BGC Banking Bar Reviewer | 2020 1

A. CONSERVATORSHIP, RECEIVERSHIP, AND institution from doing business in the Philippines and
LIQUIDATION/CLOSURE OF BANKS designate the Philippine Deposit Insurance Corporation
(PDIC) as receiver in the case of banks and direct the PDIC to
a. CONSERVATORSHIP proceed with the liquidation of the closed bank pursuant to
this section and the relevant provisions of Republic Act No.
3591, as amended. The Monetary Board shall notify in
writing, through the receiver, the board of directors of the
b. VOLUNTARY LIQUIDATION closed bank of its decision. (RA 11211a)
c. RECEIVERSHIP AND LIQUIDATION
The actions of the Monetary Board taken under this section or
New Central Bank Act (amend. 2019; “NCBA”), RA 7653, under Section 29 of this Act shall be final and executory, and may
Sec. 30. Proceedings in Receivership and Liquidation. — not be restrained or set aside by the court except on petition for
Whenever, upon report of the head of the supervising or certiorari on the ground that the action taken was in excess of
examining department, the Monetary Board finds that a bank or jurisdiction or with such grave abuse of discretion as to amount to
quasi-bank: lack or excess of jurisdiction. The petition for certiorari may only
be filed by the stockholders of record representing the majority of
(a) has notified the Bangko Sentral or publicly announced a the capital stock within ten (10) days from receipt by the board of
unilateral closure, or has been dormant for at least sixty (60) directors of the institution of the order directing receivership,
days or in any manner has suspended the payment of its liquidation or conservatorship. The designation of a conservator
deposit/deposit substitute liabilities, or is unable to pay its under Section 29 of this Act or the appointment of a receiver
liabilities as they become due in the ordinary course of under this section shall be vested exclusively with the Monetary
business: Provided, That this shall not include inability to pay Board. Furthermore, the designation of a conservator is not a
caused by extraordinary demands induced by financial panic precondition to the designation of a receiver.
in the banking community; (RA 11211a)
The authority of the Monetary Board to summarily and without
(b) has insufficient realizable assets, as determined by the Bangko need for prior hearing forbid the bank or quasi-bank from doing
Sentral, to meet its liabilities; or business in the Philippines as provided above may also be
exercised over non-stock savings and loan associations, based on
(c) cannot continue in business without involving probable losses the same applicable grounds. For quasi-banks and non-stock
to its depositors or creditors; or savings and loan associations, any person of recognized
competence in banking, credit or finance may be designated by the
(d) has willfully violated a cease and desist order under Section Bangko Sentral as a receiver. (RA 11211a)
37 of this Act that has become final, involving acts or
transactions which amount to fraud or a dissipation of the Philippine Deposit Insurance Charter (“New PDIC Charter”;
assets of the institution; in which cases, the Monetary Board amend. 2016), RA 10846, Sec. 5. Definition of Terms. — As used
may summarily and without need for prior hearing forbid the in this Act –
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New PDIC Charter, Sec. 12. Liquidation of a Closed Bank. —

(b) The term asset distribution plan refers to the plan of (a) Whenever a bank is ordered closed by the Monetary Board, the
distribution of the assets of a closed bank to its creditors, based on Corporation shall be designated as receiver and it shall proceed
its estimated realizable value as of a certain cut-off date, prepared with the takeover and liquidation of the closed bank in accordance
in accordance with the Rules on Concurrence and Preference of with this Act. For this purpose, banks closed by the Monetary
Credits under the Civil Code or other laws. Board shall no longer be rehabilitated. (n)
An asset distribution plan may be partial when it pertains to the New PDIC Charter, Sec. 13. Authorities of a Receiver and
distribution of a portion or some of the assets of the closed bank, Effects of Placement of a Bank under Liquidation. —
or final when it pertains to the distribution of all the assets of the (a) The receiver is authorized to adopt and implement, without
closed bank. need of consent of the stockholders, board of directors,
[* * *] creditors or depositors of the closed bank, any or a
(e) The term closed bank refers to a bank placed under liquidation combination of the following modes of liquidation:
by the Monetary Board.
(1) Conventional liquidation; and
(f) The term creditor refers to any individual or entity with a valid
claim against the assets of the closed bank. (2) Purchase of assets and/or assumption of liabilities.
[* * *]
(h) The term disputed claim refers to a claim or suit against the (b) In addition to the powers of a receiver provided under existing
assets of a closed bank, or for specific performance, or breach of laws, the Corporation, as receiver of a closed bank, is
contract, or damages, of whatever nature or character, whether for empowered to:
money or otherwise, liquidated or unliquidated, fixed or (1) Represent and act for and on behalf of the closed
contingent, matured or current, denied by the receiver. bank;
[* * *]
(l) The term liquidation court refers to the Regional Trial Court (2) Gather and take charge of all the assets, records and
(RTC) of general jurisdiction where the petition for assistance in affairs of the closed bank, and administer the same
the liquidation of a closed bank is filed and given due course. for the benefit of its creditors;
[* * *]
(n) The term petition for assistance in the liquidation of a closed (3) Convert the assets of the closed bank to cash or
bank refers to the petition filed by the receiver with the RTC in other forms of liquid assets, as far as practicable;
accordance with Section 16 of this Act.
[* * *] (4) Bring suits to enforce liabilities of the directors,
(p) The term receiver refers to the Corporation or any of its duly officers, employees, agents of the closed bank and
authorized agents acting as receiver of a closed bank. other entities related or connected to the closed bank
or to collect, recover, and preserve all assets,
including assets over which the bank has equitable
interest;
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modifications or reductions shall apply only to

(5) Appoint or hire persons or entities of recognized earned and unpaid interest;
competence in banking, finance, asset management
or remedial management, as its deputies, assistants (12) Utilize available funds of the bank, including funds
or agents, to perform such powers and functions of generated by the receiver from the conversion of
the Corporation as receiver of the closed bank, or assets to pay for reasonable costs and expenses
assist in the performance thereof; incurred for the preservation of the assets, and
liquidation of, the closed bank, without need for
(6) Appoint or hire persons or entities of recognized approval of the liquidation court;
competence in forensic and fraud investigations;
For banks with insufficient funds, the Corporation is
(7) Pay accrued utilities, rentals and salaries of authorized to advance the foregoing costs and
personnel of the closed bank for a period not expenses, and collect payment, as and when funds
exceeding three (3) months, from available funds of become available.
the closed bank;
(13) Charge reasonable fees for the liquidation of the
(8) Collect loans and other claims of the closed bank bank from the assets of the bank: Provided, That
and for this purpose, modify, compromise or payment of these fees, including any unpaid
restructure the terms and conditions of such loans or advances under the immediately preceding
claims as may be deemed advantageous to the paragraph, shall be subject to approval by the
interests of the creditors of the closed bank; liquidation court;

