It ,as not discussed b% the Committee but it ,as
discussed initiall% b% Luis Co and the &roup of 5tt%.
2emetrio 2emetria and 5tt%. )a>ardo (sic) in that .eptember
"', 1#'< meetin&, sir.
E2irect testimon% of /ercurio Ri-era, 3.N, ( 1ul% 1##, pp. 1$!
15.F
$#e 'ourt# Issue? May t#e Conser0ator Re0o-e
t#e Per&ected and En&orceabe Contract.
It is not disputed that the petitioner +ank ,as under a conser-ator
placed b% the Central +ank of the )hilippines durin& the time that the
ne&otiation and perfection of the contract of sale took place.
)etitioners ener&eticall% contended that the conser-ator has the
po,er to re-oke or o-errule actions of the mana&ement or the board
of directors of a bank, under .ection "'!5 of Republic 5ct No. "65
(other,ise kno,n as the Central +ank 5ct) as follo,s?
9hene-er, on the basis of a report submitted b% the
appropriate super-isin& or e=aminin& department, the
/onetar% +oard finds that a bank or a non!bank financial
intermediar% performin& 0uasi!bankin& functions is in a state
of continuin& inabilit% or un,illin&ness to maintain a state of
li0uidit% deemed ade0uate to protect the interest of
depositors and creditors, the /onetar% +oard ma% appoint a
conser-ator to take char&e of the assets, liabilities, and the
mana&ement of that institution, collect all monies and debts
due said institution and e=ercise all po,ers necessar% to
preser-e the assets of the institution, reor&ani8e the
mana&ement thereof, and restore its -iabilit%. Be shall ha-e
the po,er to o-errule or re-oke the actions of the pre-ious
mana&ement and board of directors of the bank or non!bank
financial intermediar% performin& 0uasi!bankin& functions,
an% pro-ision of la, to the contrar% not,ithstandin&, and
such other po,ers as the /onetar% +oard shall deem
necessar%.
In the first place, this issue of the Conser-ator6s alle&ed authorit% to
re-oke or repudiate the perfected contract of sale ,as raised for the
first time in this )etition J as this ,as not liti&ated in the trial court
or Court of 5ppeals. 5s alread% stated earlier, issues not raised
andIor -entilated in the trial court, let alone in the Court of 5ppeals,
Acannot be raised for the first time on appeal as it ,ould be offensi-e
to the basic rules of fair pla%, >ustice and due process.A
$(
In the second place, there is absolutel% no e-idence that the
Conser-ator, at the time the contract ,as perfected, actuall%
repudiated or o-erruled said contract of sale. 3he +ank6s actin&
conser-ator at the time, Rodolfo Rome%, ne-er ob>ected to the sale of
the propert% to 2emetria and 1anolo. 9hat petitioners are reall%
referrin& to is the letter of Conser-ator Cncarnacion, ,ho took o-er
from Rome% after the sale ,as perfected on .eptember (, 1#'<
(5nne= *, petition) ,hich unilaterall% repudiated J not the contract
J but the authorit% of Ri-era to make a bindin& offer J and ,hich
unar&uabl% came months after the perfection of the contract. .aid
letter dated /a% 1", 1#'' is reproduced hereunder?
/a% 1", 1#''
5tt%. Noe C. Xarate
Xarate Carandan& )erlas H 5ss.
.uite ("( Rufino +uildin&
5%ala 5-enue, /akati, /etro!/anila
2ear 5tt%. Xarate?
3his pertains to %our letter dated /a% 5, 1#'' on behalf of
5tt%s. 1anolo and 2emetria re&ardin& the si= (6) parcels of
land located at .ta. Rosa, La&una.
9e den% that )roducers +ank has e-er made a le&al counter!
offer to an% of %our clients nor perfected a Acontract to sell
and bu%A ,ith an% of them for the follo,in& reasons.
In the AInter!4ffice /emorandumA dated 5pril "5, 1#'6
addressed to and appro-ed b% former 5ctin& Conser-ator
/r. 5ndres I. Rustia, )roducers +ank .enior /ana&er
)erfecto /. )ascua detailed the functions of )ropert%
/ana&ement 2epartment ()/2) staff and officers (5nne=
5.), %ou ,ill immediatel% read that /ana&er /r. /ercurio
Ri-era or an% of his subordinates has no authorit%, po,er or
ri&ht to make an% alle&ed counter!offer. In short, %our
la,%er!clients did not deal ,ith the authori8ed officers of the
bank.
/oreo-er, under .ec. "( and (6 of the Corporation Code of
the )hilippines (+ates )ambansa +l&. 6'.) and .ec. "'!5 of
the Central +ank 5ct (Rep. 5ct No. "65, as amended), onl%
the +oard of 2irectorsIConser-ator ma% authori8e the sale of
an% propert% of the corportionIbank..
4ur records do not sho, that /r. Ri-era ,as authori8ed b%
the old board or b% an% of the bank conser-ators (startin&
1anuar%, 1#'$) to sell the aforesaid propert% to an% of %our
clients. 5pparentl%, ,hat took place ,ere >ust preliminar%
discussionsIconsultations bet,een him and %our clients,
,hich e-er%one kno,s cannot bind the +ank6s +oard or
Conser-ator.
9e are, therefore, constrained to refuse an% tender of
pa%ment b% %our clients, as the same is patentl% -iolati-e of
corporate and bankin& la,s. 9e belie-e that this is more
than sufficient le&al >ustification for refusin& said alle&ed
tender.
Rest assured that ,e ha-e nothin& personal a&ainst %our
clients. 5ll our acts are official, le&al and in accordance ,ith
la,. 9e also ha-e no personal interest in an% of the
properties of the +ank.
)lease be ad-ised accordin&l%.
*er% trul% %ours,
(.&d.) Leonida 3. Cncarnacion
LC4NI25 3. C2C5RN5CI4N
5ctin& Conser-ator
In the third place, ,hile admittedl%, the Central +ank la, &i-es -ast
and far!reachin& po,ers to the conser-ator of a bank, it must be
pointed out that such po,ers must be related to the A(preser-ation of)
the assets of the bank, (the reor&ani8ation of) the mana&ement
thereof and (the restoration of) its -iabilit%.A .uch po,ers, enormous
and e=tensi-e as the% are, cannot e=tend to the %ost-&acto repudiation
of perfected transactions, other,ise the% ,ould infrin&e a&ainst the
non!impairment clause of the Constitution
$$
. If the le&islature itself
cannot re-oke an e=istin& -alid contract, ho, can it dele&ate such
non!e=istent po,ers to the conser-ator under .ection "'!5 of said
la,N
4b-iousl%, therefore, .ection "'!5 merel% &i-es the conser-ator
po,er to re-oke contracts that are, under e=istin& la,, deemed to be
defecti-e J i.e., -oid, -oidable, unenforceable or rescissible. Bence,
the conser-ator merel% takes the place of a bank6s board of directors.
9hat the said board cannot do J such as repudiatin& a contract
-alidl% entered into under the doctrine of implied authorit% J the
conser-ator cannot do either. Ineluctabl%, his po,er is not unilateral
and he cannot simpl% repudiate -alid obli&ations of the +ank. Bis
authorit% ,ould be onl% to brin& court actions to assail such contracts
J as he has alread% done so in the instant case. 5 contrar%
understandin& of the la, ,ould simpl% not be permitted b% the
Constitution. Neither b% common sense. 3o rule other,ise ,ould be
to enable a failin& bank to become sol-ent, at the e=pense of third
parties, b% simpl% &ettin& the conser-ator to unilaterall% re-oke all
pre-ious dealin&s ,hich had one ,a% or another or come to be
considered unfa-orable to the +ank, %ieldin& nothin& to perfected
contractual ri&hts nor -ested interests of the third parties ,ho had
dealt ,ith the +ank.
$#e 'i&t# Issue5 *ere $#ere Re0ersibe Errors o& 'actsF
+asic is the doctrine that in petitions for re-ie, under Rule $5 of the
Rules of Court, findin&s of fact b% the Court of 5ppeals are not
re-ie,able b% the .upreme Court. In Andres 0s. Manu&acturers
1ano0er I $rust Cor%oration,
$5
, ,e held?
. . . 3he rule re&ardin& 0uestions of fact bein& raised ,ith
this Court in a petition for certiorari under Rule $5 of the
Re-ised Rules of Court has been stated in Remalante -s.
3ibe, M.R. No. 5#51$, Debruar% "5, 1#'', 15' .CR5 1(',
thus?
3he rule in this >urisdiction is that onl% 0uestions of la, ma%
be raised in a petition for certiorari under Rule $5 of the
Re-ised Rules of Court. A3he >urisdiction of the .upreme
Court in cases brou&ht to it from the Court of 5ppeals is
limited to re-ie,in& and re-isin& the errors of la, imputed
to it, its findin&s of the fact bein& conclusi-e A EChan -s.
Court of 5ppeals, M.R. No. L!"<$'', 1une (, 1#<, ((
.CR5 <(<, reiteratin& a lon& line of decisionsF. 3his Court
has emphaticall% declared that Ait is not the function of the
.upreme Court to anal%8e or ,ei&h such e-idence all o-er
a&ain, its >urisdiction bein& limited to re-ie,in& errors of
la, that mi&ht ha-e been committed b% the lo,er courtA
(3ion&co -. 2e la /erced, M. R. No. L!"$$"6, 1ul% "5, 1#<$,
5' .CR5 '#O Corona -s. Court of 5ppeals, M.R. No. L!
6"$'", 5pril "', 1#'(, 1"1 .CR5 '65O +ani0ued -s. Court
of 5ppeals, M. R. No. L!$<5(1, Debruar% ", 1#'$, 1"<
.CR5 5#6). A+arrin&, therefore, a sho,in& that the findin&s
complained of are totall% de-oid of support in the record, or
that the% are so &larin&l% erroneous as to constitute serious
abuse of discretion, such findin&s must stand, for this Court
is not e=pected or re0uired to e=amine or contrast the oral
and documentar% e-idence submitted b% the partiesA E.anta
5na, 1r. -s. Bernande8, M. R. No. L!16(#$, 2ecember 1<,
1#66, 1' .CR5 #<(F Eat pp. 1$$!1$5.F
Like,ise, in +ernardo -s. Court of 5ppeals
$6
, ,e held?
3he resolution of this petition in-ites us to closel% scrutini8e
the facts of the case, relatin& to the sufficienc% of e-idence
and the credibilit% of ,itnesses presented. 3his Court so held
that it is not the function of the .upreme Court to anal%8e or
,ei&h such e-idence all o-er a&ain. 3he .upreme Court6s
>urisdiction is limited to re-ie,in& errors of la, that ma%
ha-e been committed b% the lo,er court. 3he .upreme Court
is not a trier of facts. . . .
5s held in the recent case of Chua 3ion& 3a% -s. Court of 5ppeals
and Moldrock Construction and 2e-elopment Corp.
$<
?
3he Court has consistentl% held that the factual findin&s of
the trial court, as ,ell as the Court of 5ppeals, are final and
conclusi-e and ma% not be re-ie,ed on appeal. 5mon& the
e=ceptional circumstances ,here a reassessment of facts
found b% the lo,er courts is allo,ed are ,hen the
conclusion is a findin& &rounded entirel% on speculation,
surmises or con>ecturesO ,hen the inference made is
manifestl% absurd, mistaken or impossibleO ,hen there is
&ra-e abuse of discretion in the appreciation of factsO ,hen
the >ud&ment is premised on a misapprehension of factsO
,hen the findin&s ,ent be%ond the issues of the case and the
same are contrar% to the admissions of both appellant and
appellee. 5fter a careful stud% of the case at bench, ,e find
none of the abo-e &rounds present to >ustif% the re!
e-aluation of the findin&s of fact made b% the courts belo,.
In the same -ein, the rulin& of this Court in the recent case of Sout#
Sea Surety and Insurance Co+%any Inc. 0s.1on. Court o& A%%eas, et
a.
$'
is e0uall% applicable to the present case?
