G.R. Nos.

154470-71 September 24, 2012

BANK OF COMMERCE, Petitioner,
vs.
PAN!ERS "E#EOPMEN! BANK $%& BANGKO SEN!RA NG P''P'NAS, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - - x
G.R. Nos. 1545()-)0
BANGKO SEN!RA NG P''P'NAS, Petitioner,
vs.
PAN!ERS "E#EOPMEN! BANK, Respondent.
D E C I S I O N
BR'ON, J.:
Before the Court are two consoidated petitions for review on certiorari under Rue !",
#
on pure $uestions of aw, fied %& the petitioners Ban' of Co((erce
)BOC* and the Ban+'oSentran+Piipinas )BSP*. ,he& assai the -anuar& #., /../ and -u& /0, /../ Orders )assaied orders* of the Re+iona ,ria Court )R,C*
of 1a'ati Cit&, Branch #!0, in Civi Case Nos. 2!-0/00 and 2!-0/"!. ,hese orders dis(issed )i* the petition fied %& the Panters Deveop(ent Ban' )PDB*, )ii*
the 3countercai(3 fied %& the BOC, and )iii* the counter-co(paint4cross-cai( for interpeader fied %&the BSP5 and denied the BOC6s and the BSP6s (otions
for reconsideration.
,7E 8N,ECEDEN,S
,he Centra Ban' %is
I. 9irst set of CB %is
,he Ri:a Co((ercia Ban'in+ Corporation )RCBC* was the re+istered owner of seven Centra Ban' )CB* %is with a tota face vaue of P ;. (iion, issued on
-anuar& /, #22! and woud (ature on -anuar& /, #22".
/
8s evidenced %& a 3Detached 8ssi+n(ent3 dated 8pri <, #22!,
0
the RCBC sod these CB %is to the
BOC.
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8s evidenced %& another 3Detached 8ssi+n(ent3
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of even date, the BOC, in turn, sod these CB %is to the PDB.
=
,he BOC deivered the Detached
8ssi+n(ents to the PDB.
;
On 8pri #", #22! )8pri #" transaction*, the PDB, in turn, sod to the BOC ,reasur& Bis worth P ;. (iion, with (aturit& date of -une /2, #22!, as evidenced
%& a ,radin+ Order
<
and a Confir(ation of Sae.
2
7owever, instead of deiverin+ the ,reasur& Bis, the PDB deivered the seven CB %is to the BOC, as
evidenced %& a PDB Securit& Deiver& Receipt, %earin+ a 3note>
??
su%stitution in ieu of .=-/2-2!3 @ referrin+ to the ,reasur& Bis.
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Nevertheess, the PDB
retained possession of the Detached 8ssi+n(ents. It is %asica& the nature of this 8pri #" transaction that the PDB and the BOC cannot a+ree on.
,he transfer of the first set of seven CB %is
i. CB %i nos. !"0"#-"0
On 8pri /., #22!, accordin+ to the BOC, it 3sod %ac'3
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to the PDB three of the seven CB %is. In turn, the PDB transferred these three CB %is to Bancapita
Deveop(ent Corporation )Bancap*. On 8pri /", #22!, the BOC %ou+ht the three CB %is fro( Bancap @ so, uti(ate&, the BOC reac$uired these three CB
%is,
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particuar& descri%ed as foows>
Seria No.> /BB A1 .!"0"#
/BB A1 .!"0"/
/BB A1 .!"0"0
Buantit&> ,hree )0*
Deno(ination> Php #. (iion
,ota 9ace Caue> Php 0. (iion
ii. CB %i nos. !"0!;-".
On 8pri /., #22!, the BOC sod the re(ainin+ four )!* CB %is to Capita One E$uities Corporation
#0
which transferred the( to 8-8sia Capita and ,rust
Corporation )8 8sia*. On Septe(%er 0., #22!, 8 8sia further transferred the four CB %is %ac' to the RCBC.
#!
On Nove(%er #=, #22!, the RCBC sod %ac' to 8 8sia one of these ! CB %is. Dhen the BSP refused to reease the a(ount of this CB %i on (aturit&, the
BOC purchased fro( 8 8sia this one CB %i,
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particuar& descri%ed as foows>
#=
Seria No.> /BB A1 .!"0!<
Buantit&> One )#*
Deno(ination> Php #. (iion
,ota 9ace Caue> Php #. (iion
8s the re+istered owner of the re(ainin+ three CB %is, the RCBC sod the( to ICI Capita and Insuar Savin+s Ban'. 8+ain, when the BSP refused to reease
the a(ount of this CB %i on (aturit&, the RCBC paid %ac' its transferees, reac$uired these three CB %is and sod the( to the BOC @ uti(ate&, the BOC
ac$uired these three CB %is.
8 in a, the BOC ac$uired the first set of seven CB %is.
II. Second set of CB %is
On 8pri #2, #22!, the RCBC, as re+istered owner, )i* sod two CB %is with a tota face vaue of P /. (iion to the PDB and )ii* deivered to the PDB the
correspondin+ Detached 8ssi+n(ent.
#;
,he two CB %is were particuar& descri%ed as foows>
Seria No.> BB A1 .!"0;0
BB A1 .!"0;!
Issue date> -anuar& 0, #22!
1aturit& date> -anuar& /, #22"
Deno(ination> Php #. (iion
,ota 9ace vaue> Php /. (iion
On even date, the PDB deivered to Bancap the two CB %is
#<
)8pri #2 transaction*. In turn, Bancap sod the CB %is to 8-8(anah Isa(ic Invest(ent Ban' of
the Phiippines, which in turn sod it to the BOC.
#2
PDB6s (ove a+ainst the transfer of
the first and second sets of CB %is
On -une 0., #22!, upon earnin+ of the transfers invovin+ the CB %is, the PDB infor(ed
/.
the Officer-in-Char+e of the BSP6s Eovern(ent Securities
Depart(ent,
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Fa+ri(asNu$ui, of the PDB6s cai( over these CB %is, %ased on the Detached 8ssi+n(ents in its possession. ,he PDB re$uested the BSP
//
to
record its cai( in the BSP6s %oo's, expainin+ that its non-possession of the CB %is is 3on account of i(perfect ne+otiations thereof and4or su%se$uent setoff
or transfer.3
/0
Nu$ui denied the re$uest, invo'in+ Section < of CB Circuar No. /< )Re+uations Eovernin+ Open 1ar'et Operations, Sta%ii:ation of the Securities 1ar'et,
Issue, Servicin+ and Rede(ption of the Pu%ic De%t*
/!
which re$uires the presentation of the %ond %efore a re+istered %ond (a& %e transferred on the %oo's of
the BSP.
/"
In a -u& /", #22! etter, the PDB carified to Nu$ui that it was not 3as'in+ for the transfer of the CB BisG. rather it intends to put the BSP on for(a notice that
whoever is in possession of said %is is not a hoder in due course,3 and, therefore the BSP shoud not (a'e pa&(ent upon the presentation of the CB %is on
(aturit&.
/=
Nu$ui responded that the BSP was 3not in a position at that point in ti(e to deter(ine who is and who is not the hoder in due course since it is not
priv& to a acts and ti(e invovin+ the transfers or ne+otiation3 of the CB %is. Nu$ui added that the BSP6s action sha %e +overned %& CB Circuar No. /<, as
a(ended.
/;
On Nove(%er #;, #22!, the PDB aso as'ed BSP Deput& Eovernor Ed+ardo Hiacita that )i* a notation in the BSP6s %oo's %e (ade a+ainst the transfer,
exchan+e, or pa&(ent of the %onds and the pa&(ent of interest thereon5 and )ii* the presenter of the %onds upon (aturit& %e re$uired to su%(it proof as a
hoder in due course )of the first set of CB %is*. ,he PDB reied on Section #. )d* ! of CB Circuar No. /<.
/<
,his provision reads>
)!* 8ssi+n(ents effected %& fraud @ Dhere the assi+n(ent of a re+istered %ond is secured %& frauduent representations, the Centra Ban' can +rant no reief if
the assi+n(ent has %een honored without notice of fraud. Otherwise, the Centra Ban', upon receipt of notice that the assi+n(ent is cai(ed to have %een
secured %& frauduent representations, or pa&(ent of the %ond the pa&(ent of interest thereon, and when the %ond is presented, wi ca upon the owner and
the person presentin+ the %ond to su%stantiate their respective cai(s.If it then appears that the person presentin+ the %ond stands in the position of %onafide
hoder for vaue, the Centra Ban', after +ivin+ the owner an opportunit& to assert his cai(, wi pass the %ond for transfer, exchan+e or pa&(ents, as the case
(a& %e, without further $uestion.
In a Dece(%er /2, #22! etter, Nu$ui a+ain denied the re$uest, reiteratin+ the BSP6s previous stand.
In i+ht of these BSP responses and the i(pendin+ (aturit& of the CB %is, the PDB fied
/2
with the R,C two separate petitions for 1anda(us, Prohi%ition and
InIunction with pra&er for Prei(inar& InIunction and ,e(porar& Restrainin+ Order, doc'eted as Civi Case No. 2!-0/00 )coverin+ the first set of CB %is* and
Civi Case 2!-0/"! )coverin+ the second set of CB %is* a+ainst Nu$ui, the BSP and the RCBC.
0.
,he PDB essentia& cai(s that in %oth the 8pri #" transaction )invovin+ the first set of CB %is* and the 8pri #2 transaction )invovin+ the second set of CB
%is*, there was no intent on its part to transfer tite of the CB %is, as shown %& its non-issuance of a detached assi+n(ent in favor of the BOC and Bancap,
respective&. ,he PDB particuar& ae+es that it (ere& 3warehoused3
0#
the first set of CB %is with the BOC, as securit& coatera.
On Dece(%er /<, #22!, the R,C te(porari& enIoined Nu$ui and the BSP fro( pa&in+ the face vaue of the CB %is on (aturit&.
0/
On -anuar& #., #22", the
PDB fied an 8(ended Petition, additiona& i(peadin+ the BOC and 8 8sia.
00
In a -anuar& #0, #22" Order, the cases were consoidated.
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On -anuar& #;,
#22", the R,C +ranted the PDB6s appication for a writ of prei(inar& prohi%itor& inIunction.
0"
In %oth petitions, the PDB identica& pra&ed>
D7ERE9ORE, it is respectfu& pra&ed x xx that, after due notice and hearin+, the Drits of 1anda(us, Prohi%ition and InIunction, %e issued5 )i* co((andin+ the
BSP and Nu$ui, or whoever (a& ta'e her pace -
)a* to record forthwith in the %oo's of BSP the cai( of x xx PDB on the Jtwo sets ofK CB Bis in accordance with Section #. )d* )!* of revised C.B. Circuar No.
/<5 and
)%* aso pursuant thereto, when the %is are presented on (aturit& date for pa&(ent, to ca )i* x xx PDB, )ii* x xx RCBC x xx, )iii* x xx BOC x xx, and )iv* x xx
8FF-8SI8 x xx5 or whoever wi present the Jfirst and second sets ofK CB Bis for pa&(ent, to su%(it proof as to who stands as the hoder in due course of said
%is, and, thereafter, act accordin+&5
and )ii* orderin+ the BSP and Nu$ui to pa& Ioint& and severa& to x xx PDB the foowin+>
)a* the su( of P #..,......, as and for exe(par& da(a+es5
)%* the su( of at east P "..,......, or such a(ount as sha %e proved at the tria, as and for attorne&6s fees5
)c* the e+a rate of interest fro( the fiin+ of this Petition unti fu pa&(ent of the su(s (entioned in this Petition5 and
)d* the costs of suit.
0=
8fter the petitions were fied, the BOC ac$uired4reac$uired a the nine CB %is @ the first and second sets of CB %is )coective&, su%Iect CB %is*.
Defenses of the BSP and of the BOC
0;
,he BOC fied its 8nswer, pra&in+ for the dis(issa of the petition. It ar+ued that the PDB has no cause of action a+ainst it since the PDB is no on+er the owner
of the CB %is. Contrar& to the PDB6s 3warehousin+ theor&,3
0<
the BOC asserted that the )i* 8pri #" transaction and the )ii* 8pri #2 transaction @ coverin+ %oth
sets of CB %is - were vaid contracts of sae, foowed %& a transfer of tite )i* to the BOC )in the 8pri #" transaction* upon the PDB6s deiver& of the #st set of
CB %is in su%stitution of the ,reasur& Bis the PDB ori+ina& intended to se, and )ii* to Bancap )in the 8pri #2 transaction* upon the PDB6s deiver& of the /nd
set of CB %is to Bancap, i'ewise %& wa& of su%stitution.
,he BOC adds that Section #. )d* ! of CB Circuar No. /< cannot app& to the PDB6s case %ecause )i* the PDB is not in possession of the CB %is and )ii* the
BOC ac$uired these %is fro( the PDB, as to the #st set of CB %is, and fro( Bancap, as to the /nd set of CB %is, in +ood faith and for vaue. ,he BOC aso
asserted a co(pusor& countercai( for da(a+es and attorne&6s fees.
On the other hand, the BSP countered that the PDB cannot invo'e Section #. )d* ! of CB Circuar No. /< %ecause this section appies on& to an 3owner3 and a
3person presentin+ the %ond,3 of which the PDB is neither. ,he PDB has not presented to the BSP an& assi+n(ent of the su%Iect CB %is, du& recorded in the
BSP6s %oo's, in its favor to cothe it with the status of an 3owner.3
02
8ccordin+ to the BSP @
Section #. d. )!* appies on& to a re+istered %ond which is assi+ned. 8nd the issuance of CB Bis x xx are re$uired to %e recorded4re+istered in BSP6s %oo's.
In this re+ard, Section ! a. )#* of CB Circuar /< provides that re+istered %onds 3(a& %e transferred on& %& an assi+n(ent thereon du& executed %& the
re+istered owner or his du& authori:ed representative x xx and du& recorded on the %oo's of the Centra Ban'.3
x xxx
,he ae+ed assi+n(ent of su%Iect CB Bis in PDB6s favor is not recorded4re+istered in BSP6s %oo's.
!.
)underscorin+ suppied*
Conse$uent&, when Nu$ui and the BSP refused the PDB6s re$uest )to record its cai(*, the& were (ere& perfor(in+ their duties in accordance with CB
Circuar No. /<.
8ternative&, the BSP as'ed that an interpeader suit %e aowed %etween and a(on+ the cai(ants to the su%Iect CB %is on the position that whie it is a%e
and wiin+ to pa& the su%Iect CB %is6 face vaue, it is dut& %ound to ensure that pa&(ent is (ade to the ri+htfu owner. ,he BSP pra&ed that Iud+(ent %e
rendered>
a. Orderin+ the dis(issa of the PDB6s petition for ac' of (erit5
%. Deter(inin+ which %etween4a(on+ JPDBK and the other cai(ants is4are awfu& entited to the ownership of the su%Iect CB %is and the proceeds
thereof5
c. x xx5
d. Orderin+ PDB to pa& BSP and Nu$ui such actua4co(pensator& and exe(par& da(a+esG as the R,C (a& dee( warranted5 and
e. Orderin+ PDB to pa& Nu$ui (ora da(a+esG and to pa& the costs of the suit.
!#
Su%se$uent events
,he PDB a+reed with the BSP6s aternative response for an interpeader @
!. PDB a+rees that the various cai(ants shoud now interpead and su%stantiate their respective cai(s on the su%Iect CB %is. 7owever, the tota face vaue of
the su%Iect CB %is shoud %e deposited in escrow with a private %an' to %e disposed of on& upon order of the R,C.
!/
8ccordin+&, on -une 2, #22"
!0
and 8u+ust !, #22",
!!
the BOC and the PDB entered into two separate Escrow 8+ree(ents.
!"
,he first a+ree(ent covered the
first set of CB %is, whie the second a+ree(ent covered the second set of CB %is. ,he parties a+reed to Ioint& coect fro( the BSP the (aturit& proceeds of
these CB %is and to deposit said a(ount in escrow, 3pendin+ fina deter(ination %& Court Iud+(ent, or a(ica%e sette(ent as to who sha %e eventua&
entited thereto.3
!=
,he BOC and the PDB fied a -oint 1otion,
!;
su%(ittin+ these Escrow 8+ree(ents for court approva. ,he R,C +ave its approva to the
parties6 -oint 1otion.
!<
8ccordin+&, the BSP reeased the (aturit& proceeds of the CB %is %& creditin+ the De(and Deposit 8ccount of the PDB and of the
BOC with ".L each of the (aturit& proceeds of the a(ount in escrow.
!2
In view of the BOC6s ac$uisition of a the CB %is, 8 8sia
".
(oved to %e dropped as a respondent )with the PDB6s confor(it&
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*, which the R,C +ranted.
"/
,he
RCBC su%se$uent& foowed suit.
"0
In i+ht of the deveop(ents, on 1a& !, #22<, the R,C re$uired the parties to (anifest their intention re+ardin+ the case and to infor( the court of an& a(ica%e
sette(ent5 3otherwise, thJeK case sha %e dis(issed for ac' of interest.3
"!
Co(p&in+ with the R,C6s order, the BOC (oved )i* that the case %e set for pre-tria
and )ii* for further proceedin+ to resove the re(ainin+ issues %etween the BOC and the PDB, particuar& on 3who has a %etter ri+ht over the su%Iect CB
%is.3
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,he PDB Ioined the BOC in its (otion.
"=
On Septe(%er /<, /..., the R,C +ranted the BSP6s (otion to interpead and, accordin+&, re$uired the BOC to a(end its 8nswer and for the confictin+
cai(ants to co((ent thereon.
";
In Octo%er /..., the BOC fied its 8(ended Consoidated 8nswer with Co(pusor& Countercai(, reiteratin+ its earier
ar+u(ents assertin+ ownership over the su%Iect CB %is.
"<
In the aternative, the BOC added that even assu(in+ that there was no effective transfer of the nine CB %is uti(ate& to the BOC, the PDB re(ains o%i+ated
to deiver to the BOC, as %u&er in the 8pri #" transaction and uti(ate successor-in-interest of the %u&er )Bancap* in the 8pri #2 transaction, either the ori+ina
su%Iects of the saes or the vaue thereof, pus whatever inco(e that (a& have %een earned durin+ the pendenc& of the case.
"2
,hat BOC pra&ed>
#. ,o decare BOC as the ri+htfu owner of the nine )2* CB %is and as the part& entited to the proceeds thereof as we as a inco(e earned
pursuant to the two )/* Escrow 8+ree(ents entered into %& BOC and PDB.
/. In the aternative, orderin+ PDB to deiver the ori+ina su%Iect of the saes transactions or the vaue thereof and whatever inco(e earned %& wa& of
interest at prevaiin+ rate.
Dithout an& opposition or o%Iection fro( the PDB, on 9e%ruar& /0, /..#, the R,C ad(itted
=.
the BOC6s 8(ended Consoidated 8nswer with Co(pusor&
Countercai(s.
In 1a& /..#, the PDB fied an O(ni%us 1otion,
=#
$uestionin+ the R,C6s Iurisdiction over the BOC6s 3additiona countercai(s.3 ,he PDB ar+ues that its petitions
pra& for the BSP )not the R,C* to deter(ine who a(on+ the confictin+ cai(ants to the CB %is stands in the position of the %ona fide hoder for vaue. ,he
R,C cannot entertain the BOC6s countercai(, re+ardess of its nature, %ecause it is the BSP which has Iurisdiction to deter(ine who is entited to receive the
proceeds of the CB %is.
,he BOC opposed
=/
the PDB6s O(ni%us 1otion. ,he PDB fied its Rep&.
=0
In a -anuar& #., /../ Order, the R,C dis(issed the PDB6s petition, the BOC6s countercai( and the BSP6s counter-co(paint4cross-cai( for interpeader,
hodin+ that under CB Circuar No. /<, it has no Iurisdiction )i* over the BOC6s 3countercai(s3 and )ii* to resove the issue of ownership of the CB %is.
=!
Dith the
denia of their separate (otions for Reconsideration,
="
the BOC and the BSP separate& fied the present petitions for review on certiorari.
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,7E BOC6S and ,7E BSP6S PE,I,IONS
,he BOC ar+ues that the present cases do not fa within the i(ited provision of Section #. )d* ! of CB Circuar No. /<, which conte(pates on& of three
situations> first, where the frauduent assi+n(ent is not couped with a notice to the BSP, it can +rant no reief5 second, where the frauduent assi+n(ent is
couped with a notice of fraud to the BSP, it wi (a'e a notation a+ainst the assi+n(ent and re$uire the owner and the hoder to su%stantiate their cai(s5 and
third, where the case does not fa on either of the first two situations, the BSP wi have to await action on the assi+n(ent pendin+ sette(ent of the case,
whether %& a+ree(ent or %& court order.
,he PDB6s case cannot fa under the first two situations. Dith particuar re+ard to the second situation, CB Circuar No. /< re$uires that the confict (ust %e
%etween an 3owner3 and a 3hoder,3 for the BSP to exercise its i(ited Iurisdiction to resove confictin+ cai(s5 and the word 3owner3 here refers to the re+istered
owner +ivin+ notice of the fraud to the BSP. ,he PDB, however, is not the re+istered owner nor is it in possession )hoder* of the CB %is.
=;
Conse$uent&, the
PDB6s case can on& fas under the third situation which eaves the R,C, as a court of +enera Iurisdiction, with the authorit& to resove the issue of ownership of
a re+istered %ond )the CB %is* not fain+ in either of the first two situations.
,he BOC asserts that the poic& consideration supportive of its interpretation of CB Circuar No. /< is to have a reia%e s&ste( to protect the re+istered owner5
shoud he fie a notice with the BSP a%out a frauduent assi+n(ent of certain CB %is, the BSP si(p& has to oo' at its %oo's to deter(ine who is the owner of
the CB %is frauduent& assi+ned. Since it is on& the re+istered owner who co(pied with the BSP6s re$uire(ent of recordin+ an assi+n(ent in the BSP6s
%oo's, then 3the protective (ante of ad(inistrative proceedin+s3 shoud necessari& %enefit hi( on&, without extendin+ the sa(e %enefit to those who chose to
i+nore the Circuar6s re$uire(ent, i'e the PDB.
=<
8ssu(in+ ar+uendo that the PDB6s case fas under the second situation @ i.e., the BSP has Iurisdiction to resove the issue of ownership of the CB %is @ the
(ore recent CB Circuar No. ;=2-<. )Rues and Re+uations Eovernin+ Centra Ban' Certificates of Inde%tedness* aread& superseded CB Circuar No. /<, and,
in particuar, effective& a(ended Section #. )d* ! of CB Circuar No. /<. ,he pertinent provisions of CB Circuar No. ;=2-<. read>
8ssi+n(ent 8ffected %& 9raud. @ 8n& assi+n(ent for transfer of ownership of re+istered certificate o%tained throu+h frauduent representation if honored %& the
Centra Ban' or an& of its authori:ed service a+encies sha not (a'e the Centra Ban' or a+enc& ia%e therefore uness it has previous for(a notice of the
fraud. ,he Centra Ban', upon notice under oath that the assi+n(ent was secured throu+h frauduent (eans, sha i((ediate& issue and circuari:e a 3stop
order3 a+ainst the transfer, exchan+e, rede(ption of the Certificate incudin+ the pa&(ent of interest coupons. ,he Centra Ban' or service a+enc& concerned
sha continue to withhod action on the certificate unti such ti(e that the confictin+ cai(s have %een fina& setted either %& a(ica%e sette(ent %etween the
parties or %& order of the Court.
Mni'e CB Circuar No. /<, CB Circuar No. ;=2-<. i(ited the BSP6s authorit& to the (ere issuance and circuari:ation of a 3stop order3 a+ainst the transfer,
exchan+e and rede(ption upon sworn notice of a frauduent assi+n(ent. Mnder this Circuar, the BSP sha on& continue to withhod action unti the dispute is
ended %& an a(ica%e sette(ent or %& Iudicia deter(ination. Eiven the (ore passive stance of the BSP @ the ver& a+enc& tas'ed to enforce the circuars
invoved - under CB Circuar No. ;=2-<., the R,C6s dis(issa of the BOC6s countercai(s is papa%& erroneous.
Fast&, since Nu$ui6s office )Eovern(ent Securities Depart(ent* had aread& %een a%oished,
=2
it can no on+er adIudicate the dispute under the second
situation covered %& CB Circuar No. /<. ,he a%oition of Nu$ui6s office is not on& consistent with the BSP6s Charter %ut, (ore i(portant&, with CB Circuar No.
;=2-<., which re(oved the BSP6s adIudicative authorit& over frauduent assi+n(ents.
,7E PDB6S CO11EN,
,he PDB cai(s that Iurisdiction is deter(ined %& the ae+ations in the co(paint4petition and not %& the defenses set up in the answer.
;.
In fiin+ the petition
with the R,C, the PDB (ere& see's to co(pe the BSP to deter(ine, pursuant to CB Circuar No. /<, the part& e+a& entited to the proceeds of the su%Iect
CB %is, which, as the PDB ae+ed, have %een transferred throu+h frauduent representations @ an ae+ation which proper& reco+ni:ed the BSP6s Iurisdiction
to resove confictin+ cai(s of ownership over the CB %is.
,he PDB adds that under the doctrine of pri(ar& Iurisdiction, courts shoud refrain fro( deter(inin+ a controvers& invovin+ a $uestion whose resoution
de(ands the exercise of sound ad(inistrative discretion. In the present case, the BSP6s specia 'nowed+e and experience in resovin+ disputes on securities,
whose assi+n(ent and tradin+ are +overned %& the BSP6s rues, shoud %e uphed.
,he PDB counters that the BOC6s tri-fod interpretation of Section #. )d* ! of CB Circuar No. /< sanctions spit Iurisdiction which is not favored5%ut even this tri-
fod interpretation which, in the second situation, i(its the (eanin+ of the 3owner3 to the re+istered owner is fawed. Section #. )d* ! ai(s to protect not Iust the
re+istered owner %ut an&one who has %een deprived of his %ond %& frauduent representation in order to deter fraud in the secondar& tradin+ of +overn(ent
securities.
,he PDB asserts that the existence of CB Circuar No. ;=2-<. or the a%oition of Nu$ui6s office does not resut in deprivin+ the BSP of its Iurisdiction> first, CB
Circuar No. ;=2-<. express& provides that CB Circuar No. /< sha have suppetor& appication to CB Circuar No. ;=2-<.5 and second, the BSP can awa&s
desi+nate an office to resove the PDB6s cai( over the CB %is.
Fast&, the PDB ar+ues that even assu(in+ that the R,C has Iurisdiction to resove the issue of ownership of the CB %is, the R,C has not ac$uired Iurisdiction
over the BOC6s so-caed 3co(pusor&3 countercai(s )which in truth is (ere& 3per(issive3* %ecause of the BOC6s faiure to pa& the appropriate doc'et fees.
,hese countercai(s shoud, therefore, %e dis(issed and expun+ed fro( the record.
,7E COMR,6S RMFINE
De +rant the petitions.
8t the outset, we note that the parties have not raised the vaidit& of either CB Circuar No. /< or CB Circuar No. ;=2-<. as an issue. Dhat the parties ar+e&
contest is the appica%e circuar in case of an ae+ed& frauduent& assi+ned CB %i. ,he appica%e circuar, in turn, is deter(inative of the proper re(ed&
avaia%e to the PDB and4or the BOC as cai(ants to the proceeds of the su%Iect CB %is.
Indisputa%&, at the ti(e the PDB supposed& invo'ed the Iurisdiction of the BSP in #22! )%& re$uestin+ for the annotation of its cai( over the su%Iect CB %is in
the BSP6s %oo's*, CB Circuar No. ;=2-<. has on+ %een in effect. ,herefore, the parties6 respective interpretations of the provision of Section #. )d* ! of CB
Circuar No. /< do not have an& si+nificance uness it is first esta%ished that that Circuar +overns the resoution of their confictin+ cai(s of ownership. ,his
concusion is i(portant, +iven the supposed repea or (odification of Section #. )d* ! of CB Circuar No. /< %& the foowin+ provisions of CB Circuar No. ;=2-
<.>
8R,ICFE AI
SMPPFE1EN,8F RMFES
Section #. Centra Ban' Circuar No. /< @ ,he provisions of Centra Ban' Circuar No. /< sha have suppetor& appication to (atters not specia& covered %&
these Rues.
8R,ICFE AII
E99EC,ICI,N
Effectivit& @ ,he rues and re+uations herein prescri%ed sha ta'e effect upon approva %& the 1onetar& Board, Centra Ban' of the Phiippines, and a
circuars, (e(oranda, or office orders inconsistent herewith are revo'ed or (odified accordin+&. )E(phases added*
De a+ree with the PDB that in view of CB Circuar No. /<6s suppetor& appication, an atte(pt to har(oni:e the apparent& confictin+ provisions is a
prere$uisite %efore one (a& possi%& concude that an a(end(ent or a repea exists.
;#
Interestin+&, however, even the PDB itsef faied to su%(it an
interpretation %ased on its own position of har(oni:ation.
,he repeain+ cause of CB Circuar No. ;=2-<. o%vious& did not express& repea CB Circuar No. /<5 in fact, it even provided for the suppetor& appication of
CB Circuar No. /< on 3(atters not specia& covered %&3 CB Circuar No. ;=2-<.. Dhie no express repea exists, the intent of CB Circuar No. ;=2-<. to
operate as an i(pied repea,
;/
or at east to a(end earier CB circuars, is supported %& its text 3revo'in+3 or 3(odifJ&in+3 3a circuars3 which are inconsistent
with its ter(s.
8t the outset, we stress that none of the parties disputes that the su%Iect CB %is fa within the cate+or& of a certificate or evidence of inde%tedness and that
these were issued %& the Centra Ban', now the BSP. ,hus, even without resortin+ to statutor& construction aids, (atters invovin+ the su%Iect CB %is shoud
necessari& %e +overned %& CB Circuar No. ;=2-<.. Even +rantin+, however, that reiance on CB Circuar No. ;=2-<. aone is not enou+h, we find that CB
Circuar No. ;=2-<. i(pied& repeas CB Circuar No. /<.
8n i(pied repea transpires when a su%stantia confict exists %etween the new and the prior aws. In the a%sence of an express repea, a su%se$uent aw
cannot %e construed as repeain+ a prior aw uness an irreconcia%e inconsistenc& and repu+nanc& exist in the ter(s of the new and the od aws.
;0
Repea %&
i(pication is not favored, uness (anifest& intended %& the e+isature, or uness it is convincin+& and una(%i+uous& de(onstrated, that the aws or orders are
cear& repu+nant and patent& inconsistent with one another so that the& cannot co-exist5 the e+isature is presu(ed to 'now the existin+ aw and woud
express a repea if one is intended.
;!
,here are two instances of i(pied repea. One ta'es pace when the provisions in the two acts on the sa(e su%Iect (atter are irreconcia%& contradictor&, in
which case, the ater act, to the extent of the confict, constitutes an i(pied repea of the earier one. ,he other occurs when the ater act covers the whoe
su%Iect of the earier one and is cear& intended as a su%stitute5 thus, it wi operate to repea the earier aw.
;"
8 +enera readin+ of the two circuars shows that the second instance of i(pied repea is present in this case. CB Circuar No. /<, entited 3Re+uations
Eovernin+ Open 1ar'et Operations, Sta%ii:ation of Securities 1ar'et, Issue, Servicin+ and Rede(ption of Pu%ic De%t,3 is a re+uation +overnin+ the servicin+
and rede(ption of pu%ic de%t, incudin+ the issue, inscription, re+istration, transfer, pa&(ent and repace(ent of %onds and securities representin+ the pu%ic
de%t.
;=
On the other hand, CB Circuar No. ;=2-<., entited 3Rues and Re+uations Eovernin+ Centra Ban' Certificate of Inde%tedness,3 is the +overnin+
re+uation on (atters
;;
)i* invovin+ certificate of inde%tedness
;<
issued %& the Centra Ban' itsef and )ii* which are si(iar& covered %& CB Circuar No. /<.
,he CB 1onetar& Board issued CB Circuar No. /< to re+uate the servicin+ and rede(ption of pu%ic de%t, pursuant to Section #/! )now Section ##2 of
Repu%ic 8ct R.8. No. ;="0* of the od Centra Ban' aw
;2
which provides that 3the servicin+ and rede(ption of the pu%ic de%t sha aso %e effected throu+h the
Ban+'oSentra.3 7owever, even as R.8. No. ;="0 continued to reco+ni:e this roe %& the BSP, the aw re$uired a phase-out of a fisca a+enc& functions %& the
BSP, incudin+ Section ##2 of R.8. No. ;="0.
In other words, even if CB Circuar No. /< appies %road& to %oth +overn(ent-issued %onds and securities and Centra Ban'-issued evidence of inde%tedness,
+iven the present state of aw, CB Circuar No. /< and CB Circuar No. ;=2-<. now operate on the sa(e su%Iect @ Centra Ban'-issued evidence of
inde%tedness. Mnder Section #, 8rtice AI of CB Circuar No. ;=2-<., the continued reevance and appication of CB Circuar No. /< woud depend on the need
to suppe(ent an& deficienc& or sience in CB Circuar No. ;=2-<. on a particuar (atter.
In the present case, %oth CB Circuar No. /< and CB Circuar No. ;=2-<. provide the BSP with a course of action in case of an ae+ed& frauduent& assi+ned
certificate of inde%tedness. Mnder CB Circuar No. /<, in case of frauduent assi+n(ents, the BSP woud have to 3ca upon the owner and the person presentin+
the %ond to su%stantiate their respective cai(s3 and, fro( there, deter(ine who has a %etter ri+ht over the re+istered %ond. On the other hand, under CB
Circuar No. ;=2-<., the BSP sha (ere& 3issue and circuari:e a Ostop order6 a+ainst the transfer, exchan+e, rede(ption of the Jre+isteredK certificate3 without
an& adIudicative function )which is the precise root of the present controvers&*. 8s the two circuars stand, the patent irreconcia%iit& of these two provisions
does not re$uire ea%oration. Section ", 8rtice C of CB Circuar No. ;=2-<. inescapa%& repeaed Section #. )d* ! of CB Circuar No. /<.
,he issue of BSP6s Iurisdiction, a& hidden
On that note, the Court coud have written finis to the present controvers& %& si(p& sustainin+ the BSP6s hands-off approach to the PDB6s pro%e( under CB
Circuar No. ;=2-<.. 7owever, the Iurisdictiona provision of CB Circuar No. ;=2-<. itsef, in reation to CB Circuar No. /<, on the (atter of frauduent
assi+n(ent, has +iven rise to a $uestion of Iurisdiction - the core $uestion of aw invoved in these petitions - which the Court cannot Iust treat su%-siencio.
Broad& spea'in+, Iurisdiction is the e+a power or authorit& to hear and deter(ine a cause.
<.
In the exercise of Iudicia or $uasi-Iudicia power, it refers to the
authorit& of a court to hear and decide a case.
<#
In the context of these petitions, we har' %ac' to the %asic principes +overnin+ the $uestion of Iurisdiction over
the su%Iect (atter.
9irst, Iurisdiction over the su%Iect (atter is deter(ined on& %& the Constitution and %& aw.
</
8s a (atter of su%stantive aw, procedura rues aone can confer
no Iurisdiction to courts or ad(inistrative a+encies.
<0
In fact, an ad(inistrative a+enc&, actin+ in its $uasi-Iudicia capacit&, is a tri%una of i(ited Iurisdiction and,
as such, coud wied on& such powers that are specifica& +ranted to it %& the ena%in+ statutes. In contrast, an R,C is a court of +enera Iurisdiction, i.e., it has
Iurisdiction over cases whose su%Iect (atter does not fa within the excusive ori+ina Iurisdiction of an& court, tri%una or %od& exercisin+ Iudicia or $uasi-
Iudicia functions.
<!
Second, Iurisdiction over the su%Iect (atter is deter(ined not %& the peas set up %& the defendant in his answer
<"
%ut %& the ae+ations in the
co(paint,
<=
irrespective of whether the paintiff is entited to favora%e Iud+(ent on the %asis of his assertions.
<;
,he reason is that the co(paint is supposed to
contain a concise state(ent of the uti(ate facts constitutin+ the paintiffPs causes of action.
<<
,hird, Iurisdiction is deter(ined %& the aw in force at the ti(e of the fiin+ of the co(paint.
<2
Parenthetica&, the Court o%serves that none of the parties ever raised the issue of whether the BSP can si(p& disown its Iurisdiction, assu(in+ it has, %& the
si(pe expedient of pro(u+atin+ a new circuar )specia& appica%e to a certificate of inde%tedness issued %& the BSP itsef*, inconsistent with an od circuar,
assertive of its i(ited Iurisdiction over ownership issues arisin+ fro( frauduent assi+n(ents of a certificate of inde%tedness. ,he PDB, in particuar, reied
soe& and heavi& on CB Circuar No. /<.
In i+ht of the a%ove principes pointin+ to Iurisdiction as a (atter of su%stantive aw, the provisions of the aw itsef that +ave CB Circuar ;=2-<. its ife and
Iurisdiction (ust %e exa(ined.
,he Phiippine Centra Ban'
On -anuar& 0, #2!2, Con+ress created the Centra Ban' of the Phiippines )Centra Ban'* as a corporate %od& with the pri(ar& o%Iective of )i* (aintainin+ the
interna and externa (onetar& sta%iit& in the Phiippines5 and )ii* preservin+ the internationa vaue and the converti%iit& of the peso.
2.
In ine with these %road
o%Iectives, the Centra Ban' was e(powered to issue rues and re+uations 3necessar& for the effective dischar+e of the responsi%iities and exercise of the
powers assi+ned to the 1onetar& Board and to the Centra Ban'.3
2#
Specifica&, the Centra Ban' is authori:ed to or+ani:e )other* depart(ents for the efficient
conduct of its %usiness and whose powers and duties 3sha %e deter(ined %& the 1onetar& Board, within the authorit& +ranted to the Board and the Centra
Ban'3
2/
under its ori+ina charter.
Dith the #2;0 Constitution, the then Centra Ban' was constitutiona& (ade as the countr&6s centra (onetar& authorit& unti such ti(e that Con+ress
20
sha
have esta%ished a centra %an'. ,he #2<; Constitution continued to reco+ni:e this function of the then Centra Ban' unti Con+ress, pursuant to the
Constitution, created a new centra (onetar& authorit& which ater ca(e to %e 'nown as the Ban+'oSentran+Piipinas.
Mnder the New Centra Ban' 8ct )R.8. No. ;="0*,
2!
the BSP is +iven the responsi%iit& of providin+ poic& directions in the areas of (one&, %an'in+ and credit5 it
is +iven, too, the pri(ar& o%Iective of (aintainin+ price sta%iit&, conducive to a %aanced and sustaina%e +rowth of the econo(&, and of pro(otin+ and
(aintainin+ (onetar& sta%iit& and converti%iit& of the peso.
2"
,he Constitution express& +rants the BSP, as the countr&6s centra (onetar& authorit&, the power of supervision over the operation of %an's, whie eavin+ with
Con+ress the authorit& to define the BSP6s re+uator& powers over the operations of finance co(panies and other institutions perfor(in+ si(iar functions.
Mnder R.8. No. ;="0, the BSP6s powers and functions incude )i* supervision over the operation of %an's5 )ii* re+uation of operations of finance co(panies and
non-%an' financia institutions perfor(in+ $uasi %an'in+ functions5 )iii* soe power and authorit& to issue currenc& within the Phiippine territor&5 )iv* en+a+in+ in
forei+n exchan+e transactions5 )v* (a'in+ rediscounts, discounts, oans and advances to %an'in+ and other financia institutions to infuence the vou(e of
credit consistent with the o%Iective of achievin+ price sta%iit&5 )vi* en+a+in+ in open (ar'et operations5 and )vii* actin+ as %an'er and financia advisor of the
+overn(ent.1wphi1
On the BSP6s power of supervision over the operation of %an's, Section ! of R.8. No. <;2# ),he Eenera Ban'in+ Faw of /...* ea%orates as foows>
C78P,ER II
8M,7ORI,N O9 ,7E B8NEQO SEN,R8F
SEC,ION !.Supervisor& Powers. R ,he operations and activities of %an's sha %e su%Iect to supervision of the Ban+'oSentra. 3Supervision3 sha incude the
foowin+>
!.#. ,he issuance of rues of conduct or the esta%ish(ent of standards of operation for unifor( appication to a institutions or functions covered,
ta'in+ into consideration the distinctive character of the operations of institutions and the su%stantive si(iarities of specific functions to which such
rues, (odes or standards are to %e appied5
!./. ,he conduct of exa(ination to deter(ine co(piance with aws and re+uations if the circu(stances so warrant as deter(ined %& the 1onetar&
Board5
!.0. Overseein+ to ascertain that aws and re+uations are co(pied with5
!.!. Re+uar investi+ation which sha not %e oftener than once a &ear fro( the ast date of exa(ination to deter(ine whether an institution is
conductin+ its %usiness on a safe or sound %asis> Provided, ,hat the deficiencies4irre+uarities found %& or discovered %& an audit sha %e
i((ediate& addressed5
!.". In$uirin+ into the sovenc& and i$uidit& of the institution )/-D*5 or
!.=. Enforcin+ pro(pt corrective action. )n*
,he Ban+'oSentra sha aso have supervision over the operations of and exercise re+uator& powers over $uasi-%an's, trust entities and other financia
institutions which under specia aws are su%Iect to Ban+'oSentra supervision. )/-Ca*
9or the purposes of this 8ct, 3$uasi-%an's3 sha refer to entities en+a+ed in the %orrowin+ of funds throu+h the issuance, endorse(ent or assi+n(ent with
recourse or acceptance of deposit su%stitutes as defined in Section 2" of Repu%ic 8ct No. ;="0 )hereafter the 3New Centra Ban' 8ct3* for purposes of
reendin+ or purchasin+ of receiva%es and other o%i+ations. Je(phasis oursK
Dhie this provision e(powers the BSP to oversee the operations and activities of %an's to 3ascertain that aws and re+uations are co(pied with,3 the
existence of the BSP6s Iurisdiction in the present dispute cannot re& on this provision. ,he fact re(ains that the BSP aread& (ade 'nown to the PDB its
unfavora%e position on the atter6s cai( of frauduent assi+n(ent due to the atter6s own faiure to co(p&
2=
with existin+ re+uations>
In this connection, Section #. )%* / aso re$uires that a 3Detached assi+n(ent wi %e reco+ni:ed or accepted on& upon previous notice to the Centra Ban' x
xx.3 In fact, in a (e(o dated Septe(%er /0, #22# xxx then CB Eovernor -ose F. Cuisia advised a %an's )incudin+ PDB* xxx as foows>
In view recurrin+ incidents ostensi%& disre+ardin+ certain provisions of CB circuar No. /< )as a(ended* coverin+ assi+n(ents of re+istered %onds, a %an's
and a concerned are enIoined to o%serve strict& the pertinent provisions of said CB Circuar as hereunder $uoted>
x xxx
Mnder Section #..%. )/*
x xx Detached assi+n(ent wi %e reco+ni:ed or accepted on& upon previous notice to the Centra Ban' and its use is authori:ed on& under the foowin+
circu(stances>
)a* xxx
)%* xxx
)c* assi+n(ents of treasur& notes and certificates of inde%tedness in re+istered for( which are not provided at the %ac' thereof with assi+n(ent
for(.
)d* 8ssi+n(ent of securities which have chan+ed ownership severa ti(es.
)e* xxx
Non-co(piance herewith wi constitute a %asis for non-action or withhodin+ of action on rede(ption4pa&(ent of interest coupons4transfer transactions or
deno(inationa exchan+e that (a& %e direct& affected there%&. JBodfacin+ suppiedK
8+ain, the %oo's of the BSP do not show that the supposed assi+n(ent of su%Iect CB Bis was ever recorded in the BSP6s %oo's. JBodfacin+ suppiedK
7owever, the PDB fauts the BSP for not recordin+ the assi+n(ent of the CB %is in the PDB6s favor despite the fact that the PDB aread& re$uested the BSP to
record its assi+n(ent in the BSP6s %oo's as ear& as -une 0., #22!.
2;
,he PDB6s cai( is not accurate. Dhat the PDB re$uested the BSP on that date was not the recordin+ of the assi+n(ent of the CB %is in its favor %ut the
annotation of its cai( over the CB %is at the ti(e when )i* it was no on+er in possession of the CB %is, havin+ %een transferred fro( one entit& to another and
)ii* a it has are the detached assi+n(ents, which the PDB has not shown to %e co(piant with Section #. )%* / a%ove-$uoted. O%vious&, the PDB cannot insist
that the BSP ta'e co+ni:ance of its paint when the %asis of the BSP6s refusa under existin+ re+uation, which the PDB is %ound to o%serve, is the PDB6s own
faiure to co(p& therewith.
,rue, the BSP exercises supervisor& powers )and re+uator& powers* over %an's )and $uasi %an's*. ,he issue presented %efore the Court, however, does not
concern the BSP6s supervisor& power over %an's as this power is understood under the Eenera Ban'in+ Faw. In fact, there is nothin+ in the PDB6s petition
)even incudin+ the etters it sent to the BSP* that woud support the BSP6s Iurisdiction outside of CB Circuar No. /<, under its power of supervision, over
confictin+ cai(s to the proceeds of the CB %is.
BSP has $uasi-Iudicia powers over a
cass of cases which does not incude
the adIudication of ownership of the
CB %is in $uestion
In Mnited Coconut Panters Ban' v. E. Ean:on, Inc.,
2<
the Court considered the BSP as an ad(inistrative a+enc&,
22
exercisin+ $uasi-Iudicia functions throu+h its
1onetar& Board. It hed>
8 $uasi-Iudicia a+enc& or %od& is an or+an of +overn(ent other than a court and other than a e+isature, which affects the ri+hts of private parties throu+h
either adIudication or rue-(a'in+. ,he ver& definition of an ad(inistrative a+enc& incudes its %ein+ vested with $uasi-Iudicia powers. ,he ever increasin+
variet& of powers and functions +iven to ad(inistrative a+encies reco+ni:es the need for the active intervention of ad(inistrative a+encies in (atters cain+ for
technica 'nowed+e and speed in countess controversies which cannot possi%& %e handed %& re+uar courts. 8 3$uasi-Iudicia function3 is a ter( which appies
to the action, discretion, etc., of pu%ic ad(inistrative officers or %odies, who are re$uired to investi+ate facts, or ascertain the existence of facts, hod hearin+s,
and draw concusions fro( the(, as a %asis for their officia action and to exercise discretion of a Iudicia nature.
Mndou%ted&, the BSP 1onetar& Board is a $uasi-Iudicia a+enc& exercisin+ $uasi-Iudicia powers or functions. 8s apt& o%served %& the Court of 8ppeas, the
BSP 1onetar& Board is an independent centra (onetar& authorit& and a %od& corporate with fisca and ad(inistrative autono(&, (andated to provide poic&
directions in the areas of (one&, %an'in+ and credit. It has power to issue su%poena, to sue for conte(pt those refusin+ to o%e& the su%poena without Iustifia%e
reason, to ad(inister oaths and co(pe presentation of %oo's, records and others, needed in its exa(ination, to i(pose fines and other sanctions and to issue
cease and desist order. Section 0; of Repu%ic 8ct No. ;="0, in particuar, expicit& provides that the BSP 1onetar& Board sha exercise its discretion in
deter(inin+ whether ad(inistrative sanctions shoud %e i(posed on %an's and $uasi-%an's, which necessari& i(pies that the BSP 1onetar& Board (ust
conduct so(e for( of investi+ation or hearin+ re+ardin+ the sa(e. Jcitations o(ittedK
,he BSP is not si(p& a corporate entit& %ut $uaifies as an ad(inistrative a+enc& created, pursuant to constitutiona (andate,
#..
to carr& out a particuar
+overn(enta function.
#.#
,o %e a%e to perfor( its roe as centra (onetar& authorit&, the Constitution +ranted it fisca and ad(inistrative autono(&. In +enera,
ad(inistrative a+encies exercise powers and4or functions which (a& %e characteri:ed as ad(inistrative, investi+ator&, re+uator&, $uasi-e+isative, or $uasi-
Iudicia, or a (ix of these five, as (a& %e conferred %& the Constitution or %& statute.
#./
Dhie the ver& nature of an ad(inistrative a+enc& and the raison dPStre for its creation
#.0
and proiferation dictate a +rant of $uasi-Iudicia power to it, the (atters
over which it (a& exercise this power (ust find sufficient anchora+e on its ena%in+ aw, either %& express provision or %& necessar& i(pication. Once found,
the $uasi-Iudicia power parta'es of the nature of a i(ited and specia Iurisdiction, that is, to hear and deter(ine a cass of cases within its pecuiar co(petence
and expertise. In other words, the provisions of the ena%in+ statute are the &ardstic's %& which the Court woud (easure the $uantu( of $uasi-Iudicia powers
an ad(inistrative a+enc& (a& exercise, as defined in the ena%in+ act of such a+enc&.
#.!
Scattered provisions in R.8. No. ;="0 and R.8. No. <;2#, inter aia, exist, conferrin+ Iurisdiction on the BSP on certain (atters.
#."
9or instance, under the
situations conte(pated under Section 0=, par. /
#.=
)where a %an' or $uasi %an' persists in carr&in+ on its %usiness in an unawfu or unsafe (anner* and
Section 0;
#.;
)where the %an' or its officers wifu& vioate the %an'6s charter or %&-aws, or the rues and re+uations issued %& the 1onetar& Board* of R.8. No.
;="0, the BSP (a& pace an entit& under receivership and4or i$uidation or i(pose ad(inistrative sanctions upon the entit& or its officers or directors.
8(on+ its severa functions under R.8. No. ;="0, the BSP is authori:ed to en+a+e in open (ar'et operations and there%& 3issue, pace, %u& and se free&
ne+otia%e evidences of inde%tedness of the Ban+'oSentra3 in the foowin+ (anner.
SEC. 2..Principes of Open 1ar'et Operations. @ ,he open (ar'et purchases and saes of securities %& the Ban+'oSentra sha %e (ade excusive& in
accordance with its pri(ar& o%Iective of achievin+ price sta%iit&.
x xxx
SEC. 2/.Issue and Ne+otiation of Ban+'oSentra O%i+ations. @ In order to provide the Ban+'oSentra with effective instru(ents for open (ar'et operations, the
Ban+'oSentra (a&, su%Iect to such rues and re+uations as the 1onetar& Board (a& prescri%e and in accordance with the principes stated in Section 2. of
this 8ct, issue, pace, %u& and se free& ne+otia%e evidences of inde%tedness of the Ban+'oSentra> Provided, ,hat issuance of such certificates of
inde%tedness sha %e (ade on& in cases of extraordinar& (ove(ent in price eves. Said evidences of inde%tedness (a& %e issued direct& a+ainst the
internationa reserve of the Ban+'oSentra or a+ainst the securities which it has ac$uired under the provisions of Section 2# of this 8ct, or (a& %e issued without
reation to specific t&pes of assets of the Ban+'oSentra.
,he 1onetar& Board sha deter(ine the interest rates, (aturities and other characteristics of said o%i+ations of the Ban+'oSentra, and (a&, if it dee(s it
advisa%e, deno(inate the o%i+ations in +od or forei+n currencies.
Su%Iect to the principes stated in Section 2. of this 8ct, the evidences of inde%tedness of the Ban+'oSentra to which this section refers (a& %e ac$uired %& the
Ban+'oSentra %efore their (aturit&, either throu+h purchases in the open (ar'et or throu+h rede(ptions at par and %& ot if the Ban+'oSentra has reserved
the ri+ht to (a'e such rede(ptions. ,he evidences of inde%tedness ac$uired or redee(ed %& the Ban+'oSentra sha not %e incuded a(on+ its assets, and
sha %e i((ediate& retired and canceed.
#.<
)itaics suppied5 e(phases ours*
,he pri(ar& o%Iective of the BSP is to (aintain price sta%iit&.
#.2
,he BSP has a nu(%er of (onetar& poic& instru(ents at its disposa to pro(ote price sta%iit&.
,o increase or reduce i$uidit& in the financia s&ste(, the BSP uses open (ar'et operations, a(on+ others.
##.
Open (ar'et operation is a (onetar& too where
the BSP pu%ic& %u&s or ses +overn(ent securities
###
fro( )or to* %an's and financia institutions in order to expand or contract the supp& of (one&. B&
controin+ the (one& supp&, the BSP is a%e to exert so(e infuence on the prices of +oods and services and achieve its infation o%Iectives.
##/
Once the issue and4or sae of a securit& is (ade, the BSP woud necessari& (a'e a deter(ination, in accordance with its own rues, of the entit& entited to
receive the proceeds of the securit& upon its (aturit&. ,his deter(ination %& the BSP is an exercise of its ad(inistrative powers
##0
under the aw as an incident
to its power to prescri%e rues and re+uations +overnin+ open (ar'et operations to achieve the 3pri(ar& o%Iective of achievin+ price sta%iit&.3
##!
8s a (atter of
necessit&, too, the sa(e rues and re+uations faciitate transaction with the BSP %& providin+ for an order& (anner of, a(on+ others, issuin+, transferrin+,
exchan+in+ and pa&in+ securities representin+ pu%ic de%t.
Si+nificant&, when co(petin+ cai(s of ownership over the proceeds of the securities it has issued are %rou+ht %efore it, the aw has not +iven the BSP the
$uasi-Iudicia power to resove these co(petin+ cai(s as part of its power to en+a+e in open (ar'et operations. Nothin+ in the BSP6s charter confers on the
BSP the Iurisdiction or authorit& to deter(ine this 'ind of cai(s, arisin+ out of a su%se$uent transfer or assi+n(ent of evidence of inde%tedness @ a (atter that
appropriate& fas within the co(petence of courts of +enera Iurisdiction. ,hat the statute withhods this power fro( the BSP is on& consistent with the
funda(enta reasons for the creation of a Phiippine centra %an', that is, to a& down sta%e (onetar& poic& and exercise %an' supervisor& functions. ,hus, the
BSP6s assu(ption of Iurisdiction over co(petin+ cai(s cannot find even a stretched-out Iustification under its corporate powers 3to do and perfor( an& and a
thin+s that (a& %e necessar& or proper to carr& out the purposes3 of R.8. No. ;="0.
##"
,o reiterate, open (ar'et operation is a (onetar& poic& instru(ent that the BSP e(po&s, a(on+ others, to re+uate the supp& of (one& in the econo(& to
infuence the ti(in+, cost and avaia%iit& of (one& and credit, as we as other financia factors, for the purpose of sta%ii:in+ the price eve.
##=
Dhat the aw
+rants the BSP is a continuin+ roe to shape and carr& out the countr&6s (onetar& poic& @ not the authorit& to adIudicate co(petin+ cai(s of ownership over
the securities it has issued @ since this authorit& woud not fa under the BSP6s purposes under its charter.
Dhie R.8. No. ;="0
##;
e(powers the BSP to conduct ad(inistrative hearin+s and render Iud+(ent for or a+ainst an entit& under its supervisor& and re+uator&
powers and even authori:es the BSP Eovernor to 3render decisions, or ruin+s x xx on (atters re+ardin+ appication or enforce(ent of aws pertainin+ to
institutions supervised %& the BSP and aws pertainin+ to $uasi-%an's, as we as re+uations, poicies or instructions issued %& the 1onetar& Board,3 it is
precise& the text of the BSP6s own re+uation )whose vaidit& is not here raised as an issue* that points to the BSP6s i(ited roe in case of an ae+ed&
frauduent assi+n(ent to si(p& )i* issuin+ and circuari:in+ a O3stop order3 a+ainst the transfer, exchan+e, rede(ption of the certificate of inde%tedness,
incudin+ the pa&(ent of interest coupons, and )ii* withhodin+ action on the certificate.
8 si(iar concusion can %e drawn fro( the BSP6s ad(inistrative adIudicator& power in cases of 3wifu faiure or refusa to co(p& with, or vioation of, an&
%an'in+ aw or an& order, instruction or re+uation issued %& the 1onetar& Board, or an& order, instruction or ruin+ %& the Eovernor.3
##<
,he non-co(piance with
the pertinent re$uire(ents under CB Circuar No. /<, as a(ended, deprives a part& fro( an& ri+ht to de(and pa&(ent fro( the BSP.
In other words, the +rant of $uasi-Iudicia authorit& to the BSP cannot possi%& extend to situations which do not ca for the exercise %& the BSP of its
supervisor& or re+uator& functions over entities within its Iurisdiction.
##2
,he fact aone that the parties invoved are %an'in+ institutions does not necessari& ca for the exercise %& the BSP of its $uasi-Iudicia powers under the aw.
#/.
,he doctrine of pri(ar& Iurisdiction
ar+ues a+ainst BSP6s purported
authorit& to adIudicate ownership
issues over the disputed CB %is
Eiven the precedin+ discussions, even the PDB6s invocation of the doctrine of pri(ar& Iurisdiction is (ispaced.
In the exercise of its penar& e+isative power, Con+ress (a& create ad(inistrative a+encies endowed with $uasi-e+isative and $uasi-Iudicia powers.
Necessari&, Con+ress i'ewise defines the i(its of an a+enc&6s Iurisdiction in the sa(e (anner as it defines the Iurisdiction of courts.
#/#
8s a resut, it (a&
happen that either a court or an ad(inistrative a+enc& has excusive Iurisdiction over a specific (atter or %oth have concurrent Iurisdiction on the sa(e. It (a&
happen, too, that courts and a+encies (a& wiin+& rein$uish adIudicator& power that is ri+htfu& theirs in favor of the other. One of the instances when a court
(a& proper& defer to the adIudicator& authorit& of an a+enc& is the appica%iit& of the doctrine of pri(ar& Iurisdiction.
#//
8s ear& as #2"!, the Court appied the doctrine of pri(ar& Iurisdiction under the foowin+ ter(s>
=. In the fifties, the Court ta'in+ co+ni:ance of the (ove to vest Iurisdiction in ad(inistrative co((issions and %oards the power to resove speciai:ed disputes
xxx rued that Con+ress in re$uirin+ the Industria CourtPs intervention in the resoution of a%or-(ana+e(ent controversies xxx (eant such Iurisdiction to %e
excusive, athou+h it did not so express& state in the aw. ,he Court hed that under the 3sense-(a'in+ and expeditious doctrine of pri(ar& Iurisdiction ... the
courts cannot or wi not deter(ine a controvers& invovin+ a $uestion which is within the Iurisdiction of an ad(inistrative tri%una, where the $uestion de(ands
the exercise of sound ad(inistrative discretion re$uirin+ the specia 'nowed+e, experience, and services of the ad(inistrative tri%una to deter(ine technica
and intricate (atters of fact, and a unifor(it& of ruin+ is essentia to co(p& with the purposes of the re+uator& statute ad(inistered.3
#/0
)e(phasis ours*
In Industria Enterprises, Inc. v. Court of 8ppeas,
#/!
the Court rued that whie an action for rescission of a contract %etween coa deveopers appears to %e an
action co+ni:a%e %& re+uar courts, the tria court re(ains to %e without Iurisdiction to entertain the suit since the contract sou+ht to %e rescinded is 3inextrica%&
tied up with the ri+ht to deveop coa-%earin+ ands and the deter(ination of whether or not the reversion of the coa operatin+ contract over the su%Iect coa
%oc's to Jthe paintiffK woud %e in ine with the countr&6s nationa pro+ra( and o%Iective on coa-deveop(ent and over-a coa-supp&-de(and %aance.3 It then
appied the doctrine of pri(ar& Iurisdiction @
In recent &ears, it has %een the Iurisprudentia trend to app& the doctrine of pri(ar& Iurisdiction in (an& cases invovin+ (atters that de(and the specia
co(petence of ad(inistrative a+encies. It (a& occur that the Court has Iurisdiction to ta'e co+ni:ance of a particuar case, which (eans that the (atter
invoved is aso Iudicia in character. 7owever, if the case is such that its deter(ination re$uires the expertise, speciai:ed s'is and 'nowed+e of the proper
ad(inistrative %odies %ecause technica (atters or intricate $uestions of facts are invoved, then reief (ust first %e o%tained in an ad(inistrative proceedin+
%efore a re(ed& wi %e suppied %& the courts even thou+h the (atter is within the proper Iurisdiction of a court. ,his is the doctrine of pri(ar& Iurisdiction. It
appies 3where a cai( is ori+ina& co+ni:a%e in the courts, and co(es into pa& whenever enforce(ent of the cai( re$uires the resoution of issues which,
under a re+uator& sche(e, have %een paced within the specia co(petence of an ad(inistrative %od&.3
Cear&, the doctrine of pri(ar& Iurisdiction finds appication in this case since the $uestion of what coa areas shoud %e expoited and deveoped and which
entit& shoud %e +ranted coa operatin+ contracts over said areas invoves a technica deter(ination %& the Bureau of Ener+& Deveop(ent as the ad(inistrative
a+enc& in possession of the speciai:ed expertise to act on the (atter. ,he ,ria Court does not have the co(petence to decide (atters concernin+ activities
reative to the exporation, expoitation, deveop(ent and extraction of (inera resources i'e coa. ,hese issues precude an initia Iudicia deter(ination.
Je(phases oursK
,he a%sence of an& express or i(pied statutor& power to adIudicate confictin+ cai(s of ownership or entite(ent to the proceeds of its certificates of
inde%tedness finds co(pe(ent in the si(iar a%sence of an& technica (atter that woud ca for the BSP6s specia expertise or co(petence.
#/"
In fact, what the
PDB6s petitions %ear out is essentia& the nature of the transaction it had with the su%se$uent transferees of the su%Iect CB %is )BOC and Bancap* and not an&
(atter (ore appropriate for specia deter(ination %& the BSP or an& ad(inistrative a+enc&.
In a si(iar vein, it is we-setted that the interpretation +iven to a rue or re+uation %& those char+ed with its execution is entited to the +reatest wei+ht %& the
courts construin+ such rue or re+uation.
#/=
Dhie there are exceptions
#/;
to this rue, the PDB has not convinced us that a departure is warranted in this case.
Eiven the non-appica%iit& of the doctrine of pri(ar& Iurisdiction, the BSP6s own position, in i+ht of Circuar No. ;=2-<., deserves respect fro( the Court.
Ordinari&, cases invovin+ the appication of doctrine of pri(ar& Iurisdiction are initiated %& an action invo'in+ the Iurisdiction of a court or ad(inistrative a+enc&
to resove the su%stantive e+a confict %etween the parties. In this sense, the present case is $uite uni$ue since the court6s Iurisdiction was, ori+ina&, invo'ed
to co(pe an ad(inistrative a+enc& )the BSP* to resove the e+a confict of ownership over the CB %is - instead of o%tainin+ a Iudicia deter(ination of the
sa(e dispute.
,he re(ed& of interpeader
Based on the uni$ue factua pre(ise of the present case, the R,C acted correct& in initia& assu(in+ Iurisdiction over the PDB6s petition for (anda(us,
prohi%ition and inIunction.
#/<
Dhie the R,C a+reed )a%eit erroneous&* with the PDB6s view )that the BSP has Iurisdiction*, it, however, dis(issed not on& the
BOC6s4the BSP6s countercai(s %ut the PDB6s petition itsef as we, on the +round that it ac's Iurisdiction.
,his is pain error.
Not on& the parties the(seves, %ut (ore so the courts, are %ound %& the rue on non-waiver of Iurisdiction.
#/2
%eieves that Iurisdiction over the BOC6s
countercai(s and the BSP6s countercai(4crosscai( for interpeader cas for the appication of the doctrine of pri(ar& Iurisdiction, the aowance of the PDB6s
petition even %eco(es i(perative %ecause courts (a& raise the issue of pri(ar& Iurisdiction sua sponte.
#0.
Of the three possi%e options avaia%e to the R,C, the adoption of either of these two woud ead the tria court into serious e+a error> first, if it +ranted the
PDB6s petition, its decision woud have to %e set aside on appea %ecause the BSP has no Iurisdiction as previous& discussed5 and second when it dis(issed
the PDB6s petitions and the BOC6s countercai(s on the +round that it ac's Iurisdiction, the tria court serious& erred %ecause precise&, the resoution of the
confictin+ cai(s over the CB %is fas within its +enera Iurisdiction.
Dithout e(ascuatin+ its Iurisdiction, the R,C coud have proper& dis(issed the PDB6s petition %ut on the +round that (anda(us does not ie a+ainst the BSP5
%ut even this correct aternative is no on+er pausi%e since the BSP, as a respondent %eow, aread& proper& %rou+ht %efore the R,C the re(ainin+ confictin+
cai(s over the su%Iect CB %is %& wa& of a countercai(4crosscai( for interpeader. Section #, Rue =/ of the Rues of Court provides when an interpeader is
proper>
SEC,ION #. Dhen interpeader proper. @ Dhenever confictin+ cai(s upon the sa(e su%Iect (atter are or (a& %e (ade a+ainst a person who cai(s no
interest whatever in the su%Iect (atter, or an interest which in whoe or in part is not disputed %& the cai(ants, he (a& %rin+ an action a+ainst the confictin+
cai(ants to co(pe the( to interpead and iti+ate their severa cai(s a(on+ the(seves.
,he re(ed& of an action of interpeader
#0#
is desi+ned to protect a person a+ainst dou%e vexation in respect of a sin+e ia%iit&.
;
It re$uires, as an indispensa%e
re$uisite, that confictin+ cai(s upon the sa(e su%Iect (atter are or (a& %e (ade a+ainst the sta'ehoder )the possessor of the su%Iect (atter* who cai(s no
interest whatever in the su%Iect (atter or an interest which in whoe or in part is not disputed %& the cai(ants.
#0/
,hrou+h this re(ed&, the sta'ehoder can Ioin a co(petin+ cai(ants in a sin+e proceedin+ to deter(ine confictin+ cai(s without exposin+ the sta'ehoder to
the possi%iit& of havin+ to pa& (ore than once on a sin+e ia%iit&.
#00
Dhen the court orders that the cai(ants iti+ate a(on+ the(seves, in reait& a new action arises,
#0!
where the cai(s of the interpeaders the(seves are
%rou+ht to the fore, the sta'ehoder as paintiff is ree+ated (ere& to the roe of initiatin+ the suit. In short, the re(ed& of interpeader, when proper, (ere&
provides an avenue for the confictin+ cai(s on the sa(e su%Iect (atter to %e threshed out in an action. Section / of Rue =/ provides>
SEC. /.Order. @ Mpon the fiin+ of the co(paint, the court sha issue an order re$uirin+ the confictin+ cai(ants to interpead with one another. If the interests
of Iustice so re$uire, the court (a& direct in such order that the su%Iect (atter %e paid or deivered to the court.
,his is precise& what the R,C did %& +rantin+ the BSP6s (otion to interpead. ,he PDB itsef 3a+reed that the various cai(ants shoud now interpead.3 ,hus,
the PDB and the BOC su%se$uent& entered into two separate escrow a+ree(ents, coverin+ the CB %is, and su%(itted the( to the R,C for approva.
In +rantin+ the BSP6s (otion, the R,C acted on the correct pre(ise that it has Iurisdiction to resove the parties6 confictin+ cai(s over the CB %is - consistent
with the rues and the parties6 conduct - and accordin+& re$uired the BOC to a(end its answer and for the PDB to co((ent thereon. Sudden&, however, the
PDB (ade an a%out-face and $uestioned the Iurisdiction of the R,C. Swa&ed %& the PDB6s ar+u(ent, the R,C dis(issed even the PDB6s petition - which
(eans that it did not actua& co(pe the BSP to resove the BOC6s and the PDB6s cai(s.
Dithout the (otion to interpead and the order +rantin+ it, the R,C coud on& dis(iss the PDB6s petition since it is the R,C which has Iurisdiction to resove the
parties6 confictin+ cai(s @ not the BSP. Eiven that the (otion to interpead has %een actua& fied, the R,C coud not have rea& +ranted the reief ori+ina&
sou+ht in the PDB6s petition since the R,C6s order +rantin+ the BSP6s (otion to interpead - to which the PDB in fact ac$uiesced into - effective& resuted in the
dis(issa of the PDB6s petition. ,his is not atered %& the fact that the PDB additiona& pra&ed in its petition for da(a+es, attorne&6s fees and costs of suit
3a+ainst the pu%ic respondents3 %ecause the +rant of the order to interpead effective& sustained the propriet& of the BSP6s resort to this procedura device.
Interpeader
#. as a specia civi action
Dhat is $uite uni$ue in this case is that the BSP did not initiate the interpeader suit throu+h an ori+ina co(paint %ut throu+h its 8nswer. ,his circu(stance
%eco(es understanda%e if it is considered that insofar as the BSP is concerned, the PDB does not possess an& ri+ht to have its cai( recorded in the BSP6s
%oo's5 conse$uent&, the PDB cannot proper& %e considered even as a potentia cai(ant to the proceeds of the CB %is upon (aturit&. ,hus, the interpeader
was on& an aternative position, (ade on& in the BSP6s 8nswer.
#0"
,he re(ed& of interpeader, as a specia civi action, is pri(ari& +overned %& the specific provisions in Rue =/ of the Rues of Court and secondari& %& the
provisions appica%e to ordinar& civi actions.
#0=
Indeed, Rue =/ does not express& authori:e the fiin+ of a co(paint-in-interpeader as part of, athou+h
separate and independent fro(, the answer. Si(iar&, Section ", Rue =, in reation to Section #, Rue 2 of the Rues of Court
#0;
does not incude a co(paint-in-
interpeader as a cai(,
#0<
a for( of defense,
#02
or as an o%Iection that a defendant (a& %e aowed to put up in his answer or in a (otion to dis(iss. ,his does
not (ean, however, that the BSP6s 3counter-co(paint4cross-cai( for interpeader3 runs counter to +enera procedures.
8part fro( a peadin+,
#!.
the rues
#!#
aow a part& to see' an affir(ative reief fro( the court throu+h the procedura device of a (otion. Dhie captioned 38nswer
with counter co(paint4cross-cai( for interpeader,3 the R,C understood this as in the nature of a (otion,
#!/
see'in+ reief which essentia& consists in an order
for the confictin+ cai(ants to iti+ate with each other so that 3pa&(ent is (ade to the ri+htfu or e+iti(ate owner3
#!0
of the su%Iect CB %is.
,he rues define a 3civi action3 as 3one %& which a part& sues another for the enforce(ent or protection of a ri+ht, or the prevention or redress of a wron+.3
Interpeader (a& %e considered as a sta'ehoder6s re(ed& to prevent a wron+, that is, fro( (a'in+ pa&(ent to one not entited to it, there%& renderin+ itsef
vunera%e to awsuit4s fro( those e+a& entited to pa&(ent.
Interpeader is a civi action (ade specia %& the existence of particuar rues to +overn the uni$ueness of its appication and operation. Mnder Section /, Rue =
of the Rues of Court, +overnin+ ordinar& civi actions, a part&6s cai( is asserted 3in a co(paint, countercai(, cross-cai(, third )fourth, etc.*-part& co(paint, or
co(paint-in-intervention.3 In an interpeader suit, however, a cai( is not re$uired to %e contained in an& of these peadin+s %ut in the answer-)of the confictin+
cai(ants*-in-interpeader. ,his cai( is different fro( the counter-cai( )or cross-cai(, third part&-co(paint* which is separate& aowed under Section ", par.
/ of Rue =/.
/. the pa&(ent of doc'et fees coverin+ BOC6s countercai(
,he PDB ar+ues that, even assu(in+ that the R,C has Iurisdiction over the issue of ownership of the CB %is, the BOC6s faiure to pa& the appropriate doc'et
fees prevents the R,C fro( ac$uirin+ Iurisdiction over the BOC6s 3countercai(s.3
De disa+ree with the PDB.
,o reiterate and reca, the order +rantin+ the 3PDB6s (otion to interpead,3 aread& resuted in the dis(issa of the PDB6s petition. ,he sa(e order re$uired the
BOC to a(end its answer and for the confictin+ cai(ants to co((ent, presu(a%& to confor( to the nature of an answer-in interpeader. Perhaps, %& reason of
the BOC6s deno(ination of its cai( as a 3co(pusor& countercai(3 and the PDB6s faiure to fu& appreciate the R,C6s order +rantin+ the 3BSP6s (otion for
interpeader3 )with the PDB6s confor(it&*, the PDB (ista'en& treated the BOC6s cai( as a 3per(issive countercai(3 which necessitates the pa&(ent of doc'et
fees.
8s the precedin+ discussions woud show, however, the BOC6s 3cai(3 - i.e., its assertion of ownership over the CB %is @ is in reait& Iust that, a 3cai(3 a+ainst
the sta'ehoder and not as a 3countercai(,3
#!!
whether co(pusor&
#!"
or per(issive. It is on& the BOC6s aternative pra&er )for the PDB to deiver to the BOC,
as the %u&er in the 8pri #" transaction and the uti(ate successor-in-interest of the %u&er in the 8pri #2 transaction, either the ori+ina su%Iects of the saes or
the vaue thereof pus whatever inco(e that (a& have %een earned pendente ite* and its pra&er for da(a+es that are o%vious& co(pusor& countercai(s
a+ainst the PDB and, therefore, does not re$uire pa&(ent of doc'et fees.
#!=
,he PDB ta'es a contrar& position throu+h its insistence that a co(pusor& countercai( shoud %e one where the presence of third parties, of who( the court
cannot ac$uire Iurisdiction, is not re$uired. It reasons out that since the RCBC and 8 8sia )the intervenin+ hoders of the CB %is* have aread& %een dropped
fro( the case, then the BOC6s countercai( (ust on& %e per(issive in nature and the BOC shoud have paid the correct doc'et fees.
De see no reason to %ea%or this cai(. Even if we +oss over the PDB6s own confor(it& to the droppin+ of these entities as parties, the BOC correct& ar+ues
that a re(ed& is provided under the Rues. Section #/, Rue = of the Rues of Court reads>
SEC. #/.Brin+in+ new parties. @ Dhen the presence of parties other than those to the ori+ina action is re$uired for the +rantin+ of co(pete reief in the
deter(ination of a countercai( or cross-cai(, the court sha order the( to %e %rou+ht in as defendants, if Iurisdiction over the( can %e o%tained.
Even then, the strict characteri:ation of the BOC6s countercai( is no on+er (ateria in disposin+ of the PDB6s ar+u(ent %ased on non-pa&(ent of doc'et fees.
Dhen an action is fied in court, the co(paint (ust %e acco(panied %& the pa&(ent of the re$uisite doc'et and fiin+ fees %& the part& see'in+ affir(ative reief
fro( the court. It is the fiin+ of the co(paint or appropriate initiator& peadin+, acco(panied %& the pa&(ent of the prescri%ed doc'et fee, that vests a tria court
with Iurisdiction over the cai( or the nature of the action.
#!;
7owever, the non-pa&(ent of the doc'et fee at the ti(e of fiin+ does not auto(atica& cause the
dis(issa of the case, so on+ as the fee is paid within the appica%e prescriptive or re+e(entar& period, especia& when the cai(ant de(onstrates a
wiin+ness to a%ide %& the rues prescri%in+ such pa&(ent.
#!<
In the present case, considerin+ the ac' of a cear +uideine on the pa&(ent of doc'et fee %& the cai(ants in an interpeader suit, co(pounded %& the unusua
(anner in which the interpeader suit was initiated and the circu(stances surroundin+ it, we sure& cannot deduce fro( the BOC6s (ere faiure to specif& in its
pra&er the tota a(ount of the CB %is it a&s cai( to )or the vaue of the su%Iects of the saes in the 8pri #" and 8pri #2 transactions, in its aternative pra&er*
an intention to defraud the +overn(ent that woud warrant the dis(issa of its cai(.
#!2
8t an& rate, re+ardess of the nature of the BOC6s 3countercai(s,3 for purposes of pa&(ent of fiin+ fees, %oth the BOC and the PDB, proper& as defendants-in-
interpeader, (ust %e assessed the pa&(ent of the correct doc'et fee arisin+ fro( their respective cai(s. ,he se(ina case of Sun Insurance Office, Ftd. v.
-ud+e 8suncion
#".
provides us +uidance in the pa&(ent of doc'et fees, to wit>
#. x xx Dhere the fiin+ of the initiator& peadin+ is not acco(panied %& pa&(ent of the doc'et fee, the court (a& aow pa&(ent of the fee within a
reasona%e ti(e %ut in no case %e&ond the appica%e prescriptive or re+e(entar& period.
/. ,he sa(e rue appies to per(issive countercai(s, third-part& cai(s and si(iar peadin+s, which sha not %e considered fied unti and uness
the fiin+ fee prescri%ed therefor is paid. ,he court (a& aso aow pa&(ent of said fee within a reasona%e ti(e %ut aso in no case %e&ond its
appica%e prescriptive or re+e(entar& period. Junderscorin+ oursK
,his (ust %e the rue considerin+ that Section ;, Rue =/ of which reads>
SEC. ;.Doc'et and other awfu fees, costs and iti+ation expenses as iens. @ ,he doc'et and other awfu fees paid %& the part& who fied a co(paint under
this Rue, as we as the costs and iti+ation expenses, sha constitute a ien or char+e upon the su%Iect (atter of the action, uness the court sha order
otherwise.
on& pertain to the doc'et and awfu fees to %e paid %& the one who initiated the interpeader suit, and who, under the Rues, actua& 3cai(s no interest
whatever in the su%Iect (atter.3 B& constitutin+ a ien on the su%Iect (atter of the action, Section ; in effect on& ai(s to actua& co(pensate the co(painant-
in-interpeader, who happens to %e the sta'ehoder unfortunate enou+h to +et cau+ht in a e+a crossfire %etween two or (ore confictin+ cai(ants, for the
fautess trou%e it found itsef into. Since the defendants-in-interpeader are actua& the ones who (a'e a cai( - on& that it was extraordinari& done throu+h
the procedura device of interpeader - then to the( devoves the dut& to pa& the doc'et fees prescri%ed under Rue #!# of the Rues of Court, as a(ended.
#"#
,he i(portance of pa&in+ the correct a(ount of doc'et fee cannot %e overe(phasi:ed>
,he (atter of pa&(ent of doc'et fees is not a (ere triviait&. ,hese fees are necessar& to defra& court expenses in the handin+ of cases. Conse$uent&, in
order to avoid tre(endous osses to the Iudiciar&, and to the +overn(ent as we, the pa&(ent of doc'et fees cannot %e (ade dependent on the outco(e of the
case, except when the cai(ant is a pauper-iti+ant.
#"/
D7ERE9ORE, pre(ises considered the consoidated PE,I,IONS are ER8N,ED. ,he Panters Deveop(ent Ban' is here%& REBMIRED to fie with the
Re+iona ,ria Court its co((ent or answer-in-interpeader to Ban' of Co((erce6s 8(ended Consoidated 8nswer with Co(pusor& Countercai(, as
previous& ordered %& the Re+iona ,ria Court. ,he Re+iona ,ria Court of 1a'ati Cit&, Branch #!0, is here%& ORDERED to assess the doc'et fees due fro(
Panters Deveop(ent Ban' and Ban' of Co((erce and order their pa&(ent, and to resove with DEFIBER8,E DISP8,C7 the parties6 confictin+ cai(s of
ownership over the proceeds of the Centra Ban' %is.
,he Cer' of Court of the Re+iona ,ria Court of 1a'ati Cit&, Branch #!0, or his du& authori:ed representative is here%& ORDERED to assess and coect the
appropriate a(ount of doc'et fees separate& due the Ban' of Co((erce and Panters Deveop(ent Ban' as confictin+ cai(ants in Ban+'oSentran+Piipinas6
interpeader suit, in accordance with this decision.
SO ORDERED.
P*''PP'NE "EPOS'!
'NS+RANCE CORPORA!'ON
,P"'C-,
Petitioner,



