1. G.R. No.
o. 191424 August 7, 2013 31, 2008; and 3] take appropriate action necessary to address the violations/exceptions noted in the
ALFEO D. VIVAS, ON HIS BEHALF AND ON BEHALF OF THE SHAREHOLDERS OF EUROCREDIT
COMMUNITY BANK, PETITIONER,
vs.
THE MONETARY BOARD OF THE BANGKO SENTRAL NG PILIPINAS AND THE PHILIPPINE DEPOSIT
INSURANCE CORPORATION, RESPONDENTS.
DECISION
MENDOZA, J.:
This is a petition for prohibition with prayer for the issuance of a status quo ante order or writ of preliminary
injunction ordering the respondents to desist from closing EuroCredit Community Bank, Incorporated
(ECBI) and from pursuing the receivership thereof. The petition likewise prays that the management and
operation of ECBI be restored to its Board of Directors (BOD) and its officers.
The Facts
The Rural Bank of Faire, Incorporated (RBFI) was a duly registered rural banking institution with principal
office in Centro Sur, Sto. Niño, Cagayan. Record shows that the corporate life of RBFI expired on May 31,
2005.1 Notwithstanding, petitioner Alfeo D. Vivas (Vivas) and his principals acquired the controlling interest
in RBFI sometime in January 2006. At the initiative of Vivas and the new management team, an internal
audit was conducted on RBFI and results thereof highlighted the dismal operation of the rural bank. In view
of those findings, certain measures calculated to revitalize the bank were allegedly introduced.2 On
December 8, 2006, the Bangko Sentral ng Pilipinas (BSP) issued the Certificate of Authority extending the
corporate life of RBFI for another fifty (50) years. The BSP also approved the change of its corporate name
to EuroCredit Community Bank, Incorporated, as well as the increase in the number of the members of its
BOD, from five (5) to eleven (11).3
Pursuant to Section 28 of Republic Act (R.A.) No. 7653, otherwise known as The New Central Bank Act, the
Integrated Supervision Department II (ISD II) of the BSP conducted a general examination on ECBI with
the cut-off date of December 31, 2007. Shortly after the completion of the general examination, an exit
conference was held on March 27, 2008 at the BSP during which the BSP officials and examiners apprised
Vivas, the Chairman and President of ECBI, as well as the other bank officers and members of its BOD, of
the advance findings noted during the said examination. The ECBI submitted its comments on BSP’s
consolidated findings and risk asset classification through a letter, dated April 8, 2008.4
Sometime in April 2008, the examiners from the Department of Loans and Credit of the BSP arrived at the
ECBI and cancelled the rediscounting line of the bank. Vivas appealed the cancellation to BSP.5 Thereafter,
the Monetary Board (MB) issued Resolution No. 1255, dated September 25, 2008, placing ECBI under
Prompt Corrective Action (PCA) framework because of the following serious findings and supervisory
concerns noted during the general examination: 1] negative capital of ?14.674 million and capital adequacy
ratio of negative 18.42%; 2] CAMEL (Capital Asset Management Earnings Liquidity) composite rating of "2"
with a Management component rating of "1"; and 3] serious supervisory concerns particularly on activities
deemed unsafe or unsound.6 Vivas claimed that the BSP took the above courses of action due to the joint
influence exerted by a certain hostile shareholder and a former BSP examiner.7
Through its letter, dated September 30, 2008, the BSP furnished ECBI with a copy of the Report of
Examination (ROE) as of December 31, 2007. In addition, the BSP directed the bank’s BOD and senior
management to: 1] infuse fresh capital of ?22.643 million; 2] book the amount of ?28.563 million
representing unbooked valuation reserves on classified loans and other risks assets on or before October
examination.8
Vivas moved for a reconsideration of Resolution No. 1255 on the grounds of non-observance of due process
and arbitrariness. The ISD II, on several instances, had invited the BOD of ECBI to discuss matters
pertaining to the placement of the bank under PCA framework and other supervisory concerns before
making the appropriate recommendations to the MB. The proposed meeting, however, did not materialize
due to postponements sought by Vivas.9
In its letter, dated February 20, 2009, the BSP directed ECBI to explain why it transferred the majority
shares of RBFI without securing the prior approval of the MB in apparent violation of Subsection X126.2 of
the Manual of Regulation for Banks (MORB).10 Still in another letter,11 dated March 31, 2009, the ISD II
required ECBI to explain why it did not obtain the prior approval of the BSP anent the establishment and
operation of the bank’s sub-offices.
Also, the scheduled March 31, 2009 general examination of the books, records and general condition of
ECBI with the cut-off date of December 31, 2008, did not push through. According to Vivas, ECBI asked
for the deferment of the examination pending resolution of its appeal before the MB. Vivas believed that
he was being treated unfairly because the letter of authority to examine allegedly contained a clause which
pertained to the Anti-Money Laundering Law and the Bank Secrecy Act.12
The MB, on the other hand, posited that ECBI unjustly refused to allow the BSP examiners from examining
and inspecting its books and records, in violation of Sections 25 and 34 of R.A. No. 7653. In its letter, 13
dated May 8, 2009, the BSP informed ECBI that it was already due for another annual examination and
that the pendency of its appeal before the MB would not prevent the BSP from conducting another one as
mandated by Section 28 of R.A. No. 7653.
In view of ECBI’s refusal to comply with the required examination, the MB issued Resolution No. 726,14
dated May 14, 2009, imposing monetary penalty/fine on ECBI, and referred the matter to the Office of the
Special Investigation (OSI) for the filing of appropriate legal action. The BSP also wrote a letter,15 dated
May 26, 2009, advising ECBI to comply with MB Resolution No. 771, which essentially required the bank
to follow its directives. On May 28, 2009, the ISD II reiterated its demand upon the ECBI BOD to allow the
BSP examiners to conduct a general examination on June 3, 2009.16
In its June 2, 2009 Letter-Reply,17 ECBI asked for another deferment of the examination due to the
pendency of certain unresolved issues subject of its appeal before the MB, and because Vivas was then out
of the country. The ISD II denied ECBI’s request and ordered the general examination to proceed as
previously scheduled.18
Thereafter, the MB issued Resolution No. 823,19 dated June 4, 2009, approving the issuance of a cease and
desist order against ECBI, which enjoined it from pursuing certain acts and transactions that were
considered unsafe or unsound banking practices, and from doing such other acts or transactions
constituting fraud or might result in the dissipation of its assets.
On June 10, 2009, the OSI filed with the Department of Justice (DOJ) a complaint for Estafa Through
Falsification of Commercial Documents against certain officials and employees of ECBI. Meanwhile, the MB
issued Resolution No. 1164,20 dated August 13, 2009, denying the appeal of ECBI from Resolution No. 1255
which placed it under PCA framework. On November 18, 2009, the general examination of the books and
records of ECBI with the cut-off date of September 30, 2009, was commenced and ended in December
2009. Later, the BSP officials and examiners met with the representatives of ECBI, including Vivas, and
discussed their findings.21 On December 7, 2009, the ISD II reminded ECBI of the non-submission of its
financial audit reports for the years 2007 and 2008 with a warning that failure to submit those reports and
1
the written explanation for such omission shall result in the imposition of a monetary penalty.22 In a letter,
dated February 1, 2010, the ISD II informed ECBI of MB Resolution No. 1548 which denied its request for
reconsideration of Resolution No. 726.
On March 4, 2010, the MB issued Resolution No. 27623 placing ECBI under receivership in accordance with
the recommendation of the ISD II which reads:
On the basis of the examination findings as of 30 September 2009 as reported by the Integrated
Supervision Department (ISD) II, in its memorandum dated 17 February 2010, which findings showed that
the Eurocredit Community Bank, Inc. – a Rural Bank (Eurocredit Bank) (a) is unable to pay its liabilities as
they become due in the ordinary course of business; (b) has insufficient realizable assets to meet liabilities;
(c) cannot continue in business without involving probable losses to its depositors and creditors; and (d)
has willfully violated a cease and desist order of the Monetary Board for acts or transactions which are
considered unsafe and unsound banking practices and other acts or transactions constituting fraud or
dissipation of the assets of the institution, and considering the failure of the Board of Directors/management
of Eurocredit Bank to restore the bank’s financial health and viability despite considerable time given to
address the bank’s financial problems, and that the bank had been accorded due process, the Board, in
accordance with Section 30 of Republic Act No. 7653 (The New Central Bank Act), approved the
recommendation of ISD II as follows:
To prohibit the Eurocredit Bank from doing business in the Philippines and to place its assets and affairs
under receivership; and
To designate the Philippine Deposit Insurance Corporation as Receiver of the bank.
Assailing MB Resolution No. 276, Vivas filed this petition for prohibition before this Court, ascribing grave
abuse of discretion to the MB for prohibiting ECBI from continuing its banking business and for placing it
under receivership. The petitioner presents the following
ARGUMENTS:
(a)
It is grave abuse of discretion amounting to loss of jurisdiction to apply the general law embodied in Section
30 of the New Central Bank Act as opposed to the specific law embodied in Sections 11 and 14 of the Rural
Banks Act of 1992.
(b)
Even if it assumed that Section 30 of the New Central Bank Act is applicable, it is still the gravest abuse of
discretion amounting to lack or excess of jurisdiction to execute the law with manifest arbitrariness, abuse
of discretion, and bad faith, violation of constitutional rights and to further execute a mandate well in excess
of its parameters.
(c)
The power delegated in favor of the Bangko Sentral ng Pilipinas to place rural banks under receiverships is
unconstitutional for being a diminution or invasion of the powers of the Supreme Court, in violation of
Section 2, Article VIII of the Philippine Constitution.24
Vivas submits that the respondents committed grave abuse of discretion when they erroneously applied
Section 30 of R.A. No. 7653, instead of Sections 11 and 14 of the Rural Bank Act of 1992 or R.A. No. 7353.
He argues that despite the deficiencies, inadequacies and oversights in the conduct of the affairs of ECBI,
it has not committed any financial fraud and, hence, its placement under receivership was unwarranted
and improper. He posits that, instead, the BSP should have taken over the management of ECBI and
extended loans to the financially distrained bank pursuant to Sections 11 and 14 of R.A. No. 7353 because
the BSP’s power is limited only to supervision and management take-over of banks.
He contends that the implementation of the questioned resolution was tainted with arbitrariness and bad
faith, stressing that ECBI was placed under receivership without due and prior hearing in violation of his
and the bank’s right to due process. He adds that respondent PDIC actually closed ECBI even in the absence
of any directive to this effect. Lastly, Vivas assails the constitutionality of Section 30 of R.A. No. 7653
claiming that said provision vested upon the BSP the unbridled power to close and place under receivership
a hapless rural bank instead of aiding its financial needs. He is of the view that such power goes way
beyond its constitutional limitation and has transformed the BSP to a sovereign in its own "kingdom of
banks."25
The Court’s Ruling
The petition must fail.
Vivas Availed of the Wrong Remedy
To begin with, Vivas availed of the wrong remedy. The MB issued Resolution No. 276, dated March 4, 2010,
in the exercise of its power under R.A. No. 7653. Under Section 30 thereof, any act of the MB placing a
bank under conservatorship, receivership or liquidation may not be restrained or set aside except on a
petition for certiorari. Pertinent portions of R.A. 7653 read:
Section 30. –
x x x x.
The actions of the Monetary Board taken under this section or under Section 29 of this Act shall be final
and executory, and may not be restrained or set aside by the court except on petition for certiorari on the
ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to
amount to lack or excess of jurisdiction. The petition for certiorari may only be filed by the stockholders of
record representing the majority of the capital stock within ten (10) days from receipt by the board of
directors of the institution of the order directing receivership, liquidation or conservatorship.
x x x x. [Emphases supplied]
Prohibition is already unavailing
Granting that a petition for prohibition is allowed, it is already an ineffective remedy under the
circumstances obtaining. Prohibition or a "writ of prohibition" is that process by which a superior court
prevents inferior courts, tribunals, officers, or persons from usurping or exercising a jurisdiction with which
they have not been vested by law, and confines them to the exercise of those powers legally conferred. Its
office is to restrain subordinate courts, tribunals or persons from exercising jurisdiction over matters not
within its cognizance or exceeding its jurisdiction in matters of which it has cognizance.26 In our jurisdiction,
the rule on prohibition is enshrined in Section 2, Rule 65 of the Rules on Civil Procedure, to wit:
2
Sec. 2. Petition for prohibition - When the proceedings of any tribunal, corporation, board, officer or person,
whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no
appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that
the judgment be rendered commanding the respondent to desist from further proceedings in the action or
matter specified therein, or otherwise granting such incidental reliefs as the law and justice require.
x x x x.
Indeed, prohibition is a preventive remedy seeking that a judgment be rendered which would direct the
defendant to desist from continuing with the commission of an act perceived to be illegal.27 As a rule, the
proper function of a writ of prohibition is to prevent the doing of an act which is about to be done. It is not
intended to provide a remedy for acts already accomplished.28
Though couched in imprecise terms, this petition for prohibition apparently seeks to prevent the acts of
closing of ECBI and placing it under receivership. Resolution No. 276, however, had already been issued
by the MB and the closure of ECBI and its placement under receivership by the PDIC were already
accomplished. Apparently, the remedy of prohibition is no longer appropriate. Settled is the rule that
prohibition does not lie to restrain an act that is already a fait accompli.29
The Petition Should Have Been Filed in the CA
Even if treated as a petition for certiorari, the petition should have been filed with the CA. Section 4 of Rule
65 reads:
Section 4. When and where petition filed. — The petition shall be filed not later than sixty (60) days from
notice of the judgment, order or resolution. In case a motion for reconsideration or new trial is timely filed,
whether such motion is required or not, the sixty (60) day period shall be counted from notice of the denial
of said motion.
The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a lower court or
of a corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the
territorial area as defined by the Supreme Court. It may also be filed in the Court of Appeals whether or
not the same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate
jurisdiction. If it involves the acts or omissions of a quasi-judicial agency, unless otherwise provided by law
or these Rules, the petition shall be filed in and cognizable only by the Court of Appeals. [Emphases
supplied]
That the MB is a quasi-judicial agency was already settled and reiterated in the case of Bank of Commerce
v. Planters Development Bank And Bangko Sentral Ng Pilipinas.30
Doctrine of Hierarchy of Courts
Even in the absence of such provision, the petition is also dismissible because it simply ignored the doctrine
of hierarchy of courts. True, the Court, the CA and the RTC have original concurrent jurisdiction to issue
writs of certiorari, prohibition and mandamus. The concurrence of jurisdiction, however, does not grant the
party seeking any of the extraordinary writs the absolute freedom to file a petition in any court of his
choice. The petitioner has not advanced any special or important reason which would allow a direct resort
to this Court. Under the Rules of Court, a party may directly appeal to this Court only on pure questions of
law.31 In the case at bench, there are certainly factual issues as Vivas is questioning the findings of the
investigating team.
Strict observance of the policy of judicial hierarchy demands that where the issuance of the extraordinary
writs is also within the competence of the CA or the RTC, the special action for the obtainment of such writ
must be presented to either court. As a rule, the Court will not entertain direct resort to it unless the redress
desired cannot be obtained in the appropriate lower courts; or where exceptional and compelling
circumstances, such as cases of national interest and with serious implications, justify the availment of the
extraordinary remedy of writ of certiorari, prohibition, or mandamus calling for the exercise of its primary
jurisdiction.32 The judicial policy must be observed to prevent an imposition on the precious time and
attention of the Court.
The MB Committed No Grave Abuse of Discretion
In any event, no grave abuse of discretion can be attributed to the MB for the issuance of the assailed
Resolution No. 276.
Vivas insists that the circumstances of the case warrant the application of Section 11 of R.A. No. 7353,
which provides:
Sec. 11. The power to supervise the operation of any rural bank by the Monetary Board as herein indicated
shall consist in placing limits to the maximum credit allowed to any individual borrower; in prescribing the
interest rate, in determining the loan period and loan procedures, in indicating the manner in which
technical assistance shall be extended to rural banks, in imposing a uniform accounting system and manner
of keeping the accounts and records of rural banks; in instituting periodic surveys of loan and lending
procedures, audits, test-check of cash and other transactions of the rural banks; in conducting training
courses for personnel of rural banks; and, in general, in supervising the business operations of the rural
banks.
The Central Bank shall have the power to enforce the laws, orders, instructions, rules and regulations
promulgated by the Monetary Board, applicable to rural banks; to require rural banks, their directors,
officers and agents to conduct and manage the affairs of the rural banks in a lawful and orderly manner;
and, upon proof that the rural bank or its Board of Directors, or officers are conducting and managing the
affairs of the bank in a manner contrary to laws, orders, instructions, rules and regulations promulgated
by the Monetary Board or in a manner substantially prejudicial to the interest of the Government, depositors
or creditors, to take over the management of such bank when specifically authorized to do so by the
Monetary Board after due hearing process until a new board of directors and officers are elected and
qualified without prejudice to the prosecution of the persons responsible for such violations under the
provisions of Sections 32, 33 and 34 of Republic Act No. 265, as amended.
x x x x.
The thrust of Vivas’ argument is that ECBI did not commit any financial fraud and, hence, its placement
under receivership was unwarranted and improper. He asserts that, instead, the BSP should have taken
over the management of ECBI and extended loans to the financially distrained bank pursuant to Sections
11 and 14 of R.A. No. 7353 because the BSP’s power is limited only to supervision and management take-
over of banks, and not receivership.
Vivas argues that implementation of the questioned resolution was tainted with arbitrariness and bad faith,
stressing that ECBI was placed under receivership without due and prior hearing, invoking Section 11 of
R.A. No. 7353 which states that the BSP may take over the management of a rural bank after due hearing.33
3
He adds that because R.A. No. 7353 is a special law, the same should prevail over R.A. No. 7653 which is
a general law.
The Court has taken this into account, but it appears from all over the records that ECBI was given every
opportunity to be heard and improve on its financial standing. The records disclose that BSP officials and
examiners met with the representatives of ECBI, including Vivas, and discussed their findings.34 There were
also reminders that ECBI submit its financial audit reports for the years 2007 and 2008 with a warning that
failure to submit them and a written explanation of such omission shall result in the imposition of a
monetary penalty.35 More importantly, ECBI was heard on its motion for reconsideration. For failure of ECBI
to comply, the MB came out with Resolution No. 1548 denying its request for reconsideration of Resolution
No. 726. Having been heard on its motion for reconsideration, ECBI cannot claim that it was deprived of
its right under the Rural Bank Act.
Close Now, Hear Later
At any rate, if circumstances warrant it, the MB may forbid a bank from doing business and place it under
receivership without prior notice and hearing. Section 30 of R.A. No. 7653 provides, viz:
Sec. 30. Proceedings in Receivership and Liquidation. – Whenever, upon report of the head of the
supervising or examining department, the Monetary Board finds that a bank or quasi-bank:
(a) is unable to pay its liabilities as they become due in the ordinary course of business: Provided,
That this shall not include inability to pay caused by extraordinary demands induced by financial
panic in the banking community;
(b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its liabilities;
or
(c) cannot continue in business without involving probable losses to its depositors or creditors; or
(d) has wilfully violated a cease and desist order under Section 37 that has become final, involving
acts or transactions which amount to fraud or a dissipation of the assets of the institution; in which
cases, the Monetary Board may summarily and without need for prior hearing forbid the institution
from doing business in the Philippines and designate the Philippine Deposit Insurance Corporation
as receiver of the banking institution. [Emphases supplied.]
x x x x.
Accordingly, there is no conflict which would call for the application of the doctrine that a special law should
prevail over a general law. It must be emphasized that R.A .No. 7653 is a later law and under said act, the
power of the MB over banks, including rural banks, was increased and expanded. The Court, in several
cases, upheld the power of the MB to take over banks without need for prior hearing. It is not necessary
inasmuch as the law entrusts to the MB the appreciation and determination of whether any or all of the
statutory grounds for the closure and receivership of the erring bank are present. The MB, under R.A. No.
7653, has been invested with more power of closure and placement of a bank under receivership for
insolvency or illiquidity, or because the bank’s continuance in business would probably result in the loss to
depositors or creditors. In the case of Bangko Sentral Ng Pilipinas Monetary Board v. Hon. Antonio-
Valenzuela,36 the Court reiterated the doctrine of "close now, hear later," stating that it was justified as a
measure for the protection of the public interest. Thus:
The "close now, hear later" doctrine has already been justified as a measure for the protection of the public
interest. Swift action is called for on the part of the BSP when it finds that a bank is in dire straits. Unless
adequate and determined efforts are taken by the government against distressed and mismanaged banks,
public faith in the banking system is certain to deteriorate to the prejudice of the national economy itself,
not to mention the losses suffered by the bank depositors, creditors, and stockholders, who all deserve the
protection of the government.37 [Emphasis supplied]
In Rural Bank of Buhi, Inc. v. Court of Appeals,38 the Court also wrote that
x x x due process does not necessarily require a prior hearing; a hearing or an opportunity to be heard
may be subsequent to the closure. One can just imagine the dire consequences of a prior hearing: bank
runs would be the order of the day, resulting in panic and hysteria. In the process, fortunes may be wiped
out and disillusionment will run the gamut of the entire banking community.39
The doctrine is founded on practical and legal considerations to obviate unwarranted dissipation of the
bank’s assets and as a valid exercise of police power to protect the depositors, creditors, stockholders, and
the general public.40 Swift, adequate and determined actions must be taken against financially distressed
and mismanaged banks by government agencies lest the public faith in the banking system deteriorate to
the prejudice of the national economy.
Accordingly, the MB can immediately implement its resolution prohibiting a banking institution to do
business in the Philippines and, thereafter, appoint the PDIC as receiver. The procedure for the involuntary
closure of a bank is summary and expeditious in nature. Such action of the MB shall be final and executory,
but may be later subjected to a judicial scrutiny via a petition for certiorari to be filed by the stockholders
of record of the bank representing a majority of the capital stock. Obviously, this procedure is designed to
protect the interest of all concerned, that is, the depositors, creditors and stockholders, the bank itself and
the general public. The protection afforded public interest warrants the exercise of a summary closure.
In the case at bench, the ISD II submitted its memorandum, dated February 17, 2010, containing the
findings noted during the general examination conducted on ECBI with the cut-off date of September 30,
2009. The memorandum underscored the inability of ECBI to pay its liabilities as they would fall due in the
usual course of its business, its liabilities being in excess of the assets held. Also, it was noted that ECBI’s
continued banking operation would most probably result in the incurrence of additional losses to the
prejudice of its depositors and creditors. On top of these, it was found that ECBI had willfully violated the
cease-and-desist order of the MB issued in its June 24, 2009 Resolution, and had disregarded the BSP rules
and directives. For said reasons, the MB was forced to issue the assailed Resolution No. 276 placing ECBI
under receivership. In addition, the MB stressed that it accorded ECBI ample time and opportunity to
address its monetary problem and to restore and improve its financial health and viability but it failed to
do so.
In light of the circumstances obtaining in this case, the application of the corrective measures enunciated
in Section 30 of R.A. No. 7653 was proper and justified. Management take-over under Section 11 of R.A.
No. 7353 was no longer feasible considering the financial quagmire that engulfed ECBI showing serious
conditions of insolvency and illiquidity. Besides, placing ECBI under receivership would effectively put a
stop to the further draining of its assets.
No Undue Delegation of Legislative Power
Lastly, the petitioner challenges the constitutionality of Section 30 of R.A. No. 7653, as the legislature
granted the MB a broad and unrestrained power to close and place a financially troubled bank under
receivership. He claims that the said provision was an undue delegation of legislative power. The contention
deserves scant consideration.
4
Preliminarily, Vivas’ attempt to assail the constitutionality of Section 30 of R.A. No. 7653 constitutes
collateral attack on the said provision of law. Nothing is more settled than the rule that the constitutionality
of a statute cannot be collaterally attacked as constitutionality issues must be pleaded directly and not
collaterally.41 A collateral attack on a presumably valid law is not permissible. Unless a law or rule is annulled
in a direct proceeding, the legal presumption of its validity stands.42