9e see no -alid reason to discard the factual conclusions of
the appellate court, . . . (I)t is not the function of this Court to
assess and e-aluate all o-er a&ain the e-idence, testimonial
and documentar%, adduced b% the parties, particularl% ,here,
such as here, the findin&s of both the trial court and the
appellate court on the matter coincide. (emphasis supplied)
)etitioners, ho,e-er, assailed the respondent Court6s 2ecision as
Afrau&ht ,ith findin&s and conclusions ,hich ,ere not onl% contrar%
to the e-idence on record but ha-e no bases at all,A specificall% the
findin&s that (1) the A+ank6s counter!offer price of )5.5 million had
been determined b% the past due committee and appro-ed b%
conser-ator Rome%, after Ri-era presented the same for discussionA
and (") Athe meetin& ,ith Co ,as not to scale do,n the price and
start ne&otiations ane,, but a meetin& on the alread% determined
price of )5.5 millionA Bence,citing )hilippine National +ank -s.
Court of 5ppeals
$#
, petitioners are askin& us to re-ie, and re-erse
such factual findin&s.
3he first point ,as clearl% passed upon b% the Court of 5ppeals
5
,
thus?
3here can be no other lo&ical conclusion than that ,hen, on
.eptember 1, 1#'<, Ri-era informed plaintiffs b% letter that
Athe bank6s counter!offer is at )5.5 /illion for more than 11
hectares on lot basis, Asuch counter!offer price had been
determined b% the )ast 2ue Committee and appro-ed b% the
Conser-ator after Ri-era had dul% presented plaintiffs6 offer
for discussion b% the Committee . . . 3ersel% put, under the
established fact, the price of )5.5 /illion ,as, as clearl%
,orded in Ri-era6s letter (C=h. ACA), the official and
definiti-e price at ,hich the bank ,as sellin& the propert%.
(p. 11, C5 2ecision)
=== === ===
. . . 3he ar&ument deser-es scant consideration. 5s pointed
out b% plaintiff, durin& the meetin& of .eptember "', 1#'<
bet,een the plaintiffs, Ri-era and Luis Co, the senior -ice!
president of the bank, ,here the topic ,as the possible
lo,erin& of the price, the bank official refused it and
confirmed that the )5.5 /illion price had been passed upon
b% the Committee and could no lon&er be lo,ered (3.N of
5pril "<, 1##, pp. ($!(5) (p. 15, C5 2ecision).
3he respondent Court did not belie-e the e-idence of the petitioners
on this point, characteri8in& it as Anot credibleA and Aat best
e0ui-ocal and considerin& the &ratuitous and self!ser-in& character
of these declarations, the bank6s submissions on this point do not
inspire belief.A
3o become credible and une0ui-ocal, petitioners should ha-e
presented then Conser-ator Rodolfo Rome% to testif% on their behalf,
as he ,ould ha-e been in the best position to establish their thesis.
7nder the rules on e-idence
51
, such suppression &i-es rise to the
presumption that his testimon% ,ould ha-e been ad-erse, if
produced.
3he second point ,as s0uarel% raised in the Court of 5ppeals, but
petitioners6 e-idence ,as deemed insufficient b% both the trial court
and the respondent Court, and instead, it ,as respondent6s
submissions that ,ere belie-ed and became bases of the conclusions
arri-ed at.
In fine, it is 0uite e-ident that the le&al conclusions arri-ed at from
the findin&s of fact b% the lo,er courts are -alid and correct. +ut the
petitioners are no, askin& this Court to disturb these findin&s to fit
the conclusion the% are espousin&, 3his ,e cannot do.
3o be sure, there are settled e=ceptions ,here the .upreme Court
ma% disre&ard findin&s of fact b% the Court of 5ppeals
5"
. 9e ha-e
studied both the records and the C5 2ecision and ,e find no such
e=ceptions in this case. 4n the contrar%, the findin&s of the said
Court are supported b% a preponderance of competent and credible
e-idence. 3he inferences and conclusions are seasonabl% based on
e-idence dul% identified in the 2ecision. Indeed, the appellate court
patientl% tra-ersed and dissected the issues presented before it,
lendin& credibilit% and dependabilit% to its findin&s. 3he best that can
be said in fa-or of petitioners on this point is that the factual findin&s
of respondent Court did not correspond to petitioners6 claims, but
,ere closer to the e-idence as presented in the trial court b% pri-ate
respondent. +ut this alone is no reason to re-erse or i&nore such
factual findin&s, particularl% ,here, as in this case, the trial court and
the appellate court ,ere in common a&reement thereon. Indeed,
conclusions of fact of a trial >ud&e J as affirmed b% the Court of
5ppeals J are conclusi-e upon this Court, absent an% serious abuse
or e-ident lack of basis or capriciousness of an% kind, because the
trial court is in a better position to obser-e the demeanor of the
,itnesses and their courtroom manner as ,ell as to e=amine the real
e-idence presented.
E%iogue.
In summar%, there are t,o procedural issues in-ol-ed forum!
shoppin& and the raisin& of issues for the first time on appeal
E0iJ.! the e=tin&uishment of the +ank6s offer of )5.5 million and the
conser-ator6s po,ers to repudiate contracts entered into b% the
+ank6s officersF J ,hich %er se could >ustif% the dismissal of the
present case. 9e did not limit oursel-es thereto, but del-ed as ,ell
into the substanti-e issues J the perfection of the contract of sale
and its enforceabilit%, ,hich re0uired the determination of 0uestions
of fact. 9hile the .upreme Court is not a trier of facts and as a rule
,e are not re0uired to look into the factual bases of respondent
Court6s decisions and resolutions, ,e did so >ust the same, if onl% to
find out ,hether there is reason to disturb an% of its factual findin&s,
for ,e are onl% too a,are of the depth, ma&nitude and -i&or b%
,hich the parties throu&h their respecti-e elo0uent counsel, ar&ued
their positions before this Court.
9e are not unmindful of the tenacious plea that the petitioner +ank is
operatin& abnormall% under a &o-ernment!appointed conser-ator and
Athere is need to rehabilitate the +ank in order to &et it back on its
feet . . . as man% people depend on (it) for in-estments, deposits and
,ell as emplo%ment. 5s of 1une 1#'<, the +ank6s o-erdraft ,ith the
Central +ank had alread% reached )1."( billion . . . and there ,ere
(other) offers to bu% the sub>ect properties for a substantial amount
of mone%.A
5(
9hile ,e do not den% our s%mpath% for this distressed bank, at the
same time, the Court cannot emotionall% close its e%es to o-erridin&
considerations of substanti-e and procedural la,, like respect for
perfected contracts, non!impairment of obli&ations and sanctions
a&ainst forum!shoppin&, ,hich must be upheld under the rule of la,
and blind >ustice.
3his Court cannot >ust &loss o-er pri-ate respondent6s submission
that, ,hile the sub>ect properties ma% currentl% command a much
hi&her price, it is e0uall% true that at the time of the transaction in
1#'<, the price a&reed upon of )5.5 million ,as reasonable,
considerin& that the +ank ac0uired these properties at a foreclosure
sale for no more than )(.5 million
5$
. 3hat the +ank procrastinated
and refused to honor its commitment to sell cannot no, be used b% it
to promote its o,n ad-anta&e, to enable it to escape its bindin&
obli&ation and to reap the benefits of the increase in land -alues. 3o
rule in fa-or of the +ank simpl% because the propert% in 0uestion has
al&ebraicall% accelerated in price durin& the lon& period of liti&ation
is to re,ard la,lessness and dela%s in the fulfillment of bindin&
contracts. Certainl%, the Court cannot stamp its imprimatur on such
outra&eous proposition.
9BCRCD4RC, findin& no re-ersible error in the 0uestioned
2ecision and Resolution, the Court hereb% 2CNIC. the petition. 3he
assailed 2ecision is 5DDIR/C2. /oreo-er, petitioner +ank is
RC)RI/5N2C2 for en&a&in& in forum!shoppin& and 95RNC2
that a repetition of the same or similar acts ,ill be dealt ,ith more
se-erel%. Costs a&ainst petitioners.
.4 4R2CRC2.
G.R. No. 1C-261 ,eceBber 1-, 2006
IN REH PETITION 1OR ASSISTAN%E IN THE LI:0I,ATION
O1 THE R0RAL BANK O1 BOKO, ;BENG0ET<, IN%.,
PHILIPPINE ,EPOSIT INS0RAN%E
%ORPORATION, petitioner,
-s.
B0REA0 O1 INTERNAL REVEN0E, respondent.
3his is a )etition for Re-ie, on Certiorari
1
under Rule $5 of the
re-ised Rules of Court, pra%in& that this Court set aside the 4rders,
dated 1< 1anuar% "(
"
and 1( /a% "(,
(
of the Re&ional 3rial
Court (R3C) of La 3rinidad, +en&uet, sittin& as the Li0uidation
Court of the closed Rural +ank of +okod (+en&uet), Inc. (R++I), in
.pec. )roc. No. #1!.)!6.
3here is no dispute as to the antecedent facts of the case, recounted
as follo,s?
In 1#'6, a special e=amination of R++I ,as conducted b% the
.uper-ision and C=amination .ector (.C.) 2epartment III of ,hat is
no, the Bang-o Sentra ng Pii%inas (+.)),
$
,herein -arious loan
irre&ularities ,ere unco-ered. In a letter, dated " /a% 1#'6, the
.C. 2epartment III re0uired the R++I mana&ement to infuse fresh
capital into the bank, ,ithin ( da%s from date of the ad-ice, and to
correct all the e=ceptions noted. Bo,e-er, up to the termination of
the subse0uent &eneral e=amination conducted b% the .C.
2epartment III, no concrete action ,as taken b% the R++I
mana&ement. In -ie, of the irre&ularities noted and the insol-ent
condition of R++I, the members of the R++I +oard of 2irectors
,ere called for a conference at the +.) on $ 5u&ust 1#'6. 4nl% one
R++I 2irector, a certain /r. 9akit, attended the conference, and the
e=amination findin&s and related recommendations ,ere discussed
,ith him. In a letter, dated $ 5u&ust 1#'6, receipt of ,hich ,as
ackno,led&ed b% /r. 9akit, the .C. 2epartment III ,arned the
R++I +oard of 2irectors that, unless substantial remedial measures
are taken to rehabilitate the bank, it ,ill recommend that the bank be
placed under recei-ership. In a subse0uent letter, dated 1< No-ember
1#'6, a cop% of ,hich ,as sent to e-er% member of the R++I +oard
of 2irectors 0ia re&istered mail, the .C. 2epartment III reiterated its
,arnin& that it ,ould recommend the closure of the bank, unless the
needed fresh capital ,as immediatel% infused. 2espite these notices,
the .C. 2epartment III recei-ed no ,ord from R++I or from an% of
its 2irectors as of "' No-ember 1#'6.
5
In a meetin& held on # 1anuar% 1#'<, the /onetar% +oard of the +.)
decided to take the follo,in& action V
Rural +ank of +okod (+en&uet), Inc. V Report on its
e=amination as of 1une 16, 1#'6, its placement under
recei-ership
5C3I4N 35QCN
Dindin& to be true the statements of the .pecial 5ssistant to
the Mo-ernor and Bead, .uper-ision and C=amination .ector
(.C.) 2epartment III, in her memorandum dated "'
No-ember 1#'6 submittin& a report on the &eneral
e=amination of the Rural +ank of +okod (+en&uet), Inc. as
of 16 1une 1#'6, that the financial condition of the rural
bank is one of insol-enc% and its continuance in business
,ould in-ol-e further losses to its depositors and creditors, =
= =
= = = =
E3Fhe +oard decided as follo,s?
a. 3o forbid the bank to do business in the
)hilippines and place its assets and affairs under
recei-ership in accordance ,ith .ection "# of R.5.
No. "65, as amended.
b. 3o desi&nate the .pecial 5ssistant to the Mo-ernor
and Bead, .C. 2epartment III, as Recei-er of the
bankO
c. 3o refer the cases of irre&ularitiesIfrauds to the
4ffice of .pecial In-esti&ation for further
in-esti&ation and possible filin& of appropriate
char&es a&ainst the follo,in& presentIformer officers
and emplo%ees of the bank?
= = = =
d. 3o include the names of the abo-e!mentioned
present and former officers and emplo%ees of the
bank in the list of persons barred from emplo%ment
in an% financial institution under the super-ision of
the Central +ank ,ithout prior clearance from the
Central +ank.
6
5 memorandum and report, dated "' 5u&ust 1##, ,ere submitted
b% the 2irector of the .C. 2epartment III concludin& that the R++I
remained in insol-ent financial condition and it can no lon&er safel%
resume business ,ith the depositors, creditors, and the &eneral
public. 4n < .eptember 1##, the /onetar% +oard, after determinin&
and confirmin& the said memorandum and report, ordered the
li0uidation of the bank and desi&nated the 2irector of the .C.