- versus -



P*''PP'NE CO+N!R.S'"E
R+RA BANK, 'NC., R+RA
BANK OF CARMEN ,CEB+-,
'NC., BANK OF EAS! AS'A,M'NGAN'A, CEB+-, 'NC.,
$%& P''P'NO R+RA BANK ,CEB+-, 'NC.,
Respondents.
G.R. No. 17/40(

Present>

C8RPIO, J., Chairperson,
N8C7MR8,
PER8F,8,
8B8D, and
1ENDOH8, JJ.







Pro(u+ated>

-anuar& /!, /.##

x ----------------------------------------------------------------------------------------x

" E C ' S ' O N

MEN"O1A, J.2


,his is a petition for review on certiorari under Rue !" of the Rues of Court fied %& the Phiippine Deposit Insurance Corporation (PDIC) assaiin+ the
Septe(%er #<, /..= Decision of the Court of 8ppeas-Ce%u (CA-Cebu), which +ranted the petition for inIunction fied %& respondents Phiippine Countr&side
Rura Ban', Inc. (PCRBI), Rura Ban' of Car(en )Ce%u*, Inc. (RBCI), Ban' of East 8sia )1in+ania, Ce%u*, Inc. (BEAI), and Piipino Rura Ban' )Ce%u*,
Inc. (PRBI), a coective& referred to as TBan's.U ,he dispositive portion of the C8-Ce%u decision reads>

3*EREFORE, in view of a the fore+oin+ pre(ises, the petition for inIunction is here%& GRAN!E". ,he respondent PDIC is
restrained fro( further conductin+ investi+ations or exa(ination on petitioners-%an's without the re$uisite approva fro( the 1onetar&
Board.

SO OR"ERE".
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In a resoution dated -anuar& /", /..;, the C8-Ce%u denied petitioner6s (otion for reconsideration for Tac' of (erit.U
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!*E FAC!S
On 1arch 2, /..", the Board of Directors of the PDIC (PDIC Boar) adopted Resoution No. /.."-.0-.0/
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approvin+ the conduct of an investi+ation, in
accordance with Section 2)%-#* of Repu%ic 8ct (R.A.) No. 0"2#, as a(ended, on the %asis of the Reports of Exa(ination of the
Ban+'oSentran+Piipinas (B!P) on ten )#.* %an's, four )!* of which are respondents in this petition for review. ,he said resoution aso created a Specia
Investi+ation ,ea( to conduct the said investi+ation, with the authorit& to ad(inister oaths, to exa(ine, ta'e and preserve testi(on& of an& person reatin+ to
the su%Iect of the investi+ation, and to exa(ine pertinent %an' records.
On 1a& /", /..", the PDIC Board adopted another resoution, Resoution No. /.."-."-."=,
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approvin+ the conduct of an investi+ation on PCRBI
%ased on a Co(paint-8ffidavit fied %& a corporate depositor, the Phiippine Schoo of Entrepreneurship and 1ana+e(ent (P!E"I) throu+h its president,
-acinto F. -a(ero.
On -une 0, /..", in accordance with the two PDIC Board resoutions, then PDIC President and Chief Executive Officer Ricardo 1. ,an issued the Notice
of Investi+ation
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to the President or ,he 7i+hest Ran'in+ Officer of PCRBI.
On -une ;, /..", the PDIC Investi+ation ,ea( persona& served the Notice of Investi+ation on PCRBI at its 7ead Office in PaIo, Fapu-Fapu Cit&.
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8ccordin+ to PDIC, in the course of its investi+ation, PCRBI was found to have +ranted oans to certain individuas, which were setted %& wa& of acion of
properties. ,hese properties, however, had aread& %een previous& forecosed and consoidated under the na(es of PRBI, BE8I and RBCI.
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On -une #", /..", PDIC issued si(iar notices of investi+ation to PRBI
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and BE8I.
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,he notices stated that the investi+ation was to %e conducted pursuant to Section 2 )%-#* of the PDIC Charter and upon authorit& of PDIC Board
Resoution No. /.."-.0-.0/ authori:in+ the tweve )#/* na(ed representatives of PDIC to conduct the investi+ation.
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,he investi+ation was sou+ht %ecause the Ban's were found to %e a(on+ the ten )#.* %an's coective& 'nown as TFe+ac& Ban's.U ,he Reports of
Eenera and Specia Exa(inations of the BSP as of -une 0., /..!, discosed, a(on+ others, that the Fe+ac& Ban's were co((on& owned and4or controed
%& Fe+ac& Pans Inc. (now #e$ac% Conso&iate P&ans, Inc.), and CesoEanca&codeos 8n+es, -r. and his fa(i&.
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,he notice of investi+ation was served on PRBI the next da&, -une #=, /..".
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On -une /", /..", a separate notice of investi+ation
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was served on RBCI. ,he atter provided the PDIC Investi+ation ,ea( with certified copies of the
oan docu(ents the& had re$uested, unti its president received an order directin+ hi( not to aow the investi+ation.
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Su%se$uent&, PRBI and BE8I refused entr& to their %an' pre(ises and access to their records and docu(ents %& the PDIC Investi+ation ,ea(, upon
advice of their respective counses.
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On -une #= and #;, /..", 8tt&. Cictoria E. Noe (Att%. 'oe&) of the ,ion+sonV8ntenor Cru: Faw Office sent etters to the PDIC
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infor(in+ it of her e+a
advice to PCRBI and BE8I not to su%(it to PDIC investi+ation on the +round that its investi+ator& power pursuant to Section 2)%-#* of R.8. No. 0"2#, as
a(ended (An Act Estab&ishin$ (he Phi&ippine Deposit Insurance Corporation, De)inin$ Its Powers An Duties An *or +ther Purposes) , cannot %e differentiated
fro( the exa(ination powers accorded to PDIC under Section <, para+raph < of the sa(e aw, under which, prior approva fro( the 1onetar& Board is re$uired.
On -une #;, /..", PDIC Eenera Counse Ro(eo 1. 1endo:a sent a rep& to 8tt&. Noe statin+ that TPDIC6s investi+ation power, as distin+uished fro(
the exa(ination power of the PDIC under Section < of the sa(e aw, does not need prior approva of the 1onetar& Board.U
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PDIC then ur+ed PRBI and BE8I
Tnot to i(pede the conduct of PDIC6s investi+ationU as the sa(e Tconstitutes a vioation of the PDIC Charter for which PRBI and BE8I (a& %e hed cri(ina&
and4or ad(inistrative& ia%e.U
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On -une /; and /<, /..", the Ban's, throu+h counse, sou+ht further carification fro( PDIC on its source of authorit& to conduct the i(pendin+
investi+ations and re$uested that PDIC refrain fro( proceedin+ with the investi+ations.
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Si(utaneous&, the Ban's wrote to the 1onetar& Board re$uestin+ a carification on the para(eters of PDIC6s power of investi+ation4exa(ination over
the Ban's and for an issuance of a directive to PDIC not to pursue the investi+ations pendin+ the re$uested carification.
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On -une /<, /..", PRBI and BE8I a+ain received etters fro( PDIC, dated -une /!, /..", which appeared to %e fina de(ands on the( to aow its
investi+ation.
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PRBI and BE8I repied that etters of carification had %een sent to PDIC and the 1onetar& Board.
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Pendin+ action on such re$uests, PDIC
was re$uested to refrain fro( proceedin+ with the investi+ation.
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Notwithstandin+, on -u& ##, /..", the Ban's received a etter, dated -u& <, /..", fro( the PDIC Eenera Counse reiteratin+ its position that prior
1onetar& Board approva was not a pre-re$uisite to PDIC6s exercise of its investi+ative power.
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Not in confor(it&, on -u& /<, /..", the Ban's fied a Petition )or Dec&arator% Re&ie) with a Pra%er )or the Issuance o) a (R+ an,or -rit o) Pre&i.inar%
In/unction (R(C Petition) %efore the Re+iona ,ria Court of 1a'ati (R(C-"a0ati) which was doc'eted as Civi Case No. ."-=2;.
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In the R,C Petition, the Ban's pra&ed for a Iud+(ent interpretin+ Section 2)%-#* of the PDIC Charter, as a(ended, to re$uire prior 1onetar& Board
approva %efore PDIC coud exercise its investi+ation4exa(ination power over the Ban's.
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PDIC fied a (otion to dis(iss ae+in+ that the R,C had no Iurisdiction over the said petition since a %reach had aread& %een co((itted %& the Ban's
when the& received the notices of investi+ation, and %ecause PDIC need not secure prior 1onetar& Board approva since Texa(inationU and Tinvesti+ationU are
two different ter(s.
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Fater, the Ban's withdrew their appication for a te(porar& restrainin+ order ((R+) reasonin+ that ower courts cannot issue inIunctions a+ainst
PDIC. ,hus, the Ban's instituted a petition for inIunction with appication for ,RO and4or Prei(inar& InIunction(CA-"ani&a petition) %efore the Court of 8ppeas-
1ania (CA-"ani&a). ,he case was doc'eted as C8-E.R. SP No. 2#.0<.
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Even %efore the C8-1ania coud rue on the appication for a ,RO and4or writ of prei(inar& inIunction, the R,C-1a'ati dis(issed the petition on the
+round that there aread& existed a %reach of aw that isoated the case fro( the Iurisdiction of the tria court.
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,he Ban's fied a (otion for reconsideration %ut it was denied %& the R,C for ac' of (erit.
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On 9e%ruar& #., /..=, the Ban's fied a notice of
appea
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which the& ater withdrew on 9e%ruar& /<, /..=.
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In view of the dis(issa of the R,C-1a'ati petition, the C8-1ania dis(issed the petition for inIunction for %ein+ (oot and acade(ic. In its Decision,
dated 9e%ruar& #, /..=,
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the C8-1ania wrote>

Dhat re(ained for the petitioners to do was to iti+ate over the %reach or vioation %& ordinar& action, as the circu(stances
ensuin+ fro( the %reach or vioation warrant. ,he ordinar& action (a& either %e in the sa(e case, if the R,C per(itted the conversion, in
which event the R,C (a& aow the parties to fie such peadin+s as (a& %e necessar& or proper, pursuant to Sec. ", Rue =05 or the
petitioners (a& fie another action in the proper court )e.+. incudin+ the Court of 8ppeas, shoud inIunction %e a(on+ the reiefs to %e
sou+ht* upon so(e cause of action that has arisen fro( the %reach or vioation.
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,hereafter, on 1arch #!, /..=, the Ban's fied their Petition )or In/unction with Pra%er )or Pre&i.inar% In/unction
[35]
(CA-Cebu Petition) with the C8-
Ce%u (CA-Cebu).
On 1arch #", /..=, the C8-Ce%u issued a resoution +rantin+ the Ban'6s appication for a ,RO. ,his enIoined the PDIC, its representatives or
a+ents or an& other persons or a+enc& assistin+ the( or actin+ for and in their %ehaf fro( conductin+ exa(inations4investi+ations on the Ban's6 head and
%ranch offices without securin+ the re$uisite approva fro( the 1onetar& Board of BSP.
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Durin+ the pendenc& of the C8-Ce%u petition, PDIC fied with this Court a Petition )or Certiorari, Prohibition an "ana.us with Pra%er )or Issuance
o) (e.porar% Restrainin$ +rer an,or -rit o) Pre&i.inar% In/unction under Rue =" doc'eted as E.R. No. #;00;..
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It ae+ed that the C8-Ce%u co((itted
+rave a%use of discretion a(ountin+ to ac' or excess of Iurisdiction in ta'in+ co+ni:ance of the Ban's6 petition, and in issuin+ a ,RO and a writ of prei(inar&
inIunction.
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On -u& 0#, /..=, this Court issued a resoution dis(issin+ the petition for certiorari in E.R. No. #;00;.. ,he Resoution reads>

Considerin+ the ae+ations, issues and ar+u(ents adduced in the petition for certiorari, prohi%ition and (anda(us with pra&er for
prei(inar& inIunction and4or restrainin+ order dated #2 -u& /..=, the Court resoves to DIS1ISS the petition for faiure to sufficient&
show that the $uestioned resoution of the Court of 8ppeas is tainted with +rave a%use of discretion. 1oreover, the petition faied to
confor( with Rue =" and other reated provisions of the #22; Rues of Civi Procedure, as a(ended, +overnin+ petitions for certiorari,
prohi%ition and (anda(us fied with the Supre(e Court, since petitioner faied to su%(it a verified state(ent of (ateria date of receipt of
the assaied resoution dated #= 1a& /..= in accordance with Section !, Rue =" in reation to the second para+raph of Section 0, Rue
!=. In an& event, the petition is pre(ature since no (otion for reconsideration of the $uestioned resoution of the Court of 8ppeas was
fied prior to the avai(ent of this specia civi action and there are no sufficient ae+ations to %rin+ the case within the reco+ni:ed
exceptions to this rue.
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On Septe(%er #<, /..=, after %oth parties had su%(itted their respective (e(oranda, the C8-Ce%u rendered a decision +rantin+ the writ of
prei(inar& inIuction,
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pertinent portions of which read>

J8Kfter under+oin+ a series of a(end(ents, the controin+ aw with respect to PDIC6s power to conduct exa(ination of %an's is-
prior approva of the 1onetar& Board is a condition sine 1ua non for PDIC to exercise its power of exa(ination. ,o rue otherwise woud
disre+ard the a(endator& aw of the PDIC6s charter.