(9) Hire or retain private counsel as may be necessary; (14) Distribute the available assets of the closed bank, in
cash or in kind, to its creditors in accordance with
(10) Borrow or obtain a loan, or mortgage, pledge or the Rules on Concurrence and Preference of Credits
encumber any asset of the closed bank, when under the Civil Code or other laws;
necessary to preserve or prevent dissipation of the
assets, or to redeem foreclosed assets of the closed (15) Dispose records of the closed bank that are no
bank, or to minimize losses to its depositors and longer needed in the liquidation in accordance with
creditors; guidelines set by the PDIC Board of Directors,
notwithstanding the laws on archival period and
(11) If the stipulated interest rate on deposits is unusually disposal of records; and
high compared with prevailing applicable interest
rates, the Corporation as receiver, may exercise such (16) Exercise such other powers as are inherent and
powers which may include a reduction of the interest necessary for the effective discharge of the duties of
rate to a reasonable rate: Provided, That any the Corporation as receiver.
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by or against the closed bank and prosecute and

The Board of Directors shall adopt such policies and defend suits by or against it. In no case shall the
guidelines as may be necessary for the performance bank be reopened and permitted to resume banking
of the above powers by personnel, deputies, business after being placed under liquidation.
assistants and agents of the Corporation.
(2) On the powers and functions of its directors, officers
(c) After the payment of all liabilities and claims against the and stockholders
closed bank, the Corporation shall pay surplus, if any,
dividends at the legal rate of interest from date of takeover to The powers, voting rights, functions and duties, as
date of distribution to creditors and claimants of the closed well as the allowances, remuneration and perquisites
bank in accordance with the Rules on Concurrence and of the directors, officers, and stockholders of such
Preference of Credits under the Civil Code or other laws bank are terminated upon its closure. Accordingly,
before distribution to the shareholders of the closed bank. the directors, officers, and stockholders shall be
barred from interfering in any way with the assets,
(d) The officers, employees, deputies, assistants and agents of the records, and affairs of the bank.
receiver shall have no liability and shall not be subject to any
action, claim or demand in connection with any act done or The receiver shall exercise all authorities as may be
omitted to be done by them in good faith in connection with required to facilitate the liquidation of the closed
the exercise of their powers and functions under this Act and bank for the benefit of all its creditors.
other applicable laws, or other actions duly approved by the
court. (3) On the assets

(e) The placement of a bank under liquidation shall have the Upon service of notice of closure as provided in
following effects: Section 14 of this Act, all the assets of the closed
bank shall he deemed in custodia legis in the hands
(1) On the corporate franchise or existence of the receiver, and as such, these assets may not be
subject to attachment, garnishment, execution, levy
Upon placement by the Monetary Board of a bank or any other court processes. A judge, officer of the
under liquidation, it shall continue as a body court or any person who shall issue, order, process
corporate until the termination of the winding-up or cause the issuance or implementation of the
period under Section 16 of this Act. Such garnishment order, levy, attachment or execution,
continuation as a body corporate shall only be for shall be liable under Section 27 of this Act:
the purpose of liquidating, settling and closing its Provided, however, That collaterals securing the
affairs and for the disposal, conveyance or loans and advances granted by the Bangko Sentral
distribution of its assets pursuant to this Act. The ng Pilipinas shall not be included in the assets of the
receiver shall represent the closed bank in all cases closed bank for distribution to other creditors:
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Provided, further, That the proceeds in excess of the upon its closure by the Monetary Board without
amount secured shall be returned by the Bangko prejudice to the first paragraph of Section 85 of
Sentral ng Pilipinas to the receiver. Republic Act No. 7653 (the New Central Bank Act):
Provided, That the receiver shall have the authority,
Any preliminary attachment or garnishment on any without need for approval of the liquidation court, to
of the assets of the closed bank existing at the time assign, as payment to secured creditors, the bank
of closure shall not give any preference to the assets serving as collaterals to their respective loans
attaching or garnishing party. Upon motion of the up to the extent of the outstanding obligations,
receiver, the preliminary attachment or garnishment including interest as of date of closure of the hank,
shall be lifted and/or discharged. as validated by the receiver. The valuation of the
asset shall be based on the prevailing market value
(4) On labor relations of the collaterals as appraised by an independent
appraiser on an ‘as is where is’ basis.
Notwithstanding the provisions of the Labor Code,
the employer-employee relationship between the (7) Liability for penalties and surcharges for late
closed bank and its employees shall be deemed payment and nonpayment of taxes
terminated upon service of the notice of closure of
the bank in accordance with this Act. Payment of From the time of closure, the closed bank shall not
separation pay or benefits provided for by law shall be liable for the payment of penalties and surcharges
be made from available assets of the bank in arising from the late payment or nonpayment of real
accordance with the Rules on Concurrence and property tax, capital gains tax, transfer tax and
Preference of Credits under the Civil Code or other similar charges.
laws.
(8) Bank charges and fees on services
(5) Contractual obligations
The receiver may impose, on behalf of the closed
The receiver may cancel, terminate, rescind or bank, charges and fees for services rendered after
repudiate any contract of the closed bank that is not bank closure, such as, but not limited to, the
necessary for the orderly liquidation of the bank, or execution of pertinent deeds and certifications.
is grossly disadvantageous to the closed bank, or for
any ground provided by law. (9) Actions pending for or against the closed bank

