LIQUIDATION Liquidation as opposed t rehabilitationPhilippine Veterans Bank Employees Union-NUBE vs.

Vega [GR 105364, 28 June 2001] Facts: Sometime in 1985, the Central Bank of the Philippines filed with Branch 39 of the Regional Trial Court of Manila a Petition for Assistance in the Liquidation of the Philippine Veterans Bank (Case SP-32311). Thereafter, the Philippine Veterans Bank Employees Union-N.U.B.E. (PVBEU-NUBE), represented by Perfecto V. Fernandez, filed claims for accrued and unpaid employee wages and benefits with said court in SP-3231. After lengthy proceedings, partial payment of the sums due to the employees were made. However, due to the piecemeal hearings on the benefits, many remain unpaid. On 8 March 1991, PVBEU-NUBE Fernandez moved to disqualify the Judge Benjamin Vega, Presiding Judge of Branch 39 of the Regional Trial Court of Manila, from hearing the above case on grounds of bias and hostility towards petitioners. On 2 January 1992, the Congress enacted Republic Act 7169 providing for the rehabilitation of the Philippine Veterans Bank. Thereafter, PVBEUNUBE and Fernandez filed with the labor tribunals their residual claims for benefits and for reinstatement upon reopening of the bank. Republic Act 7169 entitled "An Act To Rehabilitate The Philippine Veterans Bank Created Under Republic Act 3518, Providing The Mechanisms Therefor, And For Other Purposes", which was signed into law by President Corazon C. Aquino on 2 January 1992 and which was published in the Official Gazette on 24 February 1992, provides in part for the reopening of the Philippine Veterans Bank together with all its branches within the period of 3 years from the date of the reopening of the head office. The law likewise provides for the creation of a rehabilitation committee in order to facilitate the implementation of the provisions of the same. Pursuant to said RA 7169, the Rehabilitation Committee submitted the proposed Rehabilitation Plan of the PVB to the Monetary Board for its approval. Meanwhile, PVB filed a Motion to Terminate Liquidation of Philippine Veterans Bank dated 13 March 1992 with Judge Vega praying that the liquidation proceedings be immediately terminated in view of the passage of RA 7169. On 10 April 1992, the Monetary Board issued Monetary Board Resolution 348 which approved the Rehabilitation Plan submitted by the Rehabilitation Committee. Thereafter, the Monetary Board issued a Certificate of Authority allowing PVB to reopen. Sometime in May 1992, the Central Bank issued a certificate of authority allowing the PVB to reopen. Despite the legislative mandate for rehabilitation and reopening of PVB, Judge Vega continued with the liquidation proceedings of the bank. Moreover, PVBEU-NUBE and Fernandez learned that the Central Bank was set to order the payment and release of employee benefits upon motion of another lawyer, while PVBEU-NUBE's and Fernandez's claims have been frozen to their prejudice. On 3 June 1992, the liquidator filed A Motion for the Termination of the Liquidation Proceedings of the Philippine Veterans Bank with Judge Vega. PVBEUNUBE and Fernandez, on the other hand, filed the petition for Prohibition with Petition for Preliminary Injunction and application for Ex Parte Temporary Restraining Order. In a Resolution, dated 8 June 1992, the Supreme Court resolved to issue a Temporary Restraining Order enjoining the trial court from further proceeding with the case. On 22 June 1992, MOP Security & Detective Agency (VOPSDA) and its 162 security guards filed a Motion for Intervention with prayer that they be excluded from the operation of the Temporary Restraining Order issued by the Court. On 3 August 1992, the Philippine Veterans Bank opened its doors to the public and started regular banking operations. Issue: Whether a liquidation court can continue with liquidation proceedings of the Philippine Veterans Bank (PVB) when Congress had mandated its rehabilitation and reopening.