,he Court is not aso swa&ed %& the contention of respondent that what it see's to conduct is an investi+ation and not an
exa(ination of petitioners6 transactions, hence prior approva of the 1onetar& Board is a (ere surpusa+e.


,he ordinar& definition of the words Texa(inationU and Tinvesti+ationU woud ead one to concude that %oth pertain to the sa(e
thin+ and there see(s to %e no fine ine differentiatin+ one fro( the other. Bac'6s Faw Dictionar& defines the word Tinvesti+ateU as Tto
exa(ine and in$uire into with care and accurac&5 to find out %& carefu in$uisition5 exa(ination and the word Texa(inationU as an
investi+ation. In Coin6s Dictionar& of Ban'in+ and 9inance, the word Tinvesti+ationU is defined as an Texa(ination to find out what is
wron+.U

In the case of Anti-2ra)t #ea$ue o) the Phi&ippines, Inc. 3s. 4on. +rte$a, et a&.,
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the Supre(e Court usin+ Baentine6s Faw
Dictionar& defines an Tinvesti+ationU as an in$uir&, Iudicia or otherwise, for the discover& or coection of facts concernin+ the (atter or
(atters invoved. Such co((on definitions woud show that there is rea& nothin+ to distin+uish %etween these two )/* ter(s as to
support the PDIC view differentiatin+ Section 2 )%-#* fro( para+raph <, Section < of the PDIC Charter.

In the rea( of the PDIC rues, specifica& under Section 0 of PDIC Re+uator& Issuance No. //."-./
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Tinvesti+ationU is defined
as> Investi+ation sha refer to fact-findin+ e5a.ination, stud&, in$uir&, for deter(inin+ whether the ae+ations in a co(paint or findin+s in
a fina report of exa(ination (a& proper& %e the su%Iect of an ad(inistrative, cri(ina or civi action.

9ro( the fore+oin+ definition aone, it can %e easi& deduced that investi+ation and exa(ination are s&non&(ous ter(s. Si(p&
stated, investi+ation enco(passes a fact-findin+ exa(ination. ,hus, it is inconsistent with the rues if respondent PDIC %e )sic* aowed to
conduct an investi+ation without the approva of the 1onetar& Board.

1oreover, the Court sees that the rationae of the aw in re$uirin+ a )sic* prior approva fro( the 1onetar& Board whenever an
exa(ination or in this case an investi+ation needs to %e conducted %& the PDIC is o%vious& to ensure that there is no overappin+ of
efforts, dupication of functions and (ore i(portant& to provide a chec' and %aance to the otherwise unrestricted power of respondent
PDIC to conduct investi+ations on %an's insured %& it.

Dith the fore+oin+ pre(ises, this Court rues that a prior approva fro( the 1onetar& Board is necessar& %efore respondent
PDIC can proceed with its investi+ations on petitioners-%an's.
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PDIC (oved for reconsideration %ut it was denied in a resoution dated -anuar& /", /..;.
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7ence, this petition.
!*E 'SS+ES
'.
3*E!*ER RESPON"EN! BANKS #'OA!E" !*E R+E AGA'NS! FOR+M S*OPP'NG 3*EN !*E. F'E" !*E PE!'!'ON FOR
'N4+NC!'ON BEFORE !*E CO+R! OF APPEAS-CEB+.
''.
3*E!*ER !*E PRONO+NCEMEN! OF !*E REG'ONA !R'A CO+R! OF MAKA!' 'N !*E PE!'!'ON FOR "ECARA!OR.
RE'EF CONS!'!+!ES RES JUDICATA !O !*E PE!'!'ON FOR 'N4+NC!'ON 'N !*E CO+R! OF APPEAS-CEB+.
'''.
3*E!*ER PE!'!'ONER 3AS "EPR'#E" OF '!S OPPOR!+N'!. !O BE *EAR" 3*EN !*E CO+R! OF APPEAS-CEB+ 'SS+E"
!*E 3R'! OF 'N4+NC!'ON.
'#.
3*E!*ER !*E 'SS+ES RA'SE" B. PE!'!'ONERS ARE !*E SAME 'SS+ES RA'SE" 'N G.R. NO. 170070 3*'C* 3AS EAR'ER
"'SM'SSE" B. !*'S CO+R!.

#.

3*E!*ER !*E CO+R! OF APPEAS ERRE" 'N F'N"'NG !*A! PR'OR APPRO#A OF !*E MONE!AR. BOAR" OF !*E
BANGKO SEN!RA NG P''P'NAS 'S NECESSAR. BEFORE !*E P"'C MA. CON"+C! AN 'N#ES!'GA!'ON OF RESPON"EN!
BANKS.


!*E CO+R!5S R+'NG


' - Whether respondent banks vo!ated the r"!e a#anst $or"% shoppn# &hen the' $!ed the petton $or n("n)ton be$ore the Co"rt o$
Appea!s*Ceb".


'' - Whether the prono"n)e%ent o$ the Re#ona! Tra! Co"rt o$ +akat n the petton $or de)!arator' re!e$ )onstt"tes res ("d)ata to
the petton $or n("n)ton n the Co"rt o$ Appea!s*Ceb".
In the recent case of !a.eer +3ersees P&ace.ent A$enc%, Inc. 3. "i&re R. !antos,
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the Court discussed the (atter of foru( shoppin+>

9oru( shoppin+ is defined as an act of a part&, a+ainst who( an adverse Iud+(ent or order has %een rendered in one foru(, of see'in+ and possi%&
+ettin+ a favora%e opinion in another foru(, other than %& appea or specia civi action forcertiorari. It (a& aso %e the institution of two or (ore actions or
proceedin+s +rounded on the sa(e cause on the supposition that one or the other court woud (a'e a favora%e disposition. ,here is foru( shoppin+ where
the ee(ents of &itispenentiaare present, na(e&> )a* there is identit& of parties, or at east such parties as represent the sa(e interest in %oth actions5 )%* there
is identit& of ri+hts asserted and reief pra&ed for, the reief %ein+ founded on the sa(e set of facts5 and )c* the identit& of the two precedin+ particuars is such
that an& Iud+(ent rendered in the pendin+ case, re+ardess of which part& is successfu, woud a(ount to res /uicata in the other. It is express& prohi%ited %&
this Court %ecause it trifes with and a%uses court processes, de+radesthe ad(inistration of Iustice, and con+ests court doc'ets. 8 wifu and dei%erate
vioation of the rue a+ainst foru( shoppin+ is a +round for su((ar& dis(issa of the case, and (a& aso constitute direct conte(pt.J!=K


-uxtaposin+ the R,C-1a'ati, C8-1ania and C8-Ce%u petitions, what (ust %e deter(ined here, is whether the ee(ents of&itispenentia are present
%etween and a(on+ these petitions, i.e. whether )a* there is identit& of parties, or at east such parties as represent the sa(e interest in %oth actions5 )%* there
is identit& of ri+hts asserted and reief pra&ed for, the reief %ein+ founded on the sa(e set of facts5 and )c* the identit& of the two precedin+ particuars is such
that an& Iud+(ent rendered in the pendin+ case, re+ardess of which part& is successfu, woud a(ount to res /uicata in the other.

,he first ee(ent is cear& present as %etween the R,C-1a'ati petition and the C8-Ce%u petition. Both invoved the Ban's on one hand, and the
PDIC on the other.

,he second and third ee(ents of &itispenentia, however, are patent& wantin+. ,he ri+hts asserted and reiefs pra&ed for were different, thou+h
founded on the sa(e set of facts. ,he R,C-1a'ati Petition was one for decarator& reief whie the C8-1ania Petition was one for inIunction with a pra&er for
prei(inar& inIunction.

8 petition for decarator& reief is fied %& an& person interested under a deed, wi, contract or other written instru(ent, or whose ri+hts are affected %&
a statute, executive order or re+uation, ordinance, or an& other +overn(enta re+uation, %efore %reach or vioation, thereof, to deter(ine an& $uestion of
construction or vaidit& arisin+, and for a decaration of his ri+hts or duties thereunder.
J!;K

InIunction, on the other hand, is Ta Iudicia writ, process or proceedin+ where%& a part& is directed either to do a particuar act, in which case it is
caed a (andator& inIunction, or to refrain fro( doin+ a particuar act, in which case it is caed a prohi%itor& inIunction. 8s a (ain action, inIunction see's to
per(anent& enIoin the defendant throu+h a fina inIunction issued %& the court and contained in the Iud+(ent.U
J!<K

Cear&, there is a (ar'ed difference %etween the reiefs sou+ht under an action for decarator& reief and an action for inIunction. Dhie an action for
decarator& reief see's a decaration of ri+hts or duties, or the deter(ination of an& $uestion or vaidit& arisin+ under a statute, executive order or re+uation,
ordinance, or an& other +overn(enta re+uation, or under a deed, wi, contract or other written instru(ent, under which his ri+hts are affected, and %efore
%reach or vioation, an action for inIunction uti(ate& see's to enIoin or to co(pe a part& to perfor( certain acts.

1oreover, as stated in the R,C-1a'ati Decision, %ecause the Ban's had aread& %reached the provisions of aw on which decarator& Iud+(ent was
%ein+ sou+ht, it was without Iurisdiction to ta'e co+ni:ance of the sa(e. 8n& Iud+(ent rendered in the R,C-1a'ati petition woud not a(ount to res /uicata in
the C8-1ania Petition. ,hus, the R,C was correct in dis(issin+ the case, havin+ %een %ereft of Iurisdiction to ta'e co+ni:ance of the action for decarator&
Iud+(ent.
8s %etween the C8-1ania and the C8-Ce%u petitions, the second and third ee(ents of &itispenentia are a%sent. ,he ri+hts asserted and reiefs
pra&ed for were different, athou+h founded on the sa(e set of facts.

,he C8-1ania Petition is a petition for inIunction wherein the Ban's pra&ed that>

#* I((ediate& upon fiin+ of this Petition, a Drit of Prei(inar& InIunction and4or ,e(porar& Restrainin+ Order %e issued
co((andin+ the respondent and a its officers, e(po&ees and a+ents to cease and desist fro( proceedin+ with the investi+ations sou+ht
to %e conducted on the petitioners6 head and %ranch offices whie the Petition for Decarator& Reief %efore Branch "< of the 1a'ati
Re+iona ,ria Court is pendin+.

/* 8fter due proceedin+s, Iud+(ent %e rendered decarin+ as per(anent the Drit of Prei(inar& InIunction and4or ,e(porar&
Restrainin+ Order pra&ed for a%ove.

Other e$uita%e reiefs are i'ewise pra&ed for.
J!2K
JMnderscorin+ suppiedK


,he C8-Ce%u Petition, on the other hand, is deno(inated as a Petition for InIunction Dith Pra&er for Drit of Prei(inar& InIunction and4or Restrainin+
Order. ,he Ban's pra&ed therein that>

#* Mpon fiin+ of this Petition, a Drit of Prei(inar& InIunction and4or ,e(porar& Restrainin+ Order %e issued forthwith, enIoinin+
Respondent PDIC and a its officers, e(po&ees and a+ents to cease and desist fro( conductin+ exa(inations4investi+ations on
Petitioner Ban's6 head and %ranch offices without securin+ the re$uisite approva fro( the 1onetar& Board of the
Ban+'oSentran+Piipinas, as re$uired %& Sec. <, Para+raph < of the PDIC Charter, as a(ended5

/* 8fter due proceedin+s, Iud+(ent %e rendered decarin+ as per(anent the Drit of Prei(inar& InIunction and4or ,e(porar&
Restrainin+ Order pra&ed for a%ove.

Other e$uita%e reiefs are i'ewise pra&ed for.
J".K
8s can %e +eaned fro( the a%ove-cited portions of the C8-1ania and C8-Ce%u petitions, the petitions see' different reiefs.

,herefore, as %etween and a(on+ the R,C 1a'ati, and the C8-1ania and C8-Ce%u petitions, there is no foru( shoppin+.

''' - Whether pettoner &as deprved o$ ts opport"nt' to be heard &hen the Co"rt o$
Appea!s*Ceb" ss"ed the &rt o$ n("n)ton.

PDIC ae+es that the C8-Ce%u, in issuin+ the ,RO in its 1arch #", /..= Resoution, and su%se$uent&, the prei(inar& inIunction in its 1a& #=, /..=
Resoution, vioated the funda(enta rue that courts shoud avoid issuin+ inIunctive reief which woud in effect dispose of the (ain case without tria.
J"#K
PDIC
ar+ues that a ,RO is intended on& as a restraint unti the propriet& of +rantin+ a te(porar& inIunction can %e deter(ined, and it +oes no further than
to preserve the status unti that deter(ination.
J"/K
1oreover, its purpose is (ere& to suspend proceedin+s unti such ti(e when there (a& %e an opportunit&
to in$uire whether an& inIunction shoud %e +ranted, and it is not intended to operate as an inIunction penente&ite, and shoud not, in effect, deter(ine the
issues invoved %efore the parties can have their da& in court, or +ive an advanta+e to either part& %& proceedin+ in the ac$uisition or ateration of the propert&
the ri+ht to which is disputed whie the hands of the other part& are tied.
J"0K
On the other hand, the Ban's cai( that PDIC was +iven ever& opportunit& to present its ar+u(ents a+ainst the issuance of the inIunction.
J"!K
Its
active participation in the proceedin+s ne+ates its assertion that it was denied procedura due process in the issuance of the writ of inIunction.
J""K
Citin+ !a&on$a
3. Court o) Appea&s,
J"=K
the Ban's state that the essence of due process is the reasona%e opportunit& to %e heard and to su%(it evidence one (a& have in
support of one6s defense,
J";K
and PDIC was a%e to do so.

On 1arch #", /..=, the C8-Ce%u issued a resoution +rantin+ their pra&er for a =.-da& ,RO, and re$uirin+ PDIC to fie its co((ent.
J"<K
,he
atter thereafter fied its Co((ent a Caute&a. dated 1arch 0., /..=.
J"2K
JMnderscorin+ oursK

On 1a& #=, /..=, the C8-Ce%u issued another resoution, this ti(e +rantin+ the pra&er for a prei(inar& inIunction and re$uirin+ the parties to fie
their respective (e(oranda. PDIC thereafter fied its (e(orandu( dated -u& 0#, /..=.
J=.K

On Septe(%er #<, /..=, the C8-Ce%u pro(u+ated its Decision +rantin+ the Petition for InIunction.
J=#K
PDIC fied a (otion for reconsideration dated
Octo%er #., /..=,
J=/K
which was su%se$uent& denied.

,he essence of procedura due process is found in the reasona%e opportunit& to %e heard and su%(it one6s evidence in support of his defense.
J=0K
,he Court finds that procedura due process was o%served %& the C8-Ce%u. ,he parties were afforded e$ua opportunit& to present their ar+u(ents. In the
a%sence of an& indication to the contrar&, the C8-Ce%u (ust %e accorded the presu(ption of re+uarit& in the perfor(ance of their functions. 7owever, as
discussed herein, the (atter of whether it erred in its concusion and issuance of the ,RO, prei(inar& inIunction and fina inIunction is another (atter
ato+ether.

'# 6 Whether the ss"es rased b' pettoner are the sa%e ss"es rased n ,.R. -o.
./33/0 &h)h &as ear!er ds%ssed b' ths Co"rt.
In E.R. #;00;., a petition for certiorari under Rue =" of the Rues of Court, PDIC ae+ed that the C8-Ce%u co((itted +rave a%use of discretion
a(ountin+ to ac' or excess of Iurisdiction in ta'in+ co+ni:ance of the Ban'6s petition, and in issuin+ a ,RO and a writ of prei(inar& inIunction.
J=!K
In the case at %ench, a petition for review under Rue !", PDIC6s core contention is that the C8-Ce%u erred in findin+ that prior approva of
the 1onetar& Board of the BSP is necessar& %efore it (a& conduct an investi+ation of the Ban's.

Cear& then, the two petitions were of different nature raisin+ different issues.

E.R. #;00;. chaen+ed the C8-Ce%u6s havin+ ta'en co+ni:ance of the Ban'6s petition and interocutor& orders on the issuance of a ,RO and a writ
of prei(inar& inIunction. ,his case, however, stri'es at the core of the fina decision on the (erits of the C8-Ce%u, and not (ere& the interocutor&
orders. Dhie %oth E.R. #;00;. and the present case (a& have %een anchored on the sa(e set of facts, that is, the refusa of the Ban's to aow PDIC to
conduct an investi+ation without the prior consent of the 1onetar& Board, the issues raised in the two petitions are not identica. 1oreover, the disposa of the
first case does not a(ount tores /uicata in this case.

# 6 Whether the Co"rt o$ Appea!s*Ceb" erred n $ndn# that pror approva! o$ the
+onetar' 1oard o$ the 1an#koSentra!n#2!pnas s ne)essar' be$ore the 2DIC %a'
)ond")t an nvest#aton o$ respondent banks.

PDIC is of the position that in order for it to exercise its power of investi+ation, the aw re$uires that>

)a* ,he investi+ation is %ased on a co(paint of a depositor or an& other +overn(ent a+enc&, or on the report of exa(ination of
JtheK Ban+'oSentran+Piipinas )BSP* and4or PDIC5 and,
)%* ,he co(paint ae+es, or the BSP and4or PDIC Report of Exa(ination contains adverse findin+s of, fraud, irre+uarities or
ano(aies co((itted %& the Ban' and4or its directors, officers, e(po&ees or a+ents5 and,

)c* ,he investi+ation is upon the authorit& of the PDIC Board of Directors.
J="K
It ar+ues that when it co((enced its investi+ation on the Ban's, a of the afore(entioned re$uire(ents were (et. PDIC stresses that its power of
exa(ination is different fro( its power of investi+ation, in such that the for(er re$uires prior approva of the 1onetar& Board whie the atter re$uires (ere& the
approva of the PDIC Board.
J==K
It further cai(s that the power of exa(ination cannot %e exercised within tweve )#/* (onths fro( the ast exa(ination
conducted, whereas the power of investi+ation is without i(itation as to the fre$uenc& of its conduct. It states that the purpose of the PDIC6s power of
exa(ination is (ere& to oo' into the condition of the %an', whereas the power of investi+ation ai(s to address fraud, irre+uarities and ano(aies %ased on
co(paints fro( depositors and other +overn(ent a+encies or upon reports of exa(inations conducted %& the PDIC itsef or %& the BSP.
J=;K
,he Ban's, on the other hand, are of the opinion that a hoistic readin+ of the PDIC charter shows that petitioner6s power of exa(ination is s&non&(ous
with its power of investi+ation.
J=<K
,he& cite, as %ases, the aw dictionar& definitions, Section <, Ei+hth para+raph
J=2K
and Section 2)%-#*
J;.K
of the PDIC Charter,
and Rue #, Section 0)#* of PDIC Re+uator& Issuance No. /.."-./, which defines Tinvesti+ationU as foows>

)* OInvesti+ation6 sha refer to fact-findin+ exa(ination, stud& or in$uir& for deter(inin+ whether the ae+ations in a co(paint
or findin+s in a fina report of exa(ination (a& proper& %e the su%Iect of an ad(inistrative, cri(ina or civi action.
,he Ban's further cite Section A="< of the 1anua of Re+uations for Ban's, which states>

Sec. A="< - Exa(ination %& the BSP. ,he ter( Oexa(ination6 sha, henceforth, refer to an investi+ation of an institution
under the supervisor& authorit& of the BSP to deter(ine co(piance with aws and re+uations. It sha incude deter(ination that the
institution is conductin+ its %usiness on a safe and sound %asis. Exa(ination re$uires fu and co(prehensive oo'in+ into the operations
and %oo's of institutions, and sha incude, %ut need not %e i(ited to the foowin+>

a. Deter(ination of the %an'6s sovenc& and i$uidit& position5

%. Evauation of asset $uait& as we as deter(ination of sufficienc& of vauation reserves on oans and
other ris' assets5

c. Review of a aspects of %an' operations5

d. 8ssess(ent of ris' (ana+e(ent s&ste(, incudin+ the evauation of the effectiveness of the %an'
(ana+e(ent6s oversi+ht functions, poicies, procedures, interna contro and audit5

e. 8ppraisa of overa (ana+e(ent of the %an'5

f. Review of co(piance and appica%e aws, rues and re+uations5 and an& other activities reevant to
the a%ove.U


8fter an evauation of the respective positions of the parties, the Court is of the view that the 1onetar& Board approva is notre$uired for PDIC to conduct
an investi+ation on the Ban's.

,he disa+ree(ent ste(s fro( the interpretation of these two 'e& provisions of the PDIC Charter. ,he confusion can %e attri%uted to the fact that athou+h
Tinvesti+ationU and Texa(inationU are two separate and distinct procedures under the charter of the PDIC and the BSP, the words see( to %e used oose& and
interchan+ea%&.

It does not hep that indeed these ter(s are ver& cose& reated in a +eneric sense. 7owever, whie Texa(inationU connotes a (ere +eneric perusa or
inspection, Tinvesti+ationU refers to a (ore intensive scrutin& for a (ore specific fact-findin+ purpose. ,he atter ter( is aso usua& associated with proceedin+s
conducted prior to cri(ina prosecution.

,he PDIC was created %& R.8. No. 0"2# on -une //, #2=0 as an insurer of deposits in a %an's entited to the %enefits of insurance under the PDIC
Charter to pro(ote and safe+uard the interests of the depositin+ pu%ic %& wa& of providin+ per(anent and continuin+ insurance covera+e of a insured
deposits. It is a +overn(ent instru(entait& that operates under the Depart(ent of 9inance. Its pri(ar& purpose is to act as deposit insurer, as a co-re+uator of
%an's, and as receiver and i$uidator of cosed %an's.
J;#K

Section # of the PDIC Charter states>

SEC!'ON 1. ,here is here%& created a Phiippine Deposit Insurance Corporation hereinafter referred to as the TCorporationU
which sha insure, as herein provided, the deposits of a %an's which are entited to the %enefits of insurance under this 8ct, and which
sha have the powers hereinafter +ranted.

,he Corporation sha, as a %asic poic&, pro(ote and safe+uard the interests of the depositin+ pu%ic %& wa& of providin+
per(anent and continuin+ insurance covera+e on a insured deposits.

Section # of R.8. No. 2";= further provides> 8n 8ct Increasin+ the 1axi(u( Deposit Insurance Covera+e, and in connection therewith, to Stren+then the
Re+uator& and 8d(inistrative 8uthorit&, and 9inancia Capa%iit& of the Phiippine Deposit Insurance Corporation )PDIC*, a(endin+ for this purpose R.8. No.
0"2#, as 8(ended, otherwise 'nown as the PDIC Charter.

SEC!'ON 1. State%ent o$ State 2o!)' and 3b(e)tves. - It is here%& decared to %e the poic& of the State to stren+then the
(andator& deposit insurance covera+e s&ste( to +enerate, preserve, (aintain faith and confidence in the countr&6s %an'in+ s&ste(, and
protect it fro( ie+a sche(es and (achinations.

,owards this end, the +overn(ent (ust extend a (eans and (echanis(s necessar& for the Phiippine Deposit Insurance
Corporation to effective& fufi its vita tas' of pro(otin+ and safe+uardin+ the interests of the depositin+ pu%ic %& wa& of providin+
per(anent and continuin+ insurance covera+e on a insured deposits, and in hepin+ deveop a sound and sta%e %an'in+ s&ste( at a
ti(es.

Mnder its charter, the PDIC is e(powered to conduct exa(ination of %an's with prior approva of the 1onetar& Board>

Ei+hth @ ,o conduct exa(ination of %an's with prior approva of the 1onetar& Board6 Pro3ie, ,hat no exa(ination can %e
conducted within tweve )#/* (onths fro( the ast exa(ination date> Pro3ie, howe3er, ,hat the Corporation (a&, in coordination with
the Ban+'oSentra, conduct a specia exa(ination as the Board of Directors, %& an affir(ative vote of a (aIorit& of a its (e(%ers, if there
is a threatened or i(pendin+ cosure of a %an'5 Pro3ie, )urther, ,hat, notwithstandin+ the provisions of Repu%ic 8ct No. #!.", as
a(ended, Repu%ic 8ct No. =!/=, as a(ended, Repu%ic 8ct No. <;2#, and other aws, the Corporation and4or the Ban+'oSentra, (a&
in$uire into or exa(ine deposit accounts and a infor(ation reated thereto in case there is a findin+ of unsafe or unsound %an'in+
practice5 Pro3ie, ,hat to avoid overappin+ of efforts, the exa(ination sha (axi(i:e the efficient use of the reevant
reports, infor(ation, and findin+s of the Ban+'oSentra, which it sha (a'e avaia%e to the Corporation5 (As a.ene b% R.A. 789:, 1:
Au$ust :99;, R.A. 7<=>, 1 June :997)

xxx. JMnderinin+ suppiedK
Section 2)%-#* of the PDIC Charter further provides that the PDIC Board sha have the power to>

PO3ERS AN" RESPONS'B''!'ES AN" PRO*'B'!'ONS

SEC!'ON ).777

)%* ,he Board of Directors sha appoint exa(iners who sha have power, on %ehaf of the Corporation to exa(ine an& insured
%an'. Each such exa(iner sha have the power to (a'e a thorou+h exa(ination of a the affairs of the %an' and in doin+ so, he sha
have the power to ad(inister oaths, to exa(ine and ta'e and preserve the testi(on& of an& of the officers and a+ents thereof, and, to
co(pe the presentation of %oo's, docu(ents, papers, or records necessar& in his Iud+(ent to ascertain the facts reative to the condition
of the %an'5 and sha (a'e a fu and detaied report of the condition of the %an' to the Corporation. ,he Board of Directors in i'e
(anner sha appoint cai( a+ents who sha have the power to investi+ate and exa(ine a cai(s for insured deposits and transferred
deposits. Each cai( a+ent sha have the power to ad(inister oaths and to exa(ine under oath and ta'e and preserve testi(on& of an&
person reatin+ to such cai(. (As a.ene b% E.+. ?79, 9? Apri& 17?8@ R.A. =;99, 18 Apri& 177:)

)%-#* ,he investi+ators appointed %& the Board of Directors sha have the power on %ehaf of the Corporation to conduct
investi+ations on frauds, irre+uarities and ano(aies co((itted in %an's, %ased on reports of exa(ination conducted %& the Corporation
and Ban$0o!entra&n$Pi&ipinas or co(paints fro( depositors or fro( other +overn(ent a+enc&. Each such investi+ator sha have the
power to ad(inister oaths, and to exa(ine and ta'e and preserve the testi(on& of an& person reatin+ to the su%Iect of investi+ation. (As
ae b% R.A. 789:, 1: Au$ust :99;)

xxx. JMnderscorin+ suppiedK

8s stated a%ove, the charter e(powers the PDIC to conduct an investi+ation of a %an' and to appoint exa(iners who sha have the power to
exa(ine an& insured %an'. Such investi+ators are authori:ed to conduct investi+ations on frauds, irre+uarities and ano(aies co((itted in %an's, %ased on an
exa(ination conducted %& the PDIC and the BSP or on co(paints fro( depositors or fro( other +overn(ent a+encies.

,he distinction %etween the power to investi+ate and the power to exa(ine is e(phasi:ed %& the existence of two separate sets of rues +overnin+
the procedure in the conduct of investi+ation and exa(ination. Re+uator& Issuance (RI) No. /.."-./ or the PDICRu&es on *act-*inin$ In3esti$ation o) *rau,
Irre$u&arities an Ano.a&ies Co..itte in Ban0s covers the procedura re$uire(ents of the exercise of the PDIC6s power of investi+ation. On the other hand,
RI No. /..2-." sets forth the +uideines for the conduct of the power of exa(ination.

,he definitions provided under the two afore(entioned re+uator& issuances eucidate on the distinction %etween the power of exa(ination and the
power of investi+ation.

Section / of RI No. /.."-./ states that its covera+e sha %e appica%e to Ta fact-findin+ investi+ations on fraud, irre+uarities and4or ano(aies
co((itted in %an's that are conducted %& PDIC %ased on> JaK co(paints fro( depositors or other +overn(ent a+encies5 and4or J%K fina reports of exa(inations
of %an's conducted %& the Ban+'oSentran+Piipinas and4or PDIC.U

,he sa(e issuance states that the 9ina Report of Exa(ination
J;/K
is one of the three pre-re$uisites to the conduct of an investi+ation, in addition to
the authori:ation of the PDIC Board
J;0K
and a co(paint.
J;!K
-uxtaposin+ this provision with Section 2)%-#* of the PDIC Charter, since an exa(ination is expicit&
(ade the %asis of a fact-findin+ exa(ination, then cear& exa(ination and investi+ation are two different proceedin+s. It woud o%vious& def& o+ic to (a'e the
resut of an Tinvesti+ationU the %asis of the sa(e proceedin+. ,hus, RI No. /.."-./ defines an Tinvesti+ationU as a Tfact-findin+ exa(ination, stud& or in$uir& for
deter(inin+ whether the ae+ations in a co(paint or findin+s in a fina report of exa(ination (a& proper& %e the su%Iect of an ad(inistrative, cri(ina or civi
action.U
J;"K

,he Ban's cite the dictionar& definitions of Texa(inationU and Tinvesti+ationU to Iustif& their concusion that these ter(s refer to one and the sa(e
proceedin+. It is te(ptin+ to use these two ter(s interchan+ea%&, which practice (a& %e perfect& Iustified in a pure& iterar& sense. Indeed, a readin+ of the
PDIC Charter shows that the two ter(s have %een used interchan+ea%& at so(e point. 7owever, %ased on the provisions aforecited, the intention of the aws is
cear& to differentiate %etween the process of investi+ation and that of exa(ination.

In /..2, to carif& procedura (atters, PDIC reeased RI No. /..2-." or the Rues and Re+uations on Exa(ination of Ban's. Section / thereof
differentiated %etween the two t&pes of exa(ination as foows>

Se8t9o% 2. !:pes o; E7$m9%$t9o%

a. Re$u&ar E5a.ination - 8n exa(ination conducted independent& or Ioint& with the BSP. It re$uires the prior approva of the
PDIC Board of Directors and the 1onetar& Board )1B*. It (a& %e conducted on& after an interva of at east tweve )#/* (onths fro( the
cosin+ date of the ast Re+uar Exa(ination.

%. !pecia& E5a.ination @ 8n exa(ination conducted at an& ti(e in coordination with the BSP, %& an affir(ative vote of a (aIorit&
of a the (e(%ers of the PDIC Board of Directors, without need of prior 1B approva, if there is a threatened or i(pendin+ %an' cosure
as deter(ined %& the PDIC Board of Directors. JMnderscorin+ suppiedK


Section 0 of RI No. /..2-." provides for the +enera scope of the PDIC exa(ination>

Se8t9o% 0. S8ope o; E7$m9%$t9o%

,he exa(ination sha incude, %ut need not %e i(ited to, the foowin+>

a. Deter(ination of the %an'6s sovenc& and i$uidit& position5

%. Evauation of asset $uait& as we as deter(ination of sufficienc& of vauation reserves on oans and other
ris' assets5

c. Review of a aspects of %an' operations5


d. 8ssess(ent of ris' (ana+e(ent s&ste(, incudin+ the evauation of the effectiveness of the %an'
(ana+e(ent6s oversi+ht functions, poicies, procedures, interna contro and audit5

e. 8ppraisa of overa (ana+e(ent of the %an'5

f. Review of co(piance with appica%e %an'in+ aws, and rues and re+uations, incudin+ PDIC
issuances5

+. 9oow-throu+h of specific exceptions4 vioations noted durin+ a previous exa(ination5 and

h. 8n& other activit& reevant to the a%ove.


Rue /, Section # of PDIC RI No. /.."-./ or the PDIC Ru&es on *act-*inin$ In3esti$ation o) *rau, Irre$u&arities an Ano.a&ies Co..itte in
Ban0s provides for the scope of fact-findin+ investi+ations as foows>

SEC!'ON 1. S8ope o; t<e '%=est9>$t9o%.

9act-findin+ Investi+ations sha %e i(ited to the particuar acts or o(issions su%Iect of a co(paint or a 9ina Report of
Exa(ination.

9ro( the a%ove-cited provisions, it is cear that the process of exa(ination covers a wider scope than that of investi+ation.

Exa(ination invoves an evauation of the current status of a %an' and deter(ines its co(piance with the set standards re+ardin+ sovenc&, i$uidit&,
asset vauation, operations, s&ste(s, (ana+e(ent, and co(piance with %an'in+ aws, rues and re+uations.
Investi+ation, on the other hand, is conducted %ased on specific findin+s of certain acts or o(issions which are su%Iect of a co(paint or a 9ina
Report of Exa(ination.

Cear&, investi+ation does not invove a +enera evauation of the status of a %an'. 8n investi+ation :eroes in on specific acts and o(issions
uncovered via an exa(ination, or which are cited in a co(paint.

8n exa(ination entais a review of essentia& a the functions and facets of a %an' and its operation. It necessitates porin+ throu+h vou(inous
docu(ents, and re$uires a detaied evauation thereof. Such a process then invoves an intrusion into a %an'6s records.
In contrast, athou+h it aso invoves a detaied evauation, an investi+ation centers on specific acts of o(issions and, thus, re$uires a ess invasive
assess(ent.
,he practica Iustification for not re$uirin+ the 1onetar& Board approva to conduct an investi+ation of %an's is the ad(inistrative hurdes and
paperwor' it entais, and the correspondent ti(e to co(pete those additiona steps or re$uire(ents. 8s in other t&pes of investi+ation, ti(e is awa&s of
essence, and it is prudent to expedite the proceedin+s if an accurate concusion is to %e arrived at, as an investi+ation is on& as precise as the evidence on
which it is %ased. ,he pro(ptness with which such evidence is +athered is awa&s of ut(ost i(portance %ecause evidence, docu(entar& evidence in particuar,
is re(ar'a%& fun+i%e. 8 PDIC investi+ation is conducted to Tdeter(ineJeK whether the ae+ations in a co(paint or findin+s in a fina report of exa(ination (a&
proper& %e the su%Iect of an ad(inistrative, cri(ina or civi action.U
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In other words, an investi+ation is %ased on reports of exa(ination and an exa(ination is
conducted with prior 1onetar& Board approva. ,herefore, it woud %e unnecessar& to secure a separate approva for the conduct of an investi+ation. Such
woud (ere& proon+ the process and provide unscrupuous individuas the opportunit& to cover their trac's.

Indeed, whie in a iterar& sense, the two ter(s (a& %e used interchan+ea%&, under the PDIC Charter, exa(ination and investi+ation refer to two
different processes. ,o reiterate, an exa(ination of %an's re$uires the prior consent of the 1onetar& Board, whereas an investi+ation %ased on an exa(ination
report, does not.

3*EREFORE, the petition is GRAN!E". ,he Decision and Resoution of the Court of 8ppeas in C8 E.R. CEB SP. No. .#""., dated Septe(%er
#<, /..= and -anuar& /", /..; are RE#ERSE" and SE! AS'"E.

SO OR"ERE".
+N'!E" COCON+! PAN!ERS BANK, 4ERON'MO +. K'A.KO,
OREN1O #. !AN, ENR'?+E . GANA, 4A'ME 3. 4AC'N!O $%& EM'.
R. A1ARO,
Petitioners,


- 3ersus -


E. GAN1ON, 'NC.,
Respondent.

7 - - - - - - - - - - - - - - - - - - - - - 7
E. GAN1ON, 'NC.,
Petitioner,



- 3ersus -



+N'!E" COCON+! PAN!ERS BANK, 4A'ME 3. 4AC'N!O $%& EM'.
R. A1ARO,
Respondents.
G.R. No. 1/((5)
















G.R. No. 1/(()7

Present>

NN8RES-S8N,I8EO, J.,
Chairperson,
C7ICO-N8H8RIO,
CEF8SCO, -R.,
N8C7MR8, and
PER8F,8, JJ.

Pro(u+ated>

-une 0., /..2


D E C I S I O N
C7ICO-N8H8RIO, J.>
,hese are two consoidated
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Petitions for Review on Certiorari under Rue !" of the #22; Revised Rues of Civi Procedure.
Mnited Coconut Panters Ban' )MCPB* is a universa %an' du& or+ani:ed and existin+ under Phiippine Faws. In G.R. No. 1/((5), MCPB and its
corporate officers, i.e., -eroni(o M. Qia&'o, Foren:o C. ,an, Enri$ue F. Eana, -ai(e D. -acinto and E(i& R. Fa:aro )MCPB, et a&.* see' the reversa and
settin+ aside of the Decision
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dated #! Octo%er /..! and Resoution
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dated ; -u& /.." of the Court of 8ppeas in C8-E.R. SP No. <#0<" and the affir(ation,
instead, of the etter-decision
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dated #= Septe(%er /..0 of the 1onetar& Board of the Ban$0o!entra&n$Pi&ipinas )BSP*. ,he Court of 8ppeas, in its assaied
Decision, set aside the aforesaid etter-decision of the BSP 1onetar& Board and re(anded the case to the atter for further proceedin+s5 and in its $uestioned
Resoution, denied for ac' of (erit the 1otion for Reconsideration of MCPB, et a&., as we as the Partia 1otion for Reconsideration of E. Ean:on, Inc. )EEI*.

On the other hand, EEI is a corporation du& or+ani:ed and existin+ under Phiippine aws and en+a+ed in rea estate construction and deveop(ent
%usiness. In G.R. No. 1/(()7, EEI pra&s for this Court to review the sa(e Decision dated #! Octo%er /..! and Resoution dated ; -u& /.." of the Court of
8ppeas in C8-E.R. SP No. <#0<", and to order the appeate court to )#* act on its findin+s in the case instead of re(andin+ the sa(e to the BSP 1onetar&
Board for further proceedin+s5 )/* direct the BSP 1onetar& Board to i(pose the appica%e ad(inistrative sanctions upon MCPB, et a&.5 and )0* to a(end its
assaied Decision and Resoution %& deetin+ therefro( the state(ents re$uirin+ the BSP 1onetar& Board to scrutini:e and di+ deeper into the acts of MCPB, et
a&., and to deter(ine if, indeed, there were irre+uar and unsound practices in its %usiness deain+s with EEI.

,he factua antecedents of these consoidated petitions are as foows>

Be+innin+ #22" to #22<, EEI avaied itsef of credit faciities fro( MCPB to finance its %usiness expansion. ,o secure said credit faciities, EEI (ort+a+ed
to MCPB its condo(iniu( unit inventories in EEI Rufino Pa:a, ocated at the intersection of Buendia and ,aft 8venues, 1ania.

Initia&, EEI was a%e to (a'e periodic a(orti:ation pa&(ents of its oans to MCPB. Dhen the ne+ative effects of the 8sian econo(ic crisis on the
propert& deveop(ent sector fina& cau+ht up with the corporation in the (idde of #22<, EEI started defautin+ in its pa&(ent of a(orti:ations, thus, (a'in+ a
of its o%i+ations due and de(anda%e. Su%se$uent&, EEI was decared in defaut %& MCPB in its etters dated / Octo%er #22<
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and #= 9e%ruar& #222.
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,hereafter, MCPB stopped sendin+ EEI (onth& state(ents of its accounts.

In #222, EEI and MCPB expored the possi%iit& of usin+ the (ort+a+ed condo(iniu( unit inventories of EEI in EEI RufinoPa:a as pa&(ent for the oans
of EEI to MCPB. Mpon a+reein+ on the vauation of said (ort+a+ed properties, EEI and MCPB entered into a 1e(orandu( of 8+ree(ent )1O8*
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on /<
Dece(%er #22< in sette(ent of the oans of EEI fro( MCPB. Based on this 1O8, the outstandin+ oan o%i+ations of EEI with MCPB a(ounted
to P)15,(0(,(22.50, incusive of a interest, char+es and fees. MCPB, throu+h its corporate officers, assured EEI that the said a(ount aread& represented the
tota oan o%i+ations of EEI to MCPB.