Be that as it may, there is no violation of the non-delegation of legislative power.1âwphi1 The rationale for
the constitutional proscription is that "legislative discretion as to the substantive contents of the law cannot
be delegated. What can be delegated is the discretion to determine how the law may be enforced, not what
the law shall be. The ascertainment of the latter subject is a prerogative of the legislature. This prerogative
cannot be abdicated or surrendered by the legislature to the delegate." 43

"There are two accepted tests to determine whether or not there is a valid delegation of legislative power,
viz, the completeness test and the sufficient standard test. Under the first test, the law must be complete
in all its terms and conditions when it leaves the legislature such that when it reaches the delegate the only
thing he will have to do is enforce it. Under the sufficient standard test, there must be adequate guidelines
or stations in the law to map out the boundaries of the delegate's authority and prevent the delegation
from running riot. Both tests are intended to prevent a total transference of legislative authority to the
delegate, who is not allowed to step into the shoes of the legislature and exercise a power essentially
legislative."44

In this case, under the two tests, there was no undue delegation of legislative authority in the issuance of
R.A. No. 7653. To address the growing concerns in the banking industry, the legislature has sufficiently
empowered the MB to effectively monitor and supervise banks and financial institutions and, if
circumstances warrant, to forbid them to do business, to take over their management or to place them
under receivership. The legislature has clearly spelled out the reasonable parameters of the power
entrusted to the MB and assigned to it only the manner of enforcing said power. In other words, the MB
was given a wide discretion and latitude only as to how the law should be implemented in order to attain
its objective of protecting the interest of the public, the banking industry and the economy.

WHEREFORE, the petition for prohibition is DENIED.

SO ORDERED.