(6) On interest payments Except for actions pending before the Supreme
Court, actions pending for or against the closed bank
The liability of a bank to pay interest on deposits in any court or quasi-judicial body shall, upon
and all other obligations as of closure shall cease motion of the receiver, be suspended for a period not
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exceeding one hundred eighty (180) days and have been performed in the regular course of
referred to mandatory mediation. Upon termination business.
of the mediation, the case shall be referred back to
the court or quasi-judicial body for further (14) Assets and documents of the closed bank shall retain
proceedings. their private nature even if administered by the
receiver. Matters relating to the exercise by the
(10) Final decisions against the closed bank receiver of the functions under this Act shall be
subject to visitorial audit only by the Commission on
The execution and enforcement of a final decision of Audit. (n)
a court other than the liquidation court against the New PDIC Charter, Sec. 14. Notice of Closure and Takeover
assets of a closed bank shall be stayed. The Activities. —
prevailing party shall file the final decision as a (a) Upon the designation of the Corporation as receiver of a
claim with the liquidation court and settled in closed bank, it shall serve a notice of closure to the
accordance with the Rules on Concurrence and highest-ranking officer of the bank present in the bank
Preference of Credits under the Civil Code or other premises, or in the absence of such officer, post the notice
laws. of closure in the bank premises or on its main entrance.
The closure of the bank shall be deemed effective upon
(11) Docket and other court fees the service of the notice of closure. Thereafter, the
receiver shall takeover the bank and exercise the powers
Payment of docket and other court fees relating to of the receiver as provided in this Act.
all cases or actions filed by the receiver with any
judicial or quasi-judicial bodies shall be deferred (b) The receiver shall have authority to use reasonable force,
until the action is terminated with finality. Any such including the authority to force open the premises of the
fees shall constitute as a first Hen on any judgment bank, and exercise such acts necessary to take actual
in favor of the closed bank or in case of unfavorable physical possession and custody of the bank and all its
judgment, such fees shall be paid as liquidation costs assets, records, documents, and take charge of its affairs
and expenses during the distribution of the assets of upon the service of the notice of closure.
the closed bank.
(c) Directors, officers, employees or agents of a bank hold
(12) All assets, records, and documents in the possession money and other assets of the bank in trust or under
of the closed bank at the time of its closure are administration or management by them for the bank in
presumed held by the bank in the concept of an their fiduciary capacity.
owner.
Upon service of the notice of closure to the bank, all
(13) The exercise of authority, functions, and duties by directors, officers, employees or agents of the closed bank
the receiver under this Act shall be presumed to shall have the duty to immediately account for, surrender
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and turn over to the receiver, and provide information receiver shall be guided by cost-benefit considerations,
relative to, the assets, records, and affairs of the closed resources of the closed bank, and potential asset recovery.
bank in their possession, custody, administration or
management. (b) The conversion of the assets of the closed bank shall be
carried out in a fair and transparent manner in accordance
(d) When the circumstances so warrant, the local government with the rules and procedures as may be determined by the
unit and law enforcement agencies concerned shall, upon receiver.
request, immediately provide assistance to the receiver
during the service of notice of closure and actual takeover (c) In the management and/or conversion of the assets of the
operations to ensure the orderly conduct thereof and the closed bank, the receiver shall have the authority to:
security and safety of the personnel of the receiver and the
employees of the closed bank. (1) Represent the closed bank before the Land
New PDIC Charter, Sec. 15. Purchase of Assets and Assumption Registration Authority (LRA), the Bureau of
of Liabilities. — Lands, the Register of Deeds, the Land
(a) The receiver shall have the authority to facilitate and Transportation Office (LTO), the Assessor’s
implement the purchase of the assets of the closed bank and Office or other appropriate office of the local
the assumption of its liabilities by another insured bank, government unit, the Securities and Exchange
without need for approval of the liquidation court. The Commission (SEC), or such other similar
exercise of this authority shall be in accordance with the Rules government agencies or private entities in:
on Concurrence and Preference of Credits under the Civil (i) Verifying the authenticity of ownership
Code or other laws, subject to such terms and conditions as documents;
the Corporation may prescribe. The disposition of the branch (ii) Registering the interest of the closed
licenses and other bank licenses of the closed bank shall be bank on a specific property;
subject to the approval of the Bangko Sentral ng Pilipinas. (iii) Consolidating ownership over an asset
of the closed bank;
(b) Such action of the receiver to determine whether a bank may (iv) Securing certified true copies of
be the subject of a purchase of assets and assumption of documents held by the foregoing
liabilities transaction shall be final and executory, and may not agencies/entities in relation to an asset
be set aside by any court. (n) of the closed bank;
New PDIC Charter, Sec. 16. Conventional Liquidation. — (v) Securing the appropriate certification
from the foregoing agencies/entities in
A. Asset Management and Conversion. relation to an asset of the closed bank;
(a) The assets gathered by the receiver shall be evaluated and and
verified as to their existence, ownership, condition, and (vi) Performing other related activities;
other factors to determine their realizable value. In the
management, preservation and disposition of assets, the (2) Conduct a physical or ocular inspection of the
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properties owned by, or mortgaged to, the closed resolution ordering the closure of a bank, any
bank, to determine their existence and present person or entity in custody or possession of assets
condition; or records of the closed bank, including, but not
limited to, the closed bank’s deposit accounts,
(3) Determine the disposal price of assets in titles to real property, collaterals, promissory
accordance with generally accepted valuation notes, evidence of indebtedness or investments
principles, standards and practices, subject to such shall immediately turn over custody of said assets
guidelines as the receiver may determine; and records to the receiver. Such obligation shall
cover evidences of deposit such as passbooks or
(4) Dispose real or personal properties of the closed certificates of deposit issued by the bank to its
bank through bidding, negotiated sale or any other depositors. Pending turnover, all persons or
mode including lease with option to purchase, entities in custody or possession of any asset or
whether by piece or by lot, as may be reasonably record of the closed bank shall hold the said assets
determined by the receiver based on cost-benefit or records in trust for the receiver.
considerations and to allow efficient distribution
of assets to creditors; and (3) The persons or entities in custody or possession of
such asset shall not allow, authorize or cause the
(5) Engage third parties to assist in the liquidation, withdrawal, transfer, disposition, removal,
manage and/or dispose the assets, handle cases conversion, concealment, or other transaction
filed against or by the closed bank, subject to such involving or relating to the subject asset, unless
guidelines as determined by the receiver. otherwise directed by the receiver.

(d) Notwithstanding any provision of law to the contrary, the (e) The receiver shall have the authority to invest funds
following rules shall apply to the management and/or received from the conversion of the assets of the closed
conversion by the receiver of the assets of the closed bank in government securities, other government-
bank: guaranteed marketable securities or investment-grade debt
instruments.
(1) Upon notification of the closure of a bank, the
LRA, the Bureau of Lands, the Register of Deeds, (f) The proceeds of the sale of the bank and branch licenses
the LTO, the assessor’s office or other appropriate shall be for the benefit of the creditors of the closed bank
office of the local government unit, or such other which shall be distributed in accordance with this Act and
similar government agencies shall not allow any the Rules on Concurrence and Preference of Credits under
transaction affecting the assets of the closed bank the Civil Code or other laws.
without the consent of the receiver.
B. Petition for Assistance in the Liquidation of a Closed Bank.
(2) Upon issuance by the Monetary Board of the (g) A petition for assistance in the liquidation is a special
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proceeding for the liquidation of a closed bank, and closed bank shall file their claims with the receiver within
includes the declaration of the concomitant right of its sixty (60) days from the date of publication of the notice
creditors and the order of payment of their valid claims in of closure. Claims filed outside the foregoing prescribed
the disposition of its assets. period shall be disallowed.