2epartment III as li0uidator.
<
4n 1 5pril 1##1, the desi&nated +.) li0uidator of R++I caused the
filin& ,ith the R3C of a )etition for 5ssistance in the Li0uidation of
R++I, docketed as .pec. )roc. No. #1!.)!6.
'
.ubse0uentl%, on "
1une 1##", the /onetar% +oard transferred to herein petitioner
)hilippine 2eposit Insurance Corporation ()2IC) the
recei-ershipIli0uidation of R++I.
#
)2IC then filed, on 11 .eptember "", a /otion for 5ppro-al of
)ro>ect of 2istribution
1
of the assets of R++I, in accordance ,ith
.ection (1, in relation to .ection (, of Republic 5ct No. <65(,
other,ise kno,n as the Ne, Central +ank 5ct. 2urin& the hearin&
held on 1< 1anuar% "(, the respondent +ureau of Internal Re-enue
(+IR), throu&h 5tt%. 1usto Re&inaldo, manifested that )2IC should
secure a ta= clearance certificate from the appropriate +IR Re&ional
4ffice, pursuant to .ection 5"(C) of Republic 5ct No. '$"$, or the
3a= Code of 1##<, before it could proceed ,ith the dissolution of
R++I. 4n e-en date, the R3C issued one of the assailed
4rders,
11
directin& )2IC to compl% ,ith .ection 5"(C) of the 3a=
Code of 1##< ,ithin ( da%s from receipt of a cop% of the said order.
)endin& compliance there,ith, the R3C held in abe%ance the /otion
for 5ppro-al of )ro>ect of 2istribution. 4n 1( /a% "(, the second
assailed 4rder
1"
,as issued, in ,hich the R3C, in resol-in& the
/otion for Reconsideration filed b% )2IC, ruled as follo,s V
4 R 2 C R
.ubmitted for resolution is petitionerRs motion for
reconsideration of the order of this court dated 1anuar% 1<,
"( holdin& in abe%ance the motion for appro-al of the
pro>ect of distribution pendin& their compliance ,ith a ta=
clearance from the +ureau of Internal Re-enue.
)etitioner in their motion state that .ection 5"!C of Republic
5ct '$"$ does not co-er closed bankin& institutions like the
Rural +ank of +okod as the la, that co-ers li0uidation of
closed banks is .ection ( of Republic 5ct No. <65(
other,ise kno,n as the ne, Central +ank La,.
Commentin& on the motion for reconsideration the +ureau
of Internal Re-enue states that the onl% lo&ic ,h% the +ureau
is re0uestin& for a ta= clearance is to determine ho, much
ta=es, if there be an%, is due the &o-ernment.
3he court belie-es and so holds that petitioner should still
secure the necessar% ta= clearance in order for it to be
cleared of all its ta= liabilities as re&ardless of ,hat la,
co-ers the li0uidation of closed banks, still these banks are
sub>ect to pa%ment of ta=es mandated b% la,. 5lso in its
motion for appro-al of the pro>ect of distribution, para&raph
", item "." states that there are unremitted ,ithholdin& ta=es
in the amount of)',<6<.(".
3his sho,s that indeed there are still ta=es to be paid. In
order therefore that all ta=es due the &o-ernment should be
paid, petitioner should secure a ta= clearance from the
+ureau of Internal Re-enue.
9herefore, based on the fore&oin& premises, the motion for
reconsideration filed b% petitioner is hereb% 2CNIC2 for
lack of merit.
1(
Bence, )2IC filed the present )etition for Re-ie, on Certiorari,
under Rule $5 of the re-ised Rules of Court, raisin& pure 0uestions
of la,. It made a lone assi&nment of error, alle&in& that V
3BC C47R3 5 T74 CRRC2 IN 5))LPINM 3BC
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LIT7I253I4N, +P 3BC /4NC35RP +45R2
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<65(.
1$
)2IC ar&ues that the closure of banks under .ection ( of the Ne,
Central +ank 5ct is summar% in nature and procurement of ta=
clearance as re0uired under .ection 5"(C) of the 3a= Code of 1##< is
not a condition precedent theretoO that under .ection (, in relation
to .ection (1, of the Ne, Central +ank 5ct, asset distribution of a
closed bank re0uires onl% the appro-al of the li0uidation courtO and
that the +IR is not ,ithout recourse since, sub>ect to the applicable
pro-isions of the 3a= Code of 1##<, it ma% therefore assess the
closed R++I for ta= liabilities, if an%.
In its Comment, the +IR countered ,ith the follo,in& ar&uments?
that the present )etition for Re-ie, on Certiorariunder Rule $5 of
the re-ised Rules of Court is not the proper remed% to 0uestion the
4rder, dated 1< 1anuar% "(, of the R3C because said order is
interlocutor% and cannot be the sub>ect of an appealO that .ection
5"(C) of the 3a= Code of 1##< applies to all corporations, includin&
banks ordered closed b% the /onetar% +oard pursuant to .ection (
of the Ne, Central +ank 5ctO that the R3C ma% order the )2IC to
obtain a ta= clearance before proceedin& to rule on the /otion for
5ppro-al of )ro>ect of 2istribution of the assets of R++IO and that
the present contro-ers% should not ha-e been ele-ated to this Court
since the parties are both &o-ernment a&encies ,ho should ha-e
administrati-el% settled the dispute.
3his Court finds that there are onl% t,o primar% issues for the
resolution of the )etition at bar, one bein& procedural, and the other
substanti-e. 3he procedural issue in-ol-es the 0uestion of ,hether
the )etition for Re-ie, on Certiorari under Rule $5 of the re-ised
Rules of Court is the proper remed% from the assailed 4rders of the
R3C. 3he substanti-e issue deals ,ith the determination of ,hether a
bank ordered closed and placed under recei-ership b% the /onetar%
+oard of the +.) still needs to secure a ta= clearance certificate from
the +IR before the li0uidation court appro-es the pro>ect of
distribution of the assets of the bank.
I
3his Court shall first proceed ,ith the procedural issue on the
appropriateness of the remed% taken b% )2IC from the assailed R3C
4rders.
3he differences bet,een an appeal b% certiorari under Rule $5
15
of
the re-ised Rules of Court and an ori&inal action for certiorari under
Rule 65
16
of the same Rules ha-e been laid do,n b% this Court in the
case of 5tt%. Paa 0. Court o& A%%eas!
1<
to ,it V
a. In appeal b% certiorari, the petition is based on 0uestions
of la, ,hich the appellant desires the appellate court to
resol-e. In certiorari as an ori&inal action, the petition raises
the issue as to ,hether the lo,er court acted ,ithout or in
e=cess of >urisdiction or ,ith &ra-e abuse of discretion.
b. Certiorari, as a mode of appeal, in-ol-es the re-ie, of the
>ud&ment, a,ard or final order on the merits. 3he ori&inal
action for certiorari ma% be directed a&ainst an interlocutor%
order of the court prior to appeal from the >ud&ment or ,here
there is no appeal or an% other plain, speed% or ade0uate
remed%.
c. 5ppeal b% certiorari must be made ,ithin the
re&lementar% period for appeal. 5n ori&inal action
forcertiorari ma% be filed not later than si=t% (6) da%s from
notice of the >ud&ment, order or resolution sou&ht to be
assailed.
d. 5ppeal b% certiorari sta%s the >ud&ment, a,ard or order
appealed from. 5n ori&inal action for certiorari, unless a
,rit of preliminar% in>unction or a temporar% restrainin&
order shall ha-e been issued, does not sta% the challen&ed
proceedin&.
e. In appeal b% certiorari, the petitioner and respondent are
the ori&inal parties to the action, and the lo,er court or
0uasi!>udicial a&enc% is not to be impleaded. In certiorari as
an ori&inal action, the parties are the a&&rie-ed part% a&ainst
the lo,er court or 0uasi!>udicial a&enc% and the pre-ailin&
parties, ,ho thereb% respecti-el% become the petitioner and
respondents.
f. In certiorari for purposes of appeal, the prior filin& of a
motion for reconsideration is not re0uired (.ec. 1, Rule $5)O
,hile in certiorari as an ori&inal action, a motion for
reconsideration is a condition precedent (Hia-Rey $ransit
0s. Beo, L!1'#5<, 5pril "(, 1#6(), sub>ect to certain
e=ceptions.
&. In appeal b% certiorari, the appellate court is in the
e=ercise of its appellate >urisdiction and po,er of re-ie,,
,hile in certiorari as an ori&inal action, the hi&her court
e=ercises ori&inal >urisdiction under its po,er of control and
super-ision o-er the proccedin&s of lo,er courts.
Muided b% the fore&oin& distinctions, this Court, in perusin& the
assailed R3C 4rders, dated 1< 1anuar% "( and 1( /a% "(,
reaches the conclusion that these are merel% interlocutor% in nature
and are not the proper sub>ects of an appeal b% certiorari under Rule
$5 of the re-ised Rules of Court.
3his Court has repeatedl% and uniforml% held that a >ud&ment or
order ma% be appealed onl% ,hen it is final, meanin& that it
completel% disposes of the case and definiti-el% ad>udicates the
respecti-e ri&hts of the parties, lea-in& thereafter no substantial
proceedin& to be had in connection ,ith the case e=cept the proper
e=ecution of the >ud&ment or order. Con-ersel%, an interlocutor%
order or >ud&ment is not appealable for it does not decide the action
,ith finalit% and lea-es substantial proceedin&s still to be had.
1'
3he R3C 4rders presentl% 0uestioned before this Court has not
disposed of the case nor has it ad>udicated definiti-el% the ri&hts of
the parties in .pec. )roc. No. #1!.)!6. 3he% onl% held in
abe%ance the appro-al of the )ro>ect of 2istribution of the assets of
R++I until )2IC, as li0uidator, ac0uires a ta= clearance from the
+IR. Indubitabl%, there are still substantial proceedin&s to be had
after )2IC presents the re0uired ta= clearance to the trial court, since
the )ro>ect of 2istribution of assets still has to be finali8ed and
appro-ed.
)2IC a-ers that the R3C 4rders of 1< 1anuar% "( and 1( /a%
"( are final because, as this Court pronounced in the case
of Paci&ic Ban-ing Cor%oration E+%oyeesK (rganiJation
(PaBCE() 0. Court o& A%%eas,
1#
an order of the li0uidation court
allo,in& or disallo,in& a claim is a final order and ma% be the
sub>ect of an appeal. It further asserts that the le&al issue of ,hether
R++I should secure a ta= clearance is a Adisputed claim,A ,hich ,as
alread% allo,ed b% the R3C in its assailed 4rders, thus, makin& the
latter final.
3his Court is uncon-inced. 3he fore&oin& ar&uments of )2IC result
from a strained interpretation of la, and >urisprudence, and are
raised in an apparent attempt to >ustif% a -er% ob-ious &au2 %as on its
part. 9hile it is true that in li0uidation proceedin&s, the settlement of
disputed or contentious claims ma% re0uire a full!dress hearin& and
the resolution of le&al issues,
"
it does not follo, that all le&al issues
resol-ed in the course of the li0uidation proceedin&s ,ould
automaticall% be tantamount to an allo,ance or disallo,ance of a
disputed or contentious claim. In .pec. )roc. No. #1!.)!6
pendin& before the R3C, there can be no doubt that the claim of the
+IR a&ainst R++I consists of the unpaid ta= liabilities of the latter.
3he +IR contends that it could onl% determine the e=istence and
correct amount of the ta= liabilities of R++I if )2IC, as li0uidator of
the bank, secures a ta= clearance from the appropriate +IR Re&ional
4ffice. 3he ac0uirement of a ta= clearance is not the claim of the
+IR a&ainst R++I, it is onl% the means b% ,hich to ascertain such
claim. 9hate-er ta= liabilities the +IR ma% claim a&ainst R++I can
still be disputed before the R3C b% the )2IC, as li0uidator of the
bank, ,hether as to the e=istence or computation of the said ta=
liabilities, and it is the rulin& of the R3C on such matters that ma%
constitute a final order ,hich definiti-el% settles the claim of the
+IR. 3he mere &rant b% the R3C of the motion re0uirin& )2IC, as
li0uidator of R++I, to secure a ta= clearance, does not %et constitute
an ad>udication of the claim of the +IR. Bence, the assailed R3C
4rders, dated 1< 1anuar% "( and 1( /a% "(, are clearl%
interlocutor% in nature.