5
 2. G.R. No. 135706 October 1, 2004
SPS. CESAR A. LARROBIS, JR. and VIRGINIA S. LARROBIS, petitioners,
vs.
PHILIPPINE VETERANS BANK, respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a petition for review of the decision of the Regional Trial Court (RTC), Cebu City, Branch 24,
dated April 17, 1998,1 and the order denying petitioner’s motion for reconsideration dated August 25, 1998,
raising pure questions of law.2
The following facts are uncontroverted:
On March 3, 1980, petitioner spouses contracted a monetary loan with respondent Philippine
Veterans Bank in the amount of ₱135,000.00, evidenced by a promissory note, due and
demandable on February 27, 1981, and secured by a Real Estate Mortgage executed on their lot
together with the improvements thereon.
On March 23, 1985, the respondent bank went bankrupt and was placed under
receivership/liquidation by the Central Bank from April 25, 1985 until August 1992.3
On August 23, 1985, the bank, through Francisco Go, sent the spouses a demand letter for "accounts
receivable in the total amount of ₱6,345.00 as of August 15, 1984,"4 which pertains to the insurance
premiums advanced by respondent bank over the mortgaged property of petitioners.5
On August 23, 1995, more than fourteen years from the time the loan became due and demandable,
respondent bank filed a petition for extrajudicial foreclosure of mortgage of petitioners’ property.6 On
October 18, 1995, the property was sold in a public auction by Sheriff Arthur Cabigon with Philippine
Veterans Bank as the lone bidder.
On April 26, 1996, petitioners filed a complaint with the RTC, Cebu City, to declare the extra-judicial
foreclosure and the subsequent sale thereof to respondent bank null and void.7
In the pre-trial conference, the parties agreed to limit the issue to whether or not the period within which
the bank was placed under receivership and liquidation was a fortuitous event which suspended the running
of the ten-year prescriptive period in bringing actions.8
On April 17, 1998, the RTC rendered its decision, the fallo of which reads:
WHEREFORE, premises considered judgment is hereby rendered dismissing the complaint for lack
of merit. Likewise the compulsory counterclaim of defendant is dismissed for being unmeritorious.9
It reasoned that:
…defendant bank was placed under receivership by the Central Bank from April 1985 until 1992.
The defendant bank was given authority by the Central Bank to operate as a private commercial
bank and became fully operational only on August 3, 1992. From April 1985 until July 1992,
defendant bank was restrained from doing its business. Doing business as construed by Justice
Laurel in 222 SCRA 131 refers to:
"….a continuity of commercial dealings and arrangements and contemplates to that
extent, the performance of acts or words or the exercise of some of the functions normally
incident to and in progressive prosecution of the purpose and object of its organization."
The defendant bank’s right to foreclose the mortgaged property prescribes in ten (10) years but
such period was interrupted when it was placed under receivership. Article 1154 of the New Civil
Code to this effect provides:
"The period during which the obligee was prevented by a fortuitous event from enforcing
his right is not reckoned against him."
In the case of Provident Savings Bank vs. Court of Appeals, 222 SCRA 131, the Supreme Court
said.
"Having arrived at the conclusion that a foreclosure is part of a bank’s activity which could not
have been pursued by the receiver then because of the circumstances discussed in the Central
Bank case, we are thus convinced that the prescriptive period was legally interrupted by fuerza
mayor in 1972 on account of the prohibition imposed by the Monetary Board against petitioner
from transacting business, until the directive of the Board was nullified in 1981. Indeed, the period
during which the obligee was prevented by a caso fortuito from enforcing his right is not reckoned
against him. (Art. 1154, NCC) When prescription is interrupted, all the benefits acquired so far
from the possession cease and when prescription starts anew, it will be entirely a new one. This
concept should not be equated with suspension where the past period is included in the
computation being added to the period after the prescription is presumed (4 Tolentino,
Commentaries and Jurisprudence on the Civil Code of the Philippines 1991 ed. pp. 18-19),
consequently, when the closure of the petitioner was set aside in 1981, the period of ten years
within which to foreclose under Art. 1142 of the N.C.C. began to run and, therefore, the action
filed on August 21, 1986 to compel petitioner to release the mortgage carried with it the mistaken
notion that petitioner’s own suit for foreclosure has prescribed."
Even assuming that the liquidation of defendant bank did not affect its right to foreclose the
plaintiffs’ mortgaged property, the questioned extrajudicial foreclosure was well within the ten
(10) year prescriptive period. It is noteworthy to mention at this point in time, that defendant
bank through authorized Deputy Francisco Go made the first extrajudicial demand to the plaintiffs
on August 1985. Then on March 24, 1995 defendant bank through its officer-in-charge Llanto
made the second extrajudicial demand. And we all know that a written extrajudicial demand wipes
out the period that has already elapsed and starts anew the prescriptive period. (Ledesma vs.
C.A., 224 SCRA 175.)10
Petitioners filed a motion for reconsideration which the RTC denied on August 25, 1998.11 Thus, the present
petition for review where petitioners claim that the RTC erred:
I
…IN RULING THAT THE PERIOD WITHIN WHICH RESPONDENT BANK WAS PUT UNDER
RECEIVERSHIP AND LIQUIDATION WAS A FORTUITOUS EVENT THAT INTERRUPTED THE RUNNING
OF THE PRESCRIPTIVE PERIOD.
6
 II
…IN RULING THAT THE WRITTEN EXTRA-JUDICIAL DEMAND MADE BY RESPONDENT ON
PETITIONERS WIPED OUT THE PERIOD THAT HAD ALREADY ELAPSED.
III
…IN DENYING PETITIONERS’ MOTION FOR RECONSIDERATION OF ITS HEREIN ASSAILED
DECISION.12
Petitioners argue that: since the extra-judicial foreclosure of the real estate mortgage was effected by the
bank on October 18, 1995, which was fourteen years from the date the obligation became due on February
27, 1981, said foreclosure and the subsequent sale at public auction should be set aside and declared null
and void ab initio since they are already barred by prescription; the court a quo erred in sustaining the
respondent’s theory that its having been placed under receivership by the Central Bank between April 1985
and August 1992 was a fortuitous event that interrupted the running of the prescriptive period;13 the court
a quo’s reliance on the case of Provident Savings Bank vs. Court of Appeals14 is misplaced since they have
different sets of facts; in the present case, a liquidator was duly appointed for respondent bank and there
was no judgment or court order that would legally or physically hinder or prohibit it from foreclosing
petitioners’ property; despite the absence of such legal or physical hindrance, respondent bank’s receiver
or liquidator failed to foreclose petitioners’ property and therefore such inaction should bind respondent
bank;15 foreclosure of mortgages is part of the receiver’s/liquidator’s duty of administering the bank’s assets
for the benefit of its depositors and creditors, thus, the ten-year prescriptive period which started on
February 27, 1981, was not interrupted by the time during which the respondent bank was placed under
receivership; and the Monetary Board’s prohibition from doing business should not be construed as barring
any and all business dealings and transactions by the bank, otherwise, the specific mandate to foreclose
mortgages under Sec. 29 of R.A. No. 265 as amended by Executive Order No. 65 would be rendered
nugatory.16 Said provision reads:
Section 29. Proceedings upon Insolvency – Whenever, upon examination by the head of the
appropriate supervising or examining department or his examiners or agents into the condition of
any bank or non-bank financial intermediary performing quasi-banking functions, it shall be
disclosed that the condition of the same is one of insolvency, or that its continuance in business
would involve probable loss to its depositors or creditors, it shall be the duty of the department
head concerned forthwith, in writing, to inform the Monetary Board of the facts. The Board may,
upon finding the statements of the department head to be true, forbid the institution to do business
in the Philippines and designate the official of the Central Bank or a person of recognized
competence in banking or finance, as receiver to immediately take charge its assets and liabilities,
as expeditiously as possible, collect and gather all the assets and administer the same for the
benefit of its creditors, and represent the bank personally or through counsel as he may retain in
all actions or proceedings for or against the institution, exercising all the powers necessary for
these purposes including, but not limited to, bringing and foreclosing mortgages in the name of
the bank.
Petitioners further contend that: the demand letter, dated March 24, 1995, was sent after the ten-year
prescriptive period, thus it cannot be deemed to have revived a period that has already elapsed; it is also
not one of the instances enumerated by Art. 1115 of the Civil Code when prescription is interrupted;17 and
the August 23, 1985 letter by Francisco Go demanding ₱6,345.00, refers to the insurance premium on the
house of petitioners, advanced by respondent bank, thus such demand letter referred to another obligation
and could not have the effect of interrupting the running of the prescriptive period in favor of herein
petitioners insofar as foreclosure of the mortgage is concerned.18
Petitioners then prayed that respondent bank be ordered to pay them ₱100,000.00 as moral damages,
₱50,000.00 as exemplary damages and ₱100,000.00 as attorney’s fees.19
Respondent for its part asserts that: the period within which it was placed under receivership and liquidation
was a fortuitous event that interrupted the running of the prescriptive period for the foreclosure of
petitioners’ mortgaged property; within such period, it was specifically restrained and immobilized from
doing business which includes foreclosure proceedings; the extra-judicial demand it made on March 24,
1995 wiped out the period that has already lapsed and started anew the prescriptive period; respondent
through its authorized deputy Francisco Go made the first extra-judicial demand on the petitioners on
August 23, 1985; while it is true that the first demand letter of August 1985 pertained to the insurance
premium advanced by it over the mortgaged property of petitioners, the same however formed part of the
latter’s total loan obligation with respondent under the mortgage instrument and therefore constitutes a
valid extra-judicial demand made within the prescriptive period.20
In their Reply, petitioners reiterate their earlier arguments and add that it was respondent that insured the
mortgaged property thus it should not pass the obligation to petitioners through the letter dated August
1985.21
To resolve this petition, two questions need to be answered: (1) Whether or not the period within which
the respondent bank was placed under receivership and liquidation proceedings may be considered a
fortuitous event which interrupted the running of the prescriptive period in bringing actions; and (2)
Whether or not the demand letter sent by respondent bank’s representative on August 23, 1985 is sufficient
to interrupt the running of the prescriptive period.
Anent the first issue, we answer in the negative.
One characteristic of a fortuitous event, in a legal sense and consequently in relations to contract, is that
its occurrence must be such as to render it impossible for a party to fulfill his obligation in a normal
manner.22
Respondent’s claims that because of a fortuitous event, it was not able to exercise its right to foreclose the
mortgage on petitioners’ property; and that since it was banned from pursuing its business and was placed
under receivership from April 25, 1985 until August 1992, it could not foreclose the mortgage on petitioners’
property within such period since foreclosure is embraced in the phrase "doing business," are without merit.
While it is true that foreclosure falls within the broad definition of "doing business," that is:
…a continuity of commercial dealings and arrangements and contemplates to that extent, the
performance of acts or words or the exercise of some of the functions normally incident to and in
progressive prosecution of the purpose and object of its organization.23
it should not be considered included, however, in the acts prohibited whenever banks are "prohibited from
doing business" during receivership and liquidation proceedings.
This we made clear in Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of the
Philippines24 where we explained that:
Section 29 of the Republic Act No. 265, as amended known as the Central Bank Act, provides that
when a bank is forbidden to do business in the Philippines and placed under receivership, the
person designated as receiver shall immediately take charge of the bank’s assets and liabilities,
as expeditiously as possible, collect and gather all the assets and administer the same for the
7
 benefit of its creditors, and represent the bank personally or through counsel as he may retain in
all actions or proceedings for or against the institution, exercising all the powers necessary for
these purposes including, but not limited to, bringing and foreclosing mortgages in the name of
the bank.25
This is consistent with the purpose of receivership proceedings, i.e., to receive collectibles and preserve
the assets of the bank in substitution of its former management, and prevent the dissipation of its assets
to the detriment of the creditors of the bank.26
When a bank is declared insolvent and placed under receivership, the Central Bank, through the Monetary
Board, determines whether to proceed with the liquidation or reorganization of the financially distressed
bank. A receiver, who concurrently represents the bank, then takes control and possession of its assets for
the benefit of the bank’s creditors. A liquidator meanwhile assumes the role of the receiver upon the
determination by the Monetary Board that the bank can no longer resume business. His task is to dispose
of all the assets of the bank and effect partial payments of the bank’s obligations in accordance with legal
priority. In both receivership and liquidation proceedings, the bank retains its juridical personality
notwithstanding the closure of its business and may even be sued as its corporate existence is assumed by
the receiver or liquidator. The receiver or liquidator meanwhile acts not only for the benefit of the bank,
but for its creditors as well.27
In Provident Savings Bank vs. Court of Appeals,28 we further stated that:
When a bank is prohibited from continuing to do business by the Central Bank and a receiver is
appointed for such bank, that bank would not be able to do new business, i.e., to grant new loans
or to accept new deposits. However, the receiver of the bank is in fact obliged to collect
debts owing to the bank, which debts form part of the assets of the bank. The receiver
must assemble the assets and pay the obligation of the bank under receivership, and
take steps to prevent dissipation of such assets. Accordingly, the receiver of the bank is
obliged to collect pre-existing debts due to the bank, and in connection therewith, to
foreclose mortgages securing such debts.29 (Emphasis supplied.)
It is true that we also held in said case that the period during which the bank was placed under receivership
was deemed fuerza mayor which validly interrupted the prescriptive period.30 This is being invoked by the
respondent and was used as basis by the trial court in its decision. Contrary to the position of the
respondent and court a quo however, such ruling does not find application in the case at bar.
A close scrutiny of the Provident case, shows that the Court arrived at said conclusion, which is an exception
to the general rule, due to the peculiar circumstances of Provident Savings Bank at the time. In said case,
we stated that:
Having arrived at the conclusion that a foreclosure is part of a bank’s business activity which
could not have been pursued by the receiver then because of the circumstances
discussed in the Central Bank case, we are thus convinced that the prescriptive period was
legally interrupted by fuerza mayor in 1972 on account of the prohibition imposed by the Monetary
Board against petitioner from transacting business, until the directive of the Board was nullified in
1981.31 (Emphasis supplied.)
Further examination of the Central Bank case reveals that the circumstances of Provident Savings Bank at
the time were peculiar because after the Monetary Board issued MB Resolution No. 1766 on September 15,
1972, prohibiting it from doing business in the Philippines, the bank’s majority stockholders immediately
went to the Court of First Instance of Manila, which prompted the trial court to issue its judgment dated
February 20, 1974, declaring null and void the resolution and ordering the Central Bank to desist from
liquidating Provident. The decision was appealed to and affirmed by this Court in 1981. Thus, the
Superintendent of Banks, which was instructed to take charge of the assets of the bank in the name of the
Monetary Board, had no power to act as a receiver of the bank and carry out the obligations specified in
Sec. 29 of the Central Bank Act.32
In this case, it is not disputed that Philippine Veterans Bank was placed under receivership by the Monetary
Board of the Central Bank by virtue of Resolution No. 364 on April 25, 1985, pursuant to Section 29 of the
Central Bank Act on insolvency of banks.33
Unlike Provident Savings Bank, there was no legal prohibition imposed upon herein respondent to deter its
receiver and liquidator from performing their obligations under the law. Thus, the ruling laid down in the
Provident case cannot apply in the case at bar.
There is also no truth to respondent’s claim that it could not continue doing business from the period of
April 1985 to August 1992, the time it was under receivership. As correctly pointed out by petitioner,
respondent was even able to send petitioners a demand letter, through Francisco Go, on August 23, 1985
for "accounts receivable in the total amount of ₱6,345.00 as of August 15, 1984" for the insurance
premiums advanced by respondent bank over the mortgaged property of petitioners. How it could send a
demand letter on unpaid insurance premiums and not foreclose the mortgage during the time it was
"prohibited from doing business" was not adequately explained by respondent.
Settled is the principle that a bank is bound by the acts, or failure to act of its receiver.34 As we held in
Philippine Veterans Bank vs. NLRC,35 a labor case which also involved respondent bank,
… all the acts of the receiver and liquidator pertain to petitioner, both having assumed petitioner’s
corporate existence. Petitioner cannot disclaim liability by arguing that the non-payment of
MOLINA’s just wages was committed by the liquidators during the liquidation period.36
However, the bank may go after the receiver who is liable to it for any culpable or negligent failure to
collect the assets of such bank and to safeguard its assets.37
Having reached the conclusion that the period within which respondent bank was placed under receivership
and liquidation proceedings does not constitute a fortuitous event which interrupted the prescriptive period
in bringing actions, we now turn to the second issue on whether or not the extra-judicial demand made by
respondent bank, through Francisco Go, on August 23, 1985 for the amount of ₱6,345.00, which pertained
to the insurance premiums advanced by the bank over the mortgaged property, constitutes a valid extra-
judicial demand which interrupted the running of the prescriptive period. Again, we answer this question
in the negative.
Prescription of actions is interrupted when they are filed before the court, when there is a written extra-
judicial demand by the creditors, and when there is any written acknowledgment of the debt by the
debtor.38
Respondent’s claim that while its first demand letter dated August 23, 1985 pertained to the insurance
premium it advanced over the mortgaged property of petitioners, the same formed part of the latter’s total
loan obligation with respondent under the mortgage instrument, and therefore, constitutes a valid extra-
judicial demand which interrupted the running of the prescriptive period, is not plausible.
The real estate mortgage signed by the petitioners expressly states that:
8
 This mortgage is constituted by the Mortgagor to secure the payment of the loan and/or credit
accommodation granted to the spouses Cesar A. Larrobis, Jr. and Virginia S. Larrobis in the
amount of ONE HUNDRED THIRTY FIVE THOUSAND (₱135,000.00) PESOS ONLY Philippine
Currency in favor of the herein Mortgagee.39

The promissory note, executed by the petitioners, also states that:

…FOR VALUE RECEIVED, I/WE, JOINTLY AND SEVERALLY, PROMISE TO PAY THE PHILIPPINE
VETERANS BANK, OR ORDER, AT ITS OFFICE AT CEBU CITY THE SUM OF ONE HUNDRED THIRTY
FIVE THOUSAND PESOS (P135,000.00), PHILIPPINE CURRENCY WITH INTEREST AT THE RATE OF
FOURTEEN PER CENT (14%) PER ANNUM FROM THIS DATE UNTIL FULLY PAID.40

Considering that the mortgage contract and the promissory note refer only to the loan of petitioners in the
amount of ₱135,000.00, we have no reason to hold that the insurance premiums, in the amount of
₱6,345.00, which was the subject of the August 1985 demand letter, should be considered as pertaining
to the entire obligation of petitioners.

In Quirino Gonzales Logging Concessionaire vs. Court of Appeals,41 we held that the notices of foreclosure
sent by the mortgagee to the mortgagor cannot be considered tantamount to written extrajudicial demands,
which may validly interrupt the running of the prescriptive period, where it does not appear from the
records that the notes are covered by the mortgage contract.42

In this case, it is clear that the advanced payment of the insurance premiums is not part of the mortgage
contract and the promissory note signed by petitioners. They pertain only to the amount of ₱135,000.00
which is the principal loan of petitioners plus interest. The arguments of respondent bank on this point
must therefore fail.

As to petitioners’ claim for damages, however, we find no sufficient basis to award the same. For moral
damages to be awarded, the claimant must satisfactorily prove the existence of the factual basis of the
damage and its causal relation to defendant’s acts.43 Exemplary damages meanwhile, which are imposed
as a deterrent against or as a negative incentive to curb socially deleterious actions, may be awarded only
after the claimant has proven that he is entitled to moral, temperate or compensatory damages.44 Finally,
as to attorney’s fees, it is demanded that there be factual, legal and equitable justification for its award.45
Since the bases for these claims were not adequately proven by the petitioners, we find no reason to grant
the same.

WHEREFORE, the decision of the Regional Trial Court, Cebu City, Branch 24, dated April 17, 1998, and
the order denying petitioners’ motion for reconsideration dated August 25, 1998 are hereby REVERSED
and SET ASIDE. The extra-judicial foreclosure of the real estate mortgage on October 18, 1995, is hereby
declared null and void and respondent is ordered to return to petitioners their owner’s duplicate certificate
of title.

Costs against respondent.

SO ORDERED.