On #< -anuar& /..., EEI and MCPB executed an 8(end(ent of 8+ree(ent
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to refect the true and correct vauation of the properties of EEI isted
in the 1O8 that woud %e transferred to MCPB in sette(ent of the tota oan o%i+ations of the for(er with the atter. ,he properties of EEI to %e used in pa&in+
for its de%t with MCPB were vaued at P)04,4)1,052.00.

8ccordin+ to the 1O8 and its a(end(ents, tites to the properties of EEI sha %e transferred to MCPB %& the foowin+ (odes> )#* forecosure of
(ort+a+e5 )/* acion en pa$o5 )0* creation of a hodin+ co(pan&5 and )!* use of other aternatives as (a& %e dee(ed appropriate %& MCPB.

MCPB proceeded to forecose so(e of the properties of EEI isted in the 1O8. Per the Certificate of Sae
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dated #0 8pri /..., the forecosure proceeds
of said properties a(ounted on& to P720,5)2,000.00, ess than the vaue of the properties of EEI stipuated in its a(ended 1O8 with MCPB.

MCPB appied the entire forecosure proceeds of P;/0,"2/,...... to the principa a(ount of the oan o%i+ations of EEI, pursuant to BSP Circuar No.
/02,
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which provided that partia propert& pa&(ents sha first %e appied to the principa. 8fter deductin+ the said a(ount fro( the tota oan o%i+ations of
EEI, there was sti an unpaid %aance of P1)2,24/,(22.50.

On < 1a& /..#, so(e of the other properties of EEI at EEI Rufino Pa:a, vaued at P1//,127,0/).50, were transferred %& wa& of acion en pa$o to
MCPB. 7owever, durin+ the si+nin+ of the transaction papers for the acion en pa$o, EEI Senior Cice-President, 8rchitect Erace S. Fa&u+ )Fa&u+*, noticed that
said papers stated that the re(ainin+ oan %aance of EEI in the a(ount ofP#2/,/!=,<//.". had increased to P22/,)/0,)05.50. ,he increase was ae+ed&
due to the addition of the transaction costs a(ountin+ to P0!,;#;,.<0.... EEI co(pained to MCPB a%out the increase, &et MCPB did not ta'e an& action on
the (atter.

,his pro(pted EEI President En+ineer EuaioEan:on )Ean:on* and Senior Cice-President Fa&u+ to review their fies to verif& the fi+ures on the oan
o%i+ations of EEI as co(puted %& MCPB. In the process, the& discovered the MCPB Interna 1e(orandu( dated // 9e%ruar& /..#,
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si+ned %& MCPB
corporate officers. ,he said Interna 1e(orandu( presented two cou(ns, one with the headin+ T8C,M8FU and the other TDISCFOSED ,O EEI.U ,he fi+ures
in the two cou(ns were confictin+. ,he fi+ures in the TDISCFOSED ,O EEIU cou(n co(puted the unpaid %aance of the oan o%i+ations of EEI to
%eP22/,)/7,1)4.(0, the a(ount which MCPB actua& (ade 'nown to and de(anded fro( EEI. ,he fi+ures in the T8C,M8FU cou(n cacuated the re(ainin+
oan o%i+ations of EEI to %e on& P14/,(4),412.5(.

Conse$uent&, EEI wrote MCPB a etter dated /# 1a& /..#,
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which incuded, a(on+ other de(ands, the refund %& MCPB to EEI of the over-pa&(ent
of P<0,...,......5
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return to EEI of a the re(ainin+ ,ransfer Certificates of ,ite ),C,s*4Condo(iniu( Certificates of ,ite )CC,s* in the possession of
MCPB5 and cost of da(a+e to EEI for the dea& in the reease of its certificates of tite.

In response, MCPB expained
J#!K
that the T8C,M8FU cou(n in its Interna 1e(orandu( dated // 9e%ruar& /..# contained the sa(e a(ounts refected or
recorded in its financia state(ents, in accordance with the 1anua of 8ccounts for Ban's, 1anua of Re+uations for Ban's
J#"K
and BSP Circuar No. /./,
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Series of #222. In contrast, the TDISCFOSED ,O EEIU cou(n showed the tota a(ount sti due fro( EEI, incudin+ the tota principa, interests, transaction
and other costs after the forecosure, whether refected in the financia %oo's of MCPB or not. 9urther, MCPB (aintained that the difference in the fi+ures in the
two cou(ns was %ecause BSP Circuar No. /./ and Section A0.".! of the 1anua of Re+uations for Ban' disaowed %an's fro( accruin+ in its %oo's interest
on oans which had %eco(e non-perfor(in+.

Despite the expanation of MCPB, EEI insisted that the fi+ures appearin+ in the T8C,M8FU cou(n of the for(er6s Interna 1e(orandu( dated //
9e%ruar& /..# reveaed the true and actua a(ount of its oan o%i+ations to MCPB, P14/,(4),412.5(.

EEI Senior Cice-President Fa&u+ (et with MCPB Cice-President, -ai(e D. -acinto )-acinto* to discuss the de(and of EEI for the return of its
overpa&(ent. MCPB Cice-President -acinto, however, refused to concede that MCPB had an& o%i+ation to (a'e a refund to EEI and, instead, insisted that
EEI Senior Cice-President Fa&u+ discose who +ave her a cop& of the MCPB Interna 1e(orandu( dated // 9e%ruar& /..#.

Based on the possession %& EEI of the MCPB Interna 1e(orandu( dated // 9e%ruar& /..#, MCPB fied a cri(ina case for theft and4or discover& of
secrets a+ainst EEI President Ean:on and Senior Cice-President Fa&u+, %ut the said case was dis(issed.
J#;K


On " Nove(%er /../, EEI, aso on the %asis of the MCPB Interna 1e(orandu( dated // 9e%ruar& /..#, EEI fied with the BSP an ad(inistrative
co(paint
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a+ainst MCPB, et a&., for vioation of Sections 0=
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and 0;,
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8rtice IC of Repu%ic 8ct No. ;="0,
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in reation to Section "".#)a*
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of Repu%ic 8ct
No. <;2#5
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and for the co((ission of irre+uarities and conductin+ %usiness in an unsafe or unsound (anner.

In a etter-decision
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dated #= Septe(%er /..0, the BSP 1onetar& Board dis(issed the ad(inistrative co(paint of EEI, hodin+ as foows>

Pease %e infor(ed that the 1onetar& Board decided to dis(iss the co(paint %ased on the evauation conducted %& the Supervision
and Exa(ination Depart(ent I and the Office of the Eenera Counse and Fe+a Services to the effect that>

#. MCPB co(puted interest on the oans %ased on BSP rues and re+uations which prohi%it %an's fro( accruin+ interest on
oans that have %eco(e non-perfor(in+ )BSP Circuar No. /./*. ,his is different fro( interest which (a& have run and accrued %ased on
the pro(issor& notes4oan docu(ents fro( the date of defaut up to sette(ent date.

/. 9air (ar'et vaue of assets to %e forecosed is different fro( the %id price su%(itted durin+ forecosure and there is no
statutor&o%i+ation for the atter to %e e$uivaent to the for(er.

0. Re+ardin+ the ae+ed P#!",#=0,...... fa%ricated oan, the docu(ents showed that there were the EEI Board Resoution to
%orrow, pro(issor& note si+ned %& 1r. EuaioEan:on, and Foan 8+ree(ent statin+ that the proceeds sha %e used to pa& outstandin+ avai(ents
and interest servicin+.

!. ,here is no findin+ %& Supervision and Exa(ination Depart(ent I on the ae+ed dou%e char+in+ and4or paddin+ of
transactioncosts.
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EEI fied a 1otion for Reconsideration and a Suppe(enta 1otion for Reconsideration of the afore$uoted etter-decision of the BSP 1onetar&
Board. ,he BSP 1onetar& Board denied %oth (otions in its etter
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dated < Dece(%er /..0 as there was no sufficient %asis to +rant the sa(e.

EEI then fied a Petition for Review under Rue !0 of the #22; Revised Rues of Civi Procedure with the Court of 8ppeas raisin+ the soe issue of
Twhether the Ban+'oSentran+Piipinas erred in dis(issin+ the ad(inistrative co(paint fied %& EEI a+ainst MCPB, et a&.U ,he case was doc'eted as C8-E.R.
SP No. <#0<".

On #! Octo%er /..!, the Court of 8ppeas rendered its assaied Decision +rantin+ the Petition for Review of EEI, thus, settin+ aside the BSP etter-
decision dated #= Septe(%er /..0 and re(andin+ the case to the BSP 1onetar& Board for further proceedin+s.

MCPB, et a&., (oved for the reconsideration of the #! Octo%er /..! Decision of the appeate court, pra&in+ for a new Iud+(ent dis(issin+ the appea of
EEI for ac' of Iurisdiction and4or ac' of (erit. EEI aso fied a Partia 1otion for Reconsideration of the sa(e Court of 8ppeas Decision, with the pra&er that
the appeate court, instead of sti re(andin+ the case to the BSP 1onetar& Board for further proceedin+s, aread& direct the atter to i(pose the appica%e
ad(inistrative sanctions upon MCPB, et a&.,.

In a Resoution dated ; -u& /..", the Court of 8ppeas denied for ac' of (erit %oth the 1otion for Reconsideration of MCPB, et a&. and the 1otion for
Partia Reconsideration of EEI.

G.R. No. 1/((5)

8++rieved %& the #! Octo%er /..! Decision and ; -u& /.." Resoution of the Court of 8ppeas, MCPB, et a&. co(es %efore this Court, 3ia a Petition for
Review on Certiorari under Rue !" of the #22; Revised Rues of Civi Procedure, %ased on the foowin+ assi+n(ent of errors>

I. ,7E 7ONOR8BFE COMR, O9 8PPE8FS 8C,ED DI,7OM, -MRISDIC,ION 8ND ER8CEFN ERRED IN 7OFDINE
,78, I, 78S 8PPEFF8,E -MRISDIC,ION OCER DECISIONS O9 ,7E BSP41ONE,8RN BO8RD.

II. ,7E 7ONOR8BFE COMR, O9 8PPE8FS ER8CEFN ERRED IN 7OFDINE ,78, ,7E B8NEQO SEN,R8F
SM118RIFN DIS1ISSED ,7E CO1PF8IN, O9 JEEIK.

III. ,7E 7ONOR8BFE COMR, O9 8PPE8FS ER8CEFN ERRED IN DISREE8RDINE ,7E 9INDINES O9 98C, O9 ,7E
B8NEQO SEN,R8F 8ND IN 7OFDINE ,78, JMCPB, et a&.K CO11I,,ED IRREEMF8R 8ND MNSOMND B8NQINE
PR8C,ICES IN ,7E SMB-EC, ,R8NS8C,IONS.
J/;K


,he Petition is doc'eted as E.R. No. #=<<"2.

MCPB, et a&., aver that the Court of 8ppeas has no appeate Iurisdiction over decisions, orders and4or resoutions of the BSP 1onetar& Board on
ad(inistrative (atters. ,he BSP 1onetar& Board is not a(on+ the $uasi-Iudicia a+encies enu(erated under Rue !0 of the #22; Revised Rues of Civi
Procedure, over which the Court of 8ppeas has appeate Iurisdiction. 9urther, there is nothin+ in Repu%ic 8ct No. ;="0 or in Repu%ic 8ct No. <;2# which
expicit& aows an appea of the decisions or orders of the BSP 1onetar& Board to the Court of 8ppeas. Resutant&, the Court of 8ppeas has no power to
review, (uch ess set aside, the findin+s of fact of the BSP 1onetar& Board as contained in its etter-decision dated #= Septe(%er /..0.

MCPB, et a&. aso cai( that, contrar& to the ruin+ of the Court of 8ppeas, the etter-decision dated #= Septe(%er /..0 of the BSP 1onetar& Board
pain& reveas that the ad(inistrative co(paint of EEI a+ainst MCPB, et a&. was not su((ari& dis(issed. ,he char+es of EEI a+ainst MCPB, et a&. was
resoved on& after the BSP 1onetar& Board thorou+h& reviewed pertinent %an' records and studied the ar+u(ents raised %& EEI in its co(paint and 1otion
for Partia Reconsideration. In its etter-decision dated #= Septe(%er /..0, the BSP 1onetar& Board stated in no uncertain ter(s that the dis(issa of the
co(paint of EEI was %ased on the evauation conducted %& its Supervision and Exa(ination Depart(ent I and the Office of the Eenera Counse and Fe+a
Services. 8so, in its etter dated < Dece(%er /..0, the BSP 1onetar& Board denied the 1otion for Reconsideration and Suppe(enta 1otion for
Reconsideration of EEI %ecause the atter did not present an& new evidence in support of its (otions. 7ence, there is no %asis for the cai( of EEI that the BSP
1onetar& Board overoo'ed and co(pete& i+nored its accusations of irre+uar and unsound %an'in+ practice a+ainst MCPB, et a&.

9ina&, MCPB, et a&., (aintain that the findin+s of fact of ad(inistrative %odies i'e the BSP 1onetar& Board are accorded +reat respect, if not finait&,
especia& if supported %& su%stantia evidence. Such findin+s are to %e respected %& the courts, especia& in the a%sence of +rave a%use of discretion or +rave
errors %& the BSP 1onetar& Board. No other office, (uch ess an appeate tri%una, can su%stitute its own findin+s of fact over that of the concerned
ad(inistrative a+enc& in view of the expertise and speciai:ed 'nowed+e ac$uired %& it on (atters fain+ within its areas of concern. MCPB, et a&. insist that it
is the BSP which has the necessar& expertise to draft +uideines for the evauation of the perfor(ance and conduct of %an's. ,hus, the Court of 8ppeas
co((itted +rave error in disre+ardin+ the findin+s of fact of the BSP 1onetar& Board which Iustified the atter6s dis(issa of the ad(inistrative co(paint of EEI
a+ainst MCPB, et a&.

,he issue of Iurisdiction of the Court of 8ppeas over appeas of decisions, orders and4or resoutions of the BSP 1onetar& Board on ad(inistrative (atters
(ust first %e resoved, %efore the other issues raised herein %& MCPB, et a&.

,ru&, there is nothin+ in Repu%ic 8ct No. ;="0 or in Repu%ic 8ct No. <;2# which expicit& aows an appea of the decisions of the BSP 1onetar&
Board to the Court of 8ppeas. 7owever, this sha not (ean that said decisions are %e&ond Iudicia review.

Section 2)0* of Batas Pa(%ansaB+. #/2, otherwise 'nown as ,he -udiciar& Reor+ani:ation 8ct of #2<., as a(ended, reads>

SEC. 2. Jurisiction. @ ,he Court of 8ppeas sha exercise>

x xxx

)0* E78@As9=e $ppe@@$te BAr9s&98t9o% over a fina Iud+(ents, decisions, resoutions, orders or awards of Re+iona ,ria Courts
and CA$s9-BA&989$@ $>e%89es, 9%strAme%t$@9t9es, bo$r&s or 8omm9ss9o%s, incudin+ the Securities and Exchan+e Co((ission, the
Socia Securit& Co((ission, the E(po&ees Co(pensation Co((ission and the Civi Service Co((ission, e78ept those fain+ within the
appeate Iurisdiction of the Supre(e Court in accordance with the Constitution, the Fa%or Code of the Phiippines under Presidentia
Decree No. !!/, as a(ended, the provisions of this 8ct, and of su%para+raph )#* of the third para+raph and su%para+raph ! of the fourth
para+raph of Section #; of the -udiciar& 8ct of #2!<. )E(phasis ours.*


In accordance with the afore-$uoted provision, Rue !0 of the #22; Revised Rues of Civi Procedure, on 8ppeas fro( the Court of ,ax 8ppeas and
Buasi--udicia 8+encies to the Court of 8ppeas, defines its scope as foows>

SEC!'ON 1. !cope. - !<9s RA@e s<$@@ $pp@: to $ppe$@s fro( Iud+(ents or fina orders of the Court of ,ax 8ppeas $%& ;rom
$D$r&s, BA&>me%ts, ;9%$@ or&ers or reso@At9o%s o; or $At<or9Ee& b: $%: CA$s9-BA&989$@ $>e%8: 9% t<e e7er89se o; 9ts CA$s9-BA&989$@
;A%8t9o%s. 8(on+ these a+encies are the Civi Service Co((ission, Centra Board of 8ssess(ent 8ppeas, Securities and Exchan+e
Co((ission, Office of the President, Fand Re+istration 8uthorit&, Socia Securit& Co((ission, Civi 8eronautics Board, Bureau of
Patents, ,rade(ar's and ,echnoo+& ,ransfer, Nationa Eectrification 8d(inistration, Ener+& Re+uator& Board, Nationa
,eeco((unications Co((ission, Depart(ent of 8+rarian Refor( under Repu%ic 8ct No. ==";, Eovern(ent Service Insurance S&ste(,
E(po&ees Co(pensation Co((ission, 8+ricutura Inventions Board, Insurance Co((ission, Phiippine 8to(ic Ener+& Co((ission,
Board of Invest(ents, Construction Industr& 8r%itration Co((ission, and vountar& ar%itrators authori:ed %& aw. )E(phasis ours.*


8 perusa of Section 2)0* of Batas Pa(%ansaB+. #/2, as a(ended, and Section #, Rue !0 of the #22; Revised Rues of Civi Procedure reveas that the
BSP 1onetar& Board is not incuded a(on+ the $uasi-Iudicia a+encies expicit& na(ed therein, whose fina Iud+(ents, orders, resoutions or awards are
appeaa%e to the Court of 8ppeas. Such o(ission, however, does not necessari& (ean that the Court of 8ppeas has no appeate Iurisdiction over the
Iud+(ents, orders, resoutions or awards of the BSP 1onetar& Board.

It %ears stressin+ that Section 2)0* of Batas Pa(%ansaB+. #/2, as a(ended, on the appeate Iurisdiction of the Court of 8ppeas, +enera& refers to
$uasi-Iudicia a+encies, instru(entaities, %oards, or co((issions. ,he use of the word Tincudin+U in the said provision, prior to the na(in+ of severa $uasi-
Iudicia a+encies, necessari& conve&s the ver& idea of non-excusivit& of the enu(eration. ,he principe of e5pressiouniuseste5c&usioa&terius does not app&
where other circu(stances indicate that the enu(eration was not intended to %e excusive, or where the enu(eration is %& wa& of exa(pe on&.
J/<K

Si(iar&, Section #, Rue !0 of the #22; Revised Rues of Civi Procedure (ere& (entions severa $uasi-Iudicia a+enciesD9t<oAt e78@As9=9t: 9% 9ts
p<r$seo@o>:.
J/2K
,he enu(eration of the a+encies therein (entioned is %ot e78@As9=e.
J0.K
,he introductor& phrase TJaK(on+ these a+encies areU precedin+ the
enu(eration of specific $uasi-Iudicia a+encies on& hi+hi+hts the fact that the ist is not (eant to %e excusive or concusive. 9urther, the overture stresses and
ac'nowed+es the e79ste%8e o; ot<er CA$s9-BA&989$@ $>e%89es %ot 9%8@A&e& 9% t<e e%Amer$t9o% bAt s<oA@& be &eeme& 9%8@A&e&.
J0#K

8 $uasi-Iudicia a+enc& or %od& is an or+an of +overn(ent other than a court and other than a e+isature, which affects the ri+hts of private parties
throu+h either adIudication or rue-(a'in+.
J0/K
,he ver& definition of an ad(inistrative a+enc& incudes its %ein+ vested with $uasi-Iudicia powers. ,he ever
increasin+ variet& of powers and functions +iven to ad(inistrative a+encies reco+ni:es the need for the active intervention of ad(inistrative a+encies in (atters
cain+ for technica 'nowed+e and speed in countess controversies which cannot possi%& %e handed %& re+uar courts.
J00K
8 3$uasi-Iudicia function3 is a ter(
which appies to the action, discretion, etc., of pu%ic ad(inistrative officers or %odies, who are re$uired to investi+ate facts, or ascertain the existence of facts,
hod hearin+s, and draw concusions fro( the(, as a %asis for their officia action and to exercise discretion of a Iudicia nature.
J0!K

Mndou%ted&, the BSP 1onetar& Board is a $uasi-Iudicia a+enc& exercisin+ $uasi-Iudicia powers or functions. 8s apt& o%served %& the Court of
8ppeas, the BSP 1onetar& Board is an independent centra (onetar& authorit& and a %od& corporate with fisca and ad(inistrative autono(&, (andated to
provide poic& directions in the areas of (one&, %an'in+ and credit.
J0"K
It has power to issue su%poena, to sue for conte(pt those refusin+ to o%e& the su%poena
without Iustifia%e reason,
J0=K
to ad(inister oaths and co(pe presentation of %oo's, records and others, needed in its exa(ination,
J0;K
to i(pose fines and other
sanctions and to issue cease and desist order.
J0<K
Section 0; of Repu%ic 8ct No. ;="0,
J02K
in particuar, expicit& provides that the BSP 1onetar& Board sha
exercise its discretion in deter(inin+ whether ad(inistrative sanctions shoud %e i(posed on %an's and $uasi-%an's, which necessari& i(pies that the BSP
1onetar& Board (ust conduct so(e for( of investi+ation or hearin+ re+ardin+ the sa(e.

7avin+ esta%ished that the BSP 1onetar& Board is indeed a $uasi-Iudicia %od& exercisin+ $uasi-Iudicia functions5 then as such, it is one of those
$uasi-Iudicia a+encies, thou+h not specifica& (entioned in Section 2)0* of Batas Pa(%ansaB+. #/2, as a(ended, and Section #, Rue !0 of the #22; Revised
Rues of Civi Procedure, are dee(ed incuded therein. ,herefore, the Court of 8ppeas has appeate Iurisdiction over fina Iud+(ents, orders, resoutions or
awards of the BSP 1onetar& Board on ad(inistrative co(paints a+ainst %an's and $uasi-%an's, which the for(er ac$uires throu+h the fiin+ %& the a++rieved
part& of a Petition for Review under Rue !0 of the #22; Revised Rues of Civi Procedure.

8s a futie effort of MCPB, et a&. to convince this Court that the Court of 8ppeas has no appeate Iurisdiction over the fina Iud+(ents, orders,
resoutions or awards of the BSP 1onetar& Board, it cited !a&u 3. Centra& Ban0 o) the Phi&ippines.
J!.K


,he invocation of MCPB, et a&. of !a&u is evident& (ispaced.

,he present case invoves a decision of the BSP 1onetar& Board as re+ards an ad(inistrative co(paint a+ainst a %an' and its corporate officers for
the ae+ed vioation of Sections 0= and 0;, 8rtice IC of RepAb@98 A8t No. 7/50, in reation to Section "".#)a* of RepAb@98 A8t No. (7)1, and for
the 8omm9ss9o% o; 9rre>A@$r9t: $%& A%s$;e or A%soA%& b$%F9%> pr$8t98e. ,here is%ot<9%> in the aforesaid aws which state that the fina Iud+(ents, orders,
resoutions or awards of the BSP 1onetar& Board on ad(inistrative co(paints a+ainst %an's or $uasi-%an's sha %e fina and executor& and %e&ond the
su%Iect of Iudicia review. Dithout %ein+ expicit& excepted or exe(pted, the fina Iud+(ents, orders, resoutions or awards of the BSP 1onetar& Board are
a(on+ those appeaa%e to the Court of 8ppeas %& wa& of Petition for Review, as provided in Section 2)0* of Batas Pa(%ansaB+. #/2, as a(ended, and
Section #, Rue !0 of the #22; Revised Rues of Civi Procedure.

8thou+h in !a&u, this Court decared that the Inter(ediate 8ppeate Court )now Court of 8ppeas* has no appeate Iurisdiction over resoutions or
orders of the 1onetar& Board of the Centra Ban' of the Phiippines )CBP, now BSP*, %ecause no aw prescri%es an& (ode of appea therefro(, the factua
settin+s of the said case are tota& different fro( the one present& %efore us. !a&u invoved a resoution issued %& the 1onetar& Board, pursuant to Section /2
of RepAb@98 A8t No. 2/5, ot<erD9se F%oD% $s t<e o@& Ce%tr$@ B$%F A8t, for%iddin+ %an'in+ institutions to do %usiness on account of a 3condition of
insovenc&3 or %ecause 3its continuance in %usiness woud invove pro%a%e oss to depositors or creditors53 or appointin+ a receiver to ta'e char+e of the assets
and ia%iities of the %an'5 or deter(inin+ whether the %an'in+ institutions shoud %e reha%iitated or i$uidated, and if in the atter case, appointin+ a i$uidator
towards this end. ,he said Section /2 of the od Centra Ban' 8ct was e7p@989t that the deter(ination %& the 1onetar& Board of whether a %an'in+ institution
is 9%so@=e%t, or shoud %e re<$b9@9t$te& or @9CA9&$te&, is ;9%$@ $%& e7e8Ator:. 7owever, said deter(ination coud %e set aside %& the tria court if there was
convincin+ proof that the 1onetar& Board acted ar%itrari& or in %ad faith. +%&er t<e 89r8Amst$%8es obt$9%9%> 9% Sa!"d, 9t 9s $pp$re%t t<$t oAr rA@9%>
t<ere9% 9s @9m9te& to 8$ses o; 9%so@=e%8:, $%& %ot to $@@ 8$ses 8o>%9E$b@e b: t<e Mo%et$r: Bo$r&.

8t an& rate, under the new aw, i.e., Section 0. of Repu%ic 8ct No. ;="0, otherwise 'nown as ,he New Centra Ban' 8ct, which too' effect on 0 -u&
#220, the order of the BSP 1onetar& Board, even re+ardin+ the i$uidation of a %an', can %e $uestioned3ia a Petition for Certiorari %efore a court when the
sa(e was issued in excess of Iurisdiction or with such +rave a%use of discretion as to a(ount to ac' or excess of Iurisdiction. ,he court referred to therein can
%e construed to (ean the Court of 8ppeas %ecause it is in the said court where a Petition for Certiorari can %e fied foowin+ the hierarch& of courts.

1oreover, the appeate Iurisdiction of the Court of 8ppeas over the fina Iud+(ents, orders, resoutions or awards of the BSP 1onetar& Board in
ad(inistrative cases invovin+ directors and officers of %an's, $uasi-%an's, and trust entities, is affir(ed in BSP Circuar No. !;;, Series of /..". ,he said BSP
Circuar express& provides that the resoution rendered %& the BSP 1onetar& Board in ad(inistrative cases (a& %e appeaed to the Court of 8ppeas within the
period and the (anner provided under Rue !0 of the #22; Revised Rues of Civi Procedure.

Dith a the fore+oin+, it cannot now %e $uestioned that the Court of 8ppeas has appeate Iurisdiction over the fina Iud+(ents, orders, resoutions or
awards rendered %& the BSP 1onetar& Board in ad(inistrative cases a+ainst %an's and their directors and officers, such as MCPB, et a&.

,he Court then proceeds to resove the issue of whether the Court of 8ppeas erred in hodin+ that the BSP 1onetar& Board su((ari& dis(issed the
ad(inistrative co(paint of EEI a+ainst MCPB, et a&.

8fter a (eticuous scrutin& of the #= Septe(%er /..0 etter-decision of the BSP 1onetar& Board, this Court rues in the ne+ative and affir(s the findin+ of
the Court of 8ppeas that the BSP 1onetar& Board did, indeed, su((ari& dis(iss ad(inistrative co(paint of EEI a+ainst MCPB, et a&., for vioation of Sections
0= and 0;, 8rtice IC of Repu%ic 8ct No. ;="0, in reation to Section "".#)a* of Repu%ic 8ct No. <;2#, and for the co((ission of irre+uarit& and unsafe or
unsound %an'in+ practice.

Eiven the +ravit& and seriousness of the char+es of EEI a+ainst MCPB, et a&., the sweepin+ state(ent of the BSP 1onetar& Board that it was incined to
dis(iss the co(paint of EEI %ased on the evauation (ade %& its Supervision and Exa(ination Depart(ent I and Office of the Eenera Counse and Fe+a
Services, is si(p& insufficient and unsatisfactor&. Dorse, the BSP 1onetar& Board (ere& presented the foowin+ concusions without %otherin+ to expain its
%ases for the sa(e> )#* MCPB co(puted interest on oans %ased on BSP rues and re+uations which prohi%it %an's fro( accruin+ interest on oans that have
%eco(e non-perfor(in+ )BSP Circuar No. /./*5 )/* fair (ar'et vaue of assets to %e forecosed is different fro( the %id price su%(itted durin+ forecosure and
there is no statutor& o%i+ation for the atter to %e e$uivaent to the for(er5 )0* re+ardin+ the ae+ed P#!",#=0,...... fa%ricated oan, the docu(ents showed
that there were the EEI Board resoution to %orrow, pro(issor& note si+ned %& 1r. EuaioEan:on, and Foan 8+ree(ent statin+ the proceeds sha %e used to
pa& outstandin+ avai(ents and interest servicin+5 and )!* there is no findin+ %& Supervision and Exa(ination Depart(ent I on the ae+ed dou%e char+in+
and4or paddin+ of transaction costs.

9urther, in resovin+ the (atter %efore it, the BSP 1onetar& Board never considered the MCPB Interna 1e(orandu( dated// 9e%ruar& /..#, which was
the heart of the ad(inistrative co(paint of EEI a+ainst MCPB, et a&. ,he BSP 1onetar& Board did not even atte(pt to esta%ish whether it was re+uar or
sound practice for a %an' to 'eep a record of its %orrower6s oan o%i+ations with two different sets of fi+ures, one hi+her than the other5 and to discose to the
%orrower on& the hi+her fi+ures. ,he expanation of MCPB, et a&., adopted %& the BSP 1onetar& Board @ that the fi+ures in the T8C,M8FU cou(n were ower
than those in the TDISCFOSED ,O EEIU cou(n %ecause the for(er was co(puted in accordance with BSP rues and re+uations prohi%itin+ the accrua of
interest on oans that have %eco(e non-perfor(in+ @ +ives rise to (ore $uestions than answers. Exa(pes of so(e of these $uestions woud %e whether the
oan o%i+ations of EEI have %eco(e non-perfor(in+5 whether the differences %etween the fi+ures in the T8C,M8FU and TDISCFOSED ,O EEIU cou(ns indeed
corresponded to the interest that shoud %e excuded fro( the fi+ures in the first cou(n per BSP rues and re+uations5 and whether the co(putations of the
fi+ures in %oth cou(ns shoud have %een free& discosed and sufficient& expained to EEI in the na(e of transparenc&.

,he BSP 1onetar& Board si(iar& faied to carif& whether MCPB can forecose the (ort+a+ed properties of EEI in a(ounts that were ess than the
vaues of the said properties as deter(ined and stipuated %& EEI and MCPB in their a(ended 1O8. ,he Court once (ore a+rees in the ruin+ of the Court of
8ppeas that the 1O8 entered into %& EEI and MCPB serves as a contract %etween the(, and it is the aw that shoud +overn their reationship, which neither of
the parties can si(p& a%ro+ate, vioate, or disre+ard. Mnfortunate&, the BSP 1onetar& Board never even referred to the 1O8 executed %& the parties in its
etter-decision dated #= Septe(%er /..0.

1oreover, the BSP 1onetar& Board found that the P#!",#=0,...... oan of EEI fro( MCPB was not fa%ricated %ased on severa
docu(ents. 7owever, there is a%soute ac' of expanation %& the BSP 1onetar& Board as to wh& said docu(ents deserved (ore wei+ht 3is-A-3is evidence of
EEI of suspicious circu(stances surroundin+ the said oan, such as MCPB +rantin+ EEI said oan even when the atter was aread& in defaut on its prior oan
o%i+ations, and without re$uirin+ additiona securit&, detaied %usiness pan, and financia proIections fro( EEI.

,he disre+ard %& BSP 1onetar& Board of a the fore+oin+ facts and issues in its etter-decision dated #= Septe(%er /..0eads this Court to decare that
it su((ari& dis(issed the ad(inistrative co(paint of EEI a+ainst MCPB, et a&. ,here can %e no co(pete resoution of the ad(inistrative co(paint of EEI
without consideration of these facts and Iud+(ent on said issues.

9ina&, there is no (erit in the assertion of MCPB, et a&. that the Court of 8ppeas erred in disre+ardin+ the findin+s of fact of the BSP 1onetar& Board in
the a%sence of +rave a%use of discretion or ac' of %asis for the sa(e.

8thou+h, as a +enera rue, findin+s of facts of an ad(inistrative a+enc&, which has ac$uired expertise in the particuar fied of its endeavor, are accorded
+reat wei+ht on appea, such rue cannot %e appied with respect to the assaied findin+s of the BSP 1onetar& Board in this case. Rather, what appies is the
reco+ni:ed exception that if such findin+s are not supported %& su%stantia evidence, the Court can (a'e its own independent evauation of the facts.
J!#K


,he standard of su%stantia evidence re$uired in ad(inistrative proceedin+s is (ore than a (ere scintia. It (eans such reevant evidence as a
reasona%e (ind (i+ht accept as ade$uate to support a concusion. Dhie rues of evidence prevaiin+ in courts of aw and e$uit& sha not %e controin+, the
o%vious purpose %ein+ to free ad(inistrative %oards fro( the co(pusion of technica rues so that the (ere ad(ission of (atter which woud %e dee(ed
inco(petent in Iudicia proceedin+s woud not invaidate the ad(inistrative order, this assurance of a desira%e fexi%iit& in ad(inistrative procedure does not +o
so far as to Iustif& orders without %asis in evidence havin+ rationa pro%ative force.
J!/K


It cannot %e convincin+& said herein that the factua findin+s of the BSP 1onetar& Board in its etter-decision dated #= Septe(%er /..0 was
supported %& su%stantia evidence since )#* (ost of the findin+s were not supported %& references to specific evidence5 and )/* the findin+s were (ade without
consideration of the pri(ar& evidence presented %& EEI )i.e., the 1O8 and its a(end(ents and the MCPB Interna 1e(orandu( dated // 9e%ruar& /..#*.

Even then, the Court of 8ppeas stopped short of cate+orica& ruin+ that MCPB, et a&. co((itted irre+uarities, or unsound or unsafe %an'in+ practice in
its transactions with EEI. Dhat the Court of 8ppeas positive& pronounced was that the BSP 1onetar& Board faied to +ive the necessar& consideration to the
ad(inistrative co(paint of EEI, su((ari& dis(issin+ the sa(e in its #= Septe(%er /..0 etter-decision. ,he #! Octo%er /..! Decision of the Court of
8ppeas cear& re(anded the case to the BSP for further proceedin+s since the BSP, with its speciai:ed 'nowed+e and expertise on %an'in+ (atters, is (ore
up to tas' to receive evidence, hod hearin+s, and thereafter resove the issues %ased on its findin+s of fact and aw.

G.R. No. 1/(()7

8so unsatisfied with the Decision dated #! Octo%er /..! and Resoution dated ; -u& /.." of the Court of 8ppeas, EEI fied with this Court its own
Petition for Review on Certiorari under Rue !" of the #22; Revised Rues of Civi Procedure, raisin+ the foowin+ issues>

I. ,he 7onora%e Court of 8ppeas does have appeate Iurisdiction over decisions, orders, and resoutions of the
BSP41onetar& Board.

II. ,he 7onora%e Court of 8ppeas was correct in 9INDINE that the JBSPK su((ari& dis(issed the co(paint of EEI.

III. Dhether or not the 7onora%e Court of 8ppeas co((itted patent, +rave, and reversi%e error when it re(anded the case
to the JBSPK for further proceedin+s instead of actin+ upon its findin+s as narrated in its Decision.

IC. Dhether or not the 7onora%e Court of 8ppeas co((itted patent, +rave, and reversi%e error in not directin+ the JBSPK to
i(pose the appropriate penaties a+ainst JMCPB, et a&.K.
J!0K


,he Petition is doc'eted as E.R. No. #=<<2;.

Since the first two TissuesU have aread& %een addressed %& this Court in its previous discussion herein on E.R. No. #=<<"2, we now proceed to resove
the next two issues raised %& EEI in its Petition in E.R. No. #=<<2;.

EEI avers that the Court of 8ppeas co((itted reversi%e error when it re(anded the case to the BSP for further proceedin+s instead of directin+ the BSP
to i(pose the appica%e sanctions on MCPB, et a&. EEI reasons that the appeate court, in its Decision dated #! Octo%er /..!, aread& found that MCPB had
co((itted severa acts of serious irre+uarit& and conducted %usiness in an unsafe and unsound (anner. B& reason thereof, there was no (ore need for the
Court of 8ppeas to re(and this case to the BSP for a further deter(ination of whether there were irre+uar and unsound practices %& MCPB, et a&. in its
deain+s with EEI. Shoud this case %e re(anded to the BSP, there woud %e nothin+ to prevent the BSP fro( ruin+ a+ain that MCPB, et a&., did not co((it
an& irre+uarit& and unsafe or unsound %usiness practice. ,o re$uire that this case %e reviewed %& the BSP woud on& ead to (utipicit& of suits, pro(ote
unnecessar& dea& and ne+ate the constitutiona ri+hts of a persons to a speed& disposition of their cases %efore a Iudicia, $uasi-Iudicia or ad(inistrative
%odies.

,he Court reiterates that the Court of 8ppeas did not &et (a'e concusive findin+s in its Decision dated #! Octo%er /..!, that MCPB, et a&., co((itted
irre+uarities and unsound or unsafe %an'in+ practices in their %usiness deain+s with EEI. ,he appeate court on& adIud+ed that the BSP 1onetar& Board
su((ari& dis(issed the ad(inistrative co(paint of EEI, without fu& appreciatin+ the facts and evidence presented %& the atter. Eiven the seriousness of the
char+es of EEI a+ainst MCPB, et a&., the BSP 1onetar& Board shoud have conducted a (ore intensive in$uir& and rendered a (ore co(prehensive decision.

B& re(andin+ the case to the BSP 1onetar& Board, the Court of 8ppeas on& acted in accordance with Repu%ic 8ct No. ;="0 and Repu%ic 8ct No.
<;2#, which tas'ed the BSP, throu+h the 1onetar& Board, to deter(ine whether a particuar act or o(ission, which is not otherwise prohi%ited %& an& aw, rue
or re+uation affectin+ %an's, $uasi-%an's or trust entities, (a& %e dee(ed as conductin+ %usiness in an unsafe or unsound (anner. 8so, the BSP 1onetar&
Board is the proper %od& to i(pose the necessar& ad(inistrative sanctions for the errin+ %an' and its directors or officers.

,he Court of 8ppeas did not dee( it appropriate, on appea, to outri+ht reverse the Iud+(ent of the BSP 1onetar& Board. ,he Court of 8ppeas hed that
the BSP 1onetar& Board did not have sufficient %asis for dis(issin+ the ad(inistrative co(paint of EEI in its #= Septe(%er /..0 etter-decision5 &et, the
appeate court i'ewise did not find enou+h evidence on record to aread& resove the ad(inistrative co(paint in favor of EEI and a+ainst MCPB, et a&.,
precise& the reason wh& it sti re(anded the case to the BSP 1onetar& Board for further proceedin+s. ,he Court of 8ppeas never (eant to +ive EEI an
assurance of a favora%e Iud+(ent5 it on& ensured that the BSP 1onetar& Board sha accord a parties concerned to e$ua opportunit& for presentation and
consideration of their ae+ations, ar+u(ents, and evidence. Dhie the speed& disposition of cases is a constitutiona& (andated ri+ht, the para(ount dut& of
the courts, as we as $uasi-Iudicia %odies, is to render Iustice %& foowin+ the %asic rues and principes of due process and fair pa&.

3*EREFORE, pre(ises considered, the Petition for Review on Certiorari of Mnited Coconut Panters Ban', -eroni(o M. Qia&'o, Foren:o C. ,an,
Enri$ue F. Eana, -ai(e D. -acinto and E(i& R. Fa:aro, in E.R. No. #=<<"25 as we as the Petition for Review on Certiorari of E. Ean:on, Inc. in E.R. No.
#=<<2;, are here%& "EN'E". ,he Decision dated #! Octo%er /..! and Resoution dated ; -u& /.." of the Court of 8ppeas in C8-E.R. SP No. <#0<" are
here%& AFF'RME" in toto. No costs.

SO OR"ERE".
ANA MAR'A A. KOR+GA,
Petitioner,

- versus -

!EO"ORO O. ARCENAS, 4R., ABER! C. AG+'RRE, CESAR S. PAG+'O,
FRANC'SCO A. R'#ERA, $%& !*E *ONORABE CO+R! OF APPEAS,
!*'R" "'#'S'ON,
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
!EO"ORO O. ARCENAS, 4R., ABER! C. AG+'RRE, CESAR S. PAG+'O,
$%& FRANC'SCO A. R'#ERA,
Petitioners,


- versus -


*ON. S'G!O MAREA, 4R., Pres9&9%> 4A&>e, Br$%8<
10(, Re>9o%$@ !r9$@ CoArto; M$F$t9 C9t:, $%& ANA MAR'A A. KOR+GA,
Respondents.
G.R. No. 1/(002











G.R. No. 1/)050

Present>

NN8RES-S8N,I8EO, J.,
Chairperson,
C8RPIO,
?
CORON8,
??
N8C7MR8, and
PER8F,8, JJ.