Any proceeding initiated under this section shall be Claims denied by the receiver shall be filed with the
considered in rem. Jurisdiction over all persons affected liquidation court within sixty (60) days from receipt of the
by the proceeding shall be considered as acquired upon final notice of denial of claim.
publication of the order setting the case for initial hearing
in any newspaper of general circulation in the Philippines. (m) A claim whose validity has not yet been determined with
finality at the time of the submission of the final asset
(h) The liquidation court shall have exclusive jurisdiction to distribution plan, either by reason of a pending suit or for
adjudicate disputed claims against the closed banks, assist whatever reason, shall be considered as contingent claim
in the enforcement of individual liabilities of the and shall not be paid under the proposed final asset
stockholders, directors and officers and decide on all other distribution plan.
issues as may be material to implement the distribution
plan adopted by the Corporation for general application to (n) Upon finality of the order approving the final asset
all closed banks. distribution plan, the petition for assistance in the
liquidation of a closed bank shall henceforth be, for all
(i) The provisions of Republic Act No. 8799, otherwise intents and purposes, considered closed and terminated
known as ‘The Securities Regulation Code’, and Supreme and the receiver, its officers, employees or agents, are
Court Administrative Matter No. 00-8-10-SC, entitled, forever discharged from any and all claims and/or liability
‘The Rules of Procedure on Corporate Rehabilitation’, arising from or in connection with the liquidation of the
shall not be applicable to the petition for assistance in the closed bank.
liquidation of the closed bank.
(o) The receiver shall submit a final report on the
(j) The petition shall be filed in the RTC which has implementation of the approved final asset distribution
jurisdiction over the principal office of the closed bank or plan to the Monetary Board and the SEC after the
the principal office of the receiver, at the option of the expiration of the winding-up period provided in this Act.
latter.
(p) The Supreme Court shall promulgate the appropriate
(k) The petition shall be filed ex parte within a reasonable procedural rules to implement this section.
period from receipt of the Monetary Board Resolution
placing the bank under liquidation. C. Winding-Up.
(q) The creditors shall have a period of six (6) months from
(l) All persons or entities with claims against the assets of the the date of publication of notice of the approval by the
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court of the final asset distribution plan of the closed bank

within which to claim payment of the principal obligations
and surplus dividends. During this six-month period, the
receiver shall hold as trustee the assets allocated in the
final asset distribution plan for said creditors.

Failure by the creditor to comply with the documentary

requirements within the prescribed period and/or refusal
to accept the asset as payment shall be deemed as
abandonment or waiver of his or her right to payment.

(r) The individual stockholders of record or their duly-

authorized representative or the court-appointed
stockholders’ representative shall have a period of six (6)
months from publication of notice of the approval by the
court of the final asset distribution plan of the closed bank
within which to claim the residual assets. During this six-
month period, the receiver shall hold as trustee the assets
allocated in the final asset distribution plan for said
stockholders of record.

Failure by the individual stockholders of record or their

duly-authorized representative or the court-appointed
stockholders’ representative to comply with the
documentary requirements within the prescribed period
and/or refusal to accept the residual assets in kind shall be
deemed as abandonment or waiver of right to receive the
residual assets.

(s) After the lapse of the six-month period provided in

paragraphs (q) and (r) of this section, all assets which
remain unclaimed by the creditors and/or stockholders of
record shall be turned over to the Bureau of Treasury.

(t) The receiver shall continue to keep all the pertinent

records of the closed bank for a period of six (6) months
BGC Banking Bar Reviewer | 2020 11

from the date of publication of the approval of the final agents acting as receiver of a closed bank.
asset distribution plan.
(o) Valid Claim refers to the claim recognized by the Receiver or
After the lapse of this period, the receiver is authorized to allowed by the LC.
dispose of the same in accordance with the rules and
regulations to be prescribed by the receiver. (n) Sec. 2. Construction. — These Rules shall be interpreted with the
Rules on Liquidation of Closed Banks (2020; “RLCB”), A.M. end in view of expeditiously terminating the liquidation of a
No. 19-12-02, r. 2. closed bank. Where applicable, the provisions of the Rules of
Court and other pertinent laws and rules shall supplement these
Sec. 1. Definition of Terms and Construction. — Rules.
[* * *]
(d) Closed Bank refers to a bank placed under liquidation by the LIPANA v. DEV. BANK OF RIZAL (1987) (1st Div.)
MB pursuant to Section 30 of the NCBA and Section 12 of the
PDIC Charter. Summary of Facts:
[* * *] The Lipanas were depositors of DBR. Upon maturity of some time
(g) Disputed Claim refers to a claim or suit against the assets of a deposit certificates, they were issued a manager’s check. The MC
closed bank, or for specific performance, or breach of contract, or was dishonored. They filed a complaint for a sum of money and
damages, of whatever nature or character, whether for money or damages with a prayer for preliminary attachment. The writ
otherwise, liquidated or unliquidated, fixed or contingent, matured issued. Meanwhile the Monetary Board placed the bank under
or current, denied or disallowed by the Receiver and subsequently receivership due to insolvency and probable loss to depositors and
filed in court. creditors. Later, the RTC ruled for the Lipanas, and they sought
execution pending appeal. On motion of DBR, the RTC stayed the
(h) Liquidation refers to the proceedings under Sections 12 to 16 writ of execution.
of the PDIC Charter in relation to Section 30 of the NCBA. Issue:
Whether the execution of judgment could be stayed in light of the
(i) Liquidation Court (LC) refers to the Regional Trial Court bank being placed under receivership.
designated as Special Commercial Court (SCC) where the Petition
for Assistance in the Liquidation (PAL) of a closed bank is filed Ruling: Yes.
and given due course. As a rule, it is the ministerial duty of the court to order execution
[* * *] of judgment once the decision becomes final and executory.
(l) Master Liquidation Plan refers to the liquidation plan adopted Exceptions are when (1) it becomes imperative in the higher
by the Philippine Deposit Insurance Corporation (PDIC) for interest of justice to direct the suspension of its execution; (2)
general application to all closed banks referred to in Section 16 (h) whenever it is necessary to accomplish the aims of justice; or (3)
of the PDIC Charter. when certain facts and circumstances transpired after the judgment
[* * *] became final which could render the execution of the judgment
(m) Receiver refers to the PDIC, or any of its duly authorized unjust.
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at the time of closure shall not give any preference to the