9
 3. G.R. No. L-23307 June 30, 1967 In view of these developments, the intervenors-appellees filed a motion to dismiss before the lower court
claiming that the ouster of Pablo Roman and his family from the management of the Republic Bank effected
DAMASO P. PEREZ and REPUBLIC BANK, ETC., ET AL., petitioners-appellants, by the voting trust agreement rendered the mandamus case moot and academic. Respondents-appellees
vs. also filed motion to dismiss in which they again raised the impropriety of mandamus. Acting upon the two
MONETARY BOARD, THE SUPERINTENDENT OF BANKS, motions and the oppositions thereto filed by petitioners, the lower court granted the motions and dismissed
CENTRAL BANK OF THE PHILIPPINES and SECRETARY OF JUSTICE, respondents-appellees. the case. Hence, this appeal.
AURORA R. RECTO, MIGUEL CANIZARES, LEON ANCHETA, PABLO ROMAN,
VICTORIA B. ROMAN and NORBERTO J. QUISUMBING, intervenors-appellees. Appellants, contending that the ouster of Pablo Roman from Republic Bank's management and control has
not altered or rendered moot the issues in the case, argue that the remedy of mandamus lies3 to compel
C. D. Baizas and Associates and Halili, Bolinao and Associates for petitioners-appellants. respondents to prosecute the aforementioned Pablo Roman and company. Addressing Ourselves directly to
Natalio M. Balboa, F. E. Evangelista and Severo Malvar for respondent-appellee Central Bank. this issue raised on the propriety of the petition for mandamus, We rule that petitioners cannot seek by
Office of the Solicitor General Arturo A. Alafriz and Solicitor C. S. Gaddi for respondent-appellee Secretary mandamus to compel respondents to prosecute criminally those alleged violators of the banking laws.
of Justice. Although the Central Bank and its respondent officials may have the duty under the Central Bank Act and
N. J. Quisumbing and E. Quisumbing-Fernando for intervenors-appellees. the General Banking Act to cause the prosecution of those alleged violators, yet We find nothing in said
laws that imposes a clear, specific duty on the former to do the actual prosecution of the latter. The Central
Bank is a government corporation created principally to administer the monetary and banking system of
BENGZON, J.P., J.:
the Republic,4 not a prosecution agency5 like the fiscal's office. Being an artificial person, The Central Bank
is limited to its statutory powers and the nearest power to which prosecution of violators of banking laws
Petitioner-appellant Damaso P. Perez, for himself and in a derivative capacity on behalf of the Republic may be attributed is its power to sue and be sued.6 But this corporate power of litigation evidently refers
Bank, instituted mandamus proceedings in the Court of First Instance of Manila on June 23, 1962, against to civil cases only.1äwphï1.ñët
the Monetary Board, the Superintendent of Banks, the Central Bank and the Secretary of Justice. His object
was to compel these respondents to prosecute, among others, Pablo Roman and several other Republic
The Central Bank and its respondent officials have already done all they could, within the confines of their
Bank officials for violations of the General Banking Act (specifically secs. 76-78 and 83 thereof) and the
powers, to cause the prosecution of those persons denounced by Perez. Annexes 5 to 7-C CBP of
Central Bank Act, and for falsification of public or commercial documents in connection with certain alleged
respondents' answer and even petitioners' opposition to the first motion to dismiss7 show that the cases of
anomalous loans amounting to P1,303,400.00 authorized by Roman and the other bank officials.
the alleged anomalous loans had already been referred by the Central Bank to the special prosecutors of
the Department of Justice for criminal investigation and prosecution. For respondents to do the actual
Respondents assailed, in their respective answers, the propriety of mandamus. The Secretary of Justice prosecuting themselves, as petitioners would have it, would be tantamount to an ultra vires act already.
claimed that it was not their specific duty to prosecute the persons denounced by Perez. The Central Bank
and its respondent officials, on the other hand, averred that they had already done their duty under the
As for the Secretary of Justice, while he may have the power to prosecute — through the office of the
law by referring to the special prosecutors of the Department of Justice for criminal investigation and
Solicitor General — criminal cases, yet it is settled rule that mandamus will not lie to compel a prosecuting
prosecution those cases involving the alleged anomalous loans.1
officer to prosecute a criminal case in court.8

On July 10, 1962, respondents moved for the dismissal of the petition for lack of cause of action. Petitioners
opposed. The lower court denied the motion.
Subsequently, herein intervenors-appellees, as the incumbent directors of the Board of the Republic Bank,
filed motion to intervene in the proceedings. Petitioners opposed the motion but the lower court approved
the same.
On January 20, 1964, the Monetary Board of the Central Bank passed Resolution No. 81 granting the
request of Republic Bank for credit accommodations to cover the unusual withdrawal of deposits by its
depositors in view of the fact that said Bank was under investigation then by the authorities. The grant,
however, was conditioned upon the execution by the management and controlling stockholders of the
Republic Bank of a voting trust agreement in favor of a Board of Trustees to be chosen by the latter with
the approval of the Central Bank.
Pursuant to this resolution, Pablo Roman and his family, is the controlling stockholders of Republic Bank,
executed a voting trust agreement in favor of a board of trustees composed of former Chief Justice Ricardo
Paras, Hon. Miguel Cuaderno and Mr. Felix de la Costa. Subsequently, or on March 13, 1964, this agreement
was superseded by another one with the Philippine National Bank as the trustee.2
Moreover, it does not appear from the law that only the Central Bank or its respondent officials can cause
the prosecution of alleged violations of banking laws. Said violations constitute a public offense, the
prosecution of which is a matter of public interest and hence, anyone — even private individuals — can
denounce such violations before the prosecuting authorities. Since Perez himself could cause the filing of
criminal complaints against those allegedly involved in the anomalous loans, if any, then he has a plain,
adequate and speedy remedy in the ordinary course of law, which makes mandamus against respondents
improper.
But petitioners-appellants would insist that the impropriety of mandamus could no longer be raised before
the lower court for the second time since it had already been invoked in previous motion to dismiss which
was denied. This is untenable. The lower court was not estopped from changing its opinion while it was
under its jurisdiction to do so and on the same ground of lack of cause of action raised before, because the
former order was purely interlocutory and thus remained constantly subject to alteration, modification or
reversal by it before the rendition of final judgment on its merits.9
Wherefore, the order of dismissal appealed from is, as it is hereby, affirmed. Costs against petitioner-
appellant Perez. So ordered.1äwphï1.ñët

10
 4. [G.R. No. 161276. January 31, 2005] Respondents were the first to appeal via a petition for review, which was docketed in the Court of Appeals
as CA-G.R. SP No. 72234 and raffled off to its 17th Division.
BORLONGAN vs. REYES
For his part, petitioner, also thru a petition for review, questioned before the Court of Appeals the
THIRD DIVISION Ombudsman's absolution of the BSP Governor and its General Counsel from his affidavit-complaint, and
sought the imposition of a graver penalty against the herein respondents. Docketed as CA-G.R. SP No.
72270, petitioner's appeal landed to the 5th Division of the appellate court.
Gentlemen:

Initially, petitioner filed a motion to consolidate the two (2) cases. Later, however, he not only withdrew
Quoted hereunder, for your information, is a resolution of this Court dated JAN 31 2005.
said motion but even vigorously opposed the consolidation.

G.R. No. 161276 (Teodoro C. Borlongan vs. Alberto V. Reyes, Ma. Dolores B. Yuviengco, Candon B.
Unconsolidated, the two (2) cases proceeded separately. And, as it turned out, the two (2) divisions of the
Guerrero and Tomas S. Aure, Jr.)
Court of Appeals rendered conflicting decisions.

At bar is this petition for review on certiorari filed by petitioner Teodoro C. Borlongan, assailing the
Thus, in a decision dated 13 August 2003,[4] the 5th Division modified the questioned orders of the
decision dated 18 September 2003[1] of the Court of Appeals in CA-G.R. SP No. 72234, reversing and
Ombudsman by finding the herein respondents, including the BSP Governor, guilty of gross neglect of duty
setting aside the Orders dated 2 July 2002 and 30 July 2002 of the Ombudsman in OMB-ADM-0-00-0867
and imposing on each of them the penalty of one (1) year suspension without pay.
which respectively declared herein respondents guilty of simple neglect of duty, and denied both parties'
separate motions for reconsideration.
On the other hand, the 17th Division, in a decision dated 18 September 2003,[5]cralawreversed and
set aside the same assailed orders of the Ombudsman and dismissed the administrative complaints against
In a complaint-affidavit filed with Office of the Ombudsman and thereat docketed as OMB-ADM-0-00-0867,
the herein respondents.
petitioner Teodoro C. Borlongan, former president and chief executive officer of Union Bank, Inc. (UBI),
administratively charged herein respondent officials of the Bangko Sentral ng Pilipinas (BSP), for allegedly
falsifying statement of facts in the BSP Supervision and Examination Sector (SES) reports and Petitioner filed a motion for reconsideration, imploring the 17th Division to set aside its September 18,2003
tendering incorrect and inaccurate reports and opinions to conjure false grounds for the closure of UBI and decision for being inconsistent with the August 13, 2003 decision of the 5th Division in CA-G.R. SP No.
Urbancorp Development Bank and placing them under receivership, to the detriment of their shareholders, 72270.
officers and employees.
In a Resolution dated 17 December 2003,[6]cralaw the 17th Division denied petitioner's motion for
In an Order dated 2 July 2002, cralaw the Ombudsman found respondents guilty of simple neglect of
[2] reconsideration, and, in the process, castigated petitioner for his refusal to have the two (2) cases
duty and imposed upon them the penalty of one (1) month and one (1) day suspension without pay. In a consolidated:
subsequent Order dated 30 July 2002,[3]cralawthe Ombudsman denied both parties' motions for
reconsideration. Without a consolidation, there is no rule of law or jurisprudence that prevents us, the 17th Division, from
deciding SP 72234 according to our own independent judgment, any more than the 5th Division can be
Therefrom, both parties interposed separate appellate recourses to the Court of Appeals. prevented from ruling upon SP 72270 according to their own independent judgment.

11
The records show that respondent had, indeed, filed with us a motion to consolidate SP 72270 with our SP
72234. But for reasons only known to him, he withdrew the motion for consolidation. He even said that the
5th Division had eventually denied the consolidation of the case with us, again for reasons we do not know.
Under these circumstances, without a consolidation, both divisions will have to decide their own cases, and
any resulting conflict in the decisions on similar issues of fact and law will have to be resolved ultimately
by the Supreme Court as the supreme arbiter of all justiciable controversies in this jurisdiction.
But for the respondent to make it appear as if we are to blame for the conflict between the two divisions
of the Court, after the respondent refused to consolidate the cases before us, is absurd and comical. Absurd,
because he is saying in so many words that we should not exercise an independent judgment in our case
anymore after the 5th Division happened to decide its case ahead of us and comical, because he has reduced
the adjudicative process into a race between the cases. If we had only known that this was the kind of
ballgame he wanted us to observe, we would have considered our case submitted for decision a long time
ago, immediately after he filed his comment, and bar the parties from filling replies, memoranda and other
pleadings as a waste of our time. This is how things would turn out if we pursued his line of thinking ad
absurdum.
To repeat, the respondent refused to have his case in the 5th Division consolidated before us. If he is to
fault anyone now for the consequence of this non-consolidation, he should point all his fingers to himself.
Later, or on June 14, 2004, the former 5th Division of the Court of Appeals, this time acting as a Special
Division of Five in connection with the motions for reconsideration therein pending, came out with an
Amended Decision,[7]cralawamending the earlier decision of 12 August 2003 in CA-G.R. SP No. 72270 by
dismissing the administrative complaint against all the respondents therein. Petitioner elevated the same
Amended Decision to this Court via a petition for review on certiorari in G.R. No. 163765.
In a Resolution promulgated on July 26, 2004,[8]cralaw the Court, thru its Third Division, denied the petition
in G.R. No. 163765 "for failure of the petitioner to show that a reversible error had been committed by the
appellate court". In a subsequent Resolution promulgated on October 1, 2004, the Court denied petitioner's
motion for reconsideration with finality "as no substantial arguments were raised to warrant a
reconsideration thereof".
Meanwhile, on February 13, 2004, petitioner filed the instant petition for review on certiorari, this time
assailing the 18 September 2003 decision of the 17th Decision of the Court of Appeals in CA-G.R. SP No.
72234.
Perusal of the present petition reveals that it raises substantially the same issues already passed upon by
the two (2) Divisions of the Court of Appeals and by this Court, no less, in G.R. No. 163765.
Chanting the same tone, the recourse is unavailing.
In Philippine Retirement Authority vs. Rupa,[9]cralaw we laid down the standard definition of simple neglect
of duty, as a disregard of a duty resulting from carelessness or indifference.
Here, we find that neither gross nor simple neglect of duty characterized the acts of the respondents. The
subject SES reports prepared by respondents and submitted to the Monetary Board were anything but
haphazardly or negligently made. As it were, the reports were a compendium of long years of monitoring
by the BSP of a problem bank, and assembled over a period of 15 hours after the respondents were
instructed to do so. The data contained therein had been patiently collected and analyzed.
Record reveals that UBI was being monitored by BSP officials for years. Respondent Dolores Yuvienco had
supervised the bank directly since 1999 as Director of DCB II
UBI had since given up its status as an expanded commercial bank and reverted to an ordinary commercial
bank because it could not meet the P3.5 billion minimum capital requirement for a universal bank. For two
(2) months prior to its closure, Urban Bank had been besieged by liquidity problems, and its declaration of
a bank holiday on April 25 only confirmed its decreasing ability to meet obligations on time.
Section 30(a) of RA 7653, otherwise known as the New Central Bank Act, is relevant. Under that law, the
Monetary Board may execute measures such those taken in this case, summarily and without need of prior
hearing:
Sec. 30. Proceedings in Receivership and Liquidation. -Whenever, upon report of the head of the
supervising and examining department, the Monetary Board finds that the Bank or quasi-bank:
(a) is unable to pay its liabilities as they become due in the ordinary course of business:
Provided, that this shall not include inability to pay caused by extraordinary demands induced by financial
panic in the banking community;
(b) has insufficient realizable asset, as determined by the Bangko Sentral to meet its liabilities; or
(c) cannot continue in business without involving probable losses to its creditors; or
(d) has willfully violated a cease and desist order under Section 37 that has become final, involving acts
or transactions which amount to fraud or a dissipation of the assets of the institution; in which cases, the
Monetary Board may summarily and without need for prior hearing forbid the institution from
doing business in the Philippines and designate the Philippine Deposit Insurance Corporation as
receiver of the Banking institution. xxx. (Emphasis supplied)
12
Pertinent, too, is Section 53 of Republic Act No. 8791,[10]cralaw since it underscores the summary character
of the MB's initiative of placing a bank under receivership. It provides that in case a bank or quasi-bank
notifies the BSP or publicly announces a bank holiday, or in any manner suspends the payment of its
deposit liabilities continuously for more than 30 days, the MB may summarily and without need of prior
hearing close such banking institution and place it under receivership of the PDIC.
All told, we find that no reversible error was committed by the 17 th Division of Court of Appeals when it
reversed and set aside the July 2, 2002 and July 30, 2002 Orders of the Ombudsman in OMB-ADM-0-00-
0867.
WHEREFORE, the instant petition is hereby DENIED DUE COURSE.

This authority is beyond review by the courts except on a petition for certiorari. Here, it is worth to note SO ORDERED.
even the Ombudsman found significant evidence to rationalize the decision of the Monetary Board to place
UBI under receivership.

Likewise, we agree with the appellate court's 17th Division in its ratiocination that it is illogical to hold the
respondents administratively liable for the preparation of reports that are, in their nature, merely
recommendatory and have to be acted upon by superior officials. The reports were not the final action that
creates right and duties and affects the interest and fortunes of third parties. Courts do not interfere with
any administrative measure prior to its completion or finality, and when they do, what is actionable is not
the recommendation but the decision of the official with the competence under the law to issue it.[11]cralaw

The subject reports are only between the Monetary Board and the BSP officials who prepared and endorsed
them and may be rejected, modified or accepted by the Monetary Board. As far as this case is concerned,
the legal obligations of diligence and good faith that BSP officials owe to the public under Section 16 of the
New Central Act start with the official acts of the Monetary Board which, rightly or wrong, are the cause of
loss or injury to third parties, not any preparatory report or recommendation.