Pro(u+ated>

-une #2, /..2

"EC'S'ON

NAC*+RA, J.2
Before this Court are two petitions that ori+inated fro( a Co(paint fied %& 8na 1aria 8. Qoru+a )Qoru+a* %efore the Re+iona ,ria Court )R,C* of
1a'ati Cit& a+ainst the Board of Directors of Banco 9iipino and the 1e(%ers of the 1onetar& Board of the Ban+'oSentran+Piipinas )BSP* for vioation of the
Corporation Code, for inspection of records of a corporation %& a stoc'hoder, for receivership, and for the creation of a (ana+e(ent co((ittee.
G.R. No. 1/(002
,he first is a Petition for Certiorari under Rue =" of the Rues of Court, doc'eted as E.R. No. #=<00/, pra&in+ for the annu(ent of the Court of
8ppeas )C8* Resoution
J#K
in C8-E.R. SP No. <<!// dated 8pri #<, /.." +rantin+ the pra&er for a Drit of Prei(inar& InIunction of therein petitioners ,eodoro
O. 8rcenas, -r., 8%ert C. 8+uirre, Cesar S. Pa+uio, and 9rancisco 8. Rivera )8rcenas, et a.*.
Qoru+a is a (inorit& stoc'hoder of Banco 9iipino Savin+s and 1ort+a+e Ban'. On 8u+ust /., /..0, she fied a co(paint %efore the 1a'ati R,C
which was raffed to Branch #0<, presided over %& -ud+e Sixto1area, -r.
J/K
Qoru+a6s co(paint ae+ed>
#.. # Cioation of Sections 0# to 0! of the Corporation Code (BCoeC) which prohi%it sef-deain+ and conficts of interest of
directors and officers, thus>
)a* 9or en+a+in+ in unsafe, unsound, and frauduent %an'in+ practices that have Ieopardi:ed the wefare
of the Ban', its sharehoders, who incudes a(on+ others, the Petitioner, and depositors. )sic*
)%* 9or +rantin+ and approvin+ oans and4or ToanedU su(s of (one& to six )=* Tdu((&U %orrower
corporations (BBorrower CorporationsC) which, at the ti(e of oan approva, had no financia capacit& to Iustif& the oans. )sic*
)c* 9or approvin+ and acceptin+ a acion en pa$o, or pa&(ent of oans with propert& instead of cash,
resutin+ to a di(inished future cu(uative interest inco(e %& the Ban' and a decine in its i$uidit& position. )sic*
)d* 9or 'nowin+& +ivin+ Tfavora%e treat(entU to the Borrower Corporations in which so(e or (ost of the(
have interests, i.e.interoc'in+ directors4officers thereof, interoc'in+ ownerships. )sic*
)e* 9or e(po&in+ their respective offices and functions as the Ban'6s officers and directors, or o(ittin+ to
perfor( their functions and duties, with ne+i+ence, unfaithfuness or a%use of confidence of fiduciar& dut&, (isappropriated or
(isappied or ratified %& inaction the (isappropriation or (isappropriations, of )sic* a(ost P#.= Biion Pesos )sic* constitutin+
the Ban'6s funds paced under their trust and ad(inistration, %& unawfu& reeasin+ oans to the Borrower Corporations or
refusin+ or faiin+ to i(pu+n these, 'nowin+ %efore the oans were reeased or thereafter that the Ban'6s cash resources woud
%e dissipated there%&, to the preIudice of the Petitioner, other Banco 9iipino depositors, and the pu%ic.
#../ Ri+ht of a stoc'hoder to inspect the records of a corporation )incudin+ financia state(ents* under Sections ;! and ;" of
the Code, as i(pe(ented %& the Interi( Rues5
)a* Mnawfu refusa to aow the Petitioner fro( inspectin+ or otherwise accessin+ the corporate records of
the %an' despite repeated de(and in writin+, where she is a stoc'hoder. )sic*
#..0 Receivership and Creation of a 1ana+e(ent Co((ittee pursuant to>
)a* Rue "2 of the #22; Rues of Civi Procedure (BRu&esC)5
)%* Section "./ of R.8. No. <;225
)c* Rue #, Section #)a*)#* of the Interi. Ru&es5
)d* Rue #, Section #)a*)/* of the Interi( Rues5
)e* Rue ; of the Interi( Rues5
)f* Rue 2 of the Interi( Rues5 and
)+* ,he Eenera Ban'in+ Faw of /... and the New Centra Ban' 8ct.
J0K
On Septe(%er #/, /..0, 8rcenas, et a. fied their 8nswer raisin+, a(on+ others, the tria court6s ac' of Iurisdiction to ta'e co+ni:ance of the
case. ,he& aso fied a 1anifestation and 1otion see'in+ the dis(issa of the case on the foowin+ +rounds> )a* ac' of Iurisdiction over the su%Iect (atter5 )%*
ac' of Iurisdiction over the persons of the defendants5 )c* foru(-shoppin+5 and )d* for %ein+ a nuisance4harass(ent suit. ,he& then (oved that the tria court
rue on their affir(ative defenses, dis(iss the intra-corporate case, and set the case for prei(inar& hearin+.
In an Order dated Octo%er #<, /..!, the tria court denied the 1anifestation and 1otion, ruin+ thus>
,he resut of the procedure sou+ht %& defendants 8rcenas, et a. )sic* is for the Court to conduct a prei(inar& hearin+ on the affir(ative
defenses raised %& the( in their 8nswer. ,his JisK proscri%ed %& the Interi( Rues of Procedure on Intracorporate )sic* Controversies
%ecause when a prei(inar& hearin+ is conducted it is Tas if a 1otion to Dis(iss was fiedU )Rue #=, Section =, #22; Rues of Civi
Procedure*. 8 1otion to Dis(iss is a prohi%ited peadin+ under the Interi( Rues, for which reason, no favora%e consideration can %e
+iven to the 1anifestation and 1otion of defendants, 8rcenas, et a.
,he Court finds no (erit to )sic* the cai( that the instant case is a nuisance or harass(ent suit.
D7ERE9ORE, the Court defers resoution of the affir(ative defenses raised %& the defendants 8rcenas, et a.
J!K
8rcenas, et a. (oved for reconsideration
J"K
%ut, on -anuar& #<, /..", the R,C denied the (otion.
J=K
,his pro(pted 8rcenas, et a. to fie %efore the
C8 a Petition for Certiorari and Prohi%ition under Rue =" of the Rues of Court with a pra&er for the issuance of a writ of prei(inar& inIunction and a te(porar&
retrainin+ order ),RO*.
J;K
On 9e%ruar& 2, /..", the C8 issued a =.-da& ,RO enIoinin+ -ud+e 1area fro( conductin+ further proceedin+s in the case.
J<K
On 9e%ruar& //, /..", the R,C issued a Notice of Pre-tria
J2K
settin+ the case for pre-tria on -une / and 2, /..". 8rcenas, et a. fied a 1anifestation
and 1otion
J#.K
%efore the C8, reiteratin+ their appication for a writ of prei(inar& inIunction. ,hus, on 8pri #<, /..", the C8 issued the assaied Resoution,
which reads in part>
)C*onsiderin+ that the ,e(porar& Restrainin+ Order issued %& this Court on 9e%ruar& 2, /.." expired on 8pri #., /..", it is necessar&
that a writ of prei(inar& inIunction %e issued in order not to render ineffectua whatever fina resoution this Court (a& render in this case,
after the petitioners sha have posted a %ond in the a(ount of 9ICE 7MNDRED ,7OMS8ND )P"..,......* PESOS.
SO ORDERED.
J##K
Dissatisfied, Qoru+a fied this Petition for Certiorari under Rue =" of the Rues of Court. Qoru+a ae+ed that the C8 effective& +ave due course to
8rcenas, et a.6s petition when it issued a writ of prei(inar& inIunction without factua or e+a %asis, either in the 8pri #<, /.." Resoution itsef or in the records
of the case. She pra&ed that this Court restrain the C8 fro( i(pe(entin+ the writ of prei(inar& inIunction and, after due proceedin+s, (a'e the inIunction
a+ainst the assaied C8 Resoution per(anent.
J#/K
In their Co((ent, 8rcenas, et a. raised severa procedura and su%stantive issues. ,he& ae+ed that the Cerification and Certification a+ainst
9oru(-Shoppin+ attached to the Petition was not executed in the (anner prescri%ed %& Phiippine aw since, as ad(itted %& Qoru+a6s counse hi(sef, the sa(e
was on& a facsi(ie.
,he& aso averred that Qoru+a had ad(itted in the Petition that she never as'ed for reconsideration of the C86s 8pri #<, /.." Resoution,
contendin+ that the Petition did not raise pure $uestions of aw as to constitute an exception to the re$uire(ent of fiin+ a 1otion for Reconsideration %efore a
Petition for Certiorari is fied.
,he&, i'ewise, ae+ed that the Petition (a& have aread& %een rendered (oot and acade(ic %& the -u& /., /.." C8 Decision,
J#0K
which denied their
Petition, and hed that the R,C did not co((it +rave a%use of discretion in issuin+ the assaied orders, and thus ordered the R,C to proceed with the tria of the
case.
1eanwhie, on 1arch #0, /..=, this Court issued a Resoution +rantin+ the pra&er for a ,RO and enIoinin+ the Presidin+ -ud+e of 1a'ati R,C,
Branch #0<, fro( proceedin+ with the hearin+ of the case upon the fiin+ %& 8rcenas, et a. of a P".,...... %ond. Qoru+a fied a (otion to ift the ,RO, which
this Court denied on -u& ", /..=.
On the other hand, respondents Dr. Conrado P. Ban:on and Een. Ra(on 1ontaWo aso fied their Co((ent on Qoru+a6s Petition, raisin+
su%stantia& the sa(e ar+u(ents as 8rcenas, et a.
G.R. No. 1/)050
E.R. No. #=2."0 is a Petition for Review on Certiorari under Rue !" of the Rues of Court, with pra&er for the issuance of a ,RO and a writ of
prei(inar& inIunction fied %& 8rcenas, et a.
In their Petition, 8rcenas, et a. as'ed the Court to set aside the Decision
J#!K
dated -u& /., /.." of the C8 in C8-E.R. SP No. <<!//, which denied
their petition, havin+ found no +rave a%use of discretion on the part of the 1a'ati R,C. ,he C8 said that the R,C Orders were interocutor& in nature and, thus,
(a& %e assaied %& certiorari or prohi%ition on& when it is shown that the court acted without or in excess of Iurisdiction or with +rave a%use of discretion. It
added that the Supre(e Court frowns upon resort to re(edia (easures a+ainst interocutor& orders.
8rcenas, et a. anchored their pra&er on the foowin+ +rounds> that, in their 8nswer %efore the R,C, the& had raised the issue of faiure of the court
to ac$uire Iurisdiction over the( due to i(proper service of su((ons5 that the Qoru+a action is a nuisance or harass(ent suit5 that there is another case
invovin+ the sa(e parties for the sa(e cause pendin+ %efore the 1onetar& Board of the BSP, and this constituted foru(-shoppin+5 and that Iurisdiction over
the su%Iect (atter of the case is vested %& aw in the BSP.
J#"K
8rcenas, et a. assi+n the foowin+ errors>
I. ,7E COMR, O9 8PPE8FS, IN T9INDINE NO ER8CE 8BMSE O9 DISCRE,ION CO11I,,ED BN PMBFIC RESPONDEN,
REEION8F ,RI8F COMR, O9 18Q8,I, BR8NC7 #0<, IN ISSMINE ,7E 8SS8IFED ORDERS,U 98IFED ,O CONSIDER
8ND 1EREFN EFOSSED OCER ,7E 1ORE ,R8NSCENDEN, ISSMES O9 ,7E F8CQ O9 -MRISDIC,ION ON ,7E P8R,
O9 S8ID PMBFIC RESPONDEN, OCER ,7E SMB-EC, 18,,ER O9 ,7E C8SE BE9ORE I,, FI,IS PENDEN,I8 8ND
9ORM1 S7OPPINE, 8ND ,7E C8SE BEFOD BEINE 8 NMIS8NCE OR 78R8SS1EN, SMI,, EI,7ER ONE 8ND 8FF O9
D7IC7 EOES4EO ,O RENDER ,7E ISSM8NCE BN PMBFIC RESPONDEN, O9 ,7E 8SS8IFED ORDERS 8 ER8CE
8BMSE O9 DISCRE,ION.
II. ,7E 9INDINE O9 ,7E COMR, O9 8PPE8FS O9 TNO ER8CE 8BMSE O9 DISCRE,ION CO11I,,ED BN PMBFIC
RESPONDEN, REEION8F ,RI8F COMR, O9 18Q8,I, BR8NC7 #0<, IN ISSMINE ,7E 8SS8IFED ORDERS,U IS NO, IN
8CCORD DI,7 F8D OR DI,7 ,7E 8PPFIC8BFE DECISIONS O9 ,7IS 7ONOR8BFE COMR,.
J#=K
1eanwhie, in a 1anifestation and 1otion fied on 8u+ust 0#, /..", Qoru+a pra&ed for, a(on+ others, the consoidation of her Petition with the
Petition for Review on Certiorari under Rue !" fied %& 8rcenas, et a., doc'eted as E.R. No. #=2."0. ,he (otion was +ranted %& this Court in a Resoution
dated Septe(%er /=, /..".
OAr RA@9%>
Initia&, we wi discuss the procedura issue.
8rcenas, et a. ar+ue that Qoru+a6s petition shoud %e dis(issed for its defective Cerification and Certification 8+ainst 9oru(-Shoppin+, since on& a
facsi(ie of the sa(e was attached to the Petition. ,he& aso cai( that the Cerification and Certification 8+ainst 9oru(-Shoppin+, ae+ed& executed
in Seatte, Dashin+ton, was not authenticated in the (anner prescri%ed %& Phiippine aw and not certified %& the Phiippine Consuate in the Mnited States.
,his contention deserves scant consideration.
On the ast pa+e of the Petition in E.R. No. #=<00/, Qoru+a6s counse executed an Mnderta'in+, which reads as foows>
In view of that fact that the Petitioner is current& in the Mnited States, undersi+ned counse is attachin+ a facsi(ie cop& of the
Cerification and Certification 8+ainst 9oru(-Shoppin+ du& si+ned %& the Petitioner and notari:ed %& Stephanie N. Eo++in, a Notar&
Pu%ic for the Sate )sic* ofDashin+ton. Mpon arriva of the ori+ina cop& of the Cerification and Certification as certified %& the Office of the
Phiippine Consu, the undersi+ned counse sha i((ediate& provide dupicate copies thereof to the 7onora%e Court.
J#;K
,hus, in a Co(piance
J#<K
fied with the Court on Septe(%er ", /..", petitioner su%(itted the ori+ina cop& of the du& notari:ed and authenticated
Cerification and Certification 8+ainst 9oru(-Shoppin+ she had executed.
J#2K
,his Court noted and considered the Co(piance satisfactor& in its Resoution dated
Nove(%er #=, /..". ,here is, therefore, no need to further %ea%or this issue.
De now discuss the su%stantive issues in this case.
9irst, we resove the pra&er to nuif& the C86s 8pri #<, /.." Resoution.
De hod that the Petition in E.R. No. #=<00/ has %eco(e (oot and acade(ic. ,he writ of prei(inar& inIunction %ein+ $uestioned had effective&
%een dissoved %& the C86s -u& /., /.." Decision. ,he dispositive portion of the Decision reads in part>

,he case is RE18NDED to the court $ CAo for further proceedin+s and to resove with dei%erate dispatch the intra-corporate
controversies and deter(ine whether there was actua& a vaid service of su((ons. If, after hearin+, such service is found to have %een
i(proper, then new su((ons shoud %e served forthwith.
J/.K
8ccordin+&, there is no necessit& to restrain the i(pe(entation of the writ of prei(inar& inIunction issued %& the C8 on 8pri #<, /..", since it no on+er exists.
7owever, this Court finds that the C8 erred in uphodin+ the Iurisdiction of, and re(andin+ the case to, the R,C.
,he resoution of these petitions rests (ain& on the deter(ination of one funda(enta issue> Dhich %od& has Iurisdiction over the Qoru+a Co(paint,
the R,C or the BSPX
De hod that it is the BSP that has Iurisdiction over the case.
8 reexa(ination of the Co(paint is in order.
Qoru+a6s Co(paint char+ed defendants with vioation of Sections 0# to 0! of the Corporation Code, prohi%itin+ sef-deain+ and confict of interest of
directors and officers5 invo'ed her ri+ht to inspect the corporation6s records under Sections ;! and ;" of the Corporation Code5 and pra&ed for Receivership and
Creation of a 1ana+e(ent Co((ittee, pursuant to Rue "2 of the Rues of Civi Procedure, the Securities Re+uation Code, the Interi( Rues of Procedure
Eovernin+ Intra-Corporate Controversies, the Eenera Ban'in+ Faw of /..., and the New Centra Ban' 8ct. She accused the directors and officers of Banco
9iipino of en+a+in+ in unsafe, unsound, and frauduent %an'in+ practices, (ore particuar&, acts that vioate the prohi%ition on sef-deain+.
It is cear that the acts co(pained of pertain to the conduct of Banco 9iipino6s %an'in+ %usiness. 8 %an', as defined in the2enera& Ban0in$ #aw,
J/#K
refers to an entit& en+a+ed in the endin+ of funds o%tained in the for( of deposits.
J//K
,he %an'in+ %usiness is proper& su%Iect to reasona%e re+uation
under the poice power of the state %ecause of its nature and reation to the fisca affairs of the peope and the revenues of the state. Ban's are affected with
pu%ic interest %ecause the& receive funds fro( the +enera pu%ic in the for( of deposits. It is the Eovern(ent6s responsi%iit& to see to it that the financia
interests of those who dea with %an's and %an'in+ institutions, as depositors or otherwise, are protected. In this countr&, that tas' is dee+ated to the BSP,
which pursuant to its Charter, is authori:ed to ad(inister the (onetar&, %an'in+, and credit s&ste( of the Phiippines. It is further authori:ed to ta'e the
necessar& steps a+ainst an& %an'in+ institution if its continued operation woud cause preIudice to its depositors, creditors and the +enera pu%ic as we.
J/0K
,he aw vests in the BSP the supervision over operations and activities of %an's. ,he 'ew Centra& Ban0 Act provides>
Se8t9o% 25. !uper3ision an E5a.ination. - ,he Ban+'oSentra sha have supervision over, and conduct periodic or specia
exa(inations of, %an'in+ institutions and $uasi-%an's, incudin+ their su%sidiaries and affiiates en+a+ed in aied activities.
J/!K
Specifica&, the BSP6s supervisor& and re+uator& powers incude>
!.# ,he issuance of rues of conduct or the esta%ish(ent of standards of operation for unifor( appication to a institutions or
functions covered, ta'in+ into consideration the distinctive character of the operations of institutions and the su%stantive
si(iarities of specific functions to which such rues, (odes or standards are to %e appied5
!./ ,he 8o%&A8t o; e7$m9%$t9o% to &eterm9%e 8omp@9$%8e D9t< @$Ds $%& re>A@$t9o%s 9; t<e 89r8Amst$%8es so D$rr$%t $s
&eterm9%e& b: t<e Mo%et$r: Bo$r&5
!.0 O=ersee9%> to $s8ert$9% t<$t @$Ds $%& Re>A@$t9o%s $re 8omp@9e& D9t<5
!.! Re>A@$r 9%=est9>$t9o% D<98< s<$@@ %ot be o;te%er t<$% o%8e $ :e$r ;rom t<e @$st &$te o; e7$m9%$t9o% to &eterm9%e
D<et<er$% 9%st9tAt9o% 9s 8o%&A8t9%> 9ts bAs9%ess o% $ s$;e or soA%& b$s9s> Pro3ie, ,hat the deficiencies4irre+uarities
found %& or discovered %& an audit sha %e i((ediate& addressed5
!." '%CA9r9%> 9%to t<e so@=e%8: $%& @9CA9&9t: o; t<e 9%st9tAt9o% )/-D*5 or
!.= Enforcin+ pro(pt corrective action.
J/"K
Qoru+a ae+es that Tthe dispute in the tria court invoves the (anner with which the Directors6 )sic* have handed the Ban'6s affairs, specifica& the
frauduent oans and acion en pa$o authori:ed %& the Directors in favor of severa du((& corporations 'nown to have cose ties and are indirect& controed
%& the Directors.U
J/=K
7er ae+ations, then, ca for the exa(ination of the ae+ed& $uestiona%e oans. Dhether these oans are covered %& the prohi%ition on
sef-deain+ is a (atter for the BSP to deter(ine. ,hese are not ordinar& intra-corporate (atters5 rather, the& invove %an'in+ activities which are, %& aw,
re+uated and supervised %& the BSP. 8s the Court has previous& hed>
It is we-setted in %oth aw and Iurisprudence that the Centra 1onetar& 8uthorit&, throu+h the 1onetar& Board, is vested with
excusive authorit& to assess, evauate and deter(ine the condition of an& %an', and findin+ such condition to %e one of insovenc&, or
that its continuance in %usiness woud invove a pro%a%e oss to its depositors or creditors, for%id %an' or non-%an' financia institution to
do %usiness in the Phiippines5 and sha desi+nate an officia of the BSP or other co(petent person as receiver to i((ediate& ta'e
char+e of its assets and ia%iities.
J/;K
Correative&, the 2enera& Ban0in$ #aw o) :999 specifica& deas with oans contracted %& %an' directors or officers, thus>
SEC!'ON 0/.Restr98t9o% o% B$%F E7posAre to "9re8tors, O;;98ers, Sto8F<o@&ers $%& !<e9r Re@$te& '%terests. R No
director or officer of an& %an' sha, direct& or indirect&, for hi(sef or as the representative or a+ent of others, %orrow fro( such %an' nor
sha he %eco(e a +uarantor, indorser or suret& for oans fro( such %an' to others, or in an& (anner %e an o%i+or or incur an&
contractua ia%iit& to the %an' except with the written approva of the (aIorit& of a the directors of the %an', excudin+ the director
concerned> Provided, ,hat such written approva sha not %e re$uired for oans, other credit acco((odations and advances +ranted to
officers under a frin+e %enefit pan approved %& the Ban+'oSentra. ,he re$uired approva sha %e entered upon the records of the %an'
and a cop& of such entr& sha %e trans(itted forthwith to the appropriate supervisin+ and exa(inin+ depart(ent of the Ban+'oSentra.
Deain+s of a %an' with an& of its directors, officers or stoc'hoders and their reated interests sha %e upon ter(s not ess
favora%e to the %an' than those offered to others.
8fter due notice to the %oard of directors of the %an', the office of an& %an' director or officer who vioates the provisions of this
Section (a& %e decared vacant and the director or officer sha %e su%Iect to the pena provisions of the New Centra Ban' 8ct.
!<e Mo%et$r: Bo$r& m$: re>A@$te t<e $moA%t o; @o$%s, 8re&9t $88ommo&$t9o%s $%& >A$r$%tees t<$t m$: be e7te%&e&,
&9re8t@: or 9%&9re8t@:, b: $ b$%F to 9ts &9re8tors, o;;98ers, sto8F<o@&ers $%& t<e9r re@$te& 9%terests, $s De@@ $s 9%=estme%ts o; sA8<
b$%F 9% e%terpr9ses oD%e& or 8o%tro@@e& b: s$9& &9re8tors, o;;98ers, sto8F<o@&ers $%& t<e9r re@$te& 9%terests. 7owever, the
outstandin+ oans, credit acco((odations and +uarantees which a %an' (a& extend to each of its stoc'hoders, directors, or officers and
their reated interests, sha %e i(ited to an a(ount e$uivaent to their respective unencu(%ered deposits and %oo' vaue of their paid-in
capita contri%ution in the %an'> Provided, however, ,hat oans, credit acco((odations and +uarantees secured %& assets considered as
non-ris' %& the 1onetar& Board sha %e excuded fro( such i(it> Provided, further, ,hat oans, credit acco((odations and advances to
officers in the for( of frin+e %enefits +ranted in accordance with rues as (a& %e prescri%ed %& the 1onetar& Board sha not %e su%Iect to
the individua i(it.
,he 1onetar& Board sha define the ter( Treated interests.U
,he i(it on oans, credit acco((odations and +uarantees prescri%ed herein sha not app& to oans, credit acco((odations
and +uarantees extended %& a cooperative %an' to its cooperative sharehoders.
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9urther(ore, the authorit& to deter(ine whether a %an' is conductin+ %usiness in an unsafe or unsound (anner is aso vested in the 1onetar&
Board. ,he 2enera& Ban0in$ #aw o) :999 provides>
SEC!'ON 5/.Co%&A8t9%> BAs9%ess 9% $% +%s$;e or +%soA%& M$%%er. R In deter(inin+ whether a particuar act or
o(ission, which is not otherwise prohi%ited %& an& aw, rue or re+uation affectin+ %an's, $uasi-%an's or trust entities, (a& %e dee(ed as
conductin+ %usiness in an unsafe or unsound (anner for purposes of this Section, the 1onetar& Board sha consider an& of the foowin+
circu(stances>
"=.#. ,he act or o(ission has resuted or (a& resut in (ateria oss or da(a+e, or a%nor(a ris' or dan+er to the safet&,
sta%iit&, i$uidit& or sovenc& of the institution5
"=./. ,he act or o(ission has resuted or (a& resut in (ateria oss or da(a+e or a%nor(a ris' to the institutionPs
depositors, creditors, investors, stoc'hoders or to the Ban+'oSentra or to the pu%ic in +enera5
"=.0. ,he act or o(ission has caused an& undue inIur&, or has +iven an& unwarranted %enefits, advanta+e or preference to
the %an' or an& part& in the dischar+e %& the director or officer of his duties and responsi%iities throu+h (anifest
partiait&, evident %ad faith or +ross inexcusa%e ne+i+ence5 or
"=.!. ,he act or o(ission invoves enterin+ into an& contract or transaction (anifest& and +ross& disadvanta+eous to the
%an', $uasi-%an' or trust entit&, whether or not the director or officer profited or wi profit there%&.
Dhenever a %an', $uasi-%an' or trust entit& persists in conductin+ its %usiness in an unsafe or unsound (anner, the 1onetar&
Board (a&, without preIudice to the ad(inistrative sanctions provided in Section 0; of the New Centra Ban' 8ct, ta'e action under
Section 0. of the sa(e 8ct and4or i((ediate& excude the errin+ %an' fro( cearin+, the provisions of aw to the contrar&
notwithstandin+.
9ina&, the 'ew Centra& Ban0 Act +rants the 1onetar& Board the power to i(pose ad(inistrative sanctions on the errin+ %an'>

Se8t9o% 07. A.inistrati3e !anctions on Ban0s an Duasi-ban0s. - Dithout preIudice to the cri(ina sanctions a+ainst the
cupa%e persons provided in Sections 0!, 0", and 0= of this 8ct, t<e Mo%et$r: Bo$r& m$:, $t 9ts &9s8ret9o%, 9mpose Apo% $%: b$%F or
CA$s9-b$%F, t<e9r &9re8tors $%&Hor o;;98ers, for an& wifu vioation of its charter or %&-aws, wifu dea& in the su%(ission of reports or
pu%ications thereof as re$uired %& aw, rues and re+uations5 an& refusa to per(it exa(ination into the affairs of the institution5 an& wifu
(a'in+ of a fase or (iseadin+ state(ent to the Board or the appropriate supervisin+ and exa(inin+ depart(ent or its exa(iners5 an&
wifu faiure or refusa to co(p& with, or vioation of, an& %an'in+ aw or an& order, instruction or re+uation issued %& the 1onetar&
Board, or an& order, instruction or ruin+ %& the Eovernor5 or $%: 8omm9ss9o% o; 9rre>A@$r9t9es, $%&Hor 8o%&A8t9%> bAs9%ess 9% $%
A%s$;e or A%soA%& m$%%er $s m$: be &eterm9%e& b: t<e Mo%et$r: Bo$r&, the foowin+ ad(inistrative sanctions, whenever
appica%e>

)a* fines in a(ounts as (a& %e deter(ined %& the 1onetar& Board to %e appropriate, %ut in no case to exceed ,hirt& thousand
pesos )P0.,...* a da& for each vioation, ta'in+ into consideration the attendant circu(stances, such as the nature and +ravit&
of the vioation or irre+uarit& and the si:e of the %an' or $uasi-%an'5

)%* suspension of rediscountin+ privie+es or access to Ban+'oSentra credit faciities5

)c* suspension of endin+ or forei+n exchan+e operations or authorit& to accept new deposits or (a'e new invest(ents5

)d* suspension of inter%an' cearin+ privie+es5 and4or

)e* revocation of $uasi-%an'in+ icense.

Resi+nation or ter(ination fro( office sha not exe(pt such director or officer fro( ad(inistrative or cri(ina sanctions.

,he 1onetar& Board (a&, whenever warranted %& circu(stances, preventive& suspend an& director or officer of a %an' or
$uasi-%an' pendin+ an investi+ation> Provided, ,hat shoud the case %e not fina& decided %& the Ban+'oSentra within a period of one
hundred twent& )#/.* da&s after the date of suspension, said director or officer sha %e reinstated in his position> Provided, further, ,hat
when the dea& in the disposition of the case is due to the faut, ne+i+ence or petition of the director or officer, the period of dea& sha not
%e counted in co(putin+ the period of suspension herein provided.

,he a%ove ad(inistrative sanctions need not %e appied in the order of their severit&.

Dhether or not there is an ad(inistrative proceedin+, if the institution and4or the directors and4or officers concerned continue
with or otherwise persist in the co((ission of the indicated practice or vioation, the 1onetar& Board (a& issue an order re$uirin+ the
institution and4or the directors and4or officers concerned to cease and desist fro( the indicated practice or vioation, and (a& further order
that i((ediate action %e ta'en to correct the conditions resutin+ fro( such practice or vioation. ,he cease and desist order sha %e
i((ediate& effective upon service on the respondents.

,he respondents sha %e afforded an opportunit& to defend their action in a hearin+ %efore the 1onetar& Board or an&
co((ittee chaired %& an& 1onetar& Board (e(%er created for the purpose, upon re$uest (ade %& the respondents within five )"* da&s
fro( their receipt of the order. If no such hearin+ is re$uested within said period, the order sha %e fina. If a hearin+ is conducted, a
issues sha %e deter(ined on the %asis of records, after which the 1onetar& Board (a& either reconsider or (a'e fina its order.

,he Eovernor is here%& authori:ed, at his discretion, to i(pose upon %an'in+ institutions, for an& faiure to co(p& with the
re$uire(ents of aw, 1onetar& Board re+uations and poicies, and4or instructions issued %& the 1onetar& Board or %& the Eovernor, fines
not in excess of ,en thousand pesos )P#.,...* a da& for each vioation, the i(position of which sha %e fina and executor& unti
reversed, (odified or ifted %& the 1onetar& Board on appea.
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Qoru+a aso accused 8rcenas, et a. of vioation of the Corporation Code6s
provisions on sef-deain+ and confict of interest. She invo'ed Section 0# of the Corporation Code, which defines the ia%iit& of directors,
trustees, or officers of a corporation for, a(on+ others, ac$uirin+ an& persona or pecuniar& interest in confict with their dut& as directors
or trustees, and Section 0/, which prescri%es the conditions under which a contract of the corporation with one or (ore of its directors or
trustees @ the so-caed Tsef-deain+ directorsU
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@ woud %e vaid. She aso ae+ed that Banco 9iipino6s directors vioated Sections 00
and 0! in approvin+ the oans of corporations with interoc'in+ ownerships, i.e., owned, directed, or (ana+ed %& cose associates of 8%ert
C. 8+uirre.
Sections 0# to 0! of the Corporation Code provide>
Se8t9o% 01. #iabi&it% o) irectors, trustees or o))icers. - Directors or trustees who wifu& and 'nowin+& vote for or assent to
patent& unawfu acts of the corporation or who are +uit& of +ross ne+i+ence or %ad faith in directin+ the affairs of the corporation or
ac$uire an& persona or pecuniar& interest in confict with their dut& as such directors or trustees sha %e ia%e Ioint& and severa& for a
da(a+es resutin+ therefro( suffered %& the corporation, its stoc'hoders or (e(%ers and other persons.
Dhen a director, trustee or officer atte(pts to ac$uire or ac$uires, in vioation of his dut&, an& interest adverse to the
corporation in respect of an& (atter which has %een reposed in hi( in confidence, as to which e$uit& i(poses a disa%iit& upon hi( to dea
in his own %ehaf, he sha %e ia%e as a trustee for the corporation and (ust account for the profits which otherwise woud have accrued
to the corporation.

Se8t9o% 02. Dea&in$s o) irectors, trustees or o))icers with the corporation. - 8 contract of the corporation with one or (ore of
its directors or trustees or officers is voida%e, at the option of such corporation, uness a the foowin+ conditions are present>

#. ,hat the presence of such director or trustee in the %oard (eetin+ in which the contract was approved was not necessar& to
constitute a $uoru( for such (eetin+5

/. ,hat the vote of such director or trustee was not necessar& for the approva of the contract5

0. ,hat the contract is fair and reasona%e under the circu(stances5 and
!. ,hat in case of an officer, the contract has %een previous& authori:ed %& the %oard of directors.

Dhere an& of the first two conditions set forth in the precedin+ para+raph is a%sent, in the case of a contract with a director or
trustee, such contract (a& %e ratified %& the vote of the stoc'hoders representin+ at east two-thirds )/40* of the outstandin+ capita stoc'
or of at east two-thirds )/40* of the (e(%ers in a (eetin+ caed for the purpose> Provided, ,hat fu discosure of the adverse interest of
the directors or trustees invoved is (ade at such (eetin+> Provided, however, ,hat the contract is fair and reasona%e under the
circu(stances.

Se8t9o% 00. Contracts between corporations with inter&oc0in$ irectors. - Except in cases of fraud, and provided the contract is
fair and reasona%e under the circu(stances, a contract %etween two or (ore corporations havin+ interoc'in+ directors sha not %e
invaidated on that +round aone> Provided, ,hat if the interest of the interoc'in+ director in one corporation is su%stantia and his interest
in the other corporation or corporations is (ere& no(ina, he sha %e su%Iect to the provisions of the precedin+ section insofar as the
atter corporation or corporations are concerned.

Stoc'hodin+s exceedin+ twent& )/.L* percent of the outstandin+ capita stoc' sha %e considered su%stantia for purposes of
interoc'in+ directors.

Se8t9o% 04. Dis&o%a&t% o) a irector. - Dhere a director, %& virtue of his office, ac$uires for hi(sef a %usiness opportunit& which
shoud %eon+ to the corporation, there%& o%tainin+ profits to the preIudice of such corporation, he (ust account to the atter for a such
profits %& refundin+ the sa(e, uness his act has %een ratified %& a vote of the stoc'hoders ownin+ or representin+ at east two-thirds )/40*
of the outstandin+ capita stoc'. ,his provision sha %e appica%e, notwithstandin+ the fact that the director ris'ed his own funds in the
venture.
Qoru+a6s invocation of the provisions of the Corporation Code is (ispaced. In an earier case with si(iar antecedents, we rued that>
,he Corporation Code, however, is a +enera aw app&in+ to a t&pes of corporations, whie the New Centra Ban' 8ct re+uates
specifica& %an's and other financia institutions, incudin+ the dissoution and i$uidation thereof. 8s %etween a +enera and specia aw,
the atter sha prevai @ $enera&iaspecia&ibus non ero$ant.
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Conse$uent&, it is not the Interi( Rues of Procedure on Intra-Corporate Controversies,
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or Rue "2 of the Rues of Civi Procedure on
Receivership, that woud app& to this case. Instead, Sections /2 and 0. of the 'ew Centra& Ban0 Act shoud %e foowed, 3iE.>
Se8t9o% 2). Appoint.ent o) Conser3ator. - Dhenever, on the %asis of a report su%(itted %& the appropriate supervisin+ or
exa(inin+ depart(ent, the 1onetar& Board finds that a %an' or a $uasi-%an' is in a state of continuin+ ina%iit& or unwiin+ness to
(aintain a condition of i$uidit& dee(ed ade$uate to protect the interest of depositors and creditors, the 1onetar& Board (a& appoint a
conservator with such powers as the 1onetar& Board sha dee( necessar& to ta'e char+e of the assets, ia%iities, and the (ana+e(ent
thereof, reor+ani:e the (ana+e(ent, coect a (onies and de%ts due said institution, and exercise a powers necessar& to restore its
via%iit&. ,he conservator sha report and %e responsi%e to the 1onetar& Board and sha have the power to overrue or revo'e the
actions of the previous (ana+e(ent and %oard of directors of the %an' or $uasi-%an'.

x xxx

,he 1onetar& Board sha ter(inate the conservatorship when it is satisfied that the institution can continue to operate on its
own and the conservatorship is no on+er necessar&. ,he conservatorship sha i'ewise %e ter(inated shoud the 1onetar& Board, on the
%asis of the report of the conservator or of its own findin+s, deter(ine that the continuance in %usiness of the institution woud invove
pro%a%e oss to its depositors or creditors, in which case the provisions of Section 0. sha app&.

Se8t9o% 00. Proceein$s in Recei3ership an #i1uiation. - Dhenever, upon report of the head of the supervisin+ or exa(inin+
depart(ent, the 1onetar& Board finds that a %an' or $uasi-%an'>

)a* is una%e to pa& its ia%iities as the& %eco(e due in the ordinar& course of %usiness> Provided, ,hat this sha not
incude ina%iit& to pa& caused %& extraordinar& de(ands induced %& financia panic in the %an'in+ co((unit&5

)%* has insufficient reai:a%e assets, as deter(ined %& the Ban+'oSentra, to (eet its ia%iities5 or

)c* cannot continue in %usiness without invovin+ pro%a%e osses to its depositors or creditors5 or

)d* has wifu& vioated a cease and desist order under Section 0; that has %eco(e fina, invovin+ acts or
transactions which a(ount to fraud or a dissipation of the assets of the institution5 in which cases, t<e Mo%et$r:
Bo$r& m$: sAmm$r9@: $%& D9t<oAt %ee& ;or pr9or <e$r9%> ;orb9& t<e 9%st9tAt9o% ;rom &o9%> bAs9%ess 9% t<e
P<9@9pp9%es $%& &es9>%$te t<e P<9@9pp9%e "epos9t '%sAr$%8e Corpor$t9o% $s re8e9=er o; t<e b$%F9%>
9%st9tAt9o%.

x xxx

,he $8t9o%s o; t<e Mo%et$r: Bo$r& t$Fe% A%&er t<9s se8t9o% or A%&er Se8t9o% 2) o; t<9s A8t s<$@@ be ;9%$@ $%&
e7e8Ator:, $%& m$: %ot be restr$9%e& or set $s9&e b: t<e 8oArt e78ept o% pet9t9o% ;or )ertorar o% t<e >roA%& t<$t t<e $8t9o%
t$Fe% D$s 9% e78ess o; BAr9s&98t9o% or D9t< sA8< >r$=e $bAse o; &9s8ret9o% $s to $moA%t to @$8F or e78ess o; BAr9s&98t9o%. ,he
petition for certiorari (a& on& %e fied %& the stoc'hoders of record representin+ the (aIorit& of the capita stoc' within ten )#.* da&s fro(
receipt %& the %oard of directors of the institution of the order directin+ receivership, i$uidation or conservatorship.

,he desi+nation of a conservator under Section /2 of this 8ct or t<e $ppo9%tme%t o; $ re8e9=er A%&er t<9s se8t9o% s<$@@ be
=este& e78@As9=e@: D9t< t<e Mo%et$r: Bo$r&. 9urther(ore, the desi+nation of a conservator is not a precondition to the desi+nation of a
receiver.
J00K


On the stren+th of these provisions, it is the 1onetar& Board that exercises excusive Iurisdiction over proceedin+s for receivership of %an's.
Cr&sta cear in Section 0. is the provision that sa&s the Tappoint(ent of a receiver under this section sha %e vested excusive& with the 1onetar&
Board.U ,he ter( Texcusive&U connotes that on& the 1onetar& Board can resove the issue of whether a %an' is to %e paced under receivership and, upon an
affir(ative findin+, it aso has authorit& to appoint a receiver. ,his is further affir(ed %& the fact that the aw aows the 1onetar& Board to ta'e action
Tsu((ari& and without need for prior hearin+.U
8nd, as a cincher, the aw expicit& provides that Tactions of the 1onetar& Board ta'en under this section or under Section /2 of this 8ct sha %e
fina and executor&, and (a& not %e restrained or set aside %& the court except on a petition for certiorari on the +round that the action ta'en was in excess of
Iurisdiction or with such +rave a%use of discretion as to a(ount to ac' or excess of Iurisdiction.U
9ro( the fore+oin+ dis$uisition, there is no dou%t that the R,C has no Iurisdiction to hear and decide a suit that see's to pace Banco 9iipino under
receivership.
Qoru+a hersef reco+ni:es the BSP6s power over the ae+ed& unawfu acts of Banco 9iipino6s directors. ,he records of this case %ear out that
Qoru+a, throu+h her e+a counse, wrote the 1onetar& Board
J0!K
on 8pri /#, /..0 to %rin+ to its attention the acts she had enu(erated in her co(paint %efore
the R,C. ,he etter reads in part>
Banco 9iipino and the current (e(%ers of its Board of Directors shoud %e paced under investi+ation for vioations of %an'in+
aws, the co((ission of irre+uarities, and for conductin+ %usiness in an unsafe or unsound (anner. ,he& shoud i'ewise %e paced
under preventive suspension %& virtue of the powers +ranted to the 1onetar& Board under Section 0; of the Centra Ban' 8ct. ,hese
%atant vioations of %an'in+ aws shoud not +o %& without penat&. ,he& have put Banco 9iipino, its depositors and stoc'hoders, and the
entire %an'in+ s&ste( )sic* in Ieopard&.
xxxx
De ur+e &ou to oo' into the (atter in &our capacit& as re+uators. Our cients, a (inorit& stoc'hoders, )sic* and (an&
depositors of Banco 9iipino are preIudiced %& a faiure to re+uate, and taxpa&ers are preIudiced %& acco((odations +ranted %& the BSP
to Banco 9iipino
J0"K
In a etter dated 1a& =, /..0, BSP Supervision and Exa(ination Depart(ent III Director Candon B. Euerrero referred Qoru+a6s etter to 8rcenas for
co((ent.
J0=K
On -une =, /..0, Banco 9iipino6s then Executive Cice President and Corporate Secretar& 9rancisco 8. Rivera su%(itted the %an'6s co((ents
essentia& ar+uin+ that Qoru+a6s accusations ac'ed e+a and factua %ases.
J0;K

On the other hand, the BSP, in its 8nswer %efore the R,C, said that it had %een oo'in+ into Banco 9iipino6s activities. 8n Octo%er /../ Report of
Exa(ination )ROE* prepared %& the Supervision and Exa(ination Depart(ent )SED* noted certain acionpa&(ents, out-of-the-ordinar& expenses, a(on+ other
deain+s. On -u& /!, /..0, the 1onetar& Board passed Resoution No. #.0! furnishin+ Banco 9iipino a cop& of the ROE with instructions for the %an' to fie its
co((ent or expanation within 0. to 2. da&s under threat of %ein+ fined or of %ein+ su%Iected to other re(edia actions. ,he ROE, the BSP said, covers
su%stantia& the sa(e (atters raised in Qoru+a6s co(paint. 8t the ti(e of the fiin+ of Qoru+a6s co(paint on 8u+ust /., /..0, the period for Banco 9iipino to
su%(it its expanation had not &et expired.
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,hus, the court6s Iurisdiction coud on& have %een invo'ed after the 1onetar& Board had ta'en action on the (atter and on& on the +round that the
action ta'en was in excess of Iurisdiction or with such +rave a%use of discretion as to a(ount to ac' or excess of Iurisdiction.

9ina&, there is one other reason wh& Qoru+a6s co(paint %efore the R,C cannot prosper. Eiven her own ad(ission @ and the sa(e is i'ewise
supported %& evidence @ that she is (ere& a (inorit& stoc'hoder of Banco 9iipino, she woud not have the standin+ to $uestion the 1onetar& Board6s
action. Section 0. of the New Centra Ban' 8ct provides>

,he petition for certiorari (a& on& %e fied %& the stoc'hoders of record representin+ the (aIorit& of the capita stoc' within ten )#.* da&s
fro( receipt %& the %oard of directors of the institution of the order directin+ receivership, i$uidation or conservatorship.


8 the fore+oin+ discussion &ieds the inevita%e concusion that the C8 erred in uphodin+ the Iurisdiction of, and re(andin+ the case to, the
R,C. Eiven that the R,C does not have Iurisdiction over the su%Iect (atter of the case, its refusa to dis(iss the case on that +round a(ounted to +rave a%use
of discretion.
3*EREFORE, the fore+oin+ pre(ises considered, the Petition in E.R. No. #=<00/ is "'SM'SSE", whie the Petition in E.R. No. #=2."0
is GRAN!E". ,he Decision of the Court of 8ppeas dated -u& /., /.." in C8-E.R. SP No. <<!// is here%&SE! AS'"E. ,he ,e(porar& Restrainin+ Order
issued %& this Court on 1arch #0, /..= is (ade PERMANEN!. Conse$uent&, Civi Case No. .0-2<", pendin+ %efore the Re+iona ,ria Court of 1a'ati Cit&,
is "'SM'SSE".
SO OR"ERE".
BANGKO SEN!RA NG P''P'NAS MONE!AR. BOAR" $%&
C*+C*' FONAC'ER,
Petitioners,

- versus -

*ON. N'NA G. AN!ON'O-#AEN1+EA, 9% <er 8$p$89t: $s
Re>9o%$@ !r9$@ CoArt 4A&>e o; M$%9@$, Br$%8< 2(I R+RA
BANK OF PARAJA?+E, 'NC.I R+RA BANK OF SAN 4OSE
,BA!ANGAS-, 'NC.I R+RA BANK OF CARMEN ,CEB+-, 'NC.I
P''P'NO R+RA BANK, 'NC.I P*''PP'NE CO+N!R.S'"E
R+RA BANK, 'NC.I R+RA BANK OF CAA!AGAN
,BA!ANGAS-, 'NC. ,%oD ".NAM'C R+RA BANK-I R+RA
BANK OF "ARBC', 'NC.I R+RA BANK OF KANANGA
,E.!E-, 'NC. ,%oD F'RS! 'N!ERS!A!E R+RA BANK-I
R+RA BANK OF B'SA.AS M'NGAN'A ,%oD BANK OF
EAS! AS'A-I $%& SAN PABO C'!. "E#EOPMEN! BANK,
'NC.,
Respondents.
G.R. No. 1(477(



Present>

NN8RES-S8N,I8EO, J.,
Chairperson,
C7ICO-N8H8RIO,
CEF8SCO, -R.,
N8C7MR8, and
PER8F,8, JJ.




Pro(u+ated>

Octo%er /, /..2

" E C ' S ' O N

#EASCO, 4R., J.2
!<e C$se

,his is a Petition for Review on Certiorari under Rue !" with Pra&er for Issuance of a ,e(porar& Restrainin+ Order ),RO*4Drit of Prei(inar& InIunction,
$uestionin+ the Decision dated Septe(%er 0., /..<
J#K
of the Court of 8ppeas )C8* in C8-E.R. SP No. #.020". ,he C8 Decision uphed the Order
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dated -une
!, /..< of the Re+iona ,ria Court )R,C*, Branch /< in 1ania, issuin+ writs of prei(inar& inIunction in Civi Case Nos. .<-##2/!0, .<-##2/!!, .<-##2/!", .<-
##2/!=, .<-##2/!;, .<-##2/!<, .<-##2/!2, .<-##2/"., .<-##2/"#, and .<-##2/;0, and the Order dated 1a& /#, /..< that consoidated the civi cases.