Held: The enactment of Republic Act 7169, as well as the subsequent developments has rendered the liquidation court functus officio. Consequently, Judge Vega has been stripped of the authority to issue orders involving acts of liquidation. Liquidation, in corporation law, connotes a winding up or settling with creditors and debtors. It is the winding up of a corporation so that assets are distributed to those entitled to receive them. It is the process of reducing assets to cash, discharging liabilities and dividing surplus or loss. On the opposite end of the spectrum is rehabilitation which connotes a reopening or reorganization. Rehabilitation contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its former position of successful operation and solvency. It is crystal clear that the concept of liquidation is diametrically opposed or contrary to the concept of rehabilitation, such that both cannot be undertaken at the same time. To allow the liquidation proceedings to continue would seriously hinder the rehabilitation of the subject bank. Actions to takeSEC. 30. Proceedings in Receivership and Liquidation. _ Whenever, upon report of the head of the supervising or examining department, the Monetary Board finds that a bank or quasi-bank: (a) is unable to pay its liabilities as they become due in the ordinary course of business: Provided, That this shall not include inability to pay caused by extraordinary demands induced by financial panic in the banking community; (b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its liabilities; or(c) cannot continue in business without involving probable losses to its depositors or creditors; or (d) has willfully violated a cease and desist order under Section 37 that has become final, involving acts or transactions which amount to fraud or a dissipation of the assets of the institution; in which cases, the Monetary Board may summarily and without need for prior hearing forbid the institution from doing business in the Philippines and designate the Philippine Deposit Insurance Corporation as receiver of the banking institution. For a quasi-bank, any person of recognized competence in banking or finance may be designated as receiver. The receiver shall immediately gather and take charge of all the assets and liabilities of the institution, administer the same for the benefit of its creditors, and exercise the general powers of a receiver under the Revised Rules of Court but shall not, with the exception of administrative expenditures, pay or commit any act that will involve the transfer or disposition of any asset of the institution: Provided, That the receiver may deposit or place the funds of the institution in nonspeculative investments. The receiver shall determine as soon as possible, but not later than ninety (90) days from take-over, whether the institution may be rehabilitated or otherwise placed in such a condition so that it

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may be permitted to resume business with safety to its depositors and creditors and the general public: Provided, That any determination for the resumption of business of the institution shall be subject to prior approval of the Monetary Board. If the receiver determines that the institution cannot be rehabilitated or permitted to resume business in accordance with the next preceding paragraph, the Monetary Board shall notify in writing the board of directors of its findings and direct the receiver to proceed with the liquidation of the institution. The receiver shall: (1) file ex parte with the proper regional trial court, and without requirement of prior notice or any other action, a petition for assistance in the liquidation of the institution pursuant to aliquidation plan adopted by the Philippine Deposit Insurance Corporation for general application to all closed banks. In case of quasi-banks, the liquidation plan shall be adopted by the Monetary Board. Upon acquiring jurisdiction, the court shall, upon motion by the receiver after due notice, adjudicate disputed claims against the institution, assist the enforcement of individual liabilities of the stockholders, directors and officers, and decide on other issues as may be material to implement the liquidation plan adopted. The receiver shall pay the cost of the proceedings from the assets of the institution. (2) convert the assets of the institution to money, dispose of the same to creditors and other parties, for the purpose of paying the debts of such institution in accordance with the rules on concurrence and preference of credit under the Civil Code of the Philippines and he may, in the name of the institution, and with the assistance of counsel as he may retain, institute such actions as may be necessary to collect and recover accounts and assets of, or defend any action against, the institution. The assets of an institution under receivership or liquidation shall be deemed in custodia legis in the hands of the receiver and shall, from the moment the institution was placed under such receivership or liquidation, be exempt from any order of garnishment, levy, attachment, or execution. The actions of the Monetary Board taken under this section or under Section 29 of this Act shall be final and executory, and may not be restrained or set aside by the court except on petition for certiorari on the ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction. The petition for certiorari may only be filed by the stockholders of record representing the majority

of the capital stock within ten (10) days from receipt by the board of directors of the institution of the order directing receivership, liquidation or conservatorship. The designation of a conservator under Section 29 of this Act or the appointment of a receiver under this section shall be vested exclusively with the Monetary Board. Furthermore, the designation of a conservator is not a