As earlier noted, UBI's own top management, specifically Bartolome III, its chairman of the Board, and the
petitioner himself, its president, continually provided the BSP the picture of the worsening situation of UBI
in the four (4) weeks from March 20, 2000 to April 25, 2000, leading to UBI's unilateral declaration of a
bank holiday on April 25, 2000.[12]cralaw Their constant reporting showed that UBI was "unable to pay its
liabilities as they become due in the ordinary course of business; (or that it) has insufficient realizable
assets, as determined by the Bangko Sentral, to meet its liabilities."[13]cralaw While other factors might
have weighed in the analysis of UBI's financial liquidity and in the preparation of the inevitable Supervisor
and Examination Sector (SES) reports, the MB considered the constant reports of UBI's own top
management as the best proof of its dire liquidity status.

Petitioner would have this Court review and reverse factual findings of the Court of Appeals. This, of course,
the Court cannot and will not do. Review of factual findings of the appellate court is not a function ordinarily
undertaken by this Court, the rule admitting only a few exceptions recognized in decisional law. The
principle is consistent with Rule 45 of the Rules of Court which categorically provides that a petition for
review on certiorari must raise "only questions of law which must be distinctly set forth" in the petition.
Even then, the review sought will be denied if the questions raised are "too unsubstantial to require
consideration" or if the Court is not convinced of the existence of "special and important reasons" to warrant
review, of which none exists in this case.

13
 5. G.R. No. 114870 May 26, 1995
MIGUELA R. VILLANUEVA, RICHARD R. VILLANUEVA, and MERCEDITA VILLANUEVA-TIRADOS,
petitioners,
vs.
COURT OF APPEALS, CENTRAL BANK OF THE PHILIPPINES, ILDEFONSO C. ONG, and PHILIPPINE
VETERANS BANK, respondents.
DAVIDE, JR., J.:
Do petitioners have a better right than private respondent Ildefonso Ong to purchase from the Philippine
Veterans Bank (PVB) the two parcels of land described as Lot No. 210-D-1 and Lot No. 210-D-2 situated
at Muntinglupa, Metro Manila, containing an area of 529 and 300 square meters, respectively? This is the
principal legal issue raised in this petition.
In its decision of 27 January 1994 in CA-G.R. CV No. 35890,1 the Court of Appeals held for Ong, while the
trial court, Branch 39 of the Regional Trial Court (RTC) of Manila, ruled for the petitioners in its joint decision
of 31 October 1991 in Civil Case No. 87-425502 and Sp. Proc. No. 85-32311.3
The operative antecedent facts are set forth in the challenged decision as follows:
The disputed lots were originally owned by the spouses Celestino Villanueva and Miguela Villanueva,
acquired by the latter during her husband's sojourn in the United States since 1968. Sometime in 1975,
Miguela Villanueva sought the help of one Jose Viudez, the then Officer-in-Charge of the PVB branch in
Makati if she could obtain a loan from said bank. Jose Viudez told Miguela Villanueva to surrender the titles
of said lots as collaterals. And to further facilitate a bigger loan, Viudez, in connivance with one Andres
Sebastian, swayed Miguela Villanueva to execute a deed of sale covering the two (2) disputed lots, which
she did but without the signature of her husband Celestino. Miguela Villanueva, however, never got the
loan she was expecting. Subsequent attempts to contact Jose Viudez proved futile, until Miguela Villanueva
thereafter found out that new titles over the two (2) lots were already issued in the name of the PVB. It
appeared upon inquiry from the Registry of Deeds that the original titles of these lots were canceled and
new ones were issued to Jose Viudez, which in turn were again canceled and new titles issued in favor of
Andres Sebastian, until finally new titles were issued in the name of PNB [should be PVB] after the lots
were foreclosed for failure to pay the loan granted in the name of Andres Sebastian.
Miguela Villanueva sought to repurchase the lots from the PVB after being informed that the lots were
about to be sold at auction. The PVB told her that she can redeem the lots for the price of P110,416.00.
Negotiations for the repurchase of the lots nevertheless were stalled by the filing of liquidation proceedings
against the PVB on August of 1985.
Plaintiff-appellant [Ong] on the other hand expounds on his claim over the disputed lots in this manner:
In October 1984, plaintiff-appellant offered to purchase two pieces of Land that had been acquired by PVB
through foreclosure. To back-up plaintiff-appellant's offer he deposited the sum of P10,000.00.
In 23 November 1984, while appellant was still abroad, PVB approved his subject offer under Board
Resolution No. 10901-84. Among the conditions imposed by PVB is that: "The purchase price shall be
P110,000.00 (Less deposit of P10,000.00) payable in cash within fifteen (15) days from receipt of approval
of the offer."
In mid-April 1985, appellant returned to the country. He immediately verified the status of his offer with
the PVB, now under the control of CB, where he was informed that the same had already been approved.
On 16 April 1985, appellant formally informed CB of his desire to pay the subject balance provided the
bank should execute in his favor the corresponding deed of conveyance. The letter was not answered.
Plaintiff-appellant sent follow-up Letters that went unheeded, the last of which was on 21 May 1987. On
26 May 1987, appellant's payment for the balance of the subject properties were accepted by CB under
Official Receipt #0816.
On 17 September 1987, plaintiff-appellant through his counsel, sent a letter to CB demanding for the latter
to execute the corresponding deed of conveyance in favor of appellant. CB did not bother to answer the
same. Hence, the instant case.
While appellant's action for specific performance against CB was pending, Miguela Villanueva and her
children filed their claims with the Liquidation court. (Appellant's Brief, pp. 3-4).4
From the pleadings, the following additional or amplificatory facts are established:
The efforts of Miguela Villanueva to reacquire the property began on 8 June 1983 when she offered to
purchase the lots for P60,000.00 with a 20%
downpayment and the balance payable in five years on a quarterly amortization basis.5
Her offer not having been accepted,6 Miguela Villanueva increased her bid to P70,000.00. It was only at
this time that she disclosed to the bank her private transactions with Jose Viudez.7
After this and her subsequent offers were rejected,8 Miguela sent her sealed bid of P110,417.00 pursuant
to the written advice of the vice president of the PVB.9
The PVB was placed under receivership pursuant to Monetary Board (MB) Resolution No. 334 dated 3 April
1985 and later, under liquidation pursuant to MB Resolution No. 612 dated 7 June 1985. Afterwards, a
petition for liquidation was filed with the RTC of Manila, which was docketed as Sp. Proc. No. 85-32311 and
assigned to Branch 39 of the said court.
On 26 May 1987, Ong tendered the sum of P100,000.00 representing the balance of the purchase price of
the litigated lots. 10 An employee of the PVB received the amount conditioned upon approval by the Central
Bank
liquidator. 11 Ong's demand for a deed of conveyance having gone unheeded, he filed on 23 October 1987
with the RTC of Manila an action for specific performance against the Central Bank.12 It was raffled to
Branch 47 thereof. Upon learning that the PVB had been placed under liquidation, the presiding judge of
Branch 47 ordered the transfer of the case to Branch 39, the liquidation court.13
On 15 June 1989, then Presiding Judge Enrique B. Inting issued an order allowing the purchase of the two
lots at the price of P150,000.00. 14 The Central Bank liquidator of the PVB moved for the reconsideration
of the order asserting that it is contrary to law as the disposal of the lots should be made through public
auction. 15
On 26 July 1989, Miguela Villanueva filed her claim with the liquidation court. She averred, among others,
that she is the lawful and registered owner of the subject lots which were mortgaged in favor of the PVB
thru the falsification committed by Jose Viudez, the manager of the PVB Makati Branch, in collusion with
Andres Sebastian; that upon discovering this fraudulent transaction, she offered to purchase the property
from the bank; and that she reported the matter to the PC/INP Criminal Investigation Service Command,
14
Camp Crame, and after investigation, the CIS officer recommended the filing of a complaint for estafa
through falsification of public documents against Jose Viudez and Andres Sebastian. She then asked that
the lots be excluded from the assets of the PVB and be conveyed back to her. 16 Later, in view of the death
of her husband, she amended her claim to include her children, herein petitioners Mercedita Villanueva-
Tirados and Richard Villanueva. 17
On 31 October 1991, the trial court rendered judgment 18 holding that while the board resolution approving
Ong's offer may have created in his favor a vested right which may be enforced against the PVB at the time
or against the liquidator after the bank was placed under liquidation proceedings, the said right was no
longer enforceable, as he failed to exercise it within the prescribed 15-day period. As to Miguela's claim,
the court ruled that the principle of estoppel bars her from questioning the transaction with Viudez and the
subsequent transactions because she was a co-participant thereto, though only with respect to her
undivided one-half (1/2) conjugal share in the disputed lots and her one-third (1/3) hereditary share in the
estate of her husband.
Nevertheless, the trial court allowed her to purchase the lots if only to restore their status as conjugal
properties. It further held that by reason of estoppel, the transactions having been perpetrated by a
responsible officer of the PVB, and for reasons of equity, the PVB should not be allowed to charge interest
on the price of the lots; hence, the purchase price should be the PVB's claim as of 29 August 1984 when it
considered the sealed bids, i.e., P110,416.20, which should be borne by Miguela Villanueva alone.
The dispositive portion of the decision of the trial court reads as follows:
WHEREFORE, judgment is hereby rendered as follows:
1. Setting aside the order of this court issued on June 15, 1989 under the caption Civil Case No. 87-42550
entitled "Ildefonso Ong vs. Central Bank of the Phils., et al.;
2. Dismissing the claim of Ildefonso Ong over the two parcels of land originally covered by TCT No. 438073
and 366364 in the names of Miguela Villanueva and Celestino Villanueva, respectively which are now
covered by TCT No. 115631 and 115632 in the name of the PVB;
3. Declaring the Deed of Absolute Sale bearing the signature of Miguela Villanueva and the falsified
signature of Celestino [sic] Viudez under date May 6, 1975 and all transactions and related documents
executed thereafter referring to the two lots covered by the above stated titles as null and void;
4. Ordering the Register of Deeds of Makati which has jurisdiction over the two parcels of land in question
to re-instate in his land records, TCT No. 438073 in the name of Miguela Villanueva and TCT No. 366364
in the name of Celestino Villanueva who were the registered owners thereof, and to cancel all subsequent
titles emanating therefrom; and
5. Ordering the Liquidator to reconvey the two lots described in TCT No. 115631 and 115632 and executing
the corresponding deed of conveyance of the said lots upon the payment of One Hundred Ten Thousand
Four Hundred Sixteen and 20/100 (P110,416.20) Pesos without interest and less the amount deposited by
the claimant, Miguela Villanueva in connection with the bidding where she had participated and conducted
by the PVB on August 29, 1984.
Cost against Ildefonso Ong and the PVB.
SO ORDERED. 19
Only Ong appealed the decision to the Court of Appeals. The appeal was docketed as CA-G.R. CV No.
35890. In its decision of 27 January 1994, the Court of Appeals reversed the decision of the trial court and
ruled as follows:
WHEREFORE, premises considered, the assailed decision is hereby REVERSED and SET ASIDE, and a new
one entered ordering the disputed-lots be awarded in favor of plaintiff-appellant Ildefonso Ong upon
defendant-appellee Central Bank's execution of the corresponding deed of sale in his favor. 20
In support thereof, the Court of Appeals declared that Ong's failure to pay the balance within the prescribed
period was excusable because the PVB neither notified him of the approval of his bid nor answered his
letters manifesting his readiness to pay the balance, for which reason he could not have known when to
reckon the 15-day period prescribed under its resolution. It went further to suggest that the Central Bank
was in estoppel because it accepted Ong's late-payment of the balance. As to the petitioners' claim, the
Court of Appeals stated:
The conclusion reached by the lower court favorable to Miguela Villanueva is, as aptly pointed out by
plaintiff-appellant, indeed confusing. While the lower court's decision declared Miguela Villanueva as
estopped from recovering her proportionate share and interest in the two (2) disputed lots for being a "co-
participant" in the fraudulent scheme perpetrated by Jose Viudez and Andres Sebastian — a factual finding
which We conform to and which Miguela Villanueva does not controvert in this appeal by not filing her
appellee's brief, yet it ordered the reconveyance of the disputed lots to Miguela Villanueva as the victorious
party upon her payment of P110,416.20. Would not estoppel defeat the claim of the party estopped? If so,
which in fact must be so, would it not then be absurd or even defiant for the lower court to finally entitle
Miguela Villanueva to the disputed lots after having been precluded from assailing their subsequent
conveyance in favor of Jose Viudez by reason of her own negligence and/or complicity therein? The intended
punitive effect of estoppel would merely be a dud if this Court leaves the lower court's conclusion
unrectified. 21
Their motion for reconsideration 22 having been denied, 23 the petitioners filed this petition for review on
certiorari. 24
Subsequently, the respondent Central Bank apprised this Court that the PVB was no longer under
receivership or liquidation and that the PVB has been back in operation since 3 August 1992. It then prayed
that it be dropped from this case or at least be substituted by the PVB, which is the real party in interest.
25
In its Manifestation and Entry of Appearance, the PVB declared that it submits to the jurisdiction of this
Court and that it has no objection to its inclusion as a party respondent in this case in lieu of the Central
Bank. 26 The petitioners did not object to the substitution. 27
Later, in its Comment dated 10 October 1994, the PVB stated that it "submits to and shall abide by whatever
judgment this Honorable Supreme Tribunal may announce as to whom said lands may be awarded without
any touch of preference in favor of one or the other party litigant in the instant
case." 28
In support of their contention that the Court of Appeals gravely erred in holding that Ong is better entitled
to purchase the disputed lots, the petitioners maintain that Ong is a disqualified bidder, his bid of
P110,000.00 being lower than the starting price of P110,417.00 and his deposit of P10,000.00 being less
than the required 10% of the bid price; that Ong failed to pay the balance of the price within the 15-day
period from notice of the approval of his bid; and that his offer of payment is ineffective since it was
conditioned on PVB's execution of the deed of absolute sale in his favor.
15
On the other hand, Ong submits that his offer, though lower than Miguela ViIlanueva's bid by P417.00, is
much better, as the same is payable in cash, while Villanueva's bid is payable in installment; that his
payment could not be said to have been made after the expiration of the 15-day period because this period
has not even started to run, there being no notice yet of the approval of his offer; and that he has a legal
right to compel the PVB or its liquidator to execute the corresponding deed of conveyance.
There is no doubt that the approval of Ong's offer constitutes an acceptance, the effect of which is to perfect
the contract of sale upon notice thereof to Ong. 29 The peculiar circumstances in this case, however, pose
a legal obstacle to his claim of a better right and deny support to the conclusion of the Court of Appeals.
Ong did not receive any notice of the approval of his offer. It was only sometime in mid-April 1985 when
he returned from the United States and inquired about the status of his bid that he came to know of the
approval.
It must be recalled that the PVB was placed under receivership pursuant to the MB Resolution of 3 April
1985 after a finding that it was insolvent, illiquid, and could not operate profitably, and that its continuance
in business would involve probable loss to its depositors and creditors. The PVB was then prohibited from
doing business in the Philippines, and the receiver appointed was directed to "immediately take charge of
its assets and liabilities, as expeditiously as possible collect and gather all the assets and administer the
same for the benefit of its creditors, exercising all the powers necessary for these purposes."
Under Article 1323 of the Civil Code, an offer becomes ineffective upon the death, civil interdiction, insanity,
or insolvency of either party before acceptance is conveyed. The reason for this is that:
[T]he contract is not perfected except by the concurrence of two wills which exist and continue until the
moment that they occur. The contract is not yet perfected at any time before acceptance is conveyed;
hence, the disappearance of either party or his loss of capacity before perfection prevents the contractual
tie from being formed. 30
It has been said that where upon the insolvency of a bank a receiver therefor is appointed, the assets of
the bank pass beyond its control into the possession and control of the receiver whose duty it is to
administer the assets for the benefit of the creditors of the bank.31 Thus, the appointment of a receiver
operates to suspend the authority of the bank and of its directors and officers over its property and effects,
such authority being reposed in the receiver, and in this respect, the receivership is equivalent to an
injunction to restrain the bank officers from intermeddling with the property of the bank in any way. 32
Section 29 of the Central Bank Act, as amended, provides thus:
Sec. 29. Proceedings upon insolvency. — Whenever, upon examination by the head of the appropriate
supervising or examining department or his examiners or agents into the condition of any bank or non-
bank financial intermediary performing quasi-banking functions, it shall be disclosed that the condition of
the same is one of insolvency, or that its continuance in business would involve probable loss to its
depositors or creditors, shall be the duty of the department head concerned forthwith, in writing, to inform
the Monetary Board of the facts. The Board may, upon finding the statements of the department head to
be true, forbid the institution to do business in the Philippines and designate an official of the Central Bank
or a person of recognized competence in banking or finance as receiver to immediately take charge of its
assets and liabilities, as expeditiously as possible collect and gather all the assets and administer the same
for the benefit of its creditors . . . exercising all the powers necessary for these purposes. . . .
xxx xxx xxx
The assets of an institution under receivership or liquidation shall be deemed in custodia legis in the hands
of the receiver or liquidator and shall, from the moment of such receivership or liquidation, be exemp from
any order of garnishment, levy, attachment, or execution.
In a nutshell, the insolvency of a bank and the consequent appointment of a receiver restrict the bank's
capacity to act, especially in relation to its property, Applying Article 1323 of the Civil Code, Ong's offer to
purchase the subject lots became ineffective because the PVB became insolvent before the bank's
acceptance of the offer came to his knowledge. Hence, the purported contract of sale between them did
not reach the stage of perfection. Corollarily, he cannot invoke the resolution of the bank approving his bid
as basis for his alleged right to buy the disputed properties.
Nor may the acceptance by an employee of the PVB of Ong's payment of P100,000.00 benefit him since
the receipt of the payment was made subject to the approval by the Central Bank liquidator of the PVB
thus:
Payment for the purchase price of the former property of Andres Sebastian per approved BR No. 10902-
84 dated 11/13/84, subject to the approval of CB liquidator. 33
This payment was disapproved on the ground that the subject property was already in custodia legis, and
hence, disposable only by public auction and subject to the approval of the liquidation court. 34
The Court of Appeals therefore erred when it held that Ong had a better right than the petitioners to the
purchase of the disputed lots.
Considering then that only Ong appealed the decision of the trial court, the PVB and the Central Bank, as
well as the petitioners, are deemed to have fully and unqualifiedly accepted the judgment, which thus
became final as to them for their failure to appeal.
WHEREFORE, the instant petition is GRANTED and the challenged decision of the Court of Appeals of 27
January 1994 in CA-G.R. CV No. 35890 is hereby SET ASIDE. The decision of Branch 39 of the Regional
Trial Court of Manila of 31 October 1991 in Civil Case No. 87-42550 and Sp. Proc. No. 85-32311 is hereby
REINSTATED.
Respondent Philippine Veterans Bank is further directed to return to private respondent Ildefonso C. Ong
the amount of P100,000.00.
No pronouncement as to costs.
SO ORDERED.
16
 6. G.R. No. 76118 March 30, 1993 Monetary Board resolutions placing a bank under conservatorship, and that TSB was without legal capacity
to sue except through its receiver.7
THE CENTRAL BANK OF THE PHILIPPINES and RAMON V. TIAOQUI, petitioners,
vs. On 9 September 1985, TSB filed an urgent motion in the RTC to direct receiver Ramon V. Tiaoqui to restore
COURT OF APPEALS and TRIUMPH SAVINGS BANK, respondents. TSB to its private management. On 11 November 1985, the RTC in separate orders denied petitioners'
motion to dismiss and ordered receiver Tiaoqui to restore the management of TSB to its elected board of
Sycip, Salazar, Hernandez & Gatmaitan for petitioners. directors and officers, subject to CB comptrollership.