5s a &eneral rule, an interlocutor% order is not appealable until after
the rendition of the >ud&ment on the merits, &i-en that a contrar% rule
,ould dela% the administration of >ustice and undul% burden the
courts. 3his Court, ho,e-er, has also held that an ori&inal action
for certiorari under Rule 65 of the re-ised Rules of Court is an
appropriate remed% to assail an interlocutor% order ,hen (1) the
tribunal issued such order ,ithout or in e=cess of >urisdiction or ,ith
&ra-e abuse of discretion, and (") the assailed interlocutor% order is
patentl% erroneous and the remed% of appeal ,ould not afford
ade0uate and e=peditious relief.
"1
3hus, despite this CourtRs findin&
that )2IC, as the li0uidator of R++I, a-ailed itself of the ,ron&
remed% b% filin& an appeal b% certiorari under Rule $5 of the re-ised
Rules of Court, 9e shall adopt a positi-e and pra&matic approach,
and, instead of dismissin& the instant )etition outri&ht, it shall treat
the same as an ori&inal action for certiorari under Rule 65 of the
same Rules, in consideration of the crucial issues and substantial
ar&uments alread% presented b% the concerned parties before this
Court.
""
II
Ba-in& disposed of the procedural issue, this Court no, addresses
the substanti-e issue of ,hether R++I, as represented b% its
li0uidator, )2IC, still needs to secure a ta= clearance from the +IR
before the R3C could appro-e the )ro>ect of 2istribution of the
assets of R++I.
3he +IR anchors its position that a ta= clearance is necessar% on
.ection 5"(C) of the 3a= Code of 1##<, ,hich pro-ides V
.CC. 5". %oror*t!o" Ret7r"$. V
= = = =
(C) Return o& Cor%oration Conte+%ating Dissoution or
ReorganiJation. V C-er% corporation shall, ,ithin thirt% da%s
(() after the adoption b% the corporation of a resolution or
plan for its dissolution, or for the li0uidation of the ,hole or
an% part of its capital stock, includin& a corporation ,hich
has been notified of possible in-oluntar% dissolution b% the
.ecurities and C=chan&e Commission, or for its
reor&ani8ation, render a correct return to the Commissioner,
-erified under oath, settin& forth the terms of such resolution
or plan and such other information as the .ecretar% of
Dinance, upon recommendation of the Commissioner, shall,
b% rules and re&ulations, prescribe.
3he dissol-in& or reor&ani8in& corporation shall, prior to the
issuance b% the .ecurities and C=chan&e Commission of the
Certificate of 2issolution or Reor&ani8ation, as ma% be defined b%
rules and re&ulations prescribed b% the .ecretar% of Dinance, upon
recommendation of the Commissioner, secure a certificate of ta=
clearance from the +ureau of Internal Re-enue ,hich certificate
shall be submitted to the .ecurities and C=chan&e Commission.
3o implement the fore&oin& pro-ision, the +IR still relies on the
re&ulations it >ointl% issued ,ith the .ecurities and C=chan&e
Commission (.CC) in 1#'5, ,hen the 3a= Code of 1#<< ,as still in
effect and a similar pro-ision could be found in .ection $6(C)
thereof. 3he full te=t of the re&ulations is reproduced belo, V
+IR!.CC RCM7L53I4N. N4. 1
.7+1CC3? Re&ulations to Implement the )ro-isions of
C=ecuti-e 4rder No. 1"6, 5mendin& .ection $6(c) of the
National Internal Re-enue Code of 1#<<, as amended,
Re0uirin& 2issol-in& Corporations to Dile Information
Returns and .ecure 3a= Clearance from the Commissioner
of Internal Re-enue, and )ro-idin& 5de0uate )enalties for
*iolations 3hereof.
34? 5ll Internal Re-enue 4fficers and 4thers Concerned.
)ursuant to the pro-isions of .ection "<<, in relation to
.ection $ of the National Re-enue Code of 1#<<, as
amended, the follo,in& re&ulations are hereb% promul&ated.
.ection 1. Sco%e. V 3hese re&ulations shall &o-ern the
procedure for the issuance of ta= clearance certificates to
dissol-in& corporations. 3his shall include corporations
intendin& to dissol-e or li0uidate the ,hole or an% part of its
capital stocks, as ,ell as, corporations ,hich ha-e been
notified of possible in-oluntar% dissolution b% the .ecurities
and C=chan&e Commission.
.ection ". Re.uire+ents in case o& dissoution. V a) C-er%
Corporation shall, ,ithin thirt% (() da%s after
! the adoption b% the corporation of a resolution or plan for
the dissolution of the corporation, or for the li0uidation of
the ,hole or an% part of its capital stock, or
! the receipt of an order of suspension b% the .ecurities and
C=chan&e Commission in case of in-oluntar% dissolution,
file their income ta= returns co-erin& the income earned b%
them from the be&innin& of the ta=able %ear up to date of
such dissolution.
In addition thereto, the% shall submit ,ithin the same period
and -erified under oath, the follo,in& documents?
1. a cop% of the articles of incorporation and b%!
la,sO
". a cop% of the resolution authori8in& dissolutionO
and
(. balance sheet as of the date of dissolution and a
profit and loss statement co-erin& the period from
the be&innin& of the ta=able %ear to the date of
dissolution.
b) 3he .ecurities and C=chan&e Commission ,hene-er it
issues an order of in-oluntar% dissolution or suspension of
the primar% franchise or certificate of re&istration of a
corporation, shall at the same time furnish the Commissioner
of Internal Re-enue a cop% of such order.
.ection (. $a2 cearance certi&icate. V a) 9ithin thirt% (()
da%s from receipt of the documents mentioned in the
precedin& .ection, the Commissioner of Internal Re-enue, or
his dul% authori8ed representati-e, shall issue the
correspondin& ta= clearance certificate (+IR Dorm No.
1<.61) for the corporation ,hich ,ill be dissol-ed.
b) 3he .ecurities and C=chan&e Commission shall issue the
final order of dissolution onl% after a certificate of ta=
clearance has been submitted b% the dissol-in&
corporation? Pro0ided, that in case of in-oluntar%
dissolution, the .ecurities and C=chan&e Commission ma%
ne-ertheless proceed ,ith the dissolution if thirt% (() da%s
after receipt of the suspension order no ta= clearance has %et
been issued.
.ection $. Penaty. V Dailure to render the return and secure
the certificate of ta= clearance as abo-e!mentioned shall
sub>ect the officer(s) of the corporation re0uired b% la, to
file the return under .ection $6(a) of the National Internal
Re-enue Code of 1#<<, as amended, to a fine of not less than
)5,. or imprisonment of not less than t,o (") %ears,
and shall make them liable for all outstandin& or unpaid ta=
liabilities of the dissol-in& corporation.
.ection 5. E&&ecti0ity. V 3hese re&ulations shall appl% to all
corporate dissolution takin& place on or after /a% 1$, 1#'5.
.ection 6. Re%eaing Cause. V 5ll re-enue re&ulations,
orders and circulars ,hich are inconsistent here,ith are
hereb% modified accordin&l%.
3he afore!0uoted 3a= Code pro-ision and re&ulations refer to a
-oluntar% dissolution andIor li0uidation of a corporation throu&h its
adoption of a resolution or plan to that effect, or an in-oluntar%
dissolution of a corporation b% order of the .CC. 3he% make no
reference at all to a situation similar to the one at bar in ,hich a
bankin& corporation is ordered closed and placed under recei-ership
b% the +.) and its assets >udiciall% li0uidated. No,, the determinin&
0uestion is, ,hether .ection 5"(C) of the 3a= Code of 1##< and +IR!
.CC Re&ulations No. 1 could be made to appl% to the present case.
3his Court rules in the ne&ati-e.
'irst! .ection 5"(C) of the 3a= Code of 1##< and the +IR!.CC
Re&ulations No. 1 re&ulate the relations onl% as bet,een the .CC
and the +IR, makin& a certificate of ta= clearance a prior
re0uirement before the .CC could appro-e the dissolution of a
corporation. In .pec. )roc. No. #1!.)!6 pendin& before the R3C,
R++I ,as placed under recei-ership and ordered li0uidated b% the
+.), not the .CCO and the .CC is not e-en a part% in the said case,
althou&h the +IR is. 3his Court cannot find an% basis to e=tend the
.CC re0uirements for dissolution of a corporation to the li0uidation
proceedin&s of R++I before the R3C ,hen the .CC is not e-en
in-ol-ed therein.
It is conceded that the .CC has the authorit% to order the dissolution
of a corporation pursuant to .ection 1"1 of +atas )ambansa +l&. 6',
other,ise kno,n as the Corporation Code of the )hilippines, ,hich
reads V
.ec. 1"1. In0ountary dissoution. V 5 corporation ma% be
dissol-ed b% the .ecurities and C=chan&e Commission upon
filin& of a -erified complaint and after proper notice and
hearin& on the &rounds pro-ided b% e=istin& la,s, rules and
re&ulations.
3he Corporation Code, ho,e-er, is a &eneral la, appl%in& to all
t%pes of corporations, ,hile the Ne, Central +ank 5ct re&ulates
specificall% banks and other financial institutions, includin& the
dissolution and li0uidation thereof. 5s bet,een a &eneral and special
la,, the latter shall pre-ail V generaia s%eciaibus non derogant.
"(
3he li0uidation of R++I is undertaken accordin& to .ections ( of
the Ne, Central +ank 5ct, 0iJ V
.ec. (. Proceedings in Recei0ers#i% and Li.uidation. !
9hene-er, upon report of the head of the super-isin& or
e=aminin& department, the /onetar% +oard finds that a bank
or 0uasi!bank?
(a) is unable to pa% its liabilities as the% become due in the
ordinar% course of business? )ro-ided, 3hat this shall not
include inabilit% to pa% caused b% e=traordinar% demands
induced b% financial panic in the bankin& communit%O
(b) has insufficient reali8able assets, as determined b% the
+an&ko .entral, to meet its liabilitiesO or
(c) cannot continue in business ,ithout in-ol-in& probable
losses to its depositors or creditorsO or
(d) has ,ilfull% -iolated a cease and desist order under
.ection (< that has become final, in-ol-in& acts or
transactions ,hich amount to fraud or a dissipation of the
assets of the institutionO in ,hich cases, the /onetar% +oard
ma% summaril% and ,ithout need for prior hearin& forbid the
institution from doin& business in the )hilippines and
desi&nate the )hilippine 2eposit Insurance Corporation as
recei-er of the bankin& institution.
Dor a 0uasi!bank, an% person of reco&ni8ed competence in
bankin& or finance ma% be desi&nated as recei-er.
3he recei-er shall immediatel% &ather and take char&e of all
the assets and liabilities of the institution, administer the
same for the benefit of its creditors, and e=ercise the &eneral
po,ers of a recei-er under the Re-ised Rules of Court but
shall not, ,ith the e=ception of administrati-e e=penditures,
pa% or commit an% act that ,ill in-ol-e the transfer or
disposition of an% asset of the institution? )ro-ided, 3hat the
recei-er ma% deposit or place the funds of the institution in
non!speculati-e in-estments. 3he recei-er shall determine as
soon as possible, but not later than ninet% (#) da%s from
take o-er, ,hether the institution ma% be rehabilitated or
other,ise placed in such a condition that it ma% be permitted
to resume business ,ith safet% to its depositors and creditors
and the &eneral public? Pro0ided! 3hat an% determination for
the resumption of business of the institution shall be sub>ect
to prior appro-al of the /onetar% +oard.
If the recei-er determines that the institution cannot be
rehabilitated or permitted to resume business in accordance
,ith the ne=t precedin& para&raph, the /onetar% +oard shall
notif% in ,ritin& the board of directors of its findin&s and
direct the recei-er to proceed ,ith the li0uidation of the
institution. 3he recei-er shall?
(1) file e2 %arte ,ith the proper re&ional trial court, and
,ithout re0uirement of prior notice or an% other action, a
petition for assistance in the li0uidation of the institution
pursuant to a li0uidation plan adopted b% the )hilippine
2eposit Insurance Corporation for &eneral application to all
closed banks. In case of 0uasi!banks, the li0uidation plan
shall be adopted b% the /onetar% +oard. 7pon ac0uirin&
>urisdiction, the court shall, upon motion b% the recei-er
after due notice, ad>udicate disputed claims a&ainst the
institution, assist the enforcement of indi-idual liabilities of
the stockholders, directors and officers, and decide on other
issues as ma% be material to implement the li0uidation plan
adopted. 3he recei-er shall pa% the cost of the proceedin&s
from the assets of the institution.