!<e F$8ts

In Septe(%er of /..;, the Supervision and Exa(ination Depart(ent )SED* of the Ban$0o!entra&n$Pi&ipinas )BSP* conducted exa(inations of the %oo's
of the foowin+ %an's> Rura Ban' of ParaWa$ue, Inc. )RBPI*, Rura Ban' of San -ose )Batan+as*, Inc., Rura Ban' of Car(en )Ce%u*, Inc., Piipino Rura Ban',
Inc., Phiippine Countr&side Rura Ban', Inc., Rura Ban' of Caata+an )Batan+as*, Inc. )now D&na(ic Rura Ban'*, Rura Ban' of Dar%ci, Inc., Rura Ban' of
Qanan+a )Fe&te*, Inc. )now 9irst Interstate Rura Ban'*, Rura Ban' de Bisa&as1in+ania )now Ban' of East 8sia*, and San Pa%o Cit& Deveop(ent Ban', Inc.

8fter the exa(inations, exit conferences were hed with the officers or representatives of the %an's wherein the SED exa(iners provided the( with
copies of Fists of 9indin+s4Exceptions containin+ the deficiencies discovered durin+ the exa(inations. ,hese %an's were then re$uired to co((ent and to
underta'e the re(edia (easures stated in these ists within 0. da&s fro( their receipt of the ists, which re(edia (easures incuded the infusion of additiona
capita. ,hou+h the %an's cai(ed that the& (ade the additiona capita infusions, petitioner Chuchi9onacier, officer-in-char+e of the SED, sent separate etters
to the Board of Directors of each %an', infor(in+ the( that the SED found that the %an's faied to carr& out the re$uired re(edia (easures. In response, the
%an's re$uested that the& %e +iven ti(e to o%tain BSP approva to a(end their 8rtices of Incorporation, that the& have an opportunit& to see' investors. ,he&
re$uested as we that the %asis for the capita infusion fi+ures %e discosed, and noted that none of the( had received the Report of Exa(ination )ROE* which
finai:es the audit findin+s. ,he& aso re$uested (eetin+s with the BSP audit tea(s to reconcie audit fi+ures. In response, 9onacier reiterated the %an's6
faiure to co(p& with the directive for additiona capita infusions.

On 1a& #/, /..<, the RBPI fied a co(paint for nuification of the BSP ROE with appication for a ,RO and writ of prei(inar& inIunction %efore the R,C
doc'eted as Civi Case No. .<-##2/!0 a+ainst 9onacier, the BSP, 8(ado 1. ,etan+co, -r., Ro(uo F. Neri, Cicente B. Cadepenas, -r., Rau 8. Boncan,
-uanita D. 8(aton+, 8fredo C. 8ntonio, and Ne& 9. Ciafuerte. RBPI pra&ed that 9onacier, her su%ordinates, a+ents, or an& other person actin+ in her %ehaf
%e enIoined fro( su%(ittin+ the ROE or an& si(iar report to the 1onetar& Board )1B*, or if the ROE had aread& %een su%(itted, the 1B %e enIoined fro(
actin+ on the %asis of said ROE, on the ae+ation that the faiure to furnish the %an' with a cop& of the ROE vioated its ri+ht to due process.

,he Rura Ban' of San -ose )Batan+as*, Inc., Rura Ban' of Car(en )Ce%u*, Inc., Piipino Rura Ban', Inc., Phiippine Countr&side Rura Ban', Inc., Rura
Ban' of Caata+an )Batan+as*, Inc., Rura Ban' of Dar%ci, Inc., Rura Ban' of Qanan+a )Fe&te*, Inc., and Rura Ban' de Bisa&as1in+ania foowed suit, fiin+
co(paints with the R,C su%stantia& si(iar to that of RBPI, incudin+ the reiefs pra&ed for, which were raffed to different %ranches and doc'eted as Civi
Cases Nos. .<-##2/!!, .<-##2/!", .<-##2/!=, .<-##2/!;, .<-##2/!<, .<-##2/!2, .<-##2/"., and .<-##2/"#, respective&.

On 1a& #0, /..<, the R,C denied the pra&er for a ,RO of Piipino Rura Ban', Inc. ,he %an' fied a (otion for reconsideration the next da&.

On 1a& #!, /..<, 9onacier and the BSP fied their opposition to the appication for a ,RO and writ of prei(inar& inIunction in Civi Case No. .<-##2/!0
with the R,C. Respondent -ud+e Nina 8ntonio-Caen:uea of Branch /< +ranted RBPI6s pra&er for the issuance of a ,RO.

,he other %an's separate& fied (otions for consoidation of their cases in Branch /<, which (otions were +ranted. -ud+e Caen:uea set the co(paint
of Rura Ban' of San -ose )Batan+as*, Inc. for hearin+ on 1a& #", /..<. Petitioners assaied the vaidit& of the consoidation of the nine cases %efore the R,C,
ae+in+ that the court had aread& preIud+ed the case %& the earier issuance of a ,RO in Civi Case No. .<-##2/!0, and (oved for the inhi%ition of respondent
Iud+e. Petitioners fied a (otion for reconsideration re+ardin+ the consoidation of the su%Iect cases.

On 1a& #=, /..<, San Pa%o Cit& Deveop(ent Ban', Inc. fied a si(iar co(paint a+ainst the sa(e defendants with the R,C, and this was doc'eted as
Civi Case No. .<-##2/;0 that was ater on consoidated with Civi Case No. .<-##2/!0. Petitioners fied an Mr+ent 1otion to Fift4Dissove the ,RO and an
Opposition to the earier (otion for reconsideration of Piipino Rura Ban', Inc.

On 1a& #2, /..<, -ud+e Caen:uea issued an Order +rantin+ the pra&er for the issuance of ,ROs for the other seven cases consoidated with Civi Case
No. .<-##2/!0. On 1a& /#, /..<, -ud+e Caen:uea issued an Order den&in+ petitioners6 (otion for reconsideration re+ardin+ the consoidation of cases in
Branch /<. On 1a& //, /..<, -ud+e Caen:uea +ranted the ur+ent (otion for reconsideration of Piipino Rura Ban', Inc. and issued a ,RO si(iar to the ones
earier issued.

On 1a& /=, /..<, petitioners fied a 1otion to Dis(iss a+ainst a the co(paints )except that of the San Pa%o Cit& Deveop(ent Ban', Inc.*, on the
+rounds that the co(paints stated no cause of action and that a condition precedent for fiin+ the cases had not %een co(pied with. On 1a& /2, /..<, a
hearin+ was conducted on the appication for a ,RO and for a writ of prei(inar& inIunction of San Pa%o Cit& Deveop(ent Ban', Inc.

!<e RA@9%> o; t<e R!C

8fter the parties fied their respective (e(oranda, the R,C, on -une !, /..<, rued that the %an's were entited to the writs of prei(inar& inIunction
pra&ed for. It hed that it had %een the practice of the SED to provide the ROEs to the %an's %efore su%(ission to the 1B. It further hed that as the %an's are
the su%Iects of exa(inations, the& are entited to copies of the ROEs. ,he denia %& petitioners of the %an's6 re$uests for copies of the ROEs was hed to %e a
denia of the %an's6 ri+ht to due process.

,he dispositive portion of the R,C6s order reads>

D7ERE9ORE, the Court rues as foows>

#* Re6 Ci3i& Case 'o. 9?-117:;8. Pursuant to Rue "<, Section !)%* of the Revised Rues of Court, paintiff Rura Ban' of Parana$ue
Inc. is directed to post a %ond executed to the defendants, in the a(ount of P"..,...... to the effect that the paintiff wi pa& to the
defendants a da(a+es which the& (a& sustain %& reason of the inIunction if the Court shoud fina& decide that the paintiff was not
entited thereto. 8fter postin+ of the %ond and approva thereof, et a writ of prei(inar& inIunction %e issued to enIoin and restrain
the defendants fro( su%(ittin+ the Report of Exa(ination or an& other si(iar report prepared in connection with the exa(ination
conducted on the paintiff, to the 1onetar& Board. In case such a Report on Exa(ination JsicK or an& other si(iar report prepared in
connection with the exa(ination conducted on the paintiff has %een su%(itted to the 1onetar& Board, the atter and its (e(%ers
)i.e. defendants ,etan+co, Neri, Cadepenas, Boncan, 8(aton+, 8ntonio, and Ciafuerte* are enIoined and restrained fro( actin+ on
the %asis of said report.

/* Re6 Ci3i& Case 'o. 9?-117:;;. Pursuant to Rue "<, Section !)%* of the Revised Rues of Court, paintiff Rura Ban' of San -ose
)Batan+as*, Inc. is directed to post a %ond executed to the defendants, in the a(ount of P"..,...... to the effect that the paintiff
wi pa& to the defendants a da(a+es which the& (a& sustain %& reason of the inIunction if the Court shoud fina& decide that the
paintiff was not entited thereto. 8fter postin+ of the %ond and approva thereof, et a writ of prei(inar& inIunction %e issued to enIoin
and restrain the defendants fro( su%(ittin+ the Report of Exa(ination or an& other si(iar report prepared in connection with the
exa(ination conducted on the paintiff, to the 1onetar& Board. In case such a Report on Exa(ination JsicK or an& other si(iar
report prepared in connection with the exa(ination conducted on the paintiff has %een su%(itted to the 1onetar& Board, the atter
and its (e(%ers )i.e. defendants ,etan+co, Neri, Cadepenas, Boncan, 8(aton+, 8ntonio, and Ciafuerte* are enIoined and
restrained fro( actin+ on the %asis of said report.

0* Re6 Ci3i& Case 'o. 9?-117:;<. Pursuant to Rue "<, Section !)%* of the Revised Rues of Court, paintiff Rura Ban' of Car(en
)Ce%u*, Inc. is directed to post a %ond executed to the defendants, in the a(ount of P"..,...... to the effect that the paintiff wi
pa& to the defendants a da(a+es which the& (a& sustain %& reason of the inIunction if the Court shoud fina& decide that the
paintiff was not entited thereto. 8fter postin+ of the %ond and approva thereof, et a writ of prei(inar& inIunction %e issued to enIoin
and restrain the defendants fro( su%(ittin+ the Report of Exa(ination or an& other si(iar report prepared in connection with the
exa(ination conducted on the paintiff, to the 1onetar& Board. In case such a Report on Exa(ination JsicK or an& other si(iar
report prepared in connection with the exa(ination conducted on the paintiff has %een su%(itted to the 1onetar& Board, the atter
and its (e(%ers )i.e. defendants ,etan+co, Neri, Cadepenas, Boncan, 8(aton+, 8ntonio, and Ciafuerte* are enIoined and
restrained fro( actin+ on the %asis of said report.

!* Re6 Ci3i& Case 'o. 9?-117:;>. Pursuant to Rue "<, Section !)%* of the Revised Rues of Court, paintiff Piipino Rura Ban' Inc. is
directed to post a %ond executed to the defendants, in the a(ount of P"..,...... to the effect that the paintiff wi pa& to the
defendants a da(a+es which the& (a& sustain %& reason of the inIunction if the Court shoud fina& decide that the paintiff was not
entited thereto. 8fter postin+ of the %ond and approva thereof, et a writ of prei(inar& inIunction %e issued to enIoin and restrain
the defendants fro( su%(ittin+ the Report of Exa(ination or an& other si(iar report prepared in connection with the exa(ination
conducted on the paintiff, to the 1onetar& Board. In case such a Report on Exa(ination JsicK or an& other si(iar report prepared in
connection with the exa(ination conducted on the paintiff has %een su%(itted to the 1onetar& Board, the atter and its (e(%ers
)i.e. defendants ,etan+co, Neri, Cadepenas, Boncan, 8(aton+, 8ntonio, and Ciafuerte* are enIoined and restrained fro( actin+ on
the %asis of said report.

"* Re6 Ci3i& Case 'o. 9?-117:;=. Pursuant to Rue "<, Section !)%* of the Revised Rues of Court, paintiff Phiippine Countr&side
Rura Ban' Inc. is directed to post a %ond executed to the defendants, in the a(ount of P"..,...... to the effect that the paintiff wi
pa& to the defendants a da(a+es which the& (a& sustain %& reason of the inIunction if the Court shoud fina& decide that the
paintiff was not entited thereto. 8fter postin+ of the %ond and approva thereof, et a writ of prei(inar& inIunction %e issued to enIoin
and restrain the defendants fro( su%(ittin+ the Report of Exa(ination or an& other si(iar report prepared in connection with the
exa(ination conducted on the paintiff, to the 1onetar& Board. In case such a Report on Exa(ination JsicK or an& other si(iar
report prepared in connection with the exa(ination conducted on the paintiff has %een su%(itted to the 1onetar& Board, the atter
and its (e(%ers )i.e. defendants ,etan+co, Neri, Cadepenas, Boncan, 8(aton+, 8ntonio, and Ciafuerte* are enIoined and
restrained fro( actin+ on the %asis of said report.

=* Re6 Ci3i& Case 'o. 9?-117:;?. Pursuant to Rue "<, Section !)%* of the Revised Rues of Court, paintiff D&na(ic Ban' Inc. )Rura
Ban' of Caata+an* is directed to post a %ond executed to the defendants, in the a(ount of P"..,...... to the effect that the paintiff
wi pa& to the defendants a da(a+es which the& (a& sustain %& reason of the inIunction if the Court shoud fina& decide that the
paintiff was not entited thereto. 8fter postin+ of the %ond and approva thereof, et a writ of prei(inar& inIunction %e issued to enIoin
and restrain the defendants fro( su%(ittin+ the Report of Exa(ination or an& other si(iar report prepared in connection with the
exa(ination conducted on the paintiff, to the 1onetar& Board. In case such a Report on Exa(ination JsicK or an& other si(iar
report prepared in connection with the exa(ination conducted on the paintiff has %een su%(itted to the 1onetar& Board, the atter
and its (e(%ers )i.e. defendants ,etan+co, Neri, Cadepenas, Boncan, 8(aton+, 8ntonio, and Ciafuerte* are enIoined and
restrained fro( actin+ on the %asis of said report.

;* Re6 Ci3i& Case 'o. 9?-117:;7. Pursuant to Rue "<, Section !)%* of the Revised Rues of Court, paintiff Rura Ban' of D8RBCI, Inc.
is directed to post a %ond executed to the defendants, in the a(ount of P"..,...... to the effect that the paintiff wi pa& to the
defendants a da(a+es which the& (a& sustain %& reason of the inIunction if the Court shoud fina& decide that the paintiff was not
entited thereto. 8fter postin+ of the %ond and approva thereof, et a writ of prei(inar& inIunction %e issued to enIoin and restrain
the defendants fro( su%(ittin+ the Report of Exa(ination or an& other si(iar report prepared in connection with the exa(ination
conducted on the paintiff, to the 1onetar& Board. In case such a Report on Exa(ination JsicK or an& other si(iar report prepared in
connection with the exa(ination conducted on the paintiff has %een su%(itted to the 1onetar& Board, the atter and its (e(%ers
)i.e. defendants ,etan+co, Neri, Cadepenas, Boncan, 8(aton+, 8ntonio, and Ciafuerte* are enIoined and restrained fro( actin+ on
the %asis of said report.

<* Re6 Ci3i& Case 'o. 9?-117:<9. Pursuant to Rue "<, Section !)%* of the Revised Rues of Court, paintiff Rura Ban' of Qanan+a Inc.
)9irst Intestate Ban'*, is directed to post a %ond executed to the defendants, in the a(ount of P"..,...... to the effect that the
paintiff wi pa& to the defendants a da(a+es which the& (a& sustain %& reason of the inIunction if the Court shoud fina& decide
that the paintiff was not entited thereto. 8fter postin+ of the %ond and approva thereof, et a writ of prei(inar& inIunction %e issued
to enIoin and restrain the defendants fro( su%(ittin+ the Report of Exa(ination or an& other si(iar report prepared in connection
with the exa(ination conducted on the paintiff, to the 1onetar& Board. In case such a Report on Exa(ination JsicK or an& other
si(iar report prepared in connection with the exa(ination conducted on the paintiff has %een su%(itted to the 1onetar& Board, the
atter and its (e(%ers )i.e. defendants ,etan+co, Neri, Cadepenas, Boncan, 8(aton+, 8ntonio, and Ciafuerte* are enIoined and
restrained fro( actin+ on the %asis of said report.

2* Re6 Ci3i& Case 'o. 9?-117:<1. Pursuant to Rue "<, Section !)%* of the Revised Rues of Court, paintiff Banco Rura De
Bisa&as1in+ania )Ce%u* Inc. )Ban' of East 8sia* is directed to post a %ond executed to the defendants, in the a(ount of
P"..,...... to the effect that the paintiff wi pa& to the defendants a da(a+es which the& (a& sustain %& reason of the inIunction
if the Court shoud fina& decide that the paintiff was not entited thereto. 8fter postin+ of the %ond and approva thereof, et a writ of
prei(inar& inIunction %e issued to enIoin and restrain the defendants fro( su%(ittin+ the Report of Exa(ination or an& other si(iar
report prepared in connection with the exa(ination conducted on the paintiff, to the 1onetar& Board. In case such a Report on
Exa(ination JsicK or an& other si(iar report prepared in connection with the exa(ination conducted on the paintiff has %een
su%(itted to the 1onetar& Board, the atter and its (e(%ers )i.e. defendants ,etan+co, Neri, Cadepenas, Boncan, 8(aton+,
8ntonio, and Ciafuerte* are enIoined and restrained fro( actin+ on the %asis of said report.

#.* Re6 Ci3i& Case 'o. 9?-117:=8. Pursuant to Rue "<, Section !)%* of the Revised Rues of Court, paintiff San Pa%o Cit& Deveop(ent
Ban', Inc. is directed to post a %ond executed to the defendants, in the a(ount of P"..,...... to the effect that the paintiff wi pa&
to the defendants a da(a+es which the& (a& sustain %& reason of the inIunction if the Court shoud fina& decide that the paintiff
was not entited thereto. 8fter postin+ of the %ond and approva thereof, et a writ of prei(inar& inIunction %e issued to enIoin and
restrain the defendants fro( su%(ittin+ the Report of Exa(ination or an& other si(iar report prepared in connection with the
exa(ination conducted on the paintiff, to the 1onetar& Board. In case such a Report on Exa(ination JsicK or an& other si(iar
report prepared in connection with the exa(ination conducted on the paintiff has %een su%(itted to the 1onetar& Board, the atter
and its (e(%ers )i.e. defendants ,etan+co, Neri, Cadepenas, Boncan, 8(aton+, 8ntonio, and Ciafuerte* are enIoined and
restrained fro( actin+ on the %asis of said report.
J0K


!<e RA@9%> o; t<e CA

Petitioners then %rou+ht the (atter to the C8 via a petition for certiorari under Rue =" cai(in+ +rave a%use of discretion on the part of -ud+e Caen:uea
when she issued the orders dated 1a& /#, /..< and -une !, /..<.

,he C8 rued that the R,C co((itted no +rave a%use of discretion when it ordered the issuance of a writ of prei(inar& inIunction and when it ordered the
consoidation of the #. cases.
It hed that petitioners shoud have first fied a (otion for reconsideration of the assaied orders, and faied to Iustif& wh& the& resorted to a specia civi
action of certiorari instead.

,he C8 aso found that aside fro( the technica aspect, there was no +rave a%use of discretion on the part of the R,C, and if there was a (ista'e in the
assess(ent of evidence %& the tria court, that shoud %e characteri:ed as an error of Iud+(ent, and shoud %e correcta%e via appea.

,he C8 hed that the principes of fairness and transparenc& dictate that the respondent %an's are entited to copies of the ROE.

Re+ardin+ the consoidation of the #. cases, the C8 found that there was a si(iarit& of facts, reiefs sou+ht, issues raised, defendants, and that paintiffs
and defendants were represented %& the sa(e sets of counses. It found that the Ioint tria of these cases woud preIudice an& su%stantia ri+ht of petitioners.

9indin+ that no +rave a%use of discretion attended the issuance of the orders %& the R,C, the C8 denied the petition.

On Nove(%er /!, /..<, a ,RO was issued %& this Court, restrainin+ the C8, R,C, and respondents fro( i(pe(entin+ and enforcin+ the C8 Decision
dated Septe(%er 0., /..< in C8-E.R. SP No. #.020".
J!K

B& reason of the ,RO issued %& this Court, the SED was a%e to su%(it their ROEs to the 1B. ,he 1B then prohi%ited the respondent %an's fro( transactin+
%usiness and paced the( under receivership under Section "0 of Repu%ic 8ct No. )R8* <;2#
J"K
and Sec. 0. of R8;="0
J=K
throu+h 1B Resoution
No. #=#= dated Dece(%er 2, /..<5 Resoution Nos. #=0; and #=0< dated Dece(%er ##, /..<5 Resoution Nos. #=!;, #=!<, and #=!2 dated Dece(%er #/,
/..<5 Resoution Nos. #="/ and #="0 dated Dece(%er #=, /..<5 and Resoution Nos. #=2/ and #=2" dated Dece(%er #2, /..<, with the Phiippine Deposit
Insurance Corporation as the appointed receiver.

Now we resove the (ain petition.

GroA%&s 9% SApport o; Pet9t9o%

I. ,7E 7ONOR8BFE COMR, O9 8PPE8FS ER8CEFN ERRED IN NO, 9INDINE ,78, ,7E IN-MNC,ION ISSMED BN ,7E
REEION8F ,RI8F COMR, CIOF8,ED SEC,ION /" O9 ,7E NED CEN,R8F B8NQ 8C, 8ND E99EC,ICEFN
78NDCM99ED ,7E B8NEQO SEN,R8F 9RO1 DISC78REINE I,S 9MNC,IONS ,O ,7E ERE8, 8ND IRREP8R8BFE
D818EE O9 ,7E COMN,RN6S B8NQINE SNS,E15
II. ,7E 7ONOR8BFE COMR, O9 8PPE8FS ER8CEFN ERRED IN 9INDINE ,78, RESPONDEN,S 8RE EN,I,FED ,O BE
9MRNIS7ED COPIES O9 ,7EIR RESPEC,ICE ROEs BE9ORE ,7E S81E IS SMB1I,,ED ,O ,7E 1ONE,8RN BO8RD
IN CIED O9 ,7E PRINCIPFES O9 98IRNESS 8ND ,R8NSP8RENCN DESPI,E F8CQ O9 EAPRESS PROCISION IN ,7E
NED CEN,R8F B8NQ 8C, REBMIRINE BSP ,O DO ,7E S81E
III. ,7E 7ONOR8BFE COMR, O9 8PPE8FS ER8CEFN ERRED IN DEP8R,INE 9RO1 DEFF-ES,8BFIS7ED PRECEP,S O9
F8D 8ND -MRISPRMDENCE

8. ,7E EACEP,IONS CI,ED BN PE,I,IONER -MS,I9IED RESOR, ,O PE,I,ION 9OR CER,IOR8RI MNDER
RMFE =" INS,E8D O9 9IRS, 9IFINE 8 1O,ION 9OR RECONSIDER8,ION
B. RESPONDEN, B8NQS6 8C, O9 RESOR,INE I11EDI8,EFN ,O ,7E COMR, D8S PRE18,MRE SINCE I,
D8S 18DE IN M,,ER DISREE8RD O9 ,7E PRINCIPFE O9 PRI18RN -MRISDIC,ION 8ND EA78MS,ION O9
8D1INIS,R8,ICE RE1EDN
C. ,7E ISSM8NCE O9 8 DRI, O9 PREFI1IN8RN IN-MNC,ION BN ,7E REEION8F ,RI8F COMR, D8S NO,
ONFN I1PROPER BM, 81OMN,ED ,O ER8CE 8BMSE O9 DISCRE,ION
J;K
OAr RA@9%>
,he petition is (eritorious.
In #i. 3. Court o) Appea&s it was stated>

,he re$uisites for prei(inar& inIunctive reief are> )a* the invasion of ri+ht sou+ht to %e protected is (ateria and su%stantia5 )%*
the ri+ht of the co(painant is cear and un(ista'a%e5 and )c* there is an ur+ent and para(ount necessit& for the writ to prevent serious
da(a+e.

8s such, a writ of prei(inar& inIunction (a& %e issued on& upon cear showin+ of an actua existin+ ri+ht to %e protected
durin+ the pendenc& of the principa action. ,he twin re$uire(ents of a vaid inIunction are the existence of a ri+ht and its actua or
threatened vioations. ,hus, to %e entited to an inIunctive writ, the ri+ht to %e protected and the vioation a+ainst that ri+ht (ust %e shown.
J<K
,hese re$uire(ents are a%sent in the present case.
In +rantin+ the writs of prei(inar& inIunction, the tria court hed that the su%(ission of the ROEs to the 1B %efore the respondent %an's woud
vioate the ri+ht to due process of said %an's.
,his is erroneous.
,he respondent %an's have faied to show that the& are entited to copies of the ROEs. ,he& can point to no provision of aw, no section in the
procedures of the BSP that shows that the BSP is re$uired to +ive the( copies of the ROEs. Sec. /< of R8 ;="0, or the New Centra Ban' 8ct, which +overns
exa(inations of %an'in+ institutions, provides that the ROE sha %e su%(itted to the 1B5 the %an' exa(ined is not (entioned as a recipient of the ROE.

,he respondent %an's cannot cai( a vioation of their ri+ht to due process if the& are not provided with copies of the ROEs. ,he sa(e ROEs are
%ased on the ists of findin+s4exceptions containin+ the deficiencies found %& the SED exa(iners when the& exa(ined the %oo's of the respondent %an's. 8s
found %& the R,C, these ists of findin+s4exceptions were furnished to the officers or representatives of the respondent %an's, and the respondent %an's were
re$uired to co((ent and to underta'e re(edia (easures stated in said ists. Despite these instructions, respondent %an's faied to co(p& with the SED6s
directive.

Respondent %an's are aread& aware of what is re$uired of the( %& the BSP, and cannot cai( vioation of their ri+ht to due process si(p& %ecause
the& are not furnished with copies of the ROEs. Respondent %an's were hed %& the C8 to %e entited to copies of the ROEs prior to or si(utaneous& with their
su%(ission to the 1B, on the principes of fairness and transparenc&. 9urther, the C8 hed that if the contents of the ROEs are essentia& the sa(e as those of
the ists of findin+s4exceptions provided to said %an's, there is no reason not to +ive copies of the ROEs to the %an's. ,his is a fawed concusion, since if the
%an's are aread& aware of the contents of the ROEs, the& cannot sa& that fairness and transparenc& are not present. If sanctions are to %e i(posed upon the
respondent %an's, the& are aread& we aware of the reasons for the sanctions, havin+ %een infor(ed via the ists of findin+s4exceptions, de(oishin+ that
particuar ar+u(ent. ,he ROEs woud then %e superfuities to the respondent %an's, and shoud not %e the %asis for a writ of prei(inar& inIunction. 8so, the
reiance of the R,C on Banco *i&ipino 3. "onetar% Boar
J2K
is (ispaced. ,he petitioner in that case was hed to %e entited to annexes of the Supervision and
Exa(ination Sector6s reports, as it aread& had a cop& of the reports the(seves. It was not the su%Iect of the case whether or not the petitioner was entited to a
cop& of the reports. 8nd the ruin+ was (ade after the petitioner %an' was ordered cosed, and it was aowed to %e suppied with annexes of the reports in order
to %etter prepare its defense. In this instance, at the ti(e the respondent %an's re$uested copies of the ROEs, no action had &et %een ta'en %& the 1B with
re+ard to i(posin+ sanctions upon said %an's.

,he issuance %& the R,C of writs of prei(inar& inIunction is an unwarranted interference with the powers of the 1B. Secs. /2 and 0. of R8
;="0
J#.K
refer to the appoint(ent of a conservator or a receiver for a %an', which is a power of the 1B for which the& need the ROEs done %& the supervisin+ or
exa(inin+ depart(ent. ,he writs of prei(inar& inIunction issued %& the tria court hinder the 1B fro( fufiin+ its function under the aw. ,he actions of the 1B
under Secs. /2 and 0. of R8 ;="0 T(a& not %e restrained or set aside %& the court except on petition for certiorari on the +round that the action ta'en was in
excess of Iurisdiction or with such +rave a%use of discretion as to a(ount to ac' or excess of Iurisdiction.U ,he writs of prei(inar& inIunction order are precise&
what cannot %e done under the aw %& preventin+ the 1B fro( ta'in+ action under either Sec. /2 or Sec. 0. of R8 ;="0.

8s to the third re$uire(ent, the respondent %an's have shown no necessit& for the writ of prei(inar& inIunction to prevent serious da(a+e. ,he
serious da(a+e conte(pated %& the tria court was the possi%iit& of the i(position of sanctions upon respondent %an's, even the sanction of cosure. Mnder
the aw, the sanction of cosure coud %e i(posed upon a %an' %& the BSP even without notice and hearin+. ,he apparent ac' of procedura due process
woud not resut in the invaidit& of action %& the 1B. ,his was the ruin+ in Centra& Ban0 o) the Phi&ippines 3. Court o) Appea&s.
J##K
,his Tcose now, hear aterU
sche(e is +rounded on practica and e+a considerations to prevent unwarranted dissipation of the %an'6s assets and as a vaid exercise of poice power to
protect the depositors, creditors, stoc'hoders, and the +enera pu%ic. ,he writ of prei(inar& inIunction cannot, thus, prevent the 1B fro( ta'in+ action, %&
preventin+ the su%(ission of the ROEs and worse, %& preventin+ the 1B fro( actin+ on such ROEs.

,he tria court re$uired the 1B to respect the respondent %an's6 ri+ht to due process %& aowin+ the respondent %an's to view the ROEs and act
upon the( to foresta an& sanctions the 1B (i+ht i(pose. Such procedure has no %asis in aw and does in fact vioate the Tcose now, hear aterU doctrine. De
hed in Rura& Ban0 o) !an "i$ue&, Inc. 3. "onetar% Boar, Ban$0o!entra&n$Pi&ipinas>


It is we-setted that the cosure of a %an' (a& %e considered as an exercise of poice power. ,he action of the 1B on this
(atter is fina and executor&. Such exercise (a& nonetheess %e su%Iect to Iudicia in$uir& and can %e set aside if found to %e in excess of
Iurisdiction or with such +rave a%use of discretion as to a(ount to ac' or excess of Iurisdiction.
J#/K


,he respondent %an's cannotRthrou+h see'in+ a writ of prei(inar& inIunction %& appeain+ to ac' of due process, in a rounda%out (annerR
prevent their cosure %& the 1B. ,heir re(ed&, as stated, is a su%se$uent one, which wi deter(ine whether the cosure of the %an' was attended %& +rave
a%use of discretion. -udicia review enters the picture on& after the 1B has ta'en action5 it cannot prevent such action %& the 1B. ,he threat of the i(position
of sanctions, even that of cosure, does not vioate their ri+ht to due process, and cannot %e the %asis for a writ of prei(inar& inIunction.


,he Tcose now, hear aterU doctrine has aread& %een Iustified as a (easure for the protection of the pu%ic interest. Swift action is caed for on the
part of the BSP when it finds that a %an' is in dire straits. Mness ade$uate and deter(ined efforts are ta'en %& the +overn(ent a+ainst distressed and
(is(ana+ed %an's, pu%ic faith in the %an'in+ s&ste( is certain to deteriorate to the preIudice of the nationa econo(& itsef, not to (ention the osses suffered
%& the %an' depositors, creditors, and stoc'hoders, who a deserve the protection of the +overn(ent.
J#0K

,he respondent %an's have faied to show their entite(ent to the writ of prei(inar& inIunction. It (ust %e e(phasi:ed that an appication for
inIunctive reief is construed strict& a+ainst the peader.
J#!K
,he respondent %an's cannot re& on a si(pe appea to procedura due process to prove
entite(ent. ,he re$uire(ents for the issuance of the writ have not %een proved. No invasion of the ri+hts of respondent %an's has %een shown, nor is their
ri+ht to copies of the ROEs cear and un(ista'a%e. ,here is aso no necessit& for the writ to prevent serious da(a+e. Indeed the issuance of the writ of
prei(inar& inIunction tra(pes upon the powers of the 1B and prevents it fro( fufiin+ its functions. ,here is no ri+ht that the writ of prei(inar& inIunction
woud protect in this particuar case. In the a%sence of a cear e+a ri+ht, the issuance of the inIunctive writ constitutes +rave a%use of discretion.
J#"K
In the
a%sence of proof of a e+a ri+ht and the inIur& sustained %& the paintiff, an order for the issuance of a writ of prei(inar& inIunction wi %e nuified.
J#=K
Courts are here%& re(inded to ta'e +reater care in issuin+ inIunctive reief to iti+ants, that it woud not vioate an& aw. ,he +rant of a prei(inar&
inIunction in a case rests on the sound discretion of the court with the caveat that it shoud %e (ade with +reat caution.
J#;K
,hus, the issuance of the writ of
prei(inar& inIunction (ust have %asis in and %e in accordance with aw. 8 tod, whie the +rant or denia of an inIunction +enera& rests on the sound
discretion of the ower court, this Court (a& and shoud intervene in a cear case of a%use.
J#<K