Here, stay of execution was warranted by RBR being placed under attaching or garnishing party. Upon motion of the receiver,
receivership. To execute the judgment would unduly deplete the the preliminary attachment or garnishment shall be lifted
assets of respondent bank to the obvious prejudice of other and/or discharged.”
depositors and creditor. After the Monetary Board has declared
that a bank is insolvent and has ordered it to cease operations, the According to this case, the stay of the writ of execution of the
Board becomes the trustee of its assets for the equal benefit of all
judgment will be lifted after approval by the liquidation court of the
the creditors, including depositors. The assets of the insolvent
banking institution are held in trust for the equal benefit of all project of distribution. Also, that after declaration of insolvency, the
creditors, and after its insolvency, one cannot obtain an advantage depositor’s remedy is to intervene in liquidation proceedings.
or a preference over another by an attachment, execution or - It is well to note that that the New PDIC Charter, as quoted
otherwise. (Central Bank of the Phil. v. Morfe). above, in § 13(e)(10) now provides, “The execution and
enforcement of a final decision of a court other than the
RBR was placed under receivership on August 10, 1984, and the liquidation court against the assets of a closed bank shall be
RTC’s decision was dated November 13, 1984. The circumstance
stayed. The prevailing party shall file the final decision as a
that the [bank], having stopped operations since [August 10], was
forbidden to do business (and that ban would include the payment claim with the liquidation court and settled in accordance
of time deposits) implies that suits for the payment of such with the Rules on Concurrence and Preference of Credits
deposits were prohibited. What was directly prohibited should not under the Civil Code or other laws.”
be encompassed indirectly. - The correct remedy would be to file a verified claim with the
Liquidation Court pursuant to RLCB, r. 5.
Issue: Whether the filing of the case preceding the complaint took
it out from the Morfe Doctrine.
RLCB, r. 5. Claims against the Assets of Closed Banks. —
Ruling: No. A. Disputed Claims.
The time of the filing of the complaint is immaterial. It is the
execution that will obviously prejudice the other depositors and Sec. 1. Classification of Disputed Claims. — Disputed claims are
creditors. Moreover, as stated in the said Morfe case, the effect of classified into:
the judgment is only to fix the amount of the debt, and not give
priority over other depositors and creditors. a) Monetary claims — those filed against the assets of a
closed bank which were denied by the Receiver after
evaluation, or disallowed by the Receiver for failure to file
This case also ruled that no preference arises from attachment. within the sixty (60)-day period from publication of notice
- This principle has been textualized in the New PDIC Charter of closure; and
in § 13(e)(3) stating, “Any preliminary attachment or
garnishment on any of the assets of the closed bank existing b) Other claims — those non-monetary claims such as for
BGC Banking Bar Reviewer | 2020 13

specific performance, breach of contract, or damages of submission of the Final ADP, by way of a Verified Notice of
whatever nature or character. Claim upon payment of docket fee as provided for under Rule 141
of the Rules of Court.
B. Monetary Claims
The Verified Notice of Claim shall contain a clear and concise
Sec. 2. Filing of Claims. — Within a period of sixty (60) days statement of facts with original or certified true copies of the
from receipt of final notice of denial or disallowance by the relevant documentary evidence attached thereto.
Receiver or twenty (20) days from publication as provided for in
Section 5 (d), Rule 4 of these Rules, whichever is later, the ABACUS REAL EST. DEV. CTR. v. MANILA BANKING CORP.
claimant shall, upon payment of the docket fee amounting to three (2005) (3rd Div.)
percent (3%) of the claim, file a Verified Claim with the LC and Summary of Facts:
furnish a copy thereof to the Receiver. Manila Bank was closed by the Central Bank for insolvency and
placed under receivership. The legality of the closure was
A Verified Claim shall contain the following: challenged by the bank, and as a result, liquidation was held in
a) A clear and concise statement of facts; abeyance. The Central Bank amended the status of its designated
liquidator to that of statutory receiver. Manila Bank’s acting
b) Material dates pertaining to the date of filing of the claim president meanwhile granted an exclusive option to purchase its
with the Receiver and the date of receipt of the notice of unfinished building to an investor which set up Abacus for the
denial or disallowance of claim by the Receiver; purpose. Abacus and the option was then offered to another
investor, who over qualms with acquiring Abacus and the option,
c) Grounds in support of the Verified Claim together with had lunch with the statutory receiver. During lunch the liquidator
the original or certified true copies of relevant allegedly ratified the agreement verbally.
documentary evidence; and Issue:
Whether an exclusive option to purchase granted by the acting
d) Affidavits of witnesses and other evidence in support of president of a closed bank under receivership is enforceable
the Verified Claim. against it.
Ruling: No.
Failure to file a Verified Claim with the LC within the above-
stated period shall render the denial of the claim by the Receiver With respondent bank having been already placed under
final. receivership, its officers, inclusive of its acting president, were no
longer authorized to transact business in connection with the
[* * *] bank's assets and property. Clearly then, the "exclusive option to
purchase" granted by the acting president was and still is
Sec. 7. Filing of Other Claims. — All claims against the assets of unenforceable against Manila Bank.
the closed bank, other than those covered under Section B of this Issue:
Rule, shall be filed with the LC, at any time prior to the Whether the statutory receiver may ratify the exclusive option.
BGC Banking Bar Reviewer | 2020 14

Ruling: No. FIDELITY SAV. & MORT. BANK v. CENZON (1990) (2nd Div.).
A contract unenforceable for lack of authority by one of the Summary of Facts:
parties may be ratified by the person in whose name the contract The Santiagos obtained a judgment for accrued interest and
was executed. However, even assuming, in gratia argumenti, that damages against Fidelity, a bank which was closed by the
Manila Bank's receiver, approved the "exclusive option to Monetary Board and was under liquidation proceedings. Their
purchase" granted by the acting president, the same would still be action stemmed from unpaid deposits.
of no force and effect. Issue:
Whether an insolvent bank may be adjudged to pay interests on
The receiver appointed by the Central Bank to take charge of the unpaid deposits after closure by the Central Bank by reason of
properties of Manila Bank only had authority to administer the insolvency without violating the CIVIL CODE provisions on
same for the benefit of its creditors. Granting or approving an preference of credits.
"exclusive option to purchase" is not an act of administration, but Ruling: No.
an act of strict ownership, involving, as it does, the disposition of It is settled jurisprudence that a banking institution which has been
property of the bank. Not being an act of administration, the so- declared insolvent and subsequently ordered closed by the Central
called "approval" by the receiver amounts to no approval at all, a Bank of the Philippines cannot be held liable to pay interest on
bank receiver not being authorized to do so on his own. bank deposits which accrued during the period when the bank is
actually closed and non-operational.
For sure, Congress itself has recognized that a bank receiver only
has powers of administration. What enables a bank to pay stipulated interest on money deposited
with it is that thru the other aspects of its operation it is able to
The Court here cited NCBA, § 30 which previously provided that generate funds to cover the payment of such interest. Unless a
“The receiver shall immediately gather and take charge of all the bank can lend money, engage in international transactions, acquire
foreclosed mortgaged properties or their proceeds and generally
assets and liabilities of the institution, administer the same for the
engage in other banking and financing activities from which it can
benefit of its creditors, […]” derive income, it is inconceivable how it can carry on as a
- This provision has been deleted by the BSP Charter depository obligated to pay stipulated interest. Conventional
Amendment, Rep. Act No. 11211 (2019). The new provision wisdom dictates this inexorable fair and just conclusion. And it
is quoted above. can be said that all who deposit money in banks are aware of such
- The phrasing, however, was carried over almost in ipsissimis a simple economic proposition. Consequently, it should be
verbis in the New PDIC Charter in § 13(b)(2) stating, deemed read into every contract of deposit with a bank that the
obligation to pay interest on the deposit ceases the moment the
“Gather and take charge of all the assets, records and affairs
operation of the bank is completely suspended by the duly
of the closed bank, and administer the same for the benefit of constituted authority, the Central Bank.
its creditors”.
- Hence, the ruling of the Court is good law. It is well to note that the New PDIC Charter, as quoted above, in §
13(e)(6) now provides, “The liability of a bank to pay interest on
BGC Banking Bar Reviewer | 2020 15