(") con-ert the assets of the institution to mone%, dispose of
the same to creditors and other parties, for the purpose of
pa%in& the debts of such institution in accordance ,ith the
rules on concurrence and preference of credit under the Ci-il
Code of the )hilippines and he ma%, in the name of the
institution, and ,ith the assistance of counsel as he ma%
retain, institute such actions as ma% be necessar% to collect
and reco-er accounts and assets of, or defend an% action
a&ainst, the institution. 3he assets of an institution under
recei-ership or li0uidation shall be deemed in custodia le&is
in the hands of the recei-er and shall, from the moment the
institution ,as placed under such recei-ership or li0uidation,
be e=empt from an% order of &arnishment, le-%, attachment,
or e=ecution.
3he actions of the /onetar% +oard taken under this section
or under .ection "# of this 5ct shall be final and e=ecutor%,
and ma% not be restrained or set aside b% the court e=cept on
petition for certiorari on the &round that the action taken ,as
in e=cess of >urisdiction or ,ith such &ra-e abuse of
discretion as to amount to lack or e=cess of >urisdiction. 3he
petition for certiorari ma% onl% be filed b% the stockholders
of record representin& the ma>orit% of the capital stock
,ithin ten (1) da%s from receipt b% the board of directors of
the institution of the order directin& recei-ership, li0uidation
or conser-atorship.
3he desi&nation of a conser-ator under .ection "# of this
5ct or the appointment of a recei-er under this section shall
be -ested e=clusi-el% ,ith the /onetar% +oard.
Durthermore, the desi&nation of a conser-ator is not a
precondition to the desi&nation of a recei-er.
.ection ( of the Ne, Central +ank 5ct la%s do,n the proceedin&s
for recei-ership and li0uidation of a bank. 3he said pro-ision is silent
as re&ards the securin& of a ta= clearance from the +IR. 3he
omission, nonetheless, cannot compel this Court to appl% b% analo&%
the ta= clearance re0uirement of the .CC, as stated in .ection 5"(C)
of the 3a= Code of 1##< and +IR!.CC Re&ulations No. 1, since,
a&ain, the dissolution of a corporation b% the .CC is a totall%
different proceedin& from the recei-ership and li0uidation of a bank
b% the +.). 3his Court cannot simpl% replace an% reference b%
.ection 5"(C) of the 3a= Code of 1##< and the pro-isions of the
+IR!.CC Re&ulations No. 1 to the A.CCA ,ith the A+.).A 3o do so
,ould be to read into the la, and the re&ulations somethin& that is
simpl% not there, and ,ould be tantamount to >udicial le&islation.
It should be noted that there are substantial differences in the
procedure for in-oluntar% dissolution and li0uidation of a
corporation under the Corporation Code, and that of a bankin&
corporation under the Ne, Central +ank 5ct, so that the
re0uirements in one cannot simpl% be imposed in the other.
7nder the Corporation Code, the .CC ma% dissol-e a corporation,
upon the filin& of a 0eri&ied co+%aint and after proper notice and
#earing, on &rounds pro-ided b% e=istin& la,s, rules, and
re&ulations.
"$
7pon receipt b% the corporation of the order o&
sus%ension from the .CC, it is re0uired to notif% and submit a cop%
of the said order, to&ether ,ith its final ta= return, to the +IR. 3he
.CC is also re0uired to furnish the +IR a cop% of its order of
suspension. 3he +IR is supposed to issue a ta2 cearance to the
corporation ,ithin ( da%s from receipt of the fore&oin&
documentar% re0uirements. 3he .CC shall issue the &ina order o&
dissoution onl% after the corporation has submitted its ta= clearanceO
or in case of in-oluntar% dissolution, the .CC ma% proceed ,ith the
dissolution after ( da%s from receipt b% the +IR of the documentar%
re0uirements ,ithout a ta= clearance ha-in& been issued.
"5
3he
corporation is allo,ed to continue as a bod% corporate for t#ree
years after its dissolution, for the purpose of prosecutin& and
defendin& suits b% or a&ainst it, to settle and close its affairs, and to
dispose of and con-e% its propert% and distribute its assets, but not
for the purpose of continuin& its business. 3he corporation ma%
undertake its o,n li0uidation, or at an% time durin& the said three
%ears, it +ay con0ey all of its propert% to trustees for the benefit of
its stockholders, members, creditors, and other persons in interest.
"6
In contrast, the /onetar% +oard ma% su++ariy and wit#out need
&or %rior #earing, forbid the bankin& corporation from doin&
business in the )hilippines, for causes enumerated in .ection ( of
the Ne, Central +ank 5ctO anda%%oint the )2IC as recei-er of the
bank. )2IC shall i++ediatey &ather and take char&e of all the assets
and liabilities of the closed bank and administer the same for the
benefit of its creditors. 3he summar% nature of the procedure for the
in-oluntar% closure of a bank is especiall% stressed in .ection ( of
the Ne, Central +ank 5ct, ,hich e=plicitl% states that the actions of
the /onetar% +oard under the said .ection or .ection "# shall be
final and e=ecutor%, and ma% not be restrained or set aside b% the
court e=cept on a )etition for Certiorari filed b% the stockholders of
record of the bank representin& a ma>orit% of the capital stock. )2IC,
as the appointed recei-er, shall &ie e2 %arte ,ith the proper R$C, and
,ithout re0uirement of prior notice or an% other action, a %etition &or
assistance in t#e i.uidation of the bank. 3he bank is not &i-en the
option to undertake its o,n li0uidation.
Second! the alle&ed purpose of the +IR in re0uirin& the li0uidator
)2IC to secure a ta= clearance is to enable it to determine the ta=
liabilities of the closed bank. It raised the point that since the )2IC,
as recei-er and li0uidator, failed to file the final return of R++I for
the %ear its operations ,ere stopped, the +IR had no ,a% of
determinin& ,hether the bank still had outstandin& ta= liabilities.
3o our mind, ,hat the +IR should ha-e re0uested from the R3C, and
,hat ,as ,ithin the discretion of the R3C to &rant, is not an order
for )2IC, as li0uidator of R++I, to secure a ta= clearanceO but,
rather, for it to submit the final return of R++I. 3he first para&raph
of .ection ((C) of the 3a= Code of 1##<, read in con>unction ,ith
.ection 5$ of the same Code, clearl% imposes upon )2IC, as the
recei-er and li0uidator of R++I, the dut% to file such a return. 3he
pertinent pro-isions are reproduced belo, for reference V
.CC. 5". %oror*t!o" Ret7r"$. V
= = = =
(C) Return o& Cor%oration Conte+%ating Dissoution or
ReorganiJation. V C-er% corporation shall, ,ithin thirt% da%s
(() after the adoption b% the corporation of a resolution or
plan for its dissolution, or for the li0uidation of the ,hole or
an% part of its capital stock, includin& a corporation ,hich
has been notified of possible in-oluntar% dissolution b% the
.ecurities and C=chan&e Commission, or for its
reor&ani8ation, render a correct return to the Commissioner,
-erified under oath, settin& forth the terms of such resolution
or plan and such other information as the .ecretar% of
Dinance, upon recommendation of the Commissioner, shall,
b% rules and re&ulations, prescribe.
= = = =
.CC. 5$. Returns o& recei0ers! $rustees in Ban-ru%tcy or
Assignees. V In cases ,herein recei-ers, trustees in
bankruptc% or assi&nees are operatin& the propert% or
business of a corporation, sub>ect to the ta= imposed b% this
3itle, such recei-ers, trustees or assi&nees shall make returns
of net income as and for such corporation, in the same
manner and form as such an or&ani8ation is hereinbefore
re0uired to make returns, and an% ta= due on the income as
returned b% recei-ers, trustees or assi&nees shall be assessed
and collected in the same manner as if assessed directl%
a&ainst the or&ani8ations of ,hose businesses or properties
the% ha-e custod% or control.
.ection 5$ of the 3a= Code of 1##< imposes a &eneral dut% on all
recei-ers, trustees in bankruptc%, and assi&nees, ,ho operate and
preser-e the assets of a corporation, re&ardless of the circumstances
or the la, b% ,hich the% came to hold their positions, to file the
necessar% returns on behalf of the corporation under their care.
3he filin& b% )2IC of a final ta= return, on behalf of R++I, should
alread% address the supposed concern of the +IR and ,ould alread%
enable the latter to determine if R++I still had outstandin& ta=
liabilities.
3he unreasonableness and impossibilit% of re0uirin& a ta= clearance
before the appro-al b% the R3C of the )ro>ect of 2istribution of the
assets of the R++I becomes apparent ,hen the timeline of the
proceedin&s is considered.
3he +IR can onl% issue a certificate of ta= clearance ,hen the
ta=pa%er had completel% paid off his ta= liabilities. 3he certificate of
ta= clearance attests that the ta=pa%er no lon&er has an% outstandin&
ta= obli&ations to the Mo-ernment.
.hould the +IR find that R++I still had outstandin& ta= liabilities,
)2IC ,ill not be able to pa% the same because the )ro>ect of
2istribution of the assets of R++I remains unappro-ed b% the R3CO
and, if R++I still had outstandin& ta= liabilities, the +IR ,ill not
issue a ta= clearanceO but, ,ithout the ta= clearance, the )ro>ect of
2istribution of assets, ,hich allocates the pa%ment for the ta=
liabilities, ,ill not be appro-ed b% the R3C. It ,ill be a chicken!and!
e&& dilemma.
3he Mo-ernment, in this case, cannot &enerall% claim preference of
credit, and recei-e pa%ment ahead of the other creditors of R++I.
2uties, ta=es, and fees due the Mo-ernment en>o% priorit% onl% ,hen
the% are ,ith reference to a specific mo-able propert%, under 5rticle
""$1(1) of the Ci-il Code, or immo-able propert%, under 5rticle
""$"(1) of the same Code. Bo,e-er, ,ith reference to the other real
and personal propert% of the debtor, sometimes referred to as Afree
propert%,A the ta=es and assessments due the National Mo-ernment,
other than those in 5rticles ""$1(1) and ""$"(1) of the Ci-il Code,
,ill come onl% in ninth place in the order of preference.
"<
3hus, the recourse of the +IR, after assessin& the final return and
e=aminin& all other pertinent documents of R++I, and makin& a
determination of the latterRs outstandin& ta= liabilities, is to present
its claim, on behalf of the National Mo-ernment, before the R3C
durin& the li0uidation proceedin&s. 3he +IR is e=pected to pro-e and
substantiate its claim, in the same manner as the other creditors. It is
onl% after the R3C allo,s the claim of the +IR, to&ether ,ith the
claims of the other creditors, can a )ro>ect for 2istribution of the
assets of R++I be finali8ed and appro-ed. )2IC, then, as li0uidator,
ma% proceed ,ith the disposition of the assets of R++I and pa% the
latterRs financial obli&ations, includin& its outstandin& ta= liabilities.
5nd, finall%, onl% after such pa%ment, can the +IR issue a certificate
of ta= clearance in the name of R++I.
$#ird! the e-ident -oid in current statutes and re&ulations as to the
relations amon& the +IR, as ta= collector of the National
Mo-ernmentO the +.), as re&ulator of the banksO and the )2IC, as the
recei-er and li0uidator of banks ordered closed b% the +.), is not for
this Court to fill in. It is up to the le&islature to address the matter
throu&h appropriate le&islation, and to the e=ecuti-e to pro-ide the
re&ulations for its implementation.
It is for these reasons that the R3C committed &ra-e abuse of
discretion, and committed patent error, in orderin& the )2IC, as the
li0uidator of R++I, to first secure a ta= clearance from the
appropriate +IR Re&ional 4ffice, and holdin& in abe%ance the
appro-al of the )ro>ect of 2istribution of the assets of the R++I b%
-irtue thereof.
5lthou&h this Court rules in fa-or of )2IC, in the sense that a ta=
clearance is not a prere0uisite to the appro-al of the )ro>ect of
2istribution of the assets of R++I, it cannot uphold its ar&ument that
the .pec. )roc. No. #1!.)!6 is summar% in nature.