Quisumbing, Torres & Evangelista for Triumph Savings Bank. Since the orders of the trial court rendered moot the petition for certiorari then pending before this Court,
Central Bank and Tiaoqui moved on 2 December 1985 for the dismissal of G.R. No. 71465 which We granted
on 18 December 1985.8

Instead of proceeding to trial, petitioners elevated the twin orders of the RTC to the Court of Appeals on a
BELLOSILLO, J.:
petition for certiorari and prohibition under Rule 65.9 On 26 September 1986, the appellate court, upheld
the orders of the trial court thus —
May a Monetary Board resolution placing a private bank under receivership be annulled on the ground of
lack of prior notice and hearing?
Petitioners' motion to dismiss was premised on two grounds, namely, that the complaint failed to state a
cause of action and that the Triumph Savings Bank was without capacity to sue except through its appointed
This petition seeks review of the decision of the Court of Appeals in CA G.R. S.P. No. 07867 entitled "The receiver.
Central Bank of the Philippines and Ramon V. Tiaoqui vs. Hon. Jose C. de Guzman and Triumph Savings
Bank," promulgated 26 September 1986, which affirmed the twin orders of the Regional Trial Court of
Concerning the first ground, petitioners themselves admit that the Monetary Board resolution placing the
Quezon City issued 11 November 19851 denying herein petitioners' motion to dismiss Civil Case No. Q-
Triumph Savings Bank under the receivership of the officials of the Central Bank was done without prior
45139, and directing petitioner Ramon V. Tiaoqui to restore the private management of Triumph Savings
hearing, that is, without first hearing the side of the bank. They further admit that said resolution can be
Bank (TSB) to its elected board of directors and officers, subject to Central Bank comptrollership.2
the subject of judicial review and may be set aside should it be found that the same was issued with
arbitrariness and in bad faith.
The antecedent facts: Based on examination reports submitted by the Supervision and Examination Sector
(SES), Department II, of the Central Bank (CB) "that the financial condition of TSB is one of insolvency and
The charge of lack of due process in the complaint may be taken as constitutive of allegations of
its continuance in business would involve probable loss to its depositors and creditors,"3 the Monetary
arbitrariness and bad faith. This is not of course to be taken as meaning that there must be previous
Board (MB) issued on 31 May 1985 Resolution No. 596 ordering the closure of TSB, forbidding it from doing
hearing before the Monetary Board may exercise its powers under Section 29 of its Charter. Rather, judicial
business in the Philippines, placing it under receivership, and appointing Ramon V. Tiaoqui as receiver.
review of such action not being foreclosed, it would be best should private respondent be given the chance
Tiaoqui assumed office on 3 June 1985.4
to show and prove arbitrariness and bad faith in the issuance of the questioned resolution, especially so in
the light of the statement of private respondent that neither the bank itself nor its officials were even
On 11 June 1985, TSB filed a complaint with the Regional Trial Court of Quezon City, docketed as Civil Case informed of any charge of violating banking laws.
No. Q-45139, against Central Bank and Ramon V. Tiaoqui to annul MB Resolution No. 596, with prayer for
injunction, challenging in the process the constitutionality of Sec. 29 of R.A. 269, otherwise known as "The
In regard to lack of capacity to sue on the part of Triumph Savings Bank, we view such argument as being
Central Bank Act," as amended, insofar as it authorizes the Central Bank to take over a banking institution
specious, for if we get the drift of petitioners' argument, they mean to convey the impression that only the
even if it is not charged with violation of any law or regulation, much less found guilty thereof.5
CB appointed receiver himself may question the CB resolution appointing him as such. This may be asking
for the impossible, for it cannot be expected that the master, the CB, will allow the receiver it has appointed
On 1 July 1985, the trial court temporarily restrained petitioners from implementing MB Resolution No. 596 to question that very appointment. Should the argument of petitioners be given circulation, then judicial
"until further orders", thus prompting them to move for the quashal of the restraining order (TRO) on the review of actions of the CB would be effectively checked and foreclosed to the very bank officials who may
ground that it did not comply with said Sec. 29, i.e., that TSB failed to show convincing proof of arbitrariness feel, as in the case at bar, that the CB action ousting them from the bank deserves to be set aside.
and bad faith on the part of petitioners;' and, that TSB failed to post the requisite bond in favor of Central
Bank.
xxx xxx xxx

On 19 July 1985, acting on the motion to quash the restraining order, the trial court granted the relief
On the questioned restoration order, this Court must say that it finds nothing whimsical, despotic,
sought and denied the application of TSB for injunction. Thereafter, Triumph Savings Bank filed with Us a
capricious, or arbitrary in its issuance, said action only being in line and congruent to the action of the
petition for certiorari under Rule 65 of the Rules of Court6 dated 25 July 1985 seeking to enjoin the
Supreme Court in the Banco Filipino Case (G.R. No. 70054) where management of the bank was restored
continued implementation of the questioned MB resolution.
to its duly elected directors and officers, but subject to the Central Bank comptrollership.10

Meanwhile, on 9 August 1985; Central Bank and Ramon Tiaoqui filed a motion to dismiss the complaint
On 15 October 1986, Central Bank and its appointed receiver, Ramon V. Tiaoqui, filed this petition under
before the RTC for failure to state a cause of action, i.e., it did not allege ultimate facts showing that the
Rule 45 of the Rules of Court praying that the decision of the Court of Appeals in CA-G.R. SP No. 07867 be
action was plainly arbitrary and made in bad faith, which are the only grounds for the annulment of