deposits and all other obligations as of closure shall cease upon its
closure by the Monetary Board without prejudice to the first It is not necessary that a claim be initially disputed in a court or
paragraph of Section 85 of Republic Act No. 7653”. agency before it is filed with the liquidation court. As

In the course of the liquidation, contentious cases might arise

ONG v. CT. APP. (1996) (1st Div.) wherein a full-dress hearing would be required and legal issues
Summary of Facts: would have to be resolved. Hence, it would be necessary in justice
Ong filed a petition for surrender of TCTs against Rural Bank of to all concerned that a Court of First Instance (now Regional Trial
Olongapo (“RBO”). The land covered by the TCTs had been Court) […] assist and supervise the liquidation and […] act as
extrajudicially foreclosed and certificates of sale had been issued. umpire or arbitrator in the allowance and disallowance of claims.
RBO failed to redeem the properties. RBO sought dismissal as it
was undergoing liquidation, and pursuant to prevailing
It is well to note that the Court of Appeals which was sustained by
jurisprudence, the liquidation court has exclusive jurisdiction to
take cognizance of Ong’s claim. RTC denied. CA reversed. The the Supreme Court reasoned that “‘Disputed claims’ refer to all
chief premise of Ong is that the parcels were no longer bank claims, whether they be against the assets of the insolvent bank, for
assets; thus, they were beyond the jurisdiction of the liquidation specific performance, breach of contract, damages, or whatever.”
court. His case could proceed independently. - This phrasing nearly mirrors the provision in the New PDIC
Issue: Charter, § 5(h) and RLCB, r. 2, § 1 (g), both of which are
Whether jurisdiction over the claim belongs to the liquidation
quoted above.
court.
Ruling: Yes.
The fact that the insolvent bank is forbidden to do business, that The case construed a provision of the old Central Bank Act
its assets are turned over to the Superintendent of Banks, as a which has since been deleted.
receiver, for conversion into cash, and that its liquidation is - The principle has been more clearly enunciated, however, in
undertaken with judicial intervention means that, as far as lawful New PDIC Charter, § 16(h) stating, “The liquidation court
and practicable, all claims against the insolvent bank should be shall have exclusive jurisdiction to adjudicate disputed
filed in the liquidation proceeding.
claims against the closed banks […]”
Judicial liquidation is intended to prevent multiplicity of actions
against the insolvent bank. It is a pragmatic arrangement designed
to establish due process and orderliness in the liquidation of the
bank, to obviate the proliferation of litigations and to avoid
injustice and arbitrariness. The lawmaking body contemplated that
for convenience only one court, if possible, should pass upon the
claims against the insolvent bank and that the liquidation court
should assist the Superintendent of Banks and regulate his
operations.
BGC Banking Bar Reviewer | 2020 16

VILLANUEVA v. CT. APP. (1995) (1st Div.) It has been said that where upon the insolvency of a bank a
Summary of Facts: receiver therefor is appointed, the assets of the bank pass beyond
This case concerns a dispute over parcels of land Villanueva its control into the possession and control of the receiver whose
mortgaged, without her husband’s knowledge, to the Phil. duty it is to administer to assets for the benefit of the creditors of
Veterans Bank (“PVB”) through its branch OIC. While she never the bank. Thus, the appointment of a receiver operates to suspend
received the loan, the lots were later foreclosed, and the OIC went the authority of the bank and of its directors and officers over its
missing. Meanwhile, Ong offered to buy the lots. The PVB Board property and effects, such authority being reposed in the receiver,
accepted conditioned on payment in cash within 15 days. Ong and in this respect, the receivership is equivalent to an injunction
abroad; thus, did not find out about the approval. Around this to restrain the bank officers from intermeddling with the property
time, Villanueva attempted to repurchase, but her negotiations of the bank in any way.
were stalled as the PVB was ordered closed by the Central Bank
and was placed under receivership. Ong, upon consulting with the In a nutshell, the insolvency of a bank and the consequent
CB, found out that his offer had been approved. After a long appointment of a receiver restrict the bank's capacity to act,
period without communication from the CB, he tendered payment. especially in relation to its property. Applying Article 1323 of the
His payment was accepted and he received a CB Official Receipt. Civil Code, Ong's offer to purchase the subject lots became
He sought to compel the CB to issue the deed of conveyance to ineffective because the PVB became insolvent before the bank's
him, but as liquidation proceedings were ongoing the court acceptance of the offer came to his knowledge. Hence, the
transferred the case to the liquidation court. Villanueva filed a purported contract of sale between them did not reach the stage of
claim before the same court on the strength of her deprivation of perfection. Corollarily, he cannot invoke the resolution of the bank
ownership by falsification. 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

Issue: payment of P100,000.00 benefit him since the receipt of the
Whether the approval by the PVB board of Ong’s offer perfected a payment was made subject to the approval by the Central Bank
contract between them. liquidator of the PVB.
Ruling: No.
The approval of Ong's offer constitutes an acceptance, the effect This payment was disapproved on the ground that the subject
of which is to perfect the contract of sale upon notice thereof to property was already in custodia legis, and hence, disposable only
Ong. He did not receive any notice of the approval of his offer, by public auction and subject to the approval
and he only found out after he inquired. of the liquidation court.