3*EREFORE, the petition is here%& GRAN!E". ,he assaied C8 Decision dated Septe(%er 0., /..< in C8-E.R. SP No. #.020" is
here%& RE#ERSE". ,he assaied order and writ of prei(inar& inIunction of respondent -ud+e Caen:uea in Civi Case Nos. .<-##2/!0, .<-##2/!!, .<-##2/!",
.<-##2/!=, .<-##2/!;, .<-##2/!<, .<-##2/!2, .<-##2/"., .<-##2/"#, and .<-##2/;0 are here%& decared N+ and #O'".
SO OR"ERE".
G.R. No. 15/207 September 15, 200/
E?+'!ABE PC' BANK ,t<e B$%F9%> E%t9t: 9%to D<98< P<9@9pp9%e Commer89$@ '%ter%$t9o%$@ B$%F D$s mer>e&-, petitioner,
vs.
RO3ENA ONG, respondent.
D E C I S I O N
C*'CO-NA1AR'O, J.2
On /2 Nove(%er #22#, Dari:aSarande deposited in her account at Phiippine Co((ercia Internationa )PCI* Ban' 1a+sa&sa& 8venue, Santa 8na District,
Davao Cit& Branch, under 8ccount No. <"./-..0!;-=, a PCI Ban' Eenera Santos Cit& Branch, ,CB,
#
Chec' No. ./!2#<< in the a(ount of P//",.......
Mpon in$uir& %& Serande at PCI Ban' on " Dece(%er #22# on whether ,CB, Chec' No. ./!2#<< had %een ceared, she received an affir(ative answer.
Re&in+ on this assurance, she issued two chec's drawn a+ainst the proceeds of ,CB, Chec' No. ./!2#<<. One of these was PCI Ban' Chec' No. .;0==#
dated " Dece(%er #22# for P#0/,...... which Sarande issued to respondent Rowena On+ Owin+ to a %usiness transaction. On the sa(e da&, On+ presented
to PCI Ban' 1a+sa&sa& 8venue Branch said Chec' No. .;0==#, and instead of encashin+ it, re$uested PCI Ban' to convert the proceeds thereof into a
(ana+erPs chec', which the PCI Ban' o%i+ed. Dhereupon, On+ was issued PCI Ban' 1ana+erPs Chec' No. #.2<0 dated " Dece(%er #22# for the su(
of P#0/,......, the vaue of Chec' No. .;0==#.
,he next da&, = Dece(%er #22#, On+ deposited PCI Ban' 1ana+erPs Chec' No. #.2<0 in her account with E$uita%e Ban'in+ Corporation Davao Cit& Branch.
On 2 Dece(%er #22#, she received a chec' return-sip infor(in+ her that PCI Ban' had stopped the pa&(ent of the said chec' on the +round of irre+uar
issuance. Despite severa de(ands (ade %& her to PCI Ban' for the pa&(ent of the a(ount in PCI Ban' 1ana+erPs Chec' No. #.2<0, the sa(e was (et with
refusa5 thus, On+ was constrained to fie a Co(paint for su( of (one&, da(a+es and attorne&Ps fees a+ainst PCI Ban'.
/
9ro( PCI Ban'Ps version, ,CB,-Eenera Santos Cit& Chec' No. ./!2#<< was returned on " Dece(%er #22# at ">.. p( on the +round that the account a+ainst
which it was drawn was aread& cosed. 8ccordin+ to PCI Ban', it i((ediate& +ave notice to Sarande and On+ a%out the return of Chec' No. ./!2#<< and
re$uested On+ to return PCI Ban' 1ana+erPs Chec' No. #.2<0 inas(uch as the return of Chec' No. ./!2#<< on the +round that the account fro( which it was
drawn had aread& %een cosed resuted in a faiure or want of consideration for the issuance of PCI Ban' 1ana+erPs Chec' No. #.2<0.
0
8fter the pre-tria conference, On+ fied a (otion for su((ar& Iud+(ent.
!
,hou+h the& were du& furnished with a cop& of the (otion for su((ar& Iud+(ent, PCI
Ban' and its counse faied to appear at the schedued hearin+.
"
Neither did the& fie an& written co((ent or opposition thereto. ,he tria court thereafter ordered
On+ to for(a& offer her exhi%its in writin+, furnishin+ copies of the sa(e to PCI Ban' which was directed to fie its co((ent or o%Iection.
=
On+ co(pied with the Order of the tria court, %ut PCI Ban' faied to fie an& co((ent or o%Iection within the period +iven to it despite receipt of the sa(e
order.
;
,he tria court then +ranted the (otion for su((ar& Iud+(ent and in its Order dated / 1arch #22", it hed>
IN ,7E FIE7, O9 ,7E 9OREEOINE, the (otion for su((ar& Iud+(ent is ER8N,ED, orderin+ defendant Phiippine Co((ercia Internationa Ban'
to pa& the paintiff the a(ount of ONE 7MNDRED ,7IR,N-,DO ,7OMS8ND PESOS )P#0/,......* e$uivaent to the a(ount of PCIB 1ana+erPs
Chec' No. #.2<0.
Set the reception of the paintiffPs evidence with respect to the da(a+es cai(ed in the co(paint.
<
PCI Ban' fied a 1otion for Reconsideration which the tria court denied in its Order dated ## 8pri #22=.
2
8fter the reception of On+Ps evidence in support of her
cai( for da(a+es, the tria court rendered its Decision
#.
dated 0 1a& #222 wherein it rued>
IN FIE7, O9 ,7E 9OREEOIN CONSIDER8,ION, and as paintiff has preponderant& esta%ished %& co(petent evidence her cai(s in the
Co(paint, Iud+(ent in here%& rendered for the paintiff a+ainst the defendant-%an' orderin+ the atter>
#. ,o pa& the paintiff the su( of 9I9,N ,7OMS8ND PESOS )P".,......* in the concept of (ora da(a+es5
/. ,o pa& the paintiff the su( of ,DEN,N ,7OMS8ND PESOS )P/.,......* as exe(par& da(a+es5
0. ,o pa& the paintiff the su( of ,7REE ,7OMS8ND 9ICE 7MNDRED PESOS )P0,".....* representin+ actua expenses5
!. ,o pa& the paintiff the su( of ,DEN,N ,7OMS8ND PESOS )P/.,......* as and for attorne&Ps feePs5 and
". ,o pa& the costs.
##
9ro( this decision, PCI Ban' sou+ht recourse %efore the Court of 8ppeas. In a Decision
#/
dated /2 Octo%er /../, the appeate court denied the appea of PCI
Ban' and affir(ed the orders and decision of the tria court.
Mnpertur%ed, PCI Ban' then fied the present petition for review %efore this Court and raised the foowin+ issues>
#. D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CO11I,,ED 8 ER8CE 8ND RECERSIBFE ERROR D7EN I, SMS,8INED ,7E FODER
COMR,PS ORDER D8,ED / 18RC7 #222 ER8N,INE RESPONDEN,PS 1O,ION 9OR SM118RN -MDE1EN, NO,DI,7S,8NDINE ,7E
EF8RINE 98C, ,78, ,7ERE 8RE EENMINE, 18,ERI8F 8ND 98C,M8F ISSMES D7IC7 REBMIRE ,7E PRESEN,8,ION O9 ECIDENCE.
/. D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS D8S IN ERROR D7EN I, SMS,8INED ,7E FODER COMR,PS DECISION D8,ED 0 18N
#222 ER8N,INE ,7E REFIE9S PR8NED 9OR IN RESPONDEN, ONEPS CO1PF8IN, INSPI,E O9 ,7E 98C, ,78, RESPONDEN, ONE
DOMFD BE 3MN-MS,FN ENRIC7ED3 8, ,7E EAPENSE O9 PE,I,IONER B8NQ, I9 PE,I,IONER B8NQ DOMFD BE REBMIRED ,O P8N 8N
MN9MNDED C7ECQ.
0. D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CO11I,,ED RECERSIBFE ERRORS D7EN I, 899IR1ED ,7E COMR, 8 BMOPS
DECISIION D8,ED 0 18N #222 8D8RDINE D818EES ,O RESPONDEN, ONE 8ND 7OFDINE ,78, RESPONDEN, ONE 78D
PREPONDER8N,FN ES,8BFIS7ED BN CO1PE,EN, ECIDENCE 7ER CF8I1S IN ,7E CO1PF8IN, INSPI,E O9 ,7E 98C, ,78, ,7E
ECIDENCE ON RECORD DOES NO, -MS,I9N ,7E 8D8RD O9 D818EES.
!. D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CO11I,,ED 8 RECERSIBFE ERROR D7EN I, 899IR1ED ,7E FODER COMR,PS
98C,M8F 9INDINE IN I,S DECISION D8,ED 0 18N #222 7OFDINE RESPONDEN, ONE 8 37OFDER IN DME COMRSE3 INSPI,E O9 ,7E
98C, ,78, ,7E REBMISI,E O9 3EOOD 98I,73 8ND 9OR C8FME IS F8CQINE 8ND DESPI,E ,7E 8BSENCE O9 8 PROPER ,RI8F ,O
DE,ER1INE SMC7 98C,M8F ISSME.
". D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CO11I,,ED 8 RECERSIBFE ERROR D7EN I, MP7EFD ,7E FODER COMR,PS DECISION
D8,ED 0 18N #222 DENNINE PE,I,IONER EPCI B8NQPS COMN,ERCF8I1 INSPI,E O9 ,7E 98C, ,78, I, D8S S7ODN ,78,
RESPONDEN, ONEPS CO1PF8IN, F8CQS 1ERI,.
#0
De affir( the Decision of the tria court and the Court of 8ppeas.
,he provision on su((ar& Iud+(ent is found in Section #, Rue 0" of the #22; Rues of Court>
SEC,ION #.Su((ar& Iud+(ent for cai(ant. @ 8 part& see'in+ to recover upon a cai(, countercai(, or cross-cai( or to o%tain a decarator& reief
(a&, at an& ti(e after the peadin+ in answer thereto has %een served, (ove with supportin+ affidavits, depositions or ad(issions for a su((ar&
Iud+(ent in his favor upon a or an& part thereof.
,hus, it has %een hed that a su((ar& Iud+(ent is proper where, upon a (otion fied after the issues had %een Ioined and on the %asis of the peadin+s and
papers fied, the court finds that there is no +enuine issue as to an& (ateria fact to except as to the a(ount of da(a+es. 8 +enuine issue has %een defined as
an issue of fact which cas for the presentation of evidence, as distin+uished fro( an issue which is sha(, fictitious, contrived and patent& unsu%stantia so as
not to constitute a +enuine issue for tria.
#!
8 court (a& +rant su((ar& Iud+(ent to sette expeditious& a case if, on (otion of either part&, there appears fro( the peadin+s, depositions, ad(issions, and
affidavits that no i(portant issues of fact are invoved, except the a(ount of da(a+es.
#"
Rue 0", Section 0, of the Rues of Court provides two re$uisites for
su((ar& Iud+(ent to %e proper> )#* there (ust %e no +enuine issue as to an& (ateria fact, except for the a(ount of da(a+es5 and )/* the part& presentin+ the
(otion for su((ar& Iud+(ent (ust %e entited to a Iud+(ent as a (atter of aw.
#=
Certain&, when the facts as peaded appear uncontested or undisputed, then therePs no rea or +enuine issue or $uestion as to the facts, and su((ar&
Iud+(ent is caed for.
#;
B& ad(ittin+ it co((itted an error, cearin+ the chec' of Sarande and issuin+ in favor of On+ not Iust an& chec' %ut a (ana+erPs chec' for that (atter, PCI
Ban'Ps ia%iit& is fixed. Mnder the circu(stances, we find that su((ar& Iud+(ent was proper and a hearin+ woud serve no purpose. ,hat su((ar& Iud+(ent is
appropriate was incisive& expounded %& the tria court when it (ade the foowin+ o%servation>
JDKefendant-%an' had certified paintiffPs PCIB Chec' No. .;0==# and since certification is e$uivaent to acceptance, defendant-%an' as drawee %an'
is %ound on the instru(ent upon certification and it is i((ateria to such ia%iit& in favor of the paintiff who is a hoder in due course whether the
drawer )Dari:aSarande* had funds or not with the defendant-%an' )Securit& vs. State Ban', #"! N.D. /</* or the drawer was inde%ted to the %an'
for (ore than the a(ount of the chec' )Nat. Ban' vs. Sch(e:, Nat. Ban', ##= S.E. <<.* as the certif&in+ %an' as a the ia%iities under Sec. =/ of
the Ne+otia%e Instru(ents Faw which refers to ia%iit& of acceptor ),ite Euarantee vs. E(adee Reat& Corp., /!. N.N. 0=*.
It (a& %e true that paintiffPs PCIB Chec' No. .;0==# for P#0/,...... which was paid to her %& Dari:aSarande was actua& not funded %ut since
paintiff %eca(e a hoder in due course, defendant-%an' cannot interpose a defense of want or ac' of consideration %ecause that defense is
e$uita%e or persona and cannot prosper a+ainst a hoder in due course pursuant to Section /< of the Ne+otia%e Instru(ents Faw. ,herefore, when
the afore(entioned chec' was endorsed and presented %& the paintiff and certified to and accepted %& defendant-%an' in the purchase of PCIB
1ana+erPs Chec' No. #2<0 in the a(ount ofP#0/,......, there was a vaid consideration.
#<
,he propert& of su((ar& Iud+(ent was further expained %& this Court when it pronounced that>
,he theor& of su((ar& Iud+(ent is that athou+h an answer (a& on its face appear to tender issues @ re$uirin+ tria @ &et if it is de(onstrated %&
affidavits, depositions, or ad(issions that those issues are not +enuine, %ut sha( or fictitious, the Court is unIustified in dispensin+ with the tria and
renderin+ su((ar& Iud+(ent for paintiff. ,he court is expected to act chief& on the %asis of the affidavits, depositions, ad(issions su%(itted %& the
(ovant, and those of the other part& in opposition thereto. ,he hearin+ conte(pated )with #.-da& notice* is for the purpose of deter(inin+ whether
the issues are +enuine or not, not to receive evidence on the issues set up in the peadin+s. 8 hearin+ is not thus e ri$uer. ,he (atter (a& %e
resoved, and usua& is, on the %asis of affidavits, depositions, ad(issions. ,his is not to sa& that a hearin+ (a& %e re+arded as a superfuit&. It is
not, and the Court has penar& discretion to deter(ine the necessit& therefore.
#2
,he second and fourth issues are inter-reated and so the& sha %e resoved to+ether. ,he second issue has reference to PCI Ban'Ps cai( of unIust enrich(ent
on the part of On+ if it woud %e co(peed to (a'e +ood the (ana+erPs chec' it had issued. 8s asserted %& PCI Ban' under the fourth issue, On+ is not a
hoder in due course %ecause the (ana+erPs chec' was drawn a+ainst a cosed account5 therefore, the sa(e was issued without consideration.
On the (atter of unIust enrich(ent, the funda(enta doctrine of unIust enrich(ent is the transfer of vaue without Iust cause or consideration. ,he ee(ents of
this doctrine are> enrich(ent on the part of the defendant5 i(poverish(ent on the part of the paintiff5 and ac' of cause. ,he (ain o%Iective is to prevent one to
enrich hi(sef at the expense of another.
/.
It is %ased on the e$uita%e postuate that it is unIust for a person to retain %enefit without pa&in+ for it.
/#
It is we to
stress that the chec' of Sarande had %een ceared %& the PCI Ban' for which reason the for(er issued the chec' to On+. 8 chec' which has %een ceared and
credited to the account of the creditor sha %e e$uivaent to a deiver& to the creditor of cash in an a(ount e$ua to the a(ount credited to his account.
//
7avin+ ceared the chec' earier, PCI Ban', therefore, %eca(e ia%e to On+ and it cannot ae+e want or faiure of consideration %etween it and Sarande. Mnder
setted Iurisprudence, On+ is a stran+er as re+ards the transaction %etween PCI Ban' and Sarande.
/0
PCI Ban' next insists that since there was no consideration for the issuance of the (ana+erPs chec', er+o, On+ is not a hoder in due course. ,his cai( is
e$ua& without %asis. Pertinent provisions of the Ne+otia%e Instru(ents Faw are hereunder $uoted>
SEC,ION "/. -hat constitutes a ho&er in ue course. @ 8 hoder in due course is a hoder who has ta'en the instru(ent under the foowin+
conditions>
)a* ,hat it is co(pete and re+uar upon its face5
)%* ,hat he %eca(e the hoder of it %efore it was overdue, and without notice it had %een previous& dishonored, if such was the fact5
)c* ,hat he too' it in +ood faith and for vaue5
)d* ,hat at the ti(e it was ne+otiated to hi(, he had no notice of an& infir(it& in the instru(ent or defect in the tite of the person ne+otiatin+ it.
,he sa(e aw provides further>
Sec. /!. Presu.ption o) consieration. @ Ever& ne+otia%e instru(ent is dee(ed pri(a facie to have %een issued for a vaua%e consideration5 and
ever& person whose si+nature appears thereon to have %eco(e a part& thereto for vaue.
Sec. /=. -hat constitutes ho&er )or 3a&ue. @ Dhere vaue has at an& ti(e %een +iven for the instru(ent, the hoder is dee(ed a hoder for vaue in
respect to a parties who %eco(e such prior to that ti(e.
Sec. /<. E))ect o) want o) consieration. @ 8%sence or faiure of consideration is a (atter of defense as a+ainst an& person not a hoder in due
course5 and partia faiure of consideration is a defense pro tanto, whether the faiure is an ascertained and i$uidated a(ount or otherwise.
Easi& discerni%e is that what On+ o%tained fro( PCI Ban' was not Iust an& ordinar& chec' %ut a (ana+erPs chec'. 8 (ana+erPs chec' is an order of the %an'
to pa&, drawn upon itsef, co((ittin+ in effect its tota resources, inte+rit& and honor %ehind its issuance. B& its pecuiar character and +enera use in co((erce,
a (ana+erPs chec' is re+arded su%stantia& to %e as +ood as the (one& it represents.
/!
8 (ana+erPs chec' stands on the sa(e footin+ as a certified chec'.
/"
,he effect of certification is found in Section #<;, Ne+otia%e Instru(ents Faw.
Sec. #<;. Certi)ication o) chec0@ e))ect o). @ Dhere a chec' is certified %& the %an' on which it is drawn, the certification is e$uivaent to an
acceptance.
/=
,he effect of issuin+ a (ana+erPs chec' was incontroverti%& eucidated when we decared that>
8 (ana+erPs chec' is one drawn %& the %an'Ps (ana+er upon the %an' itsef. It is si(iar to a cashierPs chec' %oth as to effect and use. 8 cashierPs
chec' is a chec' of the %an'Ps cashier on his own or another chec'. In effect, it is a %i of exchan+e drawn %& the cashier of a %an' upon the %an'
itsef, and accepted in advance %& the act of its issuance. It is rea& the %an'Ps own chec' and (a& %e treated as a pro(issor& note with the %an' as
a (a'er. ,he chec' %eco(es the pri(ar& o%i+ation of the %an' which issues it and constitutes its written pro(ise to pa& upon de(and. ,he (ere
issuance of it is considered an acceptance thereof. x x x.
/;
In the case of 'ew Paci)ic (i.ber F !upp&% Co., Inc. 3. !eneris
/<
>
JSKince the said chec' had %een certified %& the drawee %an', %& the certification, the funds represented %& the chec' are transferred fro( the credit
of the (a'er to that of the pa&ee or hoder, and for a intents and purposes, the atter %eco(es the depositor of the drawee %an', with ri+hts and
duties of one in such situation. Dhere a chec' is certified %& the %an' on which it is drawn, the certification is e$uivaent to acceptance. Said
certification 3i(pies that the chec' is drawn upon sufficient funds in the hands of the drawee, that the& have %een set apart for its satisfaction, and
that the& sha %e so appied whenever the chec' is presented for pa&(ent. It is an understandin+ that the chec' is +ood then, and sha continue
+ood, and this a+ree(ent is as %indin+ on the %an' as its notes circuation, a certificate of deposit pa&a%e to the order of depositor, or an& other
o%i+ation it can assu(e. ,he o%Iect of certif&in+ a chec', as re+ards %oth parties, is to enab&e the ho&er to use it as .one%.3 Dhen the hoder
procures the chec' to %e certified, 3the chec' operates as an assi+n(ent of a part of the funds to the creditors.3 7ence, the exception to the rue
enunciated under Section =0 of the Centra Ban' 8ct to the effect 3that a chec' which has %een ceared and credited to the account of the creditor
sha %e e$uivaent to a deiver& to the creditor in cash in an a(ount e$ua to the a(ount credited to his account3 sha app& in this case x xx.
B& acceptin+ PCI Ban' Chec' No. .;0==# issued %& Sarande to On+ and issuin+ in turn a (ana+erPs chec' in exchan+e thereof, PCI Ban' assu(ed the
ia%iities of an acceptor under Section =/ of the Ne+otia%e Instru(ents Faw which states>
Sec. =/. #iabi&it% o) acceptor. @ ,he acceptor %& acceptin+ the instru(ents en+a+es that he wi pa& it accordin+ to the tenor of his acceptance5 and
ad(its @
)a* ,he existence of the drawer, the +enuineness of his si+nature, and his capacit& and authorit& to draw the instru(ent5 and
)%* ,he existence of the pa&ee and his then capacit& to indorse.
Dith the a%ove Iurisprudentia %asis, the issues on On+ %ein+ not a hoder in due course and faiure or want of consideration for PCI Ban'Ps issuance of the
(ana+erPs chec' is out of s&nc.
Section /, of Repu%ic 8ct No. <;2#, ,he Eenera Ban'in+ Faw of /... decrees>
SEC. /. Dec&aration o) Po&ic%. @ ,he State reco+ni:es the vita roe of %an's in providin+ an environ(ent conducive to the sustained deveop(ent of
the nationa econo(& and the fiduciar& nature of %an'in+ that re$uires hi+h standards of inte+rit& and perfor(ance. In furtherance thereof, the State
sha pro(ote and (aintain a sta%e and efficient %an'in+ and financia s&ste( that is +o%a& co(petitive, d&na(ic and responsive to the de(ands
of a deveopin+ econo(&.
In Associate Ban0 3. (an,
/2
it was reiterated>
3x xx the de+ree of dii+ence re$uired of %an's is (ore than that of a +ood father of a fa(i& where the fiduciar& nature of their reationship with their
depositors is concerned.3 Indeed, the %an'in+ %usiness is vested with the trust and confidence of the pu%ic5 hence the 3appropriate standard of
dii+ence (ust %e ver& hi+h, if not the hi+hest de+ree of dii+ence.3
1easured a+ainst these standards, the next $uestion that needs to %e addressed is> Did PCI Ban' exercise the re$uisite de+ree of dii+ence re$uired of itX
9ro( a indications, it did not. PCI Ban' distinct& (ade the foowin+ uncontested ad(ission>
#. On /2 Nove(%er #22#, one Dari:aSarande deposited to her savin+s account with PCI Ban'Ps 1a+sa&sa& 8venue Branch, ,CB,-Eenera Santos
Branch Chec' No. ./!2#<< for P//",....... S$9& 8<e8F, <oDe=er, D$s 9%$&=erte%t@: se%t b: PC' B$%F t<roA>< @o8$@ 8@e$r9%> D<e% 9t s<oA@&
<$=e bee% se%t t<roA>< 9%ter-re>9o%$@ 8@e$r9%> s9%8e t<e 8<e8F D$s &r$D% $t !CB!-Ge%er$@ S$%tos C9t:.
/. On " Dece(%er #22#, Dari:aSarande in$uired whether ,CB, Chec' No. ./!2#<< had %een ceared. Not havin+ received an& advice fro( the
drawee %an' within the re+uar cearin+ period for the return of oca& ceared chec's, and unaware then of the error o; %ot <$=9%> se%t t<e 8<e8F
t<roA>< 9%ter-re>9o%$@ 8@e$r9%>, PC' B$%F $&=9se& <er t<$t C<e8F No. 0241(( 9s tre$te& $s 8@e$re&. 7 7 7.
0.
)E(phasis suppied.*
9ro( the fore+oin+, it is papa%e and readi& apparent that PCI Ban' faied to exercise the hi+hest de+ree of care
0#
re$uired of it under the aw.
In the case of Phi&ippine 'ationa& Ban0 3. Court o) Appea&s,
0/
we decared>
,he %an'in+ s&ste( has %eco(e an indispensa%e institution in the (odern word and pa&s a vita roe in the econo(ic ife of ever& civii:ed societ&.
Dhether as (ere passive entities for the safe-'eepin+ and savin+ of (one& or as active instru(ents of %usiness and co((erce, %an's have attained
an u%i$uitous presence a(on+ the peope, who have co(e to re+ard the( with respect and even +ratitude and, (ost of a, confidence.
7avin+ setted the other issues, we now resove the $uestion on the award of (ora and exe(par& da(a+es %& the tria court to the respondent.
1ora da(a+es incude ph&sica sufferin+, (enta an+uish, fri+ht, serious anxiet&, %es(irched reputation, wounded feein+s, (ora shoc', socia hu(iiation, and
si(iar inIur&. ,hou+h incapa%e of pecuniar& co(putation, (ora da(a+es (a& %e recovered if the& are the proxi(ate resut of the defendantPs wron+fu act or
o(ission.
00
,he re$uisites for an award of (ora da(a+es are we-defined, thus, )irst&%, evidence of %es(irched reputation or ph&sica, (enta or ps&choo+ica
sufferin+ sustained %& the cai(ant5 secon&%, a cupa%e act or o(ission factua& esta%ished5 thir&%, proof that the wron+fu act or o(ission of the defendant is
the proxi(ate cause of the da(a+es sustained %& the cai(ant5 and )ourth&%, that the case is predicated on an& of the instances expressed or envisioned %&
8rtice //#2
0!
and 8rtice ///.
0"
of the Civi Code. 8 these ee(ents are present in the instant case.
0=
In the first pace, %& refusin+ to (a'e +ood the (ana+erPs chec' it has issued, On+ suffered e(%arrass(ent and hu(iiation arisin+ fro( the dishonor of the
said chec'.
0;
Second&, the cupa%e act of PCI Ban' in havin+ ceared the chec' of Serande and issuin+ the (ana+erPs chec' to On+ is undenia%e. ,hird&, the
proxi(ate cause of the oss is attri%uta%e to PCI Ban'. Proxi(ate cause is defined as that cause which, in natura and continuous se$uence, un%ro'en %& an&
efficient intervenin+ cause, produces the inIur&, and without which the resut woud not have occurred.
0<
In this case, the proxi(ate cause of the oss is the act of
PCI Ban' in havin+ ceared the chec' of Sarande and its faiure to exercise that de+ree of dii+ence re$uired of it under the aw which resuted in the oss to
On+.
On exe(par& da(a+es, 8rtice ///2 of the Civi Code states>
8rt. ///2. Exe(par& or corrective da(a+es are i(posed, %& wa& of exa(pe or correction for the pu%ic +ood, in addition to the (ora, te(perate,
i$uidated or co(pensator& da(a+es.
,he aw aows the +rant of exe(par& da(a+es to set an exa(pe for the pu%ic +ood. ,he %an'in+ s&ste( has %eco(e an indispensa%e institution in the
(odern word and pa&s a vita roe in the econo(ic ife of ever& civii:ed societ&. Dhether as (ere passive entities for the safe-'eepin+ and savin+ of (one& or
as active instru(ents of %usiness and co((erce, %an's have attained an u%i$uitous presence a(on+ the peope, who have co(e to re+ard the( with respect
and even +ratitude and (ost of a, confidence. 9or this reason, %an's shoud +uard a+ainst inIur& attri%uta%e to ne+i+ence or %ad faith on its part.
02
Dithout a
dou%t, it has %een repeated& e(phasi:ed that since the %an'in+ %usiness is i(pressed with pu%ic interest, of para(ount i(portance thereto is the trust and
confidence of the pu%ic in +enera. Conse$uent&, the hi+hest de+ree of dii+ence is expected, and hi+h standards of inte+rit& and perfor(ance are even
re$uired of it.
!.
7avin+ faied in this respect, the award of exe(par& da(a+es is warranted.
8rtice //#= of the Civi Code provides>
8R,. //#=. No proof of pecuniar& oss is necessar& in order that (ora, no(ina, te(perate, i$uidated or exe(par& da(a+es (a& %e adIudicated.
,he assess(ent of such da(a+es, except i$uidated ones, is eft to the discretion of the court, accordin+ to the circu(stances of each case.
Based on the a%ove provision, the deter(ination of the a(ount to %e awarded )except i$uidated da(a+es* is eft to the sound discretion of the court accordin+
to the circu(stances of each case.
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In the case %efore us, we find that the award of (ora da(a+es in the a(ount of P".,...... and exe(par& da(a+es in
the a(ount ofP/.,...... is reasona%e and Iustified.
Dith the a%ove dis$uisition, there is no necessit& of further discussin+ the ast issue on the PCI Ban'Ps countercai( %ased on the supposed ac' of (erit of
On+Ps co(paint.
3*EREFORE, pre(ises considered, the Petition is "EN'E" and the Decision of the Court of 8ppeas dated /2 Octo%er /../ in C8-E.R. CC No. ="...
affir(in+ the Decision dated 0 (a& #222, of the Re+iona ,ria Court of Davao Cit&, Branch #!, in Civi Case No. /#!"<-2/, are AFF'RME".
SO OR"ERE".
+N'ON BANK OF !*E P*''PP'NES,
Petitioner,
- 3ersus -

SPO+SES RO"OFO !. !'+ AN" #'C!OR'A N. !'+,
Respondents.
G.R. Nos. 1700)0-)1

Present>

CORON8, C.J.,
Chairperson,
FEON8RDO-DE C8S,RO,
BERS81IN,
DEF C8S,IFFO, and
CIFF8R818, -R., JJ.
Pro(u+ated>Septe(%er ;, /.##


" E C ' S ' O N
EONAR"O-"E CAS!RO, J.2
,his is a Petition for Review on Certiorari see'in+ to reverse the -oint Decision
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of the Court of 8ppeas dated 9e%ruar& /#, /..= in C8-E.R. CC No.
..#2. and C8-E.R. SP No. ../"0, as we as the Resoution
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dated -une #, /..= den&in+ the 1otion for Reconsideration.
,he factua and procedura antecedents of this case are as foows>
On Nove(%er /#, #22", petitioner Mnion Ban' of the Phiippines )Mnion Ban'* and respondent spouses Rodofo ,. ,iu and Cictoria N. ,iu )the
spouses ,iu* entered into a Credit Fine 8+ree(ent )CF8* where%& Mnion Ban' a+reed to (a'e avaia%e to the spouses ,iu credit faciities in such a(ounts as
(a& %e approved.
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9ro( Septe(%er //, #22; to 1arch /=, #22<, the spouses ,iu too' out various oans pursuant to this CF8 in the tota a(ount of three
(iion six hundred thirt&-two thousand doars )MSY0,=0/,......*, as evidenced %& pro(issor& notes>