.ection ((d) of the Ne, Central +ank 5ct &i-es the /onetar%
+oard of the +.) the po,er to, summaril% and ,ithout need for prior
hearin&, &orbid a bank or 0uasi!bank from doin& business in the
)hilippines and desi&natin& the )2IC as recei-er of the bankin&
institution. It bears to emphasi8e that? (1) the po,er is &ranted to the
/onetar% +oard of the +.)O and (") ,hat is summar% in nature is the
po,er of the /onetar% +oard of the +.) to forbid or stop a bank or
0uasi!bank from doin& further business.
4nce li0uidation proceedin&s are instituted before the appropriate
trial court, and the trial court assumes >urisdiction o-er the )etition,
then the proceedin&s take a different character. .pec. )roc. No. #1!
.)!6 is the li0uidation proceedin&s initiated b% the )2IC before
the R3C. Li0uidation proceedin&s ha-e been described in detail in
the case of Paci&ic Ban-ing Cor%oration E+%oyeesK (rganiJation
(PaBCE() 0. Court o& A%%eas!
"'
to ,it V
E5F li0uidation proceedin& resembles the proceedin& for the
settlement of estate of deceased persons under Rules <( to
#1 of the Rules of Court. 3he t,o ha-e a common purpose?
the determination of all the assets and the pa%ment of all the
debts and liabilities of the insol-ent corporation or the estate.
3he Li0uidator and the administrator or e=ecutor are both
char&ed ,ith the assets for the benefit of the claimants. In
both instances, the liabilit% of the corporation and the estate
is not disputed. The #ourt0s #on#ern is ith the de#laration
of #reditors and their rights and the determination of their
order of pa!ment
= = = =
5 li0uidation proceedin& is a sin&le proceedin& ,hich
consists of a number of cases properl% classified as Aclaims.A
It is basicall% a t,o!phased proceedin&. 3he first phase is
concerned ,ith the appro-al and disappro-al of claims.
7pon the appro-al of the petition seekin& the assistance of
the proper court in the li0uidation of a closed entit%, all
mone% claims a&ainst the bank are re0uired to be filed ,ith
the li0uidation court. 3his phase ma% end ,ith the
declaration b% the li0uidation court that the claim is not
proper or ,ithout basis. 4n the other hand, it ma% also end
,ith the li0uidation court allo,in& the claim. In the latter
case, the claim shall be classified ,hether it is ordinar% or
preferred, and thereafter included Li0uidator. In either case,
the order allo,in& or disallo,in& a particular claim is final
order, and ma% be appealed b% the part% a&&rie-ed thereb%.
3he se#ond phase in-ol-es the appro-al b% the Court of the
distribution plan prepared b% the dul% appointed li0uidator.
3he distribution plan specifies in detail the total amount
a-ailable for distribution to creditors ,hose claim ,ere
earlier allo,ed. 3he 4rder finall% disposes of the issue of
ho, much propert% is a-ailable for disposal. /oreo-er, it
ushers in the final phase of the li0uidation proceedin& !
pa%ment of all allo,ed claims in accordance ,ith the order
of le&al priorit% and the appro-ed distribution plan.
= = = =
5 li0uidation proceedin& is commenced b% the filin& of a
sin&le petition b% the .olicitor Meneral ,ith a court of
competent >urisdiction entitled, A)etition for 5ssistance in
the Li0uidation of e.&., )acific +ankin& Corporation.A All
#laims a&ainst the insol-ent are re0uired to be filed ,ith the
li0uidation court. 5lthou&h the claims are litigated in the
same proceedin&, the treatment is indi-idual. Cach claim is
heard separatel%. 5nd the 4rder issued relati-e to a particular
claim applies onl% to said claim, lea-in& the other claims
unaffected, as each claim is considered separate and distinct
from the others. = = = ECmphases supplied.F
Irrefra&abl%, li0uidation proceedin&s cannot be summar% in nature. It
re0uires the holdin& of hearin&s and presentation of e-idence of the
parties concerned, i.e.! creditors ,ho must pro-e and substantiate
their claims, and the li0uidator disputin& the same. It also allo,s for
multiple appeals, so that each creditor ma% appeal a final order
rendered a&ainst its claim. Bence, li0uidation proceedin&s ma% -er%
,ell be hi&hl%!contested and dra,n!out, because, at the end of it all,
all claims a&ainst the corporation under&oin& liti&ation must be
settled definiti-el% and its assets properl% disposed off.
>HERE1ORE, in -ie, of the fore&oin&, this Court rules as follo,s
V
(a) 3he instant )etition is GRANTE, and the 4rders, dated 1<
1anuar% "( and 1( /a% "(, of the R3C, sittin& as the
Li0uidation Court of the closed R++I, in .pec. )roc. No. #1!.)!
6, are N0LLI1IE, and SET ASI,E for ha-in& been rendered
,ith &ra-e abuse of discretionO
(b) 3he )2IC, as li0uidator, is OR,ERE, to submit to the +IR the
final ta= return of R++I, in accordance ,ith the first para&raph of
.ection 5"(C), in connection ,ith .ection 5$, of the 3a= Code of
1##<O and
(c) 3he R3C is OR,ERE, to resume the li0uidation proceedin&s in
.pec. )roc. No. #1!.)!6 in order to determine all the claims of
the creditors, includin& that of the National Mo-ernment, as
determined and presented b% the +IRO and, pursuant to such
determination, and &uided accordin&l% b% the pro-isions of the Ci-il
Code on preference of credit, to re-ie, and appro-e the )ro>ect of
2istribution of the assets of R++I.
SO OR,ERE,.
G.R. No. L24620- Ar!6 C, 1990
1I,ELIT/ SAVINGS AN, &ORTGAGE BANK, petitioner,
-s.
HON. PE,RO ,. %EN(ON, !" 3!$ c**c!t4 *$ Pre$!+!"5 )7+5e
o8 t3e %o7rt o8 1!r$t I"$t*"ce o8 &*"!6* ;Br*"c3 EL< *"+
SPO0SES TI&OTEO AN, OLI&PIA SANTIAGO, respondents.
3he instant petition seeks the re-ie,, on pure 0uestions of la,, of the
decision rendered b% the Court of Dirst Instance of /anila (no,
Re&ional 3rial Court), +ranch SL, on 2ecember (, 1#<6 in Ci-il
Case No. '$',
1
orderin& herein petitioner to pa% pri-ate
respondents the follo,in& amounts?
(a) )#,. ,ith accrued interest in accordance
,ith C=hibits 5 and + until full% paidO
(b) )(,, as e=emplar% dama&esO and
(c) )1,. as and for attorne%6s fees.
3he pa%ment b% the defendant Didelit% .a-in&s and
/ort&a&e +ank of the aforementioned sums of
mone% shall be sub>ect to the +ank Li0uidation
Rules and Re&ulations embodied in the 4rder of the
Court of Dirst Instance of /anila, +ranch SIII, dated
4ctober (, 1#<", Ci-il Case No. '65, entitled, AIN
RC? Li0uidation of the Didelit% .a-in&s +ank -ersus
Central +ank of the )hilippines, Li0uidator.A
9ith costs a&ainst the defendant Didelit% .a-in&s
and /ort&a&e +ank.
.4 4R2CRC2.
)ri-ate respondents instituted this present action for a sum of mone%
,ith dama&es a&ainst Didelit% .a-in&s and /ort&a&e +ank, Central
+ank of the )hilippines, Cusebio Lope8, 1r., 5rsenio /. Lope8, .r.,
5rsenio .. Lope8, 1r., +ibiana C. Lacuna, 1ose C. /orales, Leon ).
Cusi, )ilar P. )obre!Cusi and Crnani 5. )acana. 4n motion of herein
pri-ate respondents, as plaintiffs, the amended complaint ,as
dismissed ,ithout pre>udice a&ainst defendants 1ose C. /orales,
Leon ). Cusi, )ilar P. )obre!Cusi and Crnani 5. )acana.
2
In its
aforesaid decision of 2ecember (, 1#<6, the court a .uo dismissed
the complaint as a&ainst defendants Central +ank of the )hilippines,
Cusebio Lope8, 1r., 5rsenio .. Lope8, 1r., 5rsenio /. Lope8, .r. and
+ibiana .. Lacuna.
+ack on 5u&ust 1, 1#<(, the plaintiffs (herein pri-ate respondents)
and the defendants Didelit% .a-in&s and /ort&a&e +ank (petitioner
herein), Central +ank of the )hilippines and +ibiana C. Lacuna had
filed in said case in the lo,er court a partial stipulation of facts, as
follo,s?
C4/C N49 herein plaintiffs, .)47.C.
3I/43C4 /. .5N3I5M4 and 4LI/)I5 R.
.5N3I5M4, herein defendants DI2CLI3P
.5*INM. 5N2 /4R3M5MC +5NQ and the
CCN3R5L +5NQ 4D 3BC )BILI))INC., and
herein defendant +I+I5N5 C. L5C7N5, throu&h
their respecti-e undersi&ned counsel, and before this
Bonorable Court most respectfull% submit the
follo,in& )artial .tipulation of Dacts?
1. 3hat herein plaintiffs are husband and ,ife, both
of le&al a&e, and presentl% residin& at No. $' C. de
la )a8 .treet, .ta. Clena, /arikina, Ri8alO
". 3hat herein defendant Didelit% .a-in&s and
/ort&a&e +ank is a corporation dul% or&ani8ed and
e=istin& under and b% -irtue of the la,s of the
)hilippinesO that defendant Central +ank of the
)hilippines is a corporation dul% or&ani8ed and
e=istin& under and b% -irtue of the la,s of the
)hilippinesO
(. 3hat herein defendant +ibiana C. Lacuna is of
le&al a&e and a resident of No. $" Cast La,in .treet,
)hilamlife Bomes, Tue8on Cit%, said defendant ,as
an assistant *ice!)resident of the defendant fidelit%
.a-in&s and /ort&a&e +ank,
$. 3hat sometime on /a% 16, 1#6', here in plaintiffs
deposited ,ith the defendant Didelit% .a-in&s +ank
the amount of DID3P 3B47.5N2 )C.4.
()5,.) under .a-in&s 5ccount No. 16!5(6O
that like,ise, sometime on 1ul% 6, 1#6', herein
plaintiff,! deposited ,ith the defendant Didelit%
.a-in&s and /ort&a&e +ank the amount of DID3P
3B47.5N2 )C.4. ()5,.) under Certificate
of 3ime 2eposit No. "1O that the a&&re&ate
amount of deposits of the plaintiffs ,ith the
defendant Didelit% .a-in&s and /ort&a&e +ank is
4NC B7N2RC2 3B47.5N2 )C.4.
()1,.)O
5. 3hat on Debruar% 1', 1#6#, the /onetar% +oard,
after findin& the report of the .uperintendent of
+anks, that the condition of the defendant Didelit%
.a-in&s and /ort&a&e +ank is one of insol-enc%, to
be true, issued Resolution No. (5 decidin&, amon&
others, as follo,s?
1) 3o forbid the Didelit% .a-in&s +ank to do business in the
)hilippinesO
") 3o instruct the 5ctin& .uperintendent of +anks to take char&e, in
the name of the /onetar% +oard, of the +ank6s assets
6. 3hat pursuant to the abo-e!cited instructions of
the /onetar% +oard, the .uperintendent of +anks
took char&e in the name of the /onetar% +oard, of
the assets of defendant Didelit% .a-in&s +ank on
Debruar% 1#, 1#6#O and that since that date up to this
date, the .uperintendent of +anks (no, desi&nated
as 2irector, 2epartment of Commercial and .a-in&s
+anks) has been takin& char&e of the assets of
defendant Didelit% .a-in&s and /ort&a&e +ankO
<. 3hat sometime on 4ctober 1, 1#6# the )hilippine
2eposit Insurance Corporation paid the plaintiffs the
amount of 3CN 3B47.5N2 )C.4. ()1,.)
on the a&&re&ate deposits of )1,. pursuant to
Republic 5ct No. 551<, thereb% lea-in& a deposit
balance of )#,.O
'. 3hat on 2ecember #, 1#6#, the /onetar% +oard
issued its Resolution No. "1"$ directin& the
li0uidation of the affairs of defendant Didelit%
.a-in&s +ankO
#. 3hat on 1anuar% "5, 1#<", the .olicitor Meneral of
the )hilippines filed a A)etition for 5ssistance and
.uper-ision in Li0uidationA of the affairs of the
defendant Didelit% .a-in&s and /ort&a&e +ank ,ith
the Court of Dirst Instance of /anila, assi&ned to
+ranch SIII and docketed as Ci-il Case No. '65O
1. 3hat on 4ctober (, 1#<", the Li0uidation Court
promul&ated the +ank Rules and Re&ulations to
&o-ern the li0uidation of the affairs of defendant
Didelit% .a-in&s and /ort&a&e +ank, prescribin& the
rules on the con-ersion of the +ank6s assets into
mone%, processin& of claims a&ainst it and the
manner and time of distributin& the proceeds from
the assets of the +ankO
11. 3hat the li0uidation proceedin&s has not been
terminated and is still pendin& up to the presentO
1". 3hat herein plaintiffs, throu&h their counsel, sent
demand letters to herein defendants, demandin& the
immediate pa%ment of the aforementioned sa-in&s
and time deposits.