17
set aside, and that the civil case pending before the RTC of Quezon City, Civil Case No.
Q-45139, be dismissed. Petitioners allege that the Court of Appeals erred —
(1) in affirming that an insolvent bank that had been summarily closed by the Monetary Board should be
restored to its private management supposedly because such summary closure was "arbitrary and in bad
faith" and a denial of "due process";
(2) in holding that the "charge of lack of due process" for "want of prior hearing" in a complaint to annul a
Monetary Board receivership resolution under Sec. 29 of R.A. 265 "may be taken as . . allegations of
arbitrariness and bad faith"; and
(3) in holding that the owners and former officers of an insolvent bank may still act or sue in the name and
corporate capacity of such bank, even after it had been ordered closed and placed under receivership.11
The respondents, on the other hand, allege inter alia that in the Banco Filipino case,12 We held that CB
violated the rule on administrative due process laid down in Ang Tibay vs. CIR (69 Phil. 635) and Eastern
Telecom Corp. vs. Dans, Jr. (137 SCRA 628) which requires that prior notice and hearing be afforded to all
parties in administrative proceedings. Since MB Resolution No. 596 was adopted without TSB being
previously notified and heard, according to respondents, the same is void for want of due process;
consequently, the bank's management should be restored to its board of directors and officers.13
Petitioners claim that it is the essence of Sec. 29 of R.A. 265 that prior notice and hearing in cases involving
bank closures should not be required since in all probability a hearing would not only cause unnecessary
delay but also provide bank "insiders" and stockholders the opportunity to further dissipate the bank's
resources, create liabilities for the bank up to the insured amount of P40,000.00, and even destroy evidence
of fraud or irregularity in the bank's operations to the prejudice of its depositors and creditors. 14 Petitioners
further argue that the legislative intent of Sec. 29 is to repose in the Monetary Board exclusive power to
determine the existence of statutory grounds for the closure and liquidation of banks, having the required
expertise and specialized competence to do so.
The first issue raised before Us is whether absence of prior notice and hearing may be considered acts of
arbitrariness and bad faith sufficient to annul a Monetary Board resolution enjoining a bank from doing
business and placing it under receivership. Otherwise stated, is absence of prior notice and hearing
constitutive of acts of arbitrariness and bad faith?
Under Sec. 29 of R.A. 265,15 the Central Bank, through the Monetary Board, is vested with exclusive
authority to assess, evaluate and determine the condition of any bank, and finding such condition to be
one of insolvency, or that its continuance in business would involve probable loss to its depositors or
creditors, forbid the bank or non-bank financial institution to do business in the Philippines; and shall
designate an official of the CB or other competent person as receiver to immediately take charge of its
assets and liabilities. The fourth paragraph,16 which was then in effect at the time the action was
commenced, allows the filing of a case to set aside the actions of the Monetary Board which are tainted
with arbitrariness and bad faith.
Contrary to the notion of private respondent, Sec. 29 does not contemplate prior notice and hearing before
a bank may be directed to stop operations and placed under receivership. When par. 4 (now par. 5, as
amended by E.O. 289) provides for the filing of a case within ten (10) days after the receiver takes charge
of the assets of the bank, it is unmistakable that the assailed actions should precede the filing of the case.
Plainly, the legislature could not have intended to authorize "no prior notice and hearing" in the closure of
the bank and at the same time allow a suit to annul it on the basis of absence thereof.
In the early case of Rural Bank of Lucena, Inc. v. Arca [1965],17 We held that a previous hearing is nowhere
required in Sec. 29 nor does the constitutional requirement of due process demand that the correctness of
the Monetary Board's resolution to stop operation and proceed to liquidation be first adjudged before
making the resolution effective. It is enough that a subsequent judicial review be provided.
Even in Banco Filipino, 18 We reiterated that Sec. 29 of R.A. 265 does not require a previous hearing before
the Monetary Board can implement its resolution closing a bank, since its action is subject to judicial
scrutiny as provided by law.
It may be emphasized that Sec. 29 does not altogether divest a bank or a non-bank financial institution
placed under receivership of the opportunity to be heard and present evidence on arbitrariness and bad
faith because within ten (10) days from the date the receiver takes charge of the assets of the bank, resort
to judicial review may be had by filing an appropriate pleading with the court. Respondent TSB did in fact
avail of this remedy by filing a complaint with the RTC of Quezon City on the 8th day following the takeover
by the receiver of the bank's assets on 3 June 1985.
This "close now and hear later" scheme is grounded on practical and legal considerations to prevent
unwarranted dissipation of the bank's assets and as a valid exercise of police power to protect the
depositors, creditors, stockholders and the general public.
In Rural Bank of Buhi, Inc. v. Court of Appeals,19 We stated that —
. . . due process does not necessarily require a prior hearing; a hearing or an opportunity to be heard may
be subsequent to the closure. One can just imagine the dire consequences of a prior hearing: bank runs
would be the order of the day, resulting in panic and hysteria. In the process, fortunes may be wiped out
and disillusionment will run the gamut of the entire banking community.
We stressed in Central Bank of the Philippines v. Court of Appeals20 that —
. . . the banking business is properly subject to reasonable regulation under the police power of the state
because of its nature and relation to the fiscal affairs of the people and the revenues of the state (9 CJS
32). Banks are affected with public interest because they receive funds from the general public in the form
of deposits. Due to the nature of their transactions and functions, a fiduciary relationship is created between
the banking institutions and their depositors. Therefore, banks are under the obligation to treat with
meticulous care and utmost fidelity the accounts of those who have reposed their trust and confidence in
them (Simex International [Manila], Inc., v. Court of Appeals, 183 SCRA 360 [1990]).
It is then the Government's responsibility to see to it that the financial interests of those who deal with the
banks and banking institutions, as depositors or otherwise, are protected. In this country, that task is
delegated to the Central Bank which, pursuant to its Charter (R.A. 265, as amended), is authorized to
administer the monetary, banking and credit system of the Philippines. Under both the 1973 and 1987
Constitutions, the Central Bank is tasked with providing policy direction in the areas of money, banking and
credit; corollarily, it shall have supervision over the operations of banks (Sec. 14, Art. XV, 1973
Constitution, and Sec. 20, Art. XII, 1987 Constitution). Under its charter, the CB is further authorized to
take the necessary steps against any banking institution if its continued operation would cause prejudice
to its depositors, creditors and the general public as well. This power has been expressly recognized by this
Court. In Philippine Veterans Bank Employees Union-NUBE v. Philippine Veterans Banks (189 SCRA 14
[1990], this Court held that:
. . . [u]nless adequate and determined efforts are taken by the government against distressed and
mismanaged banks, public faith in the banking system is certain to deteriorate to the prejudice of the
national economy itself, not to mention the losses suffered by the bank depositors, creditors, and
18
stockholders, who all deserve the protection of the government. The government cannot simply cross its
arms while the assets of a bank are being depleted through mismanagement or irregularities. It is the duty
of the Central Bank in such an event to step in and salvage the remaining resources of the bank so that
they may not continue to be dissipated or plundered by those entrusted with their management.
Section 29 of R.A. 265 should be viewed in this light; otherwise, We would be subscribing to a situation
where the procedural rights invoked by private respondent would take precedence over the substantive
interests of depositors, creditors and stockholders over the assets of the bank.
Admittedly, the mere filing of a case for receivership by the Central Bank can trigger a bank run and drain
its assets in days or even hours leading to insolvency even if the bank be actually solvent. The procedure
prescribed in Sec. 29 is truly designed to protect the interest of all concerned, i.e., the depositors, creditors
and stockholders, the bank itself, and the general public, and the summary closure pales in comparison to
the protection afforded public interest. At any rate, the bank is given full opportunity to prove arbitrariness
and bad faith in placing the bank under receivership, in which event, the resolution may be properly nullified
and the receivership lifted as the trial court may determine.
The heavy reliance of respondents on the Banco Filipino case is misplaced in view of factual circumstances
therein which are not attendant in the present case. We ruled in Banco Filipino that the closure of the bank
was arbitrary and attendant with grave abuse of discretion, not because of the absence of prior notice and
hearing, but that the Monetary Board had no sufficient basis to arrive at a sound conclusion of insolvency
to justify the closure. In other words, the arbitrariness, bad faith and abuse of discretion were determined
only after the bank was placed under conservatorship and evidence thereon was received by the trial court.
As this Court found in that case, the Valenzuela, Aurellano and Tiaoqui Reports contained unfounded
assumptions and deductions which did not reflect the true financial condition of the bank. For instance, the
subtraction of an uncertain amount as valuation reserve from the assets of the bank would merely result
in its net worth or the unimpaired capital and surplus; it did not reflect the total financial condition of Banco
Filipino.
Furthermore, the same reports showed that the total assets of Banco Filipino far exceeded its total liabilities.
Consequently, on the basis thereof, the Monetary Board had no valid reason to liquidate the bank; perhaps
it could have merely ordered its reorganization or rehabilitation, if need be. Clearly, there was in that case
a manifest arbitrariness, abuse of discretion and bad faith in the closure of Banco Filipino by the Monetary
Board. But, this is not the case before Us. For here, what is being raised as arbitrary by private respondent
is the denial of prior notice and hearing by the Monetary Board, a matter long settled in this jurisdiction,
and not the arbitrariness which the conclusions of the Supervision and Examination Sector (SES),
Department II, of the Central Bank were reached.
Once again We refer to Rural Bank of Buhi, Inc. v. Court of Appeals,21 and reiterate Our pronouncement
therein that —
. . . the law is explicit as to the conditions prerequisite to the action of the Monetary Board to forbid the
institution to do business in the Philippines and to appoint a receiver to immediately take charge of the
bank's assets and liabilities. They are: (a) an examination made by the examining department of the
Central Bank; (b) report by said department to the Monetary Board; and (c) prima facie showing that its
continuance in business would involve probable loss to its depositors or creditors.
In sum, appeal to procedural due process cannot just outweigh the evil sought to be prevented; hence, We
rule that Sec. 29 of R.A. 265 is a sound legislation promulgated in accordance with the Constitution in the
exercise of police power of the state. Consequently, the absence of notice and hearing is not a valid ground
to annul a Monetary Board resolution placing a bank under receivership. The absence of prior notice and
hearing cannot be deemed acts of arbitrariness and bad faith. Thus, an MB resolution placing a bank under
receivership, or conservatorship for that matter, may only be annulled after a determination has been made
by the trial court that its issuance was tainted with arbitrariness and bad faith. Until such determination is
made, the status quo shall be maintained, i.e., the bank shall continue to be under receivership.
As regards the second ground, to rule that only the receiver may bring suit in behalf of the bank is, to echo
the respondent appellate court, "asking for the impossible, for it cannot be expected that the master, the
CB, will allow the receiver it has appointed to question that very appointment." Consequently, only
stockholders of a bank could file an action for annulment of a Monetary Board resolution placing the bank
under receivership and prohibiting it from continuing operations.22 In Central Bank v. Court of Appeals, 23
We explained the purpose of the law —
. . . in requiring that only the stockholders of record representing the majority of the capital stock may
bring the action to set aside a resolution to place a bank under conservatorship is to ensure that it be not
frustrated or defeated by the incumbent Board of Directors or officers who may immediately resort to court
action to prevent its implementation or enforcement. It is presumed that such a resolution is directed
principally against acts of said Directors and officers which place the bank in a state of continuing inability
to maintain a condition of liquidity adequate to protect the interest of depositors and creditors. Indirectly,
it is likewise intended to protect and safeguard the rights and interests of the stockholders. Common sense
and public policy dictate then that the authority to decide on whether to contest the resolution should be
lodged with the stockholders owning a majority of the shares for they are expected to be more objective
in determining whether the resolution is plainly arbitrary and issued in bad faith.
It is observed that the complaint in this case was filed on 11 June 1985 or two (2) years prior to 25 July
1987 when E.O. 289 was issued, to be effective sixty (60) days after its approval (Sec. 5). The implication
is that before E.O
. 289, any party in interest could institute court proceedings to question a Monetary Board resolution placing
a bank under receivership. Consequently, since the instant complaint was filed by parties representing
themselves to be officers of respondent Bank (Officer-in-Charge and Vice President), the case before the
trial court should now take its natural course. However, after the effectivity of E.O. 289, the procedure
stated therein should be followed and observed.
PREMISES considered, the Decision of the Court of Appeals in CA-G.R. SP No. 07867 is AFFIRMED, except
insofar as it upholds the Order of the trial court of 11 November 1985 directing petitioner RAMON V.
TIAOQUI to restore the management of TRIUMPH SAVINGS BANK to its elected Board of Directors and
Officers, which is hereby SET ASIDE.
Let this case be remanded to the Regional Trial Court of Quezon City for further proceedings to determine
whether the issuance of Resolution No. 596 of the Monetary Board was tainted with arbitrariness and bad
faith and to decide the case accordingly.
SO ORDERED.
19
 7. G.R. No. L-44932 April 15, 1988
JOSE CARANDANG and BENITA CARANDANG, petitioners,
vs.
COURT OF APPEALS, RURAL BANK OF LUCENA, INC., APRONIANO MLS. MAGSINO, CENTRAL
BANK OF THE PHILIPPINES, HONESTO O. FRANCISCO, and CARLOTA P. VALENZUEIA,
respondents.
Florentino Poonin for petitioners.
The Solicitor General for public respondent.
F.E. Evangelista, Ceceron Angeles, Feliciano Asoy and Restituto Ventura for respondents.
GANCAYCO, J.:
Before Us is a petition for review of the decision of the Court of Appeals in CA-G.R. No. 58421-R 1 dated
August 16, 1976, and its Resolution of October 11, 1976, affirming the Resolution of the then Court of First
Instance of Laguna in Civil Case No. SP-1029 declaring itself to be without jurisdiction to entertain
petitioners' complaint for cancellation and nullification of the promissory note and the deed of mortgage
allegedly executed by petitioners in favor of Rural Bank of Lucena, Inc. which said court declared earlier to
be a forgery in its Decision of September 10, 1974.
The Rural Bank of Lucena, Inc., one of the respondents herein, is a banking institution with principal office
and place of business in Lucena City. On February 2, 1962, the Central Bank of the Philippines through the
Monetary Board approved Resolution No. 122 requesting the Solicitor General to file the necessary petition
for liquidation of the Rural Bank of Lucena. On March 31, 1962, the Solicitor General filed a petition for
liquidation in the then Court of First Instance of Manila, Branch I, docketed as Civil Case No. 50019. 2 In
the Order of March 28, 1963, then Presiding Judge Francisco Arca directed the liquidator of the Central
Bank to take over the assets, books, papers and properties of the Rural Bank of Lucena, Inc.
An inventory of the assets, properties, books, etc. of the said bank was conducted and a corresponding list
was prepared. The assets include among others the uncollected loan allegedly procured by herein
petitioners in the amount of P9,513.56 inclusive of interest as of December 31, 1971. Said loan appears to
have been secured by a real estate mortgage on a parcel of land covered by Tax Declaration No. 27410 of
the City of San Pablo. The documents of the insolvent bank show that petitioners filed an application for
agricultural loan for P5,000.00 with 9% interest per annum covered by a promissory note allegedly
executed by petitioners. According to respondent Central Bank, several demand letters were sent to
petitioners but to no avail. Thus, for failure to settle the said obligation, the designated receiver * of the
bank petitioned the Sheriff of Laguna to sell the subject property. 3
Meanwhile, on April 26, 1972, petitioners, upon Teaming of the petition for the sale of their coconut land,
flied a complaint for nullification and cancellation of the promissory note and the mortgage deed with
damages and with prayer for a temporary restraining order with the Court of First Instance (CFI) of Laguna
on the ground that the said documents were forgeries. On May 2, 1972, said court issued an order
restraining the Sheriff of San Pablo and Laguna from conducting the public auction sale of the subject
property scheduled on May 11, 1972.
On May 22, 1972, respondent Central Bank of the Philippines filed a motion for intervention stating its legal
interest in the case in that for reasons of insolvency, Rural Bank of Lucena is under receivership of the
Central Bank. On June 26, 1972, the motion was granted requiring respondent Central Bank to file its
complaint in intervention. Said respondent filed instead a motion to dismissal s on the ground of lack of
jurisdiction but it was denied. Thus said respondent filed its answer in intervention maintaining that the
CFI of Laguna has no jurisdiction.
The issues having been joined the court a quo rendered its decision ** declaring the promissory note in
question null and void and without any effect, and made permanent the restraining order of May 2, 1972.
On October 4, 1974, respondent Central Bank filed a motion for reconsideration of the above decision
alleging that it is contrary to law and that the evidence is insufficient to justify the decision.
In the order of March 3, 1975, the court a quo *** set aside its decision and declared itself to be without
jurisdiction to entertain the action and dismissed the complaint and counterclaims.
From this Order petitioners appealed to the Court of Appeals. On August 16, 1976 said court rendered a
judgment declaring the documents in question null and void quoting with approval the observations made
by the first judge. 4 The appellate court, however, sustained the second judge in the dismiss of the case
on the ground of lack of jurisdiction. 5
Hence this petition.
Petitioners contend that since the land in question is within the territorial jurisdiction of Laguna, then it is
the Court of First Instance of Laguna that has jurisdiction over the case. They argue further that the
question of jurisdiction is determined by the allegations of the complaint, not by the averments in the
answer or by the evidence adduced in the trial. In support of their contention petitioners cited Section
44(b) Judiciary Act of 1948 and Section 2(e) Rule 4 of the Old Rules of Court **** as well as the case of
Fernandez vs. De Gala Sison, and Manlapaz vs. Pagdanganan. 6
On the other hand, respondent Central Bank contends that the pendency of the liquidation proceedings
before the Court of First Instance of Manila vested in the said court exclusive jurisdiction over all matters
pertaining to the assets, properties, funds, etc. of the Rural Bank of Lucena, Inc. citing Section 29 *****
of Presidential Decree No. 72. It argued further that the action for cancellation and nullification of the
contract of loan is a personal action and hence the jurisdiction of the Court of First Instance of Laguna is
only concurrent with the liquidation court, and that since it was the liquidation court that first acquired
jurisdiction over the subject matter of the instant case, it should retain the same to the exclusion of others.
We will first resolve the nature of the action, Section 2(a), Rule 4 of the Revised Rules of Court provides
that real actions like actions affecting title to or for recovery of possession, or for partition or condemnation
of or foreclosure of mortgage on real property shall be commenced and tried in the province where the
property or any part thereof lies. All other civil actions are persona actions which may be commenced and
tried where the defendant or any of the defendants reside or may be found, or where the plaintiff or any
of the plaintiffs reside at the election of the plaintiff. 7
In the case of Hernandez vs. Rural Bank of Lucena, Inc., 8 this Court ruled that an action for cancellation
of real estate mortgage is a personal action. The said case was primarily an action to compel the mortgagee
bank to accept payment of the mortgage debt and to release the mortgage. It appears that no foreclosure
of mortgage took place and that the plaintiffs remained in possession of the mortgaged lot. Hence it was
ruled that the action for cancellation of real estate mortgage is a personal action as it is not expressly
included in the enumeration found in Section 2(a) of Rule 4, and does not involve title to the mortgaged
lot. 9
20
However, We are not convinced that the ruling in Hernandez 10 in this respect is applicable in the case
before Us considering that the subject property herein was already foreclosed extrajudicially. If not for the
timely issuance of a restraining order sought by petitioners the same would have already been sold at a
public auction sale. Moreover, it should be borne in mind that in the action for nullification of the mortgage
documents petitioners questioned the validity of the mortgage in favor of the insolvent bank over which
respondent Central Bank claimed title seeking the collection and eventually the foreclosure of the
mortgaged property. Thus, it is a real action as the action affects the title to a property. Applying the rules
on venue of the matter, the action should be brought before the court having jurisdiction over the territory
in which the subject Property or part thereof lies which in this case should properly be in the then Court of
First Instance of Laguna. 11
On the other hand, it should be recalled that the subject property appears to be included in the assets of
the Rural Bank of Lucena, Inc., which is an insolvent bank. Under Section 29 of the Central Bank Act 12
when the Monetary Board finds out that the insolvent bank cannot resume business with safety to its
creditors, it shall, through the Solicitor General, file a petition in the Court of First Instance praying for the
assistance and supervision of the court in the liquidation of the bank's affairs.
In Hernandez, 13 We held that where an insolvent bank is forbidden to do business, its assets are turned
over to the Superintendent of Banks as receiver for conversion into cash and its liquidation is undertaken
with judicial intervention as far as lawful and practicable so that all claims against the insolvent bank should
be filed in the liquidation proceeding. This is intended to prevent multiplicity of actions against the insolvent
bank and that for convenience, only one court should, if possible, pass upon all claims against the insolvent
bank, where the liquidation court should assist the Superintendent of Banks and control his operations. 14
From the foregoing discussions it appears that both courts have concurrent jurisdiction over the subject
matter. Respondent Central Bank stressed the rule that where several courts have concurrent jurisdiction
over the same case, the court which first acquired jurisdiction retains it to the exclusion of the others.
However, this case presents a novel situation so that the accepted rule on concurrent jurisdiction may not
apply. As above stated, in petitioners' action before the court a quo respondent Central Bank filed a motion
to intervene. After the motion was granted it filed a motion to dismiss on the ground of lack of jurisdiction,
but this was denied. Respondent Central Bank then filed an answer in intervention reiterating lack of
jurisdiction and at the same time upholding the authenticity of the mortgage documents. It participated in
the trial. Unfortunately, the mortgage documents were found by the trial court to be forgeries.
Upon respondent Central Bank's motion for reconsideration the lower court took a total turn-about by
ruling, this time, that it is without jurisdiction over the case. When petitioners appealed to the Court of
Appeals despite the argument of respondent Central Bank that the documents in question are genuine and
that the mortgage is valid the appellate court filed the lower court s findings that the questioned documents
are null and void. Nevertheless, the Court of Appeals also affirmed the dismissal of the case on the ground
of lack of jurisdiction.
The court is not persuaded that the Laguna Court is without jurisdiction over the case and that it is the
Manila Court where the Central Bank instituted the liquidation proceedings that has jurisdiction.
Respondent Central Bank's allegation of convenience as that all suits against the insolvent bank should be
brought before the liquidation court is untenable. The action for nullification of the mortgage deed before
the liquidation court after the case was fully litigated below would only mean more inconvenience to the
parties, en waste of more money and precious time. Indeed, it is an action in futility Respondent Central
Bank was already accorded a full-dress hearing in the Laguna court where it defended its cause. However,
it failed to establish its theory upholding the validity of the questioned documents and the genuineness of
petitioners' thumbmarks thereon.
Moreover, the role of the liquidation court which is a court of limited jurisdiction is to assist the Central
Bank in the liquidation of a certain bank. It cannot pass upon the validity of all contracts as the mortgage
deed in question in this case. This matter should be litigated before the regular courts with general
jurisdiction.
The Court of Appeals affirmed the findings of the lower court on this aspect as it held:
Upon a factual analysis of the evidence on record, this Court is by convinced that the real estate mortgage
sought to be foreclosed extra-judicially by intervenors, the supposed thumbmarks of Jose Carandang and
Benita Carandang, is a forgery (Exhs. B & 2). As seen on the face of the mortgage deed itself, Benita
Carandang was therein referred to as widow and Jose Carandang as single. However, contradicted is the
evidence that on August 31, 1959, when the mortgage deed was supposedly executed, both Benita and
Jose Carandang were very much married. Obviously, their status entered on the mortgage deed was the
product of mere "guess work."
Then the testimony of both plaintiff's that thumbmarks on the mortgage deed were not their thumbmarks
stands unrefuted on the reward. The evidence moreover shows that they had not appellant before the
Notary Public Jose B. Hernandez to acknowledge said deed. Neither they have been in Lucena City at
anytime in their lives (sic). They also had not secured any loan from the Rural Bank of Lucena. Nor have
they authorized anyone to transact business for and in their behalf.
Ironically, intervenors witnesses even supported plaintiff cause. The bank examiner, Mr. Napoleon Cruz,
admitted that he was assigned at the Rural Bank of Lucena City, Inc., as deputy of the receiver because of
numerous anomalies of said bank. In fact, he testified that all officers of the bank were prosecuted for the
anomalies. And that the filed in the City Court and Court of First Instance of Lucena, for falsification of
documents and estafa, in connection with said bank anomalies, y numbered around fifty. Another
intervenors' witness Lucena CFI Clerk of Court and Notary Public who notarized the mortgage deed in
question, Mr. Jose V. Hernandez (sic) confirming the aforesaid revelation of Mr. Cruz, testified that there
were around 60 of falsification, or estafa thru falsification, filed in court regarding anomalous transactions
in said Rural Bank. In fact, he claimed that the witness to the real estate mortgage in question are among
those charged for the anomalies. In the atmosphere of such an anomalous surrounding, and the vehement
claims and evidence of plaintiff that the mortgage dead is a forgery, we wonder why if it were not so,
intervenors did not counteract plaintiff evidence. Not even the witness to the deed, nor even the
investigators of the bank, were presented when the authenticity of the thumbmark in said deed were
vigorously denied and filed by plaintiffs. And the very Notary Public who no the deed did not say that
plaintiff's were the ones who acknowledged and deed or said the thumbmarks. What is more, there is no
check shown or introduced by the intervenors to indicate that the plaintiff's or anyone of them ever
received, at least something, from the mortgage. In the face of all these, the presumed regularity, validity,
or genuineness of the document is overcome. And the claim of plaintiffs that they have not borrowed money
from different Rural Bank stands valid. Quite understandably, intervenors, in their responsive pleading, did
not put up "genuineness" of the document as a defense.
Another circumstance that plaintiffs are not actual mortgagors nor loan borrowers of defendant Rural Bank
can be gleaned from the fact that even the purported application for agricultural loan was falsified (Exhs.
a & 1). As so categorically testified by the plaintiff Jose and Benita Carandang, they never applied for
agricultural loan in said Bank. And again, no witness was presented by intervenors to show otherwise. Then
contrary to the entries in said application, plaintifrs clearly proved that they were not regular credit
customers of said bank; they have not been in said bank or at Lucena City, even for once in their lifetime;
they have no coconut lands at Bo. Sta. Isabel, San Pablo City, and that the thumbprints in the application
for agriculture loan above were (sic) not their thumbprints.
21
Then even the purported report of Inspection and Credit investigation, submitted by intervenor as part of
defendant Banks (sic) record appeared to be evident falsification (Exh. 13). For instance, instance said
report, it was made to appear that plaintiffs owned a riceland at Alaminos, Laguna, and (a) sari-sari store
elsewhere, when the facto clearly show that they do not own such properties. And neither were they ever
investigated by any bank investigator in connection with the purported loan.