PN No. 8(ount in MSY Date Eranted
<;42<4### ;/,...... ./4#=42<
<;42<4#.< <!,...... ./4#042<
<;42<4#"/ 0/.,...... .04./42<
<;42<4.;" #".,...... .#40.42<
<;42<4/## 0/,...... .04/=42<
<;42<4.;# ##.,...... .#4/242<
<;42<4#.; #0",...... ./4#0442<
<;42<4#.. ;",...... ./4#/42<
<;42<4#2; #2",...... .04#242<
<;42;4;=# =.,...... .24/=42;
<;42;4;=< 0.,...... .24/242;
<;42;4;=; #<.,...... .24/242;
<;42;42;. ##.,...... #/4/242;
<;42;4;!; ".,...... .24//42;
<;42=42!! =.",...... #/4#242;
<;42<4#2# !;.,...... .04#=42<
<;42<4#2< ".",...... .04#242<
<;42<4.2. !!2,...... ./4.242<
MSY0,=0/,......
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On -une /0, #22<, Mnion Ban' advised the spouses ,iu throu+h a etter
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that, in view of the existin+ currenc& ris's, the oans sha %e
redeno(inated to their e$uivaent Phiippine peso a(ount on -u& #", #22<. On -u& 0, #22<, the spouses ,iu wrote to Mnion Ban' authori:in+ the atter to
redeno(inate the oans at the rate of MSY#ZP!#.!.
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with interest of #2L for one &ear.
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On Dece(%er /#, #222, Mnion Ban' and the spouses ,iu entered into a Restructurin+ 8+ree(ent.
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,he Restructurin+ 8+ree(ent contains a cause
wherein the spouses ,iu confir(ed their de%t and waived an& action on account thereof. ,o $uote said cause>
#. Co%;9rm$t9o% o; "ebt @ ,he BORRODER here%& confir(s and accepts that as of Dece(%er <, #222, its outstandin+
principa inde%tedness to the B8NQ under the 8+ree(ent and the Notes a(ount to ONE 7MNDRED 9I9,NJ-K9ICE 1IFFION
,7REE 7MNDRED SIA,NJ-K9OMR ,7OMS8ND EIE7, 7MNDRED PESOS )P7P #"",0=!,<.....* excusive of interests,
service and penat& char+es )the TInde%tednessU* and further confir(s the correctness, e+ait&, coecta%iit& and enforcea%iit&
of the Inde%tedness. ,he BORRODER unconditiona& waives an& action, de(and or cai( that the& (a& otherwise have to
dispute the a(ount of the Inde%tedness as of the date specified in this Section, or the coecta%iit& and enforcea%iit&
thereof. It is the understandin+ of the parties that the BORRODER6s ac'nowed+(ent, affir(ation, and waiver herein are
(ateria considerations for the B8NQ6s a+reein+ to restructure the Inde%tedness which woud have aread& %eco(e due and
pa&a%e as of the a%ove date under the ter(s of the 8+ree(ent and the Notes.
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,he restructured a(ount )P#"",0=!,<.....* is the su( of the foowin+ fi+ures> )#* P#".,0=!,<....., which is the vaue of the MSY0,=0/,...... oan
as redeno(inated under the a%ove-(entioned exchan+e rate of MSY#ZP!#.!.5 and )/* P",...,......, an additiona oan +iven to the spouses ,iu to update
their interest pa&(ents.
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Mnder the sa(e Restructurin+ 8+ree(ent, the parties decared that the oan o%i+ation to %e restructured )after deductin+ theacion price of
properties ceded %& the ,iu spouses and addin+> J#K the taxes, re+istration fees and other expenses advanced %& Mnion Ban' in re+isterin+ the Deeds of Dation
in Pa&(ent5 and J/K other fees and char+es incurred %& the Inde%tedness* is one hundred four (iion six hundred sixt&-ei+ht thousand seven hundred fort&-one
pesos )P#.!,==<,;!#...* )tota restructured a(ount*.
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,he Deeds of Dation in Pa&(ent referred to are the foowin+>
#. Dation of the $b$%>o% propert9es @ Deed executed %& -uanita ,iu, the (other of respondent Rodofo ,iu, invovin+ ten parces of and with
i(prove(ents ocated in Fa%an+on, Ce%u Cit& and with a tota and area of 0,0!! s$uare (eters, for the a(ount of P/",#0.,....... ,he Deed
states that these properties sha %e eased to the ,iu spouses at a (onth& rate ofP2<,...... for a period of two &ears.
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/. Dation of the M$%&$Ae propert: @ Deed executed %& the spouses ,iu invovin+ one parce of and with i(prove(ents ocated in 8.S. 9ortuna
St., 1andaue Cit&, covered %& ,C, No. ,-0#=.! and with a and area of /,2=. s$uare (eters, for the a(ount of P0=,.<.,....... ,he Deed
states that said propert& sha %e eased to the ,iu spouses at a (onth& rate ofP#".,...... for a period of two &ears.
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8s i'ewise provided in the Restructurin+ 8+ree(ent, the spouses ,iu executed a Rea Estate 1ort+a+e in favor of Mnion Ban' over their Tresidentia
propert& incusive of ot and i(prove(entsU ocated at P. Bur+os St., 1andaue Cit&, covered %& ,C, No. ,-##2"# with an area of 0,.2= s$uare (eters.
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,he spouses ,iu undertoo' to pa& the tota restructured a(ount )P#.!,==<,;!#...* via three oan faciities )pa&(ent sche(es*.
,he spouses ,iu cai( to have (ade the foowin+ pa&(ents> )#* P#",...,...... on 8u+ust 0, #2225 and )/* anotherP#0,#2;,"!=.;2 as of 1a& <,
/..#. 8ddin+ the a(ounts paid under the Deeds of Dation in Pa&(ent, the spouses ,iu postuate that their pa&(ents added up to P<2,!.;,"!=.;2.
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8ssertin+ that the spouses ,iu faied to co(p& with the pa&(ent sche(es set up in the Restructurin+ 8+ree(ent, Mnion Ban' initiated extraIudicia
forecosure proceedin+s on the residentia propert& of the spouses ,iu, covered %& ,C, No. ,-##2"#. ,he propert& was to %e sod at pu%ic auction on -u& #<,
/../.
,he spouses ,iu, to+ether with -uanita ,. ,iu, Rosainda ,. Qin+, Rufino ,. ,iu, Rosaie ,. Noun+ and Rosenda ,. ,iu, fied with the Re+iona ,ria
Court )R,C* of 1andaue Cit& a Co(paint see'in+ to have the ExtraIudicia 9orecosure decared nu and void. ,he case was doc'eted as Civi Case No.
18N-!0=0.
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Na(ed as defendants were Mnion Ban' and Sheriff IC Ceronico C. Ouano )Sheriff Oano* of Branch "", R,C, 1andaue Cit&. Co(painants
therein pra&ed for the foowin+> )#* that the spouses ,iu %e decared to have fu& paid their o%i+ation to Mnion Ban'5 )/* that defendants %e per(anent&
enIoined fro( proceedin+ with the auction sae5 )0* that Mnion Ban' %e ordered to return to the spouses ,iu their properties as isted in the Co(paint5 )!* that
Mnion Ban' %e ordered to pa& the paintiffs the su( of P#.,...,...... as (ora da(a+es, P/,...,...... as exe(par& da(a+es,P0,...,...... as attorne&6s
fees and P"..,...... as expenses of iti+ation5 and )"* a writ of prei(inar& inIunction or te(porar& restrainin+ order %e issued enIoinin+ the pu%ic auction sae
to %e hed on -u& #<, /../.
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,he spouses ,iu cai( that fro( the %e+innin+ the oans were in pesos, not in doars. ,heir office cer', Fiia Eutierre:, testified that the spouses ,iu
(ere& received the peso e$uivaent of their MSY0,=0/,...... oan at the rate of MSY#ZP/=.... ,he spouses ,iu further cai( that the& were (ere& forced to
si+n the Restructurin+ 8+ree(ent and ta'e up an additiona oan ofP",...,......, the proceeds of which the& never saw %ecause this a(ount was i((ediate&
appied %& Mnion Ban' to interest pa&(ents.
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,he spouses ,iu ae+e that the forecosure sae of the (ort+a+ed properties was invaid, as the oans have aread& %een fu& paid. ,he& aso ae+e
that the& are not the owners of the i(prove(ents constructed on the ot %ecause the rea owners thereof are their co-petitioners, -uanita ,. ,iu, Rosainda ,.
Qin+, Rufino ,. ,iu, Rosaie ,. Noun+ and Rosenda ,. ,iu.
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,he spouses ,iu further cai( that prior to the si+nin+ of the Restructurin+ 8+ree(ent, the& entered into a 1e(orandu( of 8+ree(ent with Mnion
Ban' where%& the for(er deposited with the atter severa certificates of shares of stoc' of various co(panies and four certificates of tite of various parces of
and ocated in Ce%u. ,he spouses ,iu cai( that these properties have not %een su%Iected to an& ien in favor of Mnion Ban', &et the atter continues to hod on
to these properties and has not returned the sa(e to the for(er.
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On the other hand, Mnion Ban' cai(s that the Restructurin+ 8+ree(ent was vountari& and vaid& entered into %& %oth parties. Presentin+ as
evidence the Darranties e(%odied in the Rea Estate 1ort+a+e, Mnion Ban' contends that the forecosure of the (ort+a+e on the residentia propert& of the
spouses ,iu was vaid and that the i(prove(ents thereon were a%soute& owned %& the(. Mnion Ban' denies receivin+ certificates of shares of stoc' of
various co(panies or the four certificates of tite of various parces of and fro( the spouses ,iu. 7owever, Mnion Ban' aso ae+es that even if said certificates
were in its possession it is authori:ed under the Restructurin+ 8+ree(ent to retain an& and a properties of the de%tor as securit& for the oan.
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,he R,C issued a ,e(porar& Restrainin+ Order
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and, eventua&, a Drit of Prei(inar& InIunction
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preventin+ the sae of the residentia propert& of
the spouses ,iu.
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On Dece(%er #=, /..!, the R,C rendered its Decision
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in Civi Case No. 18N-!0=0 in favor of Mnion Ban'. ,he dispositive portion of the Decision
read>
D7ERE9ORE, pre(ises considered, Iud+(ent is here%& rendered dis(issin+ the Co(paint and iftin+ and settin+ aside the
Drit of Prei(inar& InIunction. No pronounce(ent as to da(a+es, attorne&6s fees and costs of suit.
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In uphodin+ the vaidit& of the Restructurin+ 8+ree(ent, the R,C hed that the spouses ,iu faied to present an& evidence to prove either fraud or
inti(idation or an& other act vitiatin+ their consent to the sa(e. ,he exact o%i+ation of the spouses ,iu to Mnion Ban' is therefore P#.!,==<,;!#..., as a+reed
upon %& the parties in the Restructurin+ 8+ree(ent. 8s re+ards the contention of the spouses ,iu that the& have fu& paid their inde%tedness, the R,C noted
that the& coud not present an& detaied accountin+ as to the tota a(ount the& have paid after the execution of the Restructurin+ 8+ree(ent.
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On -anuar& !, /..", Mnion Ban' fied a 1otion for Partia Reconsideration,
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protestin+ the findin+ in the %od& of the Dece(%er #=, /..! Decision
that the residentia house on Fot No. =02 is not owned %& the spouses ,iu and therefore shoud %e excuded fro( the rea properties covered %& the rea estate
(ort+a+e. On -anuar& =, /..", the spouses ,iu fied their own 1otion for Partia Reconsideration and4or New ,ria.
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,he& ae+ed that the tria court faied to
rue on their fourth cause of action wherein the& (entioned that the& turned over the foowin+ tites to Mnion Ban'> ,C, Nos. 0./;#, ##=/<; and ##=/<< and
OC, No. .-0"0<. ,he& aso pra&ed for a partia new tria and for a decaration that the& have fu& paid their o%i+ation to Mnion Ban'.
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On -anuar& ##, /..", the spouses ,iu received fro( Sheriff Oano a Second Notice of Extra-Iudicia 9orecosure Sae of Fot No. =02 to %e hed
on 9e%ruar& 0, /..". ,o prevent the sa(e, the ,iu spouses fied with the Court of 8ppeas a Petition for Prohi%ition and InIunction with 8ppication for ,RO4Drit
of Prei(inar& InIunction.
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,he petition was doc'eted as C8-E.R. SP No. ../"0. ,he Court of 8ppeas issued a ,e(porar& Restrainin+ Order on -anuar& /;,
/..".
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On -anuar& #2, /..", the R,C issued an Order den&in+ Mnion Ban'6s 1otion for Partia Reconsideration and the ,iu spouses6 1otion for Partia
Reconsideration and4or New ,ria.
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Both the spouses ,iu and Mnion Ban' appeaed the case to the Court of 8ppeas.
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,he two appeas were +iven a sin+e doc'et nu(%er, C8-E.R.
CEB-CC No. ..#2.. 8ctin+ on a (otion fied %& the spouses ,iu, the Court of 8ppeas consoidatedC8-E.R. SP No. ../"0 with C8-E.R. CEB-CC No. ..#2..
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On 8pri #2, /..", the Court of 8ppeas issued a Resoution findin+ that there was no need for the issuance of a Drit of Prei(inar& InIunction as the
Iud+(ent of the ower court has %een sta&ed %& the perfection of the appea therefro(.
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On 1a& 2, /..", Sheriff Oano proceeded to conduct the extraIudicia sae. Mnion Ban' su%(itted the one %id ofP#<,";=,.......
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On -une #!,
/..", Mnion Ban' fied a (otion with the Court of 8ppeas pra&in+ that Sheriff Oano %e ordered to issue a definite and re+uar Certificate of Sae.
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On -u& /#,
/..", the Court of 8ppeas issued a Resoution den&in+ the 1otion and suspendin+ the auction sae at whatever sta+e, pendin+ resoution of the appea and
conditioned upon the fiin+ of a %ond in the a(ount of P#<,...,...... %& the ,iu spouses.
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,he ,iu spouses faied to fie said %ond.
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On 9e%ruar& /#, /..=, the Court of 8ppeas rendered the assaied -oint Decision in C8-E.R. CC No. ..#2. and C8-E.R. SP No. ../"0. ,he Court
of 8ppeas dis(issed the Petition for Prohi%ition, C8-E.R. SP No. ../"0, on the +round that the proper venue for the sa(e is with the R,C.
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On the other hand, the Court of 8ppeas rued in favor of the spouses ,iu in C8-E.R. CC No. ..#2.. ,he Court of 8ppeas hed that the oan
transactions were in pesos, since there was supposed& no stipuation the oans wi %e paid in doars and since no doars ever exchan+ed hands. Considerin+
that the oans were in pesos fro( the %e+innin+, the Court of 8ppeas reasoned that there is no need to convert the sa(e. B& (a'in+ it appear that the oans
were ori+ina& in doars, Mnion Ban' overstepped its ri+hts as creditor, and (ade unwarranted interpretations of the ori+ina oan a+ree(ent. 8ccordin+ to the
Court of 8ppeas, the Restructurin+ 8+ree(ent, which purported& atte(pts to create a novation of the ori+ina oan, was not cear& authori:ed %& the de%tors
and was not supported %& an& cause or consideration. Since the Restructurin+ 8+ree(ent is void, the ori+ina oan of P2!,!0/,...... )representin+ the a(ount
received %& the spouses ,iu of MSY0,=0/,...... usin+ the MSY#ZP/=... exchan+e rate* shoud su%sist. ,he Court of 8ppeas i'ewise invaidated )#*
the P",...,...... char+e for interest in the Restructurin+ 8+ree(ent, for havin+ %een uniatera& i(posed %& Mnion Ban'5 and )/* the ease of the properties
conve&ed in acion en pa$o, for %ein+ a+ainst pu%ic poic&.
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In su(, the Court of 8ppeas found Mnion Ban' ia%e to the spouses ,iu in the a(ount of P2/;,"!=.;2. 9or convenient reference, we $uote reevant
portion of the Court of 8ppea6s Decision here>
,o su((ari:e the o%i+ation of the ,iu spouses, the& owe Mnion Ban' P2!,!0/,....... ,he ,iu spouses had aread& paid
Mnion Ban' the a(ount of P<2,!.;,"!=.;2. On the other hand, Mnion Ban' (ust return to the ,iu spouses the ie+a& coected rentas in
the a(ount ofP",2"/,....... Eiven these findin+s, the o%i+ation of the ,iu spouses has aread& %een fu& paid. In fact, it is the Mnion
Ban' that (ust return to the ,iu spouses the a(ount of NINE 7MNDRED ,DEN,NJ-KSECEN ,7OMS8ND 9ICE 7MNDRED 9OR,NJ-KSIA
PESOS 8ND SECEN,NJ-KNINE CEN,8COS )P2/;,"!=.;2*.
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Dith re+ard to the ownership of the i(prove(ents on the su%Iect (ort+a+ed propert&, the Court of 8ppeas rued that it %eon+ed to respondent
Rodofo ,iu6s father, -ose ,iu, since #2<#. 8ccordin+ to the Court of 8ppeas, Mnion Ban' shoud not have reied on warranties (ade %& de%tors that the& are
the owners of the propert&. ,he appeate court went on to per(anent& enIoin Mnion Ban' fro( forecosin+ the (ort+a+e not on& of the propert& covered %&
,C, No. ,-##2"#, %ut aso an& other (ort+a+e over an& other propert& of the spouses ,iu.
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,he Court of 8ppeas i'ewise found Mnion Ban' ia%e to return the certificates of stoc's and tites to rea properties of the spouses ,iu in its
possession. ,he appeate court hed that Mnion Ban' (ade Iudicia ad(issions of such possession in its Rep& to Paintiff6s Re$uest for 8d(ission.
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In the
event that Mnion Ban' can no on+er return these certificates and tites, it was (andated to shouder the cost for their repace(ent.
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9ina&, the Court of 8ppeas too' Iudicia notice that %efore or durin+ the financia crisis, %an's active& convinced de%tors to (a'e doar oans in the
+uise of %enevoence, saddin+ %orrowers with oans that %aooned twice or thrice their ori+ina oans. ,he Court of 8ppeas, notin+ Tthe cavaier wa& with which
%an's expoited and (anipuated the situation,U
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hed Mnion Ban' ia%e to the spouses ,iu for P#..,...... in (ora da(a+es, P#..,...... in exe(par&
da(a+es, and P".,...... in attorne&6s fees.
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,he Court of 8ppeas disposed of the case as foows>
D7ERE9ORE, in view of the fore+oin+ pre(ises, Iud+(ent is here%& rendered %& us per(anent& enIoinin+ Mnion Ban' fro(
forecosin+ the (ort+a+e of the residentia propert& of the ,iu spouses which is covered %& ,ransfer Certificate of ,ite No. ##2"# and
fro( pursuin+ other forecosure of (ort+a+es over an& other properties of the ,iu spouses for the a%ove-iti+ated de%t that has aread&
%een fu& paid. If a forecosure sae has aread& %een (ade over such properties, this Court orders the canceation of such forecosure
sae and the Certificate of Sae thereof if an& has %een issued. ,his Court orders Mnion Ban' to return to the ,iu spouses the a(ount
of NINE 7MNDRED ,DEN,NJ-KSECEN ,7OMS8ND 9ICE 7MNDRED 9OR,NJ-KSIA PESOS 8ND SECEN,NJ-KNINE CEN,8COS
)P2/;,"!=.;2* representin+ ie+a& coected rentas. ,his Court aso orders Mnion Ban' to return to the ,iu spouses a the certificates of
shares of stoc's and tites to rea properties of the ,iu spouses that were deposited to it or, in ieu thereof, to pa& the cost for the
repace(ent and issuance of new certificates and new tites over the said properties. ,his Court fina& orders Mnion Ban' to pa& the ,iu
spouses ONE 7MNDRED ,7OMS8ND PESOS )P#..,......* in (ora da(a+es, ONE 7MNDRED ,7OMS8ND PESOS )P#..,......*
in exe(par& da(a+es, 9I9,N ,7OMS8ND PESOS )P".,......* in attorne&6s fees and cost, %oth in the ower court and in this Court.
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On -une #, /..=, the Court of 8ppeas rendered the assaied Resoution den&in+ Mnion Ban'6s 1otion for Reconsideration.
7ence, this Petition for Review on Certiorari, wherein Mnion Ban' su%(its the foowin+ issues for the consideration of this Court>
#. D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CO11I,,ED ER8CE 8ND RECERSIBFE ERROR D7EN I, CONCFMDED
,78, ,7ERE DERE NO DOFF8R FO8NS OB,8INED BN J,7EK ,IM SPOMSES 9RO1 MNION B8NQ DESPI,E J,7EK CFE8R
8D1ISSION O9 INDEB,EDNESS BN ,7E BORRODER-1OR,E8EOR ,IM SPOMSES.
/. D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CO11I,,ED ER8CE 8ND RECERSIBFE ERROR D7EN I, NMFFI9IED ,7E
RES,RMC,MRINE 8EREE1EN, BE,DEEN ,IM SPOMSES 8ND MNION B8NQ 9OR F8CQ O9 C8MSE OR CONSIDER8,ION
DESPI,E ,7E 8D1ISSION O9 ,7E BORRODER-1OR,E8EOR ,IM SPOMSES O9 ,7E DME 8ND COFMN,8RN EAECM,ION
O9 S8ID RES,RMC,MRINE 8EREE1EN,.
0. D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CO11I,,ED ER8CE 8ND RECERSIBFE ERROR D7EN I, PER18NEN,FN
EN-OINED MNION B8NQ 9RO1 9ORECFOSINE ,7E 1OR,E8EE ON ,7E RESIDEN,I8F PROPER,N O9 ,7E ,IM SPOMSES
DESPI,E ,7E 8D1ISSION O9 NON-P8N1EN, O9 ,7EIR OM,S,8NDINE FO8N ,O ,7E B8NQ BN ,7E BORRODER-
1OR,E8EOR ,IM SPOMSES5
!. D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CO11I,,ED ER8CE 8ND RECERSIBFE ERROR D7EN I, 9IAED ,7E
81OMN, O9 ,7E OBFIE8,ION O9 RESPONDEN, SPOMSES CON,R8RN ,O ,7E PROCISIONS O9 ,7E PRO1ISSORN
NO,ES, RES,RMC,MRINE 8EREE1EN, 8ND J,7EK COFMN,8RN 8D1ISSIONS BN BORRODER-1OR,E8EOR ,IM
SPOMSES5
". D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CO11I,,ED ER8CE 8ND RECERSIBFE ERROR D7EN I, RMFED ON ,7E
8FFEEED REN,8FS P8ID BN RESPONDEN, SPOMSES DI,7OM, 8NN 98C,M8F B8SIS5
=. D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CO11I,,ED ER8CE 8ND RECERSIBFE ERROR D7EN I, 7EFD DI,7OM,
8NN 98C,M8F B8SIS ,78, ,7E FO8N OBFIE8,ION O9 ,IM SPOMSES 78S BEEN 9MFFN P8ID5
;. D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CO11I,,ED ER8CE 8ND RECERSIBFE ERROR D7EN I, 7EFD DI,7OM,
8NN 98C,M8F B8SIS ,78, ,7E 7OMSE INCFMDED IN ,7E RE8F ES,8,E 1OR,E8EE DID NO, BEFONE ,O ,7E ,IM
SPOMSES.
<. D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CO11I,,ED ER8CE 8ND RECERSIBFE ERROR IN ORDERINE MNION B8NQ
,O RE,MRN ,7E CER,I9IC8,ES O9 S78RES O9 S,OCQ 8ND ,I,FES ,O RE8F PROPER,IES O9 ,IM SPOMSES
8FFEEEDFN IN ,7E POSSESSION O9 MNION B8NQ.
2. D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CIOF8,ED ,7E DOC,RINES 8ND PRINCIPFES ON 8PPEFF8,E
-MRISDIC,ION.
#.. D7E,7ER OR NO, ,7E COMR, O9 8PPE8FS CO11I,,ED ER8CE 8ND RECERSIBFE ERROR IN 8D8RDINE D818EES
8E8INS, MNION B8NQ.
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#$@9&9t: o; t<e RestrA8tAr9%> A>reeme%t
8s previous& discussed, the Court of 8ppeas decared that the Restructurin+ 8+ree(ent is void on account of its %ein+ a faied novation of the
ori+ina oan a+ree(ents. ,he Court of 8ppeas expained that since there was no stipuation that the oans wi %e paid in doars, and since no doars ever
exchan+ed hands, the ori+ina oan transactions were in pesos.
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Proceedin+ fro( this pre(ise, the Court of 8ppeas hed that the Restructurin+ 8+ree(ent,
which was (eant to convert the oans into pesos, was unwarranted. ,hus, the Court of 8ppeas reasoned that>
Be that as it (a&, however, since the oans of the ,iu spouses fro( Mnion Ban' were peso oans fro( the ver& %e+innin+,
there is no need for conversion thereof. 8 Restructurin+ 8+ree(ent shoud (ere& confir( the oans, not add thereto. B& (a'in+ it
appear in the Restructurin+ 8+ree(ent that the oans were ori+ina& doar oans, Mnion Ban' overstepped its ri+hts as a creditor and
(ade unwarranted interpretations of the ori+ina oan a+ree(ent. ,his Court is not %ound %& such interpretations (ade %& Mnion
Ban'. Dhen one part& (a'es an interpretation of a contract, he (a'es it at his own ris', su%Iect to a su%se$uent chaen+e %& the other
part& and a (odification %& the courts. In this case, that part& (a'in+ the interpretation is not Iust an& part&, %ut a we entrenched and
hi+h& respected %an'. ,he (atter that was %ein+ interpreted was aso a financia (atter that is within the profound expertise of the
%an'. 8 nor(a person who does not possess the sa(e financia proficienc& or acu(en as that of a %an' wi (ost i'e& defer to the
atter6s estee(ed opinion, representations and interpretations. It has %een often stated in our Iurisprudence that %an's have a fiduciar&
dut& to their depositors. 8ccordin+ to the case of Ban0 o) the Phi&ippine Is&ans 3s. IAC (2.R. 'o. >71>:, *ebruar% :1, 177:*, Tas a
%usiness affected with pu%ic interest and %ecause of the nature of its functions, the %an' is under o%i+ation to treat the accounts of its
depositors with (eticuous care, awa&s havin+ in (ind the fiduciar& nature of their reationship.U Such fiduciar& reationship shoud aso
extend to the %an'6s %orrowers who, (ore often than not, are aso depositors of the %an'. Ban's are in the %usiness of endin+ whie
(ost %orrowers hard& 'now the %asics of such %usiness. Dhen transactin+ with a %an', (ost %orrowers concede to the expertise of the
%an' and consider their procedures, pronounce(ents and representations as unassaia%e, whether such %e true or not. ,herefore, when
there is a dou%tfu %an'in+ transaction, this Court wi tip the scaes in favor of the %orrower.
Eiven the a%ove ruin+, the Restructurin+ 8+ree(ent, therefore, %etween the ,iu spouses and Mnion Ban' does not operate to
supersede a previous oan docu(ents, as cai(ed %& Mnion Ban'. But the said Restructurin+ 8+ree(ent, as it was crafted %& Mnion
Ban', does not (ere& confir( the ori+ina oan of the ,iu spouses %ut atte(pts to create a novation of the said ori+ina oan that is not
cear& authori:ed %& the de%tors and that is not supported %& an& cause or consideration. 8ccordin+ to 8rtice #/2/ of the New Civi
Code, in order that an o%i+ation (a& %& extin+uished %& another which su%stitutes the sa(e, it is i(perative that it %e so decared in
une$uivoca ter(s, or that the od and the new o%i+ations %e on ever& point inco(pati%e with each other. Such is not the case in this
instance. No vaid novation of the ori+ina o%i+ation too' pace. Even +rantin+ ar+uendo that there was a novation, the sudden chan+e in
the ori+ina a(ount of the oan to the new a(ount decared in the Restructurin+ 8+ree(ent is not supported %& an& cause or
consideration. Mnder 8rtice #0"/ of the Civi Code, contracts without cause, or with unawfu cause, produce no effect whatever. 8
contract whose cause did not exist at the ti(e of the transaction is void. 8ccordin+&, 8rtice #/2; of the New Civi Code (andates that, if
the new o%i+ation is void, the ori+ina one sha su%sist, uness the parties intended that the for(er reation shoud %e extin+uished at an&
event. Since the Restructurin+ 8+ree(ent is void and since there was no intention to extin+uish the ori+ina oan, the ori+ina oan sha
su%sist.
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Mnion Ban' does not dispute that the spouses ,iu received the oaned a(ount of MSY0,=0/,...... in Phiippine pesos, not doars, at the prevaiin+
exchan+e rate of MSY#ZP/=.
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7owever, Mnion Ban' cai(s that this does not chan+e the true nature of the oan as a forei+n currenc& oan,
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and proceeded
to iustrate in its 1e(orandu( that the spouses ,iu o%tained favora%e interest rates %& optin+ to %orrow in doars )%ut receivin+ the e$uivaent peso a(ount* as
opposed to %orrowin+ in pesos.
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De a+ree with Mnion Ban' on this point. 8thou+h indeed, the spouses ,iu received peso e$uivaents of the %orrowed a(ounts, the oan docu(ents
presented as evidence, i.e., the pro(issor& notes,
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expressed the a(ount of the oans in MS doars and not in an& other currenc&. ,his cear& indicates that
the spouses ,iu were %ound to pa& Mnion Ban' in doars, the a(ount stipuated in said oan docu(ents. ,hus, %efore the Restructurin+ 8+ree(ent, the
spouses ,iu were %ound to pa& Mnion Ban' the a(ount of MSY0,=0/,...... pus the interest stipuated in the pro(issor& notes, without convertin+ the sa(e to
pesos. ,he spouses ,iu, who are in the construction %usiness and appear to %e deain+ pri(ari& in Phiippine currenc&, shoud therefore purchase the
necessar& a(ount of doars to pa& Mnion Ban', who coud have Iust& refused pa&(ent in an& currenc& other than that which was stipuated in the pro(issor&
notes.
De disa+ree with the findin+ of the Court of 8ppeas that the testi(on& of Fia Eutierre:, which (ere& attests to the fact that the spouses ,iu received
the peso e$uivaent of their doar oan, proves the intention of the parties that such oans shoud %e paid in pesos. If such had %een the intention of the parties,
the pro(issor& notes coud have easi& indicated the sa(e.
Such stipuation of pa&(ent in doars is not prohi%ited %& an& prevaiin+ aw or Iurisprudence at the ti(e the oans were ta'en. In this re+ard, 8rtice
#/!2 of the Civi Code provides>
8rt. #/!2. ,he pa&(ent of de%ts in (one& sha %e (ade in the currenc& stipuated, and if it is not possi%e to deiver such
currenc&, then in the currenc& which is e+a tender in the Phiippines.
8thou+h the Civi Code too' effect on AA>Ast 00, 1)50, Iurisprudence had uphed
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the continued effectivit& of Repu%ic 8ct No. "/2, which too' effect earier
on 4A%e 1/, 1)50. Pursuant to Section #
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of Repu%ic 8ct No. "/2, an& a+ree(ent to pa& an o%i+ation in a currenc& other than the Phiippine currenc& is void5
the (ost that coud %e de(anded is to pa& said o%i+ation in Phiippine currenc& to %e (easured in the prevaiin+ rate of exchan+e at the ti(e the o%i+ation was
incurred.
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On 4A%e 1), 1)/4, Repu%ic 8ct No. !#.. too' effect, (odif&in+ Repu%ic 8ct No. "/2 %& providin+ for severa exceptions to the nuit& of
a+ree(ents to pa& in forei+n currenc&.
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On Apr9@ 10, 1))0, Centra Ban' Circuar No. #0<2
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was issued, iftin+ forei+n exchan+e restrictions and i%erai:in+ trade in forei+n currenc&. In
cases of forei+n %orrowin+s and forei+n currenc& oans, however, prior Ban+'oSentra approva was re$uired. On 4A@: 5, 1))/, Repu%ic 8ct No. <#<0 too'
effect,
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express& repeain+ Repu%ic 8ct No. "/2 in Section /
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thereof. ,he sa(e statute aso expicit& provided that parties (a& a+ree that the o%i+ation or
transaction sha %e setted in a currenc& other than Phiippine currenc& at the ti(e of pa&(ent.
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8thou+h the Credit Fine 8+ree(ent %etween the spouses ,iu and Mnion Ban' was entered into on No=ember 21, 1))5,
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when the a+ree(ent to
pa& in forei+n currenc& was sti considered void under Repu%ic 8ct No. "/2, the actua oans,
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as shown in the pro(issor& notes, were ta'en out
fro( September 22, 1))7 to M$r8< 2/, 1))(, durin+ which ti(e Repu%ic 8ct No. <#<0 was aread& in effect. In Gnite Coconut P&anters Ban0 3. Be&uso,
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we
hed that>
JOKpenin+ a credit ine does not create a credit transaction of oan or .utuu., since the for(er is (ere& a preparator& contract to the
contract of oan or .utuu.. Mnder such credit ine, the %an' is (ere& o%i+ed, for the considerations specified therefor, to end to the
other part& a(ounts not exceedin+ the i(it provided. ,he credit transaction thus occurred not when the credit ine was opened, %ut rather
when the credit ine was avaied of. x x x.
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7avin+ esta%ished that Mnion Ban' and the spouses ,iu vaid& entered into doar oans, the concusion of the Court of 8ppeas that there were no
doar oans to novate into peso oans (ust necessari& fai.
Si(iar&, the Court of 8ppeas6 pronounce(ent that the novation was not supported %& an& cause or consideration is i'ewise incorrect. ,his
concusion su++ests that when the parties si+ned the Restructurin+ 8+ree(ent, Mnion Ban' +ot so(ethin+ out of nothin+ or that the spouses ,iu received no
%enefit fro( the restructurin+ of their existin+ oan and was (ere& ta'en advanta+e of %& the %an'. It is i(portant to note at this point that in the deter(ination
of the nuit& of a contract %ased on the ac' of consideration, the de%tor has the %urden to prove the sa(e. 8rtice #0"! of the Civi Code provides that
TJaKthou+h the cause is not stated in the contract, it is presu(ed that it exists and is awfu, uness the de%tor proves the contrar&.U
In the case at %ar, the Restructurin+ 8+ree(ent was si+ned at the hei+ht of the financia crisis when the Phiippine peso was rapid&
depreciatin+. Since the spouses ,iu were %ound to pa& their de%t in doars, the cost of purchasin+ the re$uired currenc& was i'ewise swift& increasin+. If the
parties did not enter into the Restructurin+ 8+ree(ent in Dece(%er #222 and the peso continued to deteriorate, the a%iit& of the spouses ,iu to pa& and the
a%iit& of Mnion Ban' to coect woud %oth have i((ense& suffered. 8s shown %& the evidence presented %& Mnion Ban', the peso indeed continued to
deteriorate, ci(%in+ to MSY#ZP"...# on Dece(%er /....
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7ence, in order to ensure the sta%iit& of the oan a+ree(ent, Mnion Ban' and the spouses ,iu
a+reed in the Restructurin+ 8+ree(ent to pe+ the principa oan at P#".,0=!,<..... and the unpaid interest at P",...,.......
Before this Court, the spouses ,iu %eated& ar+ue that their consent to the Restructurin+ 8+ree(ent was vitiated %& fraud and (ista'e, ae+in+ that
)#* the Restructurin+ 8+ree(ent did not ta'e into consideration their su%stantia pa&(ent in the a(ount of P!.,!!;,#<".=. %efore its execution5 and )/* the doar
oans had aread& %een redeno(inated in #22; at the rate of MSY#ZP/=.0!.
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De have painsta'in+& perused over the records of this case, %ut faied to find an& docu(entar& evidence of the ae+ed pa&(ent of P!.,!!;,#<".=.
%efore the execution of the Restructurin+ 8+ree(ent. In para+raph #= of their 8(ended Co(paint, the spouses ,iu ae+ed pa&(ent of P!.,!!;,#<".=. )or
interests %efore the conversion of the doar oan.
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,his was specifica& denied %& Mnion Ban' in para+raph " of its 8nswer with Countercai(.
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Respondent
Rodofo ,iu testified that the& (ade T". (iion pusU in cash pa&(ent pus Tother (onth& interest pa&(ents,U
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and identified a co(putation of pa&(ents dated
-u& #;, /../ si+ned %& hi(sef.
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Such co(putation, however, was never for(a& offered in evidence and was in an& event, who& sef-servin+.
8s re+ards the ae+ed redeno(ination of the sa(e doar oans in #22; at the rate of MSY#ZP/=.0!, the spouses ,iu (ere& reied on the foowin+
direct testi(on& of 7er%ert 7oIas, one of the witnesses of Mnion Ban'>
B> Coud &ou pease descri%e what 'ind of oan was the oan of the spouses Rodofo ,iu, the paintiffs in this caseX
8> It was ori+ina& an 9CDM, (eanin+ a doar oan.
B> Dhat happened to this 9CDM oan or doar oanX
8> ,he doar oan was re-deno(inated in view of the ver& unsta%e exchan+e of the doar and the peso at that ti(e,
B> Coud &ou sti re(e(%er what &ear this account was re-deno(inated fro( doar to pesoX
8> I thin0 it was on the &ear #22;.
B> Coud J&ouK sti re(e(%er what was then the prevaiin+ exchan+e rate %etween the doar and the peso at that &ear #22;X
8> Nes. I have here the ist of the doar exchan+e rate fro( -anuar& #2<; )sic*. It was P/=.0! per doar.
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Neither part& presented an& docu(entar& evidence of the ae+ed redeno(ination in #22;. Respondent Rodofo ,iu did not even (ention it in his
testi(on&. 9urther(ore, 7oIas was o%vious& uncertain in his state(ent that said redeno(ination was (ade in #22;.
8s pointed out %& the tria court, the Restructurin+ 8+ree(ent, %ein+ notari:ed, is a pu%ic docu(ent enIo&in+ a pri.a )aciepresu(ption of
authenticit& and due execution. Cear and convincin+ evidence (ust %e presented to overco(e such e+a presu(ption.
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,he spouses ,iu, who attested
%efore the notar& pu%ic that the Restructurin+ 8+ree(ent Tis their own free and vountar& act and deed,U
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faied to present sufficient evidence to prove
otherwise. It is difficut to %eieve that the spouses ,iu, veteran %usiness(en who operate a (uti-(iion peso co(pan&, woud si+n a ver& i(portant docu(ent
without fu& understandin+ its contents and conse$uences.
,his Court therefore rues that the Restructurin+ 8+ree(ent is vaid and, as such, a vaid and %indin+ novation of oans of the spouses ,iu entered
into fro( Septe(%er //, #22; to 1arch /=, #22< which had a tota a(ount of MSY0,=0/,.......
#$@9&9t: o; t<e Fore8@osAre o; Mort>$>e
,he spouses ,iu chaen+e the vaidit& of the forecosure of the (ort+a+e on two +rounds, cai(in+ that> )#* the de%t had aread& %een fu& paid5 and
)/* the& are not the owners of the i(prove(ents on the (ort+a+ed propert&.
4.5 A!!e#aton o$ $"!! pa'%ent o$ the %ort#a#e debt
In the precedin+ discussion, we have rued that the Restructurin+ 8+ree(ent is a vaid and %indin+ novation of oans of the spouses ,iu entered into
fro( Septe(%er //, #22; to 1arch /=, #22< in the tota a(ount of MSY0,=0/,....... ,hus, in order that the spouses ,iu can %e hed to have fu& paid their
oan o%i+ation, the& shoud present evidence showin+ their pa&(ent of the tota restructured a(ount under the Restructurin+ 8+ree(ent which
was P#.!,==<,;!#.... 8s we have discussed a%ove, however, whie respondent Rodofo ,iu appeared to have identified durin+ his testi(on& a co(putation
dated -u& #;, /../ of the ae+ed pa&(ents (ade to Mnion Ban',
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the sa(e was not for(a& offered in evidence. 8pp&in+ Section 0!, Rue #0/
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of the
Rues of Court, such co(putation cannot %e considered %& this Court. De have hed that a for(a offer is necessar& %ecause Iud+es are (andated to rest their
findin+s of facts and their Iud+(ent on& and strict& upon the evidence offered %& the parties at the tria. It has severa functions> )#* to ena%e the tria Iud+e to
'now the purpose or purposes for which the proponent is presentin+ the evidence5 )/* to aow opposin+ parties to exa(ine the evidence and o%Iect to its
ad(issi%iit&5 and )0* to faciitate review %& the appeate court, which wi not %e re$uired to review docu(ents not previous& scrutini:ed %& the tria court.
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1oreover, even if such co(putation were ad(itted in evidence, the sa(e is sef-servin+ and cannot %e +iven pro%ative wei+ht. In the case at %ar, the
records do not contain even a sin+e receipt evidencin+ pa&(ent to Mnion Ban'.
,he Court of 8ppeas, however, hed that severa pa&(ents (ade %& the spouses ,iu had %een ad(itted %& Mnion Ban'. Indeed, Section ##, Rue <
of the Rues of Court provides that an ae+ation not specifica& denied is dee(ed ad(itted. In such a case, no further evidence woud %e re$uired to prove the
antecedent facts. De shoud therefore exa(ine which of the pa&(ents specified %& the spouses ,iu in their 8(ended Co(paint
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were not specifica& denied
%& Mnion Ban'.
,he ae+ations of pa&(ent are (ade in para+raphs #= to /# of the 8(ended Co(paint>
#=. Before conversion of the doar oan into a peso oanJ,K the spouses ,iu had aread& paid the defendant %an' the a(ount of
P!.,!!;,#<".=. for interests5
#;. On 8u+ust 0, #222 and 8u+ust #/, #222, paintiffs (ade pa&(ents in the a(ount of P#",...,......5
#<. In order to essen the o%i+ation of paintiffs, the (other of paintiff Rodofo ,. ,iu, paintiff -uanita ,. ,iu, executed a deed
of dacion in pa&(ent in favor of defendant invovin+ her #. parces of and ocated in Fa%an+on, Ce%u Cit& for the a(ount
of P/",#0.,....... Cop& of the deed was attached to the ori+ina co(paint as 8nnex TCU5
#2. 9or the sa(e purpose, paintiffs spouses ,iu aso executed a deed of dacion in pa&(ent of their propert& ocated at 8.S.
9ortuna St., 1andaue Cit& for the a(ount of P0=,.<.,....... Cop& of the deed was attached to the ori+ina co(paint as 8nnex TDU5
/.. ,he tota a(ount of the two dacions in pa&(ent (ade %& the paintiffs was P=#,/#.,......5
/#. Paintiffs spouses ,iu aso (ade other pa&(ent of the a(ount of P#0,#2;,"!=.;2 as of 1a& <, /..#5
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In para+raphs ! and " of their 8nswer with Countercai(,
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Mnion Ban' specifica& denied the ae+ation in para+raph 2 of the Co(paint, %ut
ad(itted the ae+ations in para+raphs #;, #<, #2, /. and /# thereof. Para+raphs #<, #2 and /. ae+e the two deeds of acion. 7owever, these instru(ents
were aread& incorporated in the co(putation of the outstandin+ de%t )i.e., su%tracted fro( the confir(ed de%t of P#"",0=!,<.....*, as can %e +eaned fro( the
foowin+ provisions in the Restructurin+ 8+ree(ent>
a.* ,he oan o%i+ation to the B8NQ to %e restructured herein after deductin+ fro( the Inde%tedness of the BORRODER the
dacion price of the properties su%Iect of the Deeds of Dacion and addin+ to the Inde%tedness a the taxes, re+istration fees
and other expenses advanced %& the %an' in re+isterin+ the Deeds of Dacion, and aso addin+ to the Inde%tedness the
interest, and other fees and char+es incurred %& the Inde%tedness, a(ounts to ONE 7MNDRED 9OMR 1IFFION SIA
7MNDRED SIA,N-EIE7, ,7OMS8ND SECEN 7MNDRED 9OR,N-ONE PESOS )P7P#.!,==<,;!#...* )the T,O,8F
RES,RMC,MRED 81OMN,U*.
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8s re+ards the ae+ations of cash pa&(ents in para+raphs #; and /# of the 8(ended Co(paint, the date of the ae+ed pa&(ent is critica as to
whether the& were incuded in the Restructurin+ 8+ree(ent. ,he pa&(ent of P#",...,...... ae+ed in para+raph #; of the 8(ended Co(paint was
supposed& (ade on 8u+ust 0 and #/, #222. ,his pa&(ent was %efore the date of execution of the Restructurin+ 8+ree(ent on Dece(%er /#, #222, and is
therefore aread& factored into the restructured o%i+ation of the spouses.
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On the other hand, the pa&(ent of P#0,#2;,"!=.;2 ae+ed in para+raph /# of the
8(ended Co(paint was dated 1a&, <, /..#. Said pa&(ent cannot %e dee(ed incuded in the co(putation of the spouses ,iu6s de%t in the Restructurin+
8+ree(ent, which was assented to (ore than a &ear earier. ,his a(ount )P#0,#2;,"!=.;2* is even a%sent
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in the co(putation of Mnion Ban' of the
outstandin+ de%t, in contrast with the P#",...,...... pa&(ent which is incuded
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therein. Mnion Ban' did not expain this discrepanc& and (ere& reied on the
spouses ,iu6s faiure to for(a& offer supportin+ evidence. Since this pa&(ent ofP#0,#2;,"!=.;2 on 1a& <, /..# was ad(itted %& Mnion Ban' in their 8nswer
with Countercai(, there was no need on the part of the spouses ,iu to present evidence on the sa(e. Nonetheess, if we su%tract this fi+ure fro( the tota
restructured a(ount )P#.!,==<,;!#...* in the Restructurin+ 8+ree(ent, the resut is that the spouses ,iu sti owe Mnion Ban' P2#,!;#,#2!./#.
465 A!!e#aton o$ thrd part' o&nershp o$ the %prove%ents on the %ort#a#ed !ot
,he Court of 8ppeas, ta'in+ into consideration its earier ruin+ that the oan was aread& fu& paid, per(anent& enIoined Mnion Ban' fro(
forecosin+ the (ort+a+e on the propert& covered %& ,ransfer Certificate of ,ite No. ##2"# )Fot No. =02* and fro( pursuin+ other forecosure of (ort+a+es over
an& other properties of the spouses ,iu. ,he Court of 8ppeas rued>
,he pra&er, therefore, of the ,iu spouses to enIoin the forecosure of the rea estate (ort+a+e over their residentia propert&
has (erit. ,he oan has aread& %een fu& paid. It shoud aso %e noted that the house constructed on the residentia propert& of the ,iu
spouses is not re+istered in the na(e of the ,iu spouses, %ut in the na(e of -ose ,iu )Records, pp. #/;-#0/*, the father of appeant and
petitioner Rodofo ,iu, since #2<#. It had %een ae+ed %& the ,iu spouses that -ose ,iu died on Dece(%er #<, #2<0, and, that
conse$uent& upon his death, -uanita ,. ,iu, Rosainda ,. Qin+, Rufino ,. ,iu, Rosaie ,. Noun+ and Rosenda ,. ,iu %eca(e owners of
the house )Records, p. ##=*. ,his ae+ation has not %een su%stantia& denied %& Mnion Ban'. 8 that the Mnion Ban' presented to
refute this ae+ation are a ,ransfer Certificate of ,ite and a coupe of ,ax Decarations which do not indicate that a residentia house is
tited in the na(e of the ,iu spouses. In fact, in one of the ,ax Decarations, the (ar'et vaue of the i(prove(ents is worth on&
P0,=0..... Certain&, Mnion Ban' shoud have %een aware that this ,ax Decaration did not cover the residentia house. Mnion Ban'
shoud aso not re& on warranties (ade %& de%tors that the& are the owners of the propert&. ,he& shoud investi+ate such
representations. ,he courts have (ade consistent ruin+s that a %an', %ein+ in the %usiness of endin+, is o%i+ated to verif& the true
ownership of the properties (ort+a+ed to the(. Conse$uent&, this Court per(anent& enIoins Mnion Ban' fro( forecosin+ the (ort+a+e
of the residentia propert& of the ,iu spouses which is covered %& ,ransfer Certificate of ,ite No. ##2"# and fro( pursuin+ other
forecosure of (ort+a+es over an& other properties of the ,iu spouses. If a forecosure sae has aread& %een (ade over such properties,
this Court orders the canceation of such forecosure sae and the Certificate of Sae thereof if an& has %een issued, and the return of the
tite to the ,iu spouses.
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De disa+ree. Contrar& to the ruin+ of the Court of 8ppeas, the %urden to prove the spouses ,iu6s ae+ation @ that the& do not own the
i(prove(ents on Fot No. =02, despite havin+ such i(prove(ents incuded in the (ort+a+e @ is on the spouses ,iu the(seves. ,he funda(enta rue is that he
who ae+es (ust prove.
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,he ae+ations of the spouses ,iu on this (atter, which are found in para+raphs 0" to 02
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of their 8(ended Co(paint, were
specifica& denied in para+raph 2 of Mnion Ban'6s 8nswer with Countercai(.
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Mpon carefu exa(ination of the evidence, we find that the spouses ,iu faied to prove that the i(prove(ents on Fot No. =02 were owned %& third
persons. In fact, the evidence presented %& the spouses ,iu (ere& atte(pt to prove that the i(prove(ents on Fot No. =02 were decared for taxes in the na(e
of respondent Rodofo ,iu6s father, -ose ,iu, who ae+ed& died on Dece(%er #<, #2<0. ,here was no effort to show how their co-paintiffs in the ori+ina
co(paint, na(e& -uanita ,. ,iu, Rosainda ,. Qin+, Rufino ,. ,iu, Rosaie ,. Noun+ and Rosenda ,. ,iu, %eca(e co-owners of the house. ,he spouses ,iu did
not present evidence as to )#* who the heirs of -ose ,iu are5 )/* if -uanita ,. ,iu, Rosainda ,. Qin+, Rufino ,. ,iu, Rosaie ,. Noun+ and Rosenda ,. ,iu are
indeed incuded as heirs5 and )0* wh& petitioner Rodofo ,iu is not incuded as an heir despite %ein+ the son of -ose ,iu. No %irth certificate of the ae+ed heirs,
wi of the deceased, or an& other piece of evidence showin+ Iudicia or extraIudicia sette(ent of the estate of -ose ,iu was presented.
In i+ht of the fore+oin+, this Court therefore sets aside the ruin+ of the Court of 8ppeas per(anent& enIoinin+ Mnion Ban' fro( forecosin+ the
(ort+a+e on Fot No. =02, incudin+ the i(prove(ents thereon.
#$@9&9t: o; A@@e>e& Re%t$@ P$:me%ts o% t<e Propert9es Co%=e:e& to t<e B$%F =9$ Da)on en 2a#o
,he Court of 8ppeas found the ease contracts over the properties conve&ed to Mnion Ban' via acion en pa$o to %e void for %ein+ a+ainst pu%ic
poic&. ,he appeate court hed that since the Eenera Ban'in+ Faw of /...
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(andates %an's to i((ediate& dispose of rea estate properties that are not
necessar& for its own use in the conduct of its %usiness, %an's shoud not enter into two-&ear contracts of ease over properties paid to the( throu+h acion.
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,he Court of 8ppeas thus ordered Mnion Ban' to return the rentas it coected. ,o deter(ine the a(ount of rentas paid %& the spouses ,iu to Mnion Ban',
the Court of 8ppeas si(p& (utipied the (onth& renta stipuated in the Restructurin+ 8+ree(ent %& the stipuated period of the ease a+ree(ent>
9or the Fa%an+on propert&, the ,iu spouses paid rentas in the a(ount of P2<,...... per (onth for two &ears, or a tota
a(ount ofP/,0"/,....... 9or the 8.S. 9ortuna propert&, the ,iu spouses paid rentas in the a(ount of P#".,...... per (onth for two
&ears, or a tota a(ount of P0,=..,....... ,he tota a(ount in rentas paid %& the ,iu spouses to Mnion Ban' is 9ICE 1IFFION NINE
7MNDRED 9I9,N- ,DO ,7OMS8ND PESOS )P",2"/,......*. ,his Court finds that the return of this a(ount to the ,iu spouses is
caed for since it wi %etter serve pu%ic poic&. ,hese properties that were +iven %& the ,iu spouses to Mnion Ban' as pa&(ent shoud
not %e used %& the atter to extract (ore (one& fro( the for(er. ,his situation is anao+ous to havin+ a de%tor pa& interest for a de%t
aread& paid. Instead of easin+ the properties, Mnion Ban' shoud have instructed the ,iu spouses to vacate the said properties so that it
coud dispose of the(.
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,he Court of 8ppeas co((itted a serious error in this re+ard. 8s pointed out %& petitioner Mnion Ban', the spouses ,iu did not present an& proof of
the ae+ed renta pa&(ents. Not a sin+e receipt was for(a& offered in evidence. ,he (ere stipuation in a contract of the (onth& rent to %e paid %& the
essee is certain& not evidence that the sa(e has %een paid. Since the spouses ,iu faied to prove their pa&(ent to Mnion Ban' of the a(ount
of P",2"/,......, we are constrained to reverse the ruin+ of the Court of 8ppeas orderin+ its return.
Even assu(in+ ar$ueno that the spouses ,iu had du& proven that it had paid rent to Mnion Ban', we nevertheess disa+ree with the findin+ of the
Court of 8ppeas that it is a+ainst pu%ic poic& for %an's to enter into two-&ear contracts of ease of properties ceded to the( throu+h acion en pa$o. ,he
provisions of aw cited %& the Court of 8ppeas, na(e& Sections "# and "/ of the Eenera Ban'in+ Faw of /..., (ere& provide>
SEC,ION "#. Cei&in$ on In3est.ents in Certain Assets. R 8n& %an' (a& ac$uire rea estate as sha %e necessar& for its own
use in the conduct of its %usiness> Pro3ie, howe3er, ,hat the tota invest(ent in such rea estate and i(prove(ents thereof, incudin+
%an' e$uip(ent, sha not exceed fift& percent )".L* of co(%ined capita accounts> Pro3ie, )urther, ,hat the e$uit& invest(ent of a %an'
in another corporation en+a+ed pri(ari& in rea estate sha %e considered as part of the %an'Ps tota invest(ent in rea estate, uness
otherwise provided %& the 1onetar& Board.
SEC,ION "/. Ac1uisition o) Rea& Estate b% -a% o) !atis)action o) C&ai.s. R Notwithstandin+ the i(itations of the precedin+
Section, a %an' (a& ac$uire, hod or conve& rea propert& under the foowin+ circu(stances>

"/.#. Such as sha %e (ort+a+ed to it in +ood faith %& wa& of securit& for de%ts5

"/./. Such as sha %e conve&ed to it in satisfaction of de%ts previous& contracted in the course of its deain+s5 or

"/.0. Such as it sha purchase at saes under Iud+(ents, decrees, (ort+a+es, or trust deeds hed %& it and such as it sha
purchase to secure de%ts due it.

8n& rea propert& ac$uired or hed under the circu(stances enu(erated in the a%ove para+raph sha %e disposed of %& the
%an' within a period of five )"* &ears or as (a& %e prescri%ed %& the 1onetar& Board> Pro3ie, howe3er, ,hat the %an' (a&, after said
period, continue to hod the propert& for its own use, su%Iect to the i(itations of the precedin+ Section.
Section "/./ conte(pates a acion en pa$o. ,hus, Section "/ undenia%& +ives %an's five &ears to dispose of properties conve&ed to the( in
satisfaction of de%ts previous& contracted in the course of its deain+s, uness another period is prescri%ed %& the 1onetar& Board. 9urther(ore, there appears
to %e no e+a i(pedi(ent for a %an' to ease the rea properties it has received in satisfaction of de%ts, within the five-&ear period that such %an' is aowed to
hod the ac$uired reat&.
De do not dispute the interpretation of the Court of 8ppeas that the purpose of the aw is to prevent the concentration of and hodin+s in a few
hands, and that %an's shoud not %e aowed to hod on to the properties conte(pated in Section "/ %e&ond the five-&ear period uness such %an' has exerted
its %est efforts to dispose of the propert& in +ood faith %ut faied. 7owever, in$uiries as to whether the %an's exerted %est efforts to dispose of the propert& can
on& %e done if said %an's fai to dispose of the sa(e within the period provided. Such in$uir& is further(ore irreevant to the issues in the case at %ar.
Or&er to RetAr% Cert9;98$tes A@@e>e&@: 9% +%9o% B$%F5s Possess9o%
In the 8(ended Co(paint, the spouses ,iu ae+ed
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that the& deivered severa certificates and tites to Mnion Ban' pursuant to a 1e(orandu( of
8+ree(ent. ,hese certificates and tites were not su%Iected to an& ien in favor of Mnion Ban', %ut the atter ae+ed& continued to hod on to said properties.
,he R,C faied to rue on this issue. ,he Court of 8ppeas, tac'in+ this issue for the first ti(e, rued in favor of the ,iu spouses and ordered the
return of these certificates and tites. ,he appeate court added that if Mnion Ban' can no on+er return these certificates or tites, it shoud shouder the cost for
their repace(ent.
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Mnion Ban', assertin+ that the 1e(orandu( of 8+ree(ent did not, in fact, push throu+h, denies havin+ received the su%Iect certificates and
tites. Mnion Ban' added that even assu(in+ ar$ueno that it is in possession of said docu(ents, the Restructurin+ 8+ree(ent itsef aows such possession.
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,he evidence on hand ends credi%iit& to the ae+ation of Mnion Ban' that the 1e(orandu( of 8+ree(ent did not push throu+h. ,he cop& of the
1e(orandu( of 8+ree(ent attached %& the spouses ,iu the(seves to their ori+ina co(paint did not %ear the si+nature of an& representative fro( Mnion Ban'
and was not notari:ed.
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De, however, a+ree with the findin+ of the Court of 8ppeas that despite the faiure of the 1e(orandu( of 8+ree(ent to push throu+h, the
certificates and tites (entioned therein do appear to %e in the possession of Mnion Ban'. 8s hed %& the Court of 8ppeas>
Fast&, this Court wi order, as it here%& orders, Mnion Ban' to return to the ,iu spouses a the certificates of shares of stoc's
and tites to rea properties of the ,iu spouses in its possession. Mnion Ban' cannot den& possession of these ite(s since it had (ade
Iudicia ad(issions of such possession in their docu(ent entited TRep& to Paintiffs6 re$uest for 8d(issionU )records, pp. /#=-/#;*. Dhie
in that docu(ent, Mnion Ban' on& ad(itted to the possession of four rea estate tites, this Court is convinced that a the certificates and
tites (entioned in the unconsu((ated 1e(orandu( of 8+ree(ent )Records, pp. /##-/#0* were +iven %& the ,iu spouses to Mnion Ban'
for appraisa. ,his findin+ is further %ostered %& the ad(ission of the Mnion Ban' that it 'ept the tites for safe'eepin+ after it reIected the
1e(orandu( of 8+ree(ent. Since Mnion Ban' reIected these certificates and tites of propert&, it shoud return the said ite(s to the ,iu
spouses. If Mnion Ban' can no on+er return these certificates and tites or if it has (ispaced the(, it sha shouder the cost for the
repace(ent and issuance of new certificates and new tites over the said properties.
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8s re+ards Mnion Ban'6s ar+u(ent that it has the ri+ht to retain said docu(ents pursuant to the Restructurin+ 8+ree(ent, it is referrin+ to para+raph
##)%*, which provides that>
##. Effects of Defaut @ Dhen the BORRODER is in defaut, such defaut sha have the foowin+ effects, aternative, concurrent and
cu(uative with each other>
x xxx
)%* ,he B8NQ sha %e entited to a the re(edies provided for and further sha have the ri+ht to effect or app&
a+ainst the partia or fu pa&(ent of an& and a o%i+ations of the BORRODER under this Restructurin+ 8+ree(ent an& and a
(one&s or other properties of the BORRODER which, for an& reason, are or (a& hereafter co(e into the possession of the Ban' or
the Ban'6s a+ent. 8 such (one&s or properties sha %e dee(ed in the B8NQ6s possession as soon as put in transit to the B8NQ
%& (ai or carrier.
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In the first pace, notwithstandin+ the fore+oin+ provision, there is no cear intention on the part of the spouses ,iu to deiver the certificates over
certain shares of stoc' and rea properties as securit& for their de%t. 9ro( the ter(s of the 1e(orandu( of 8+ree(ent, these certificates were surrendered to
Mnion Ban' in order that the said properties descri%ed therein %e +iven their correspondin+ oan vaues re$uired for the restructurin+ of the spouses ,iu6s
outstandin+ o%i+ations. 7owever, in the event the parties fai to a+ree on the vauation of the su%Iect properties, Mnion Ban' a+rees to reease the sa(e.
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8s
Mnion Ban' itsef vehe(ent& ae+es, the 1e(orandu( of 8+ree(ent was not consu((ated. 1oreover, despite the fact that the Ban' was aware, or in
possession, of these certificates,
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at the ti(e of execution of the Restructurin+ 8+ree(ent, on& the (ort+a+e over the rea propert& covered %& ,C, No. ,-
##2"# was express& (entioned as a securit& in the Restructurin+ 8+ree(ent. In fact, in its Rep& to Re$uest for 8d(ission,
J#.0K
Mnion Ban' ad(itted that )#* the
tites to the rea properties were su%(itted to it for appraisa %ut were su%se$uent& reIected, and )/* no rea estate (ort+a+es were executed over the said
properties. ,here %ein+ no a+ree(ent that these properties sha secure respondents6 o%i+ation, Mnion Ban' has no ri+ht to retain said certificates.
8ssu(in+ ar$ueno that para+raph ##)%* of the Restructurin+ 8+ree(ent indeed aows the retention of the certificates )su%(itted to the Ban'
ostensi%& for safe'eepin+ and appraisa* as securit& for spouses ,iu6s de%t, Mnion Ban'6s position sti cannot %e uphed. Insofar as said provision per(its Mnion
Ban' to app& properties of the spouses ,iu in its possession to the fu or partia pa&(ent of the atter6s o%i+ations, the sa(e appears to i(pied& aow Mnion
Ban' to appropriate these properties for such purpose. 7owever, said provision cannot %e vaid& appied to the su%Iect certificates and tites without vioatin+
the prohi%ition a+ainst pactu.co..issoriu. contained in 8rtice /.<< of the Civi Code, to the effect that TJtKhe creditor cannot appropriate the thin+s +iven %&
wa& of ped+e or (ort+a+e, or dispose of the(J5K JaKn& stipuation to the contrar& is nu and void.U 8ppica%e %& anao+& to the present case is our ruin+
in 'a0pi& 3. Inter.eiate Appe&&ate Court,
[.07]
wherein propert& hed in trust was ceded to the trustee upon faiure of the %eneficiar& to answer for the a(ounts
owed to the for(er, to wit>
9or, there was to %e auto(atic appropriation of the propert& %& Cades in the event of faiure of petitioner to pa& the vaue of the advances.
,hus, contrar& to respondentPs (anifestations, a the ee(ents of a pactu.co..issoriu. were present> there was $ 8re&9tor-&ebtor
re@$t9o%s<9p%etween the parties5 the propert: D$s Ase& $s se8Ar9t: for the oan5 and, there was $Atom$t98 $ppropr9$t9o% %&
respondent of Puon+1auap 9% 8$se o; &e;$A@t of petitioner.
J#."K
)E(phases suppied.*
,his Court therefore affir(s the order of the Court of 8ppeas for Mnion Ban' to return to the spouses ,iu a the certificates of shares of stoc' and
tites to rea properties that were su%(itted to it or, in ieu thereof, to pa& the cost for the repace(ent and issuance of new certificates and new tites over the
said properties.
#$@9&9t: o; t<e AD$r& o; "$m$>es
,he Court of 8ppeas awarded da(a+es in favor of the spouses ,iu %ased on its ta'in+ Iudicia notice of the ae+ed expoitation %& (an& %an's of
the 8sian financia crisis, as we as the forecosure of the (ort+a+e of the ho(e of the spouses ,iu despite the ae+ed fu pa&(ent %& the atter. 8s re+ards the
ae+ed (anipuation of the financia crisis, the Court of 8ppeas hed>
8s a fina note, this Court o%serves the irre+uarit& in the circu(stances Jsurroundin+K doar oans +ranted %& %an's ri+ht
%efore or durin+ the 8sian financia crisis. It is of co((on 'nowed+e that (an& %an's, around that ti(e, active& pursued and convinced
de%tors to (a'e doar oans or to convert their peso oans to doar oans ae+ed& %ecause of the ower interest rate of doar oans. ,his
is a hi+h& suspect %ehavior on the part of the %an's %ecause it is irrationa for the %an's to vountari& and active& proffer a conversion
that woud +ive the( su%stantia& ess inco(e. In the +uise of %enevoence, (an& %an's were a%e to convince %orrowers to (a'e doar
oans or to convert their peso oans to doar oans. Soon thereafter, the 8sian financia crisis hit, and (an& %orrowers were sadded with
oans that %aooned to twice or thrice the a(ount of their ori+ina oans. ,his court ta'es Iudicia notice of these events or (atters which
are of pu%ic 'nowed+e. It is inconceiva%e that the %an's were unaware of the oo(in+ 8sian financia crisis. Bein+ in the forefront of the
financia word and havin+ access to financia data that were not avaia%e to the avera+e %orrower, the %an's were in such a position that
the& had a hi+her vanta+e point with respect to the financia andscape over their avera+e cients. ,he cavaier wa& with which %an's
expoited and (anipuated the situation is a(ost too papa%e that the& open& and una%ashed& struc' heav& %ows on the Phiippine
econo(&, industries and %usinesses. ,he %an's have a fiduciar& dut& to their cients and to the 9iipino peope to %e transparent in their
deain+s and to (a'e sure that the atter6s interest are not preIudiced %& the for(er6s interest. 8rtice #002 of the New Civi Code provides
that the faiure to discose facts, when there is a dut& to revea the(, as when the parties are %ound %& confidentia reations, constitutes
fraud. Mndou%ted&, the %an's and their cients are %ound %& confidentia reations. ,he a(ost perfect ti(in+ of the %an's in convincin+
their cients to shift to doar oans Iust when the 8sian financia crisis struc' indicates that the %an's not on& faied to discose facts to
their cients of the oo(in+ crisis, %ut aso su++ests of the insidious desi+n to ta'e advanta+e of these undiscosed facts.
J#.=K
De have aread& hed that the forecosure of the (ort+a+e was warranted under the circu(stances. 8s re+ards the ae+ed expoitation %& (an&
%an's of the 8sian financia crisis, this Court rues that the +enerai:ation (ade %& the appeate court is unfounded and cannot %e the su%Iect of Iudicia
notice. TIt is axio(atic that +ood faith is awa&s presu(ed uness convincin+ evidence to the contrar& is adduced. It is incu(%ent upon the part& ae+in+ %ad
faith to sufficient& prove such ae+ation. 8%sent enou+h proof thereof, the presu(ption of +ood faith prevais.U
J#.;K
,he ae+ed insidious desi+n of (an& %an's
to %etra& their cients durin+ the 8sian financia crisis is certain& not of pu%ic 'nowed+e. ,he deetion of the award of (ora and exe(par& da(a+es in favor of
the spouses ,iu is therefore in order.

3*EREFORE, the Petition is PAR!'A. GRAN!E". ,he -oint Decision of the Court of 8ppeas in C8-E.R. CC No. ..#2. and C8-E.R. SP No.
../"0 dated 9e%ruar& /#, /..= is here%& AFF'RME" insofar as it ordered petitioner Mnion Ban' of the Phiippines to return to the respondent spouses Rodofo
,. ,iu and Cictoria N. ,iu a the certificates of shares of stoc' and tites to rea properties that were su%(itted to it or, in ieu thereof, to pa& the cost for the
repace(ent and issuance of new certificates and new tites over the said properties. ,he fore+oin+ -oint Decision is here%& SE! AS'"E> )#* insofar as it
per(anent& enIoined Mnion Ban' of the Phiippines fro( forecosin+ the (ort+a+e of the residentia propert& of respondent spouses Rodofo ,. ,iu and Cictoria
N. ,iu which is covered %& ,ransfer Certificate of ,ite No. ##2"#5 )/* insofar as it ordered Mnion Ban' of the Phiippines to return to the respondent spouses
Rodofo ,. ,iu and Cictoria N. ,iu the a(ount of P2/;,"!=.;2 representin+ ie+a& coected rentas5 and )0* insofar as it ordered Mnion Ban' of the Phiippines
to pa& the respondent spouses Rodofo ,. ,iu and Cictoria N. ,iuP#..,...... in (ora da(a+es, P#..,...... in exe(par& da(a+es, P".,...... in attorne&6s
fees and cost, %oth in the ower court and in this Court.
No further pronounce(ent as to costs.
SO OR"ERE".