9BCRCD4RC, it is respectfull% pra%ed that the
fore&oin& )artial .tipulation of Dacts be appro-ed b%
this Bonorable Court, ,ithout pre>udice to the
presentation of additional documentar% or
testimonial e-idence b% herein parties.
/anila, )hilippines, 5u&ust 1, 1#<(.
3
5ssi&nin& error in the >ud&ment of the lo,er court 0uoted ab
antecedents, petitioner raises t,o 0uestions of la,, to ,it?
1. 9hether or not an insol-ent bank like the Didelit% .a-in&s and
/ort&a&e +ank ma% be ad>ud&ed to pa% interest on unpaid deposits
e-en after its closure b% the Central +ank b% reason of insol-enc%
,ithout -iolatin& the pro-isions of the Ci-il Code on preference of
creditsO and
". 9hether or not an insol-ent bank like the Didelit% .a-in&s and
/ort&a&e +ank ma% be ad>ud&ed to pa% moral and e=emplar%
dama&es, attorne%6s fees and costs ,hen the insol-enc% is caused b
the anomalous real estate transactions ,ithout -iolatin& the
pro-isions of the Ci-il Code on preference of credits.
3here is merit in the petition.
It is settled >urisprudence that a bankin& institution ,hich has been
declared insol-ent and subse0uentl% ordered closed b% the Central
+ank of the )hilippines cannot be held liable to pa% interest on bank
deposits ,hich accrued durin& the period ,hen the bank is actuall%
closed and non!operational.
In $#e (0erseas Ban- o& Mania 0s. Court o& A%%eas and $ony
D. $a%ia!
4
,e held that?
It is a matter of common kno,led&e, ,hich 9e take
>udicial notice of, that ,hat enables a bank to pa%
stipulated interest on mone% deposited ,ith it is that
thru the other aspects of its operation it is able to
&enerate funds to co-er the pa%ment of such interest.
7nless a bank can lend mone%, en&a&e in
international transactions, ac0uire foreclosed
mort&a&ed properties or their proceeds and &enerall%
en&a&e in other bankin& and financin& acti-ities
from ,hich it can deri-e income, it is inconcei-able
ho, it can carr% on as a depositor% obli&ated to pa%
stipulated interest. Con-entional ,isdom dictates
this ine=orable fair and >ust conclusion. 5nd it can
be said that all ,ho deposit mone% in banks are
a,are of such a simple economic proposition.
Conse0uentl%, it should be deemed read into e-er%
contract of deposit ,ith a bank that the obli&ation to
pa% interest on the deposit ceases the moment the
operation of the bank is completel% suspended b%
the dul% constituted authorit%, the Central +ank.
3his ,as reiterated in the subse0uent case of $#e (0erseas Ban- o&
Mania 0s. $#e 1on. Court o& A%%eas and >uian R. Cordero.
C
and
in the recent cases of Integrated Reaty Cor%oration! et
a. 0s. P#ii%%ine "ationa Ban-! et a. and the (0erseas Ban- o&
Mania 0s. Court o& a%%eas! et a.
1
Drom the aforecited authorities, it is manifest that petitioner cannot
be held liable for interest on bank deposits ,hich accrued from the
time it ,as prohibited b% the Central +ank to continue ,ith its
bankin& operations, that is, ,hen Resolution No. (5 to that effect
,as issued on Debruar% 1', 1#6#.
3he order, therefore, of the Central +ank as recei-erIli0uidator of
petitioner bank allo,in& the claims of depositors and creditors to
earn interest up to the date of its closure on Debruar% 1', 1#6#,
.
in
line ,ith the doctrine laid do,n in the >urisprudence abo-e cited.
5lthou&h petitioner6s formulation of the second issue that it poses is
sli&htl% inaccurate and defecti-e, ,e like,ise find the a,ards of
moral and e=emplar% dama&es and attorne%6s fees to be erroneous.
3he trial court found, and it is not disputed, that there ,as no fraud
or bad faith on the part of petitioner bank and the other defendants in
acceptin& the deposits of pri-ate respondents. )etitioner bank could
not e-en be faulted in not immediatel% returnin& the amount claimed
b% pri-ate respondents considerin& that the demand to pa% ,as made
and Ci-il Case No. '$' ,as filed in the trial court se-eral months
after the Central +ank had ordered petitioner6s closure. +% that time,
petitioner bank ,as no lon&er in a position to compl% ,ith its
obli&ations to its creditors, includin& herein pri-ate respondents.
C-en the trial court had to admit that petitioner bank failed to pa%
pri-ate respondents because it ,as alread% insol-ent.
-
Durther, this
case is not one of the specified or analo&ous cases ,herein moral
dama&es ma% be reco-ered.
9
3here is no -alid basis for the a,ard of e=emplar% dama&es ,hich is
supposed to ser-e as a ,arnin& to other banks from dissipatin& their
assets in anomalous transactions. It ,as not pro-en b% pri-ate
respondents, and neither ,as there a cate&orical findin& made b% the
trial court, that petitioner bank actuall% en&a&ed in anomalous real
estate transactions. 3he same ,ere raised onl% durin& the testimon%
of the bank e=aminer of the Central +ank,
10
but no documentar%
e-idence ,as e-er presented in support thereof. Bence, it ,as error
for the lo,er court to impose e=emplar% dama&es upon petitioner
bank since, in contracts, such sanction re0uires that the offendin&
part% acted in a ,anton, fraudulent, reckless, oppressi-e or
male-olent manner.
11
Neither does this case present the situation
,here attorne%6s fees ma% be a,arded.
12
In the absence of fraud, bad faith, malice or ,anton attitude,
petitioner bank ma%, therefore, not be held responsible for dama&es
,hich ma% be reasonabl% attributed to the non!performance of the
obli&ation.
13
Conse0uentl%, ,e reiterate that under the premises and
pursuant to the aforementioned pro-isions of la,, it is apparent that
pri-ate respondents are not >ustifiabl% entitled to the pa%ment of
moral and e=emplar% dama&es and attorne%6s fees.
9hile ,e tend to a&ree ,ith petitioner bank that pri-ate respondents6
claims should he been filed in the li0uidation proceedin&s in Ci-il
Case No. '65, entitled AIn Re? Li0uidation of the Didelit% .a-in&s
and /ort&a&e +ank,A pendin& before +ranch SIII of the then Court
of Dirst Instance of /anila, ,e do not belie-e that the decision
rendered in the instant case ,ould be -iolati-e of the le&al pro-isions
on preference and concurrence of credits. 5s the trial court puts it?
. . . +ut this order of pa%ment should not be
understood as raisin& these deposits to the cate&or%
of preferred credits of the defendant Didelit% .a-in&s
and /ort&a&e +ank but shall be paid in accordance
,ith the +ank Li0uidation Rules and Re&ulations
embodied in the 4rder of the. Court of Dirst Instance
of /anila, +ranch SIII dated 4ctober (, 1#<" (C=h.
(). . . .
14
9BCRCD4RC, the >ud&ment appealed from is hereb% /42IDIC2.
)etitioner Didelit% .a-in&s and /ort&a&e +ank is hereb% declared
liable to pa% pri-ate respondents 3imoteo and 4limpia .antia&o the
sum of )#,., ,ith accrued interest in accordance ,ith the
terms of .a-in&s 5ccount 2eposit No. 16!5(6 (C=hibit 5) and
Certificate of 3ime 2eposit No. "1 (C=hibit +) until Debruar% 1',
1#6#. 3he a,ards for moral and e=emplar% dama&es, and attorne%6s
fees are hereb% 2CLC3C2. No costs.
.4 4R2CRC2.
G.R. No. 169334 SeteBber -, 2006
LETI%IA G. &IRAN,A, petitioner,
-s.
PHILIPPINE ,EPOSIT INS0RAN%E %ORPORATION,
BANGKO SENTRAL NG PILIPINAS *"+ PRI&E SAVINGS
BANK, Respondents.
3his )etition for Re-ie, on Certiorari under Rule $5 of the Rules of
Court seeks a re-ersal of the 2ecision
1
of the Court of 5ppeals dated
Debruar% "(, "5 in C5!M.R. C* No. <<556 ,hich re-ersed and set
aside the 2ecision
"
of the Re&ional 3rial Court of .antia&o Cit%,
+ranch (5, in Ci-il Case No. (5!"'$$ and the 1ul% <, "5
Resolution den%in& petitioner6s /otion for Reconsideration.
(
)etitioner Leticia M. /iranda ,as a depositor of )rime .a-in&s
+ank, .antia&o Cit% +ranch. 4n 1une (, 1###, she ,ithdre,
substantial amounts from her account, but instead of cash she opted
to be issued a crossed cashier6s check. .he ,as thus issued cashier6s
check no. 51' in the sum of )",5,. and cashier6s
check no. 51$ in the amount of )(,",..
$
)etitioner deposited the t,o checks into her account in another bank
on the same da%, ho,e-er, Bang-o Sentra ng Pii%inas (+.))
suspended the clearin& pri-ile&es of )rime .a-in&s +ank effecti-e
"? p.m. of 1une (, 1###. 3he t,o checks of petitioner ,ere
returned to her unpaid.
5
4n 1une $, 1###, )rime .a-in&s +ank declared a bank holida%. 4n
1anuar% <, ", the +.) placed )rime .a-in&s +ank under the
recei-ership of the )hilippine 2eposit Insurance Corporation
()2IC).
6
)etitioner filed a ci-il action for sum of mone% in the Re&ional 3rial
Court of .antia&o Cit%, Isabela to reco-er the funds from her unpaid
checks a&ainst )rime .a-in&s +ank, )2IC and the +.). 1ud&ment on
the pleadin&s ,as rendered on /arch 1, "1, the dispositi-e portion
of ,hich reads?
9BCRCD4RC, >ud&ment is rendered a&ainst defendants
namel%? )hilippine 2eposit Insurance Corporation, +an&ko
.entral n& )ilipinas and )rime +ank, to pa% >ointl% and
solidaril% the amount of )5,5",. to the plaintiff.
.4 4R2CRC2.
<
4n appeal, the Court of 5ppeals re-ersed the trial court and ruled in
fa-or of the )2IC and +.), dismissin& the case a&ainst them,
,ithout pre>udice to the ri&ht of petitioner to file her claim before the
court desi&nated to ad>udicate on claims a&ainst )rime .a-in&s
+ank. 3he dispositi-e portion of the appellate court6s decision dated
Debruar% "(, "5 thus reads?
9BCRCD4RC, the appeal is MR5N3C2 and the decision
appealed from is RC*CR.C2 and .C3 5.I2C and the case
is 2I./I..C2, ,ithout pre>udice to the ri&ht of /iranda to
file her claim before the court desi&nated to ad>udicate on
claims a&ainst )rime .a-in&s +ank.
.4 4R2CRC2.
'
)etitioner6s motion for reconsideration ,as denied,
#
hence, this
petition.
3he issues presented b% the petitioner before this Court can be
summari8ed as follo,s? (1) 9hether the t,o cashier6s checks operate
as an assi&nment of funds in the hands of the petitionerO (") 9hether
the claim lod&ed b% the petitioner is a disputed claim under .ection
( of Republic 5ct (R.5.) No. <65(, other,ise kno,n as the Ne,
Central +ank 5ct, and therefore, under the >urisdiction of the
li0uidation courtO and (() 9hether the respondents are solidaril%
liable to the petitioner.