Plainly, plaintiff were themselves victims of defendant bank's anomalies. The mortgage deed being an
evident forgery, there is no valid contract to speak of (Art. 1313, NCC). Consequently, the mortgage deed
become prohibitive in law (sic). It is a deed absolutely simulated or fictitious, hence inexistent and void
from the beginning. (Art. 1409 (1) & (7) (NCC). A fortiori, it cannot and will not affect the rights of the
plaintiff.

In passing, this Court is not unaware that the Cacthlosopic report of the NBI shows that (in) so far as the
promissory note is concerned, the thumbprint in the name of Benita Carandang thereon and her sample
right thumbprint were impressed by the same answer of the same person. (Exh. "f 01; 6 a). But such
finding is not decisive of the issue, not only because the NBI examiner was not presented as witness and
his report and conclusion subject to (cross) examination, but also because of other proof to the contrary.
Thus, considering the established fact that plaintifrs are not actual mortgagors or loan borrowers of
defendant bank, it is incomprehensible why Benita's thumbmark should appear in the promissory note?
(sic) What is she to pay for when she is not a mortgagor or loan borrower? Surely, it would be the height
of injustice to require her to pay and answer for something she does not owe". pp. 110-114, Record on
Appeal. 15

The foregoing findings of facts of the appellate court are conclusive in this proceeding.

Considering that the claim to title of respondent Central Bank over petitioners' property had been found to
be null and " Pages 35-38, Rollo. void, it cannot now lawfully contend that the property is under receivership
as its property and is in custodia legis of the receivership court. Said court is bereft of jurisdiction over this
property.

WHEREFORE, the petition for review is GRANTED and the questioned decision of the Court of Appeals in so
far as it aimed the decision of dismiss of the court a quo is hereby REVERSED and SET ASIDE, but it is
aimed in all other respects. The questioned promissory note and real estate mortage pertaining to the
subject property are hereby declared null and void. No pronouncement as to costs.

SO ORDERED.

22
 8. G.R. No. 73884 September 24, 1987
SPOUSES ROMEO LIPANA and MILAGROS LIPANA, petitioners,
vs.
DEVELOPMENT BANK OF RIZAL, respondent.
PARAS, J.:
This is a petition for review on certiorari of the August 30, 1985 Order of the Regional Trial Court of Pasig
denying petitioners' Motion to Lift Stay of Execution in Civil Case No. 50802.
During the period from 1982 to January, 1984, herein petitioners opened and maintained both time and
savings deposits with the herein respondent Development Bank of Rizal all in the aggregate amount of
P939,737.32. When some of the Time Deposit Certificates matured, petitioners were not able to cash them
but instead were issued a manager's check which was dishonored upon presentment. Demands for the
payment of both time and savings deposits having failed, on March 14, 1984, petitioners filed with the
Regional Trial Court of Pasig a Complaint With Prayer For Issuance of a Writ of Preliminary Attachment for
collection of a sum of money with damages, docketed therein as Civil Case No. 50802 (Record, pp. 3-11).
Respondent Judge, in an Order dated March 19, 1984 (Ibid., p. 19-21), ordered the issuance of a writ of
attachment, and pursuant thereto, a writ of attachment dated March 20, 1984 was issued in favor of the
petitioners (Ibid., p. 33).
On June 27, 1984, respondent bank filed its Answer (Ibid., p. 58-61).
On July 23, 1984, petitioners filed a Motion For Judgment on the Pleadings (Ibid., pp. 68-73), opposed by
respondent bank (Ibid., pp. 74-76), but respondent judge, in a Decision dated November 13, 1984,
rendered judgment in favor of petitioners. The dispositive portion of the said Decision, reads:
IN VIEW OF ALL THE FOREGOING, the Court renders judgment in favor of the plaintiffs, ordering the
defendant to pay the total sum of P939,737.32 plus stipulated interest; the sum equivalent to 15% of the
amount due as attorney's fees; and costs of suit.
The counterclaim is dismissed, for lack of merit.
Meanwhile, on August 10, 1984, the Monetary Board, in its Resolution No. 1009, finding that the condition
of respondent bank was one of insolvency and that its continuance in business would result in probable
loss to its depositors and creditors, decided to place it under receivership (Rollo, p. 84).
On December 7, 1984, petitioners filed a Motion for Execution Pending Appeal (Rcd., pp. 91-93), which
was opposed by respondent bank (Ibid., p. 94-96). On December 27, 1984, petitioners filed their Reply to
the opposition (Ibid., pp. 98-101), to which respondent bank filed its Rejoinder on January 1, 1985 (Ibid.,
pp. 102-105).
In an order dated January 29, 1985, respondent judge ordered the issuance of a writ of execution (Ibid.,
p. 106).
On February 11, 1985, respondent bank filed a Motion for Reconsideration of order dated January 29, 1985
and to Stay Writ of Execution (Ibid., pp. 109-110), opposed by petitioners (Ibid., p. 111) but in an Order
dated March 6, 1985, respondent judge stayed the execution (Ibid., p. 113).
On August 7, 1985, petitioners filed a Motion to Lift Stay of Execution (Ibid., pp. 119-122), opposed by
respondent bank (Ibid., pp. 123-127), and in an Order dated August 30, 1985, respondent judge denied
the said motion (Ibid., p. 130). Hence, the instant petition (Rollo, pp. 8-17).
The Second Division of the Court, in a resolution dated May 5, 1986, resolved to require the respondent to
comment (Ibid., p. 52). In compliance therewith, respondent bank filed its Comment on June 9, 1986
(Ibid., pp. 53-58).
The petition was given due course in a resolution dated August 11, 1986, and the parties were required to
file their respective memoranda (Ibid., p. 61). In compliance therewith, petitioners filed their Memorandum
on September 19, 1986 (Ibid., p. 63-75), while respondent bank filed its Memorandum on September 25,
1986 (Ibid., pp. 76-83), and the case was considered submitted for deliberation in the Resolution dated
October 8, 1986 (Ibid., p. 88)
Petitioners raised the following issues:
1. Respondent judge cannot legally stay execution of judgement that has already become final and
executory;
2. The placing under receivership by the Central Bank of the respondent bank, long after the complaint was
filed removed it from the application of the doctrine in Re: Central Bank vs. Morfe (63 SCRA 113);
3. The filing of the complaint for a sum of money With damages against respondent bank and the
subsequent attachment of its property in Pasig, Metro Manila long before the receivership took place render
inapplicable the doctrine laid down by this Honorable Supreme Court in the said Morfe case;
4. The indefinite stay of execution without a ruling as to how long it will last, amounts to deprivation of
petitioners of their property without due process of law.
The instant petition is without merit.
I.
The main issue in this case is whether or not respondent judge could legally stay execution of judgment
that has already become final and executory.
The answer is in the affirmative.
The rule that once a decision becomes final and executory, it is the ministerial duty of the court to order
its execution, admits of certain exceptions as in cases of special and exceptional nature where it becomes
imperative in the higher interest of justice to direct the suspension of its execution (Vecine vs. Geronimo,
59 O.G. 579); whenever it is necessary to accomplish the aims of justice (Pascual vs. Tan, 85 Phil. 164);
or when certain facts and circumstances transpired after the judgment became final which could render
the execution of the judgment unjust (Cabrias vs. Adil, 135 SCRA 354).
23
In the instant case, the stay of the execution of judgment is warranted by the fact that respondent bank deputy will authorize payments to all claimants concerned in accordance with the approved project of
was placed under receivership. To execute the judgment would unduly deplete the assets of respondent distribution.
bank to the obvious prejudice of other depositors and creditors, since, as aptly stated in Central Bank of
the Philippines vs. Morfe (63 SCRA 114), after the Monetary Board has declared that a bank is insolvent PREMISES CONSIDERED, the instant petition is hereby DISMISSED.
and has ordered it to cease operations, the Board becomes the trustee of its assets for the equal benefit of
all the creditors, including depositors. The assets of the insolvent banking institution are held in trust for
SO ORDERED.
the equal benefit of all creditors, and after its insolvency, one cannot obtain an advantage or a preference
over another by an attachment, execution or otherwise.

Moreover, it will be noted that respondent bank was placed under receivership on August 10, 1984, and
the Decision of respondent judge is dated November 13, 1984. Accordingly, in line with the ruling in the
aforesaid Morfe case, which reads:

The circumstance that the Fidelity Savings Bank, having stopped operations since February 19, 1969, was
forbidden to do business (and that ban would include the payment of time deposits) implies that suits for
the payment of such deposits were prohibited. What was directly prohibited should not be encompassed
indirectly. ...

petitioners 'complaint should have been dismissed.

II.

It is the contention of petitioners, however, that the placing under receivership of respondent bank long
after the filing of the complaint removed it from the doctrine in the said Morfe case.

This contention is untenable. The time of the filing of the complaint is immaterial. It is the execution that
win obviously prejudice the other depositors and creditors. Moreover, as stated in the said Morfe case, the
effect of the judgment is only to fix the amount of the debt, and not give priority over other depositors and
creditors.

III.

Anent the contention of petitioners that the attachment of one of the properties of respondent bank was
erased by virtue of the delayed receivership is to expand the power of the Central Bank, Suffice it to say
that in the case of Central Bank of the Philippines, et al. vs. Court of Appeals, et al. (Resolution of this
Court dated September 17, 1984 in G.R. No. 33302), wherein the original plaintiff Algue Inc. was able to
obtain a writ of preliminary attachment against the original defendant Island Savings Bank, this Court
refused to recognize any preference resulting from such attachment and ruled that after a declaration of
insolvency, the remedy of the depositors is to intervene in the liquidation proceedings.

IV.

It is also contended by the petitioners that the indefinite stay of execution without ruling as to how long it
will last, amounts to a deprivation of their property without due process of law.

Said contention, likewise, is devoid of merit. Apart from the fact that the stay of execution is not only in
accordance with law but is also supported by jurisprudence, such staying of execution is not without a time
limit. In fact, the Monetary Board, in its resolution No. 4-33 approved the liquidation of respondent bank
on April 26, 1985 and ordered, among others, the filing of a petition in the Regional Trial Court praying for
assistance of said court in the liquidation of the bank. (Rollo, p. 81). The staying of the writ of execution
will be lifted after approval by the liquidation court of the project of distribution, and the liquidator or his

24