Under Article 1323 of the Civil Code, an offer becomes The restriction on the bank’s capacity to act through its board is now
ineffective upon the death, civil interdiction, insanity, or provided in the New PDIC Charter in § 13(e)(2) as follows, “The
insolvency of either party before acceptance is conveyed. powers, voting rights, functions and duties, […] of the directors,
officers, and stockholders of such bank are terminated upon its
BGC Banking Bar Reviewer | 2020 17

closure. Accordingly, the directors, officers, and stockholders shall functus officio. Consequently, respondent judge has been stripped
be barred from interfering in any way with the assets, records, and of the authority to issue orders involving acts of liquidation.
affairs of the bank.”
Liquidation, in corporation law, connotes a winding up or settling
- This case construed CBA, § 29 which has since been
with creditors and debtors. It is the winding up of a corporation so
superseded by NCBA, § 30, which in turn has been that assets are distributed to those entitled to receive them. It is the
amended. The parallel provision appears in the New PDIC process of reducing assets to cash, discharging liabilities and
Charter as quoted above. dividing surplus or loss.

In relation to properties being in custodia legis, the New PDIC On the opposite end of the spectrum is rehabilitation which
Charter provides in § 13(e)(3), as follows, “Upon service of notice of connotes a reopening or reorganization. Rehabilitation
contemplates a continuance of corporate life and activities in an
closure as provided in Section 14 of this Act, all the assets of the
effort to restore and reinstate the corporation to its former position
closed bank shall he deemed in custodia legis in the hands of the of successful operation and solvency.
receiver, and as such, these assets may not be subject to attachment,
garnishment, execution, levy or any other court processes.” It is crystal clear that the concept of liquidation is diametrically
PHILIPPINE VETERANS BANK EMP'EES UNION v. VEGA opposed or contrary to the concept of rehabilitation, such that both
(2001) (1st Div.) cannot be undertaken at the same time. To allow the liquidation
Summary of Facts: proceedings to continue would seriously hinder the rehabilitation
The Central Bank filed a petition for assistance in the liquidation of the subject bank.
of the PVB with the RTC. Employees filed claims for accrued and
unpaid employee wages and benefits. Meanwhile, Congress It is important to note that clause in the old NCBA, § 30 requiring
enacted Rep. Act No. 7169 providing for the rehabilitation of the the receiver to determine whether rehabilitation is possible has been
Philippine Veterans Bank. The Union filed with the labor tribunals deleted by the BSP Charter Amendment. New PDIC Charter, §
their residual claims for benefits and for reinstatement upon
12(a), cl. 2 also provides, “For this purpose, banks closed by the
reopening of the bank. Central Bank issued a certificate of
authority allowing the PVB to reopen. Despite the legislative Monetary Board shall no longer be rehabilitated.”
mandate for rehabilitation, the judge proceeded with liquidation
proceedings. MANALO v. CT. APP. (2001) (1st Div.)
Issue: Summary of Facts:
Whether liquidation court continue with liquidation proceedings A company got a loan from PAIC Savings and mortgaged lots. It
of the PVB when Congress had mandated its rehabilitation and defaulted, and the collateral was foreclosed and sold to the bank at
reopening through Rep. Act No. 7169. auction which the company’s president (owner of the land) failed
Ruling: No. to redeem. Meanwhile, the Central Bank filed a petition for
Clearly, the enactment of Republic Act No. 7169, as well as the assistance in liquidation of PAIC which was given due course.
subsequent developments has rendered the liquidation court PAIC through its receiver prayed for the issuance of a writ of
BGC Banking Bar Reviewer | 2020 18

possession over the lots before the RTC. Meantime, the lots were Issue:
sold by the company, and the buyer in turn assigned the rights to Whether the bank’s corporate personality has ceased; thus, bereft
Manalo. Manalo questioned the RTC’s jurisdiction and the of personality to sue.
capacity of PAIC to sue. Ruling: No.
Issue: A bank which had been ordered closed by the monetary board
Whether liquidation court to the exclusion of the regular court retains its juridical personality which can sue and be sued through
held jurisdiction over actions maintained by the bank through the its liquidator. The only limitation being that the prosecution or
receiver. defense of the action must be done through the liquidator.
Ruling: No. Otherwise, no suit for or against an insolvent entity would prosper.
The legal provision (“The court shall have jurisdiction in the same In such situation, banks in liquidation would lose what justly
proceedings to assist in the adjudication of disputed claims against belongs to them through a mere technicality.
the bank”) only finds operation in cases where there are claims
against an insolvent bank. The exclusive jurisdiction of the That the law allows a bank under liquidation to participate in an
liquidation court pertains only to the adjudication of claims action can be clearly inferred from the third paragraph of the same
against the bank. It does not cover the reverse situation where it is Section 29 of The Central Bank Act (“institute such actions as
the bank which files a claim against another person or legal entity. may be necessary“, which authorizes or empowers a liquidator to
institute actions.
The requirement that all claims against the bank be pursued in the
liquidation proceedings filed by the Central Bank is intended to As to the power of the PDIC as statutory receiver, its charter in
prevent multiplicity of actions against the insolvent bank and § 13(b)(4) provides that it may, “[b]ring suits to enforce liabilities of
designed to establish due process and orderliness in the liquidation the directors, officers, employees, agents of the closed bank and
of the bank, to obviate the proliferation of litigations and to avoid
injustice and arbitrariness. The lawmaking body contemplated that other entities related or connected to the closed bank or to collect,
for convenience, only one court, if possible, should pass upon the recover, and preserve all assets, including assets over which the bank
claims against the insolvent bank and that the liquidation court has equitable interest;”
should assist the Superintendents of Banks and regulate his - The PDIC qua receiver is, therefore, clearly now vested with
operations. the power to bring action in order to recover assets of the
bank. Effectively, the principle of law has been statutorily
On the contrary, it is an action instituted by the closed bank itself
crystalized.
for the preservation of its asset and protection of its property. It
was filed upon the instance of the PAIC's liquidator in order to
take possession of a tract of land over which it has ownership On its juridical personality, the New PDIC Charter provides in
claims. § 13(e)(1) as follows, “Upon placement by the Monetary Board of a
bank under liquidation, it shall continue as a body corporate until the
To be sure, the liquidator took the proper course of action when it termination of the winding-up period under Section 16 of this Act.
applied for a writ in the Pasay City RTC. Such continuation as a body corporate shall only be for the purpose
BGC Banking Bar Reviewer | 2020 19