)etitioner contends that she ceased to be a depositor upon
,ithdra,al of her deposit and the issuance of the t,o cashier6s
checks to her. 5s a holder in due course of the cashier6s checks as
defined under .ections 5" and 1#1 of the Ne&otiable Instruments
La,, she is an assi&nee of the funds of )rime .a-in&s +ank as
dra,er thereof and entitled to its immediate pa%ment.
1
)etitioner ne=t ar&ues that the present claim is not a disputed claim in
contemplation of .ection ( of the Ne, Central +ank 5ct. .ince
disputed claims refer to all claims, ,hether the% be a&ainst the assets
of the insol-ent bank, for specific performance, breach of contract, or
dama&es, it is manifest that petitioner6s claim cannot fall ,ithin the
pur-ie, of a disputed claim because she is reco-erin& assi&ned funds
,hich are se&re&ated monies of )rime .a-in&s +ank.
11
)etitioner further states that b% the mere issuance of the cashier6s
check, the funds represented b% the check are transferred from the
credit of the maker to that of the pa%ee or holder. Bence, petitioner
alle&es that she cannot be placed on the same footin& ,ith the
ordinar% creditors of the bank because .ection ( of R.5. No. <65(
is for e0ualit% amon& creditors. .he a-ers that she is not a creditor
thus is entitled to the immediate pa%ment of her claim, pursuant to
.ection 1'# of the Ne&otiable Instruments La, and e=istin&
>urisprudence. .he ar&ues that puttin& her on e0ual footin& ,ith
ordinar% creditors, ,ould contra-ene the pro-isions of the
Ne&otiable Instruments La, and ,ould &reatl% diminish her ri&hts as
a holder in due course of said t,o cashier6s checks.
1"
)etitioner also ar&ues that respondents )2IC and +.) contrar% to
.ections 1'5 and 1'# of the Ne&otiable Instruments La, ha-e
caused dama&e to the petitioner and should be held solidaril% liable
b% indemnif%in& the petitioner for the -alue of the t,o cashier6s
checks.
1(
Respondents, on the other hand, state that the mere issuance of the
cashier6s checks did not operate as assi&nment of funds in fa-or of
the petitioner. 3he% ar&ue that e-en prior to the issuance of the
cashier6s checks, the bank ,as alread% cash!strapped, ,hich ne&ates
petitioner6s claim that there ,as an assi&nment of funds in her
fa-or.
1$
3here can be no assi&nment of funds ,hen there is no funds
to speak of in the first place.
3he% like,ise ar&ue that the cashier6s checks issued to petitioner
,ere not certified but crossed, hence, there ,as no assi&nment of
funds made b% the cashier or mana&er of respondent )rime .a-in&s
+ank!.antia&o Cit% +ranch as it had insufficient funds to meet the
said checks either in its cash -ault or ,ith respondent +.) to clear
the said checks.
15
Respondents ar&ue that the instant case in-ol-es a disputed claim of
sum of mone% a&ainst a closed financial institution. .ections ( and
(1 of R.5. No. <65(, e=clusi-el% -ests the authorit% to assess,
e-aluate and determine the condition of an% bank ,ith the +.),
,hile the )2IC has the primar% responsibilit% of actin& as recei-er or
li0uidator of the closed financial institution.
16
.ince the relationship
bet,een petitioner and )rime .a-in&s +ank is one of creditor and
debtor, petitioner should file her claim ,ith the li0uidation court
constituted precisel% for purposes of ad>udicatin& claims a&ainst the
bank in accordance ,ith the rules on concurrence and preference of
credits.
1<
Respondent )2IC alle&es that it ,as impleaded in its representati-e
capacit% as the recei-erIli0uidator of the closed institution, therefore,
it has no direct, personal and solidar% liabilit% for the pa%ment of the
t,o cashier6s checks. Its in-ol-ement came about onl% because a
bank under recei-ership or li0uidation cannot sue or be sued e=cept
throu&h its recei-er or li0uidator.
1'
Respondent +.) also insists that not bein& a part% to the said checks
nor for imposin& sanctions on co!respondent )rime .a-in&s +ank, is
not liable on the said crossed cashier6s checks.
1#
5nent the first issue, the t,o cashier6s checks issued b% )rime
.a-in&s +ank do not constitute an assi&nment of funds in the hands
of the petitioner as there ,ere no funds to speak of in the first place.
3he bank ,as financiall% insol-ent for sometime, e-en before the
issuance of the checks on 1une (, 1###. 5s the Court of 5ppeals
correctl% ruled, the issuance of the cashier6s checks to petitioner did
not constitute an assi&nment of funds, of ,hich there ,as practicall%
none at the time these ,ere issued, as the bank ,as in dire financial
straits for some time.
"
5s re&ards the second issue, the claim lod&ed b% the petitioner
0ualifies as a disputed claim sub>ect to the >urisdiction of the
li0uidation court. Re&ular courts do not ha-e >urisdiction o-er
actions filed b% claimants a&ainst an insol-ent bank, unless there is a
clear sho,in& that the action taken b% the +.), throu&h the /onetar%
+oard in the closure of financial institutions ,as in e=cess of
>urisdiction, or ,ith &ra-e abuse of discretion.
3he po,er and authorit% of the /onetar% +oard to close banks and
li0uidate them thereafter ,hen public interest so re0uires is an
e=ercise of the police po,er of the .tate. )olice po,er, ho,e-er, is
sub>ect to >udicial in0uir%. It ma% not be e=ercised arbitraril% or
unreasonabl% and could be set aside if it is either capricious,
discriminator%, ,himsical, arbitrar%, un>ust, or is tantamount to a
denial of due process and e0ual protection clauses of the
Constitution.
"1
A2isputed claimsA refer to all claims, ,hether the% be a&ainst the
assets of the insol-ent bank, for specific performance, breach of
contract, dama&es, or ,hate-er.
""
)etitioner6s claim ,hich in-ol-ed
the pa%ment of the t,o cashier6s checks that ,ere not honored b%
)rime .a-in&s +ank due to its closure falls ,ithin the ambit of a
claim a&ainst the assets of the insol-ent bank. 3he issuance of the
cashier6s checks b% )rime .a-in&s +ank to the petitioner created a
debtorIcreditor relationship bet,een them. 3his disputed claim
should therefore be lod&ed in the li0uidation proceedin&s b% the
petitioner as creditor, since the closure of )rime .a-in&s +ank has
rendered all claims subsistin& at that time moot ,hich can best be
threshed out b% the li0uidation court and not the re&ular courts.
It is ,ell!settled in both la, and >urisprudence that the Central
/onetar% 5uthorit%, throu&h the /onetar% +oard, is -ested ,ith
e=clusi-e authorit% to assess, e-aluate and determine the condition of
an% bank, and findin& such condition to be one of insol-enc%, or that
its continuance in business ,ould in-ol-e a probable loss to its
depositors or creditors, forbid bank or non!bank financial institution
to do business in the )hilippinesO and shall desi&nate an official of
the +.) or other competent person as recei-er to immediatel% take
char&e of its assets and liabilities.
"(
In Centra Ban- o& t#e P#ii%%ines 0. De a CruJ,
"$
,e held that the
actions of the /onetar% +oard in proceedin&s on insol-enc% are
e=plicitl% declared b% la, to be Afinal and e=ecutor%.A 3he% ma% not
be set aside, or restrained, or en>oined b% the courts, e=cept upon
Acon-incin& proof that the action is plainl% arbitrar% and made in bad
faith.
Bence, as clearl% laid do,n in (ng 0. Court o& A%%eas,
"5
the
rationale behind >udicial li0uidation is intended to pre-ent
multiplicit% of actions a&ainst the insol-ent bank. It is a pra&matic
arran&ement desi&ned to establish due process and orderliness in the
li0uidation of the bank, to ob-iate the proliferation of liti&ations and
to a-oid in>ustice and arbitrariness. 3he la,makin& bod%
contemplated that for con-enience, onl% one court, if possible,
should pass upon the claims a&ainst the insol-ent bank and that the
li0uidation court should assist the .uperintendent of +anks and
re&ulate his operations.
Re&ardin& the third issue, it is onl% )rime .a-in&s +ank that is liable
to pa% for the amount of the t,o cashier6s checks. .olidar% liabilit%
cannot attach to the +.), in its capacit% as &o-ernment re&ulator of
banks, and the )2IC as statutor% recei-er under R.5. No. <65(,
because the% are the principal &o-ernment a&encies mandated b% la,
to determine the financial -iabilit% of banks and 0uasi!banks, and
facilitate recei-ership and li0uidation of closed financial institutions,
upon a factual determination of the latter6s insol-enc%.
5s correctl% pointed out b% the Court of 5ppeals, the +.) should not
be held liable on the crossed cashier6s checks for it ,as not a part% to
the issuance of the sameO nor can it be held liable for imposin& the
sanctions on )rime .a-in&s +ank ,hich indirectl% affected /iranda,
since it is mandated under .ec. (< of R.5. No. <65( to act
accordin&l%.
"6
3he +.), throu&h the /onetar% +oard ,as ,ell ,ithin
its discretion to e=ercise this po,er &ranted b% la, to issue a
resolution suspendin& the interbank clearin& pri-ile&es of )rime
.a-in&s +ank, ha-in& made a factual determination that the bank had
deficient cash reser-es deposited before the +.). 3here is no
sho,in& that the +.) abused this discretionar% po,er conferred
upon it b% la,.
In addition, co!respondent )2IC ,as impleaded as a part%!liti&ant
onl% in its representati-e capacit% as the recei-erIli0uidator of )rime
.a-in&s +ank. +oth +.) and )2IC cannot therefore be held directl%
and solidaril% liable for the pa%ment of the t,o cashier6s checks. .ole
liabilit% rests ,ith )rime .a-in&s +ank.
In the absence of fraud, the purchase of a cashier6s check, like the
purchase of a draft on a correspondent bank, creates the relation of
creditor and debtor, not that of principal and a&ent, ,ith the result
that the purchaser or holder thereof is not entitled to a preference
o-er &eneral creditors in the assets of the bank issuin& the check,
,hen it fails before pa%ment of the check. 2oever3 in a situation
involving the element of fraud3 here a #ashier0s #he#k is
pur#hased from a bank at a time hen it is insolvent3 as its offi#ers
kno or are bound to kno b! the e4er#ise of reasonable diligen#e3
it has been held that the pur#hase is entitled to a preferen#e in the
assets of the bank on its li5uidation before the #he#k is paid.
"<
5s correctl% found b% the Court of 5ppeals?
)rime .a-in&s as a bank did not collapse o-erni&ht but ,as
hemorrha&in& and in financial e=tremis for some time, a fact
,hich could not ha-e &one unnoticed b% the bank officers.
3he% could not ha-e issued in &ood faith checks for the total
sum of )5,5",. kno,in& that the bank6s coffers could
not meet this.
"'
Clearl%, there ,as fraud or the intent to decei-e ,hen the t,o
cashier6s checks dated 1une (, 1### ,ere issued b% )rime .a-in&s
+ank to the petitioner.
In the distribution of assets of )rime .a-in&s +ank, .ection (1 of the
Ne, Central +ank 5ct ,hich pro-ides that AEiFn case of li0uidation
of a bank or 0uasi!bank, after pa%ment of the cost of proceedin&s,
includin& reasonable e=penses and fees of the recei-er to be allo,ed
b% the court, the recei-er shall pa% the debts of such institution,
under order of the court, in accordance ,ith the rules on concurrence
and preference of credit as pro-ided in the Ci-il Code,A should appl%.
>HERE1ORE, the petition is ,ENIE,. 3he 2ecision of the Court
of 5ppeals dated Debruar% "(, "5 and the Resolution dated 1ul% <,
"5, in C5!M.R. C* No. <<556, are A11IR&E, ,ith
the &O,I1I%ATION that petitioner Leticia M. /iranda is entitled
to a preference in the assets of )rime .a-in&s +ank in its li0uidation
for the amounts of )(,",. and )",5,., respecti-el%
stated in Cashier6s Check No. 51$ and 51' dated
1une (, 1### in the proceedin&s before the li0uidation court
desi&nated to ad>udicate on all claims a&ainst )rime .a-in&s +ank, in
accordance ,ith the rules on concurrence and preference of credits
as pro-ided in the Ci-il Code.
SO OR,ERE,.

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G.R. No.

130439 October 26, 1999

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