of liquidating, settling and closing its affairs and for the disposal, Petition for Certiorari before a court when the same was issued in
conveyance or distribution of its assets pursuant to this Act. The excess of jurisdiction or with such grave abuse of discretion as to
receiver shall represent the closed bank in all cases by or against the amount to lack or excess of jurisdiction. The court referred to
therein can be construed to mean the Court of Appeals because it
closed bank and prosecute and defend suits by or against it. In no
is in the said court where a Petition for Certiorari can be filed
case shall the bank be reopened and permitted to resume banking following the hierarchy of courts.
business after being placed under liquidation.”
- Thus, there is now explicit textual basis for the continued The case did not concern receivership and liquidation of banks.
existence of the bank, albeit for limited purposes, until However, the Court drew the distinction between the case at bench
winding-up ceases. against the cited Salud. The doctrine there precisely did not apply in
UCPB because the facts were not on all fours.
UNITED COCONUT PLANTERS BANK v. E. GANZON, INC. - Salud concerned an MB resolution forbidding a bank from
(2009) (3rd Div.) doing business due to insolvency and causing probable loss
Summary of Facts: to creditors and depositors.
E. Ganzon filed an administrative complaint against UCBP for - The Court ruled that the IAC had no appellate jurisdiction
unsafe and unsound banking practices and violations of NCBA, §§
over CBA, § 29 MB resolutions concerning closure,
36 (Proceedings Upon Violation of this Act and Other Banking
Laws, Rules, Regulations, Orders or Instructions); 37 receivership, and the decision to rehabilitate or liquidate as
(Administrative Sanctions on Banks and Quasi-banks); ch. IV the section provided that the decision of the MB was “final
(Instruments of Bangko Sentral Action) in relation to GBLA, § and executory”.
55.1 (Prohibited Transactions). The Monetary Board dismissed the - This determination could only be set aside by the trial court
complaint. E. Ganzon filed a Rule 43 petition for review before on “convincing proof that the Monetary Board acted
the Court of Appeals. UCBP argued that the CA lacked appellate
arbitrarily or in bad faith.”
jurisdiction over administrative complaints on the strength of
Salud v. Central Bank of the Phil., where the Court ruled the CA - Such ruling applied to insolvency alone, and not to all
had no appellate jurisdiction over resolutions or orders of the decisions of the MB.
Monetary Board of the Central Bank of the Philippines because no - Thereafter, as an aside, the Court noted what was at the time,
law prescribes any mode of appeal therefrom. the new law, i.e., NCBA, § 30.
Topical Question: - Notwithstanding the Court’s dictum here that the CA had
Which court has jurisdiction over a petition for certiorari over the jurisdiction of certiorari petitions in relation to NCBA, § 30,
Monetary Board’s resolution to liquidate a bank.
the case of Salud interpreting CBA, § 29 was a review of the
Obiter Dictum: The Court of Appeals.
At any rate, under the new law, i.e., Section 30 of Republic Act MB resolution by the CFI.
No. 7653, otherwise known as The New Central Bank Act, which - In fact Rural Bank of Buhi v. Ct. App., 245 Phil. 263 (1988)
took effect on 3 July 1993, the order of the BSP Monetary Board, on the strength of Salud deemed that RTC jurisdiction in
even regarding the liquidation of a bank, can be questioned via a judicial review related to CBA, § 29 was settled law.
BGC Banking Bar Reviewer | 2020 20

said majority stockholders of the order placing the bank under

conservatorship.

The following requisites, therefore, must be present before the

CENTRAL BANK OF THE PHIL. v. CT. APP. (1992) (en banc)
order of conservatorship may be set aside by a court:
Summary of Facts: (1) The appropriate pleading must be filed by the stockholders of
This concerns several cases which stemmed from fictitious record representing the majority of the capital stock of the
uncollateralized loans amounting in the millions extended by bank in the proper court;
Producers Bank of the Phil. (“PBP”) to related interests. The
acting on an SED report following the findings from the regular (2) Said pleading must be filed within ten (10) days from receipt
examination, the Monetary Board placed PBP under of notice by said majority stockholders of the order placing
conservatorship. It submitted to conservatorship, but sought its the bank under conservatorship; and
lifting from the MB. It submitted a rehabilitation plan which was
not agreed to by the MB. Three years passed without a (3) There must be convincing proof, after hearing, that the action
rehabilitation plan submitted. PBP filed a case for damages and is plainly arbitrary and made in bad faith.
praying for preliminary injunction while devoting several pages of
its pleading assailing “arbitrary” and “illegal” acts of the In the instant case, PBP was placed under conservatorship on 20
conservator. It, likewise, asked that the Central Bank be ordered to January 1984. The original complaint was filed only on 27 August
“restore the viability of PBP”. 1987, or three (3) years, seven (7) months and seven (7) days later,
Issue: long after the expiration of the 10-day period referred to above. It
Whether the conservatorship could be lifted. is also beyond question that the complaint and the amended
Ruling: No. complaint were not initiated by the stockholders of record
Obviously, the trial court was of the impression that what was representing the majority of the capital stock. Accordingly, the
sought for in Civil Case No. 17692 is the lifting of the order placing PBP under conservatorship had long become final
conservatorship because it was arbitrarily and illegally imposed. and its validity could no longer be litigated upon before the trial
There is nothing in the amended complaint to reflect an court.
unequivocal intention to ask for its lifting. Unfortunately too,
respondent Court was easily misled into believing that the
This case does not concern receivership and liquidation. Neither does
amended complaint sought the lifting of the conservatorship.
it construe the present provision, as it dealt with CBA, § 29, ¶ 5
If it were to lift the conservatorship because it was arbitrarily (amend. 1986) in relation to § 28-A (Appointment of Conservator).
imposed, then the case should have been dismissed on the grounds - However, it cited Rural Bank of Lucena, Inc. v. Arca which
of prescription and lack of personality to bring the action. Central concerned proceedings in insolvency and liquidation.
Bank Act, § 29, ¶ 5 as amended by Executive Order No. 289, the - The amendment by Exec. Order No. 289 (1986) merely
actions of the MB may be assailed in an appropriate pleading filed
extended the mode of judicial review in insolvency and
by the stockholders of record representing the majority of the
capital stock within ten (10) days from receipt of notice by the liquidation to conservatorship.
BGC Banking Bar Reviewer | 2020 21

- It is to that extent of equal applicability to insolvency and

liquidation.

That being said, it is well to note that the phrasing of the law has
been modified in the NCBA. The Act in § 30, reads:

“The actions of the Monetary Board taken under this section [viz.,
Proceedings in Receivership and Liquidation] or under Section 29
[viz., Appointment of Conservator] 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. […]”
- It must also be noted that grave abuse of discretion is a legal
term of art, which is expressed canonically as, “either
capricious, discriminatory, whimsical, arbitrary, unjust, or is
tantamount to a denial of due process and equal protection
clauses of the Constitution.” (Miranda v. Phil. Deposit Ins.
Corp., 532 Phil. 723 [2006] citing Banco Filipino Sav. &
Mort. Bank v. Monetary Bd., 226 Phil. 428, [1986] [en
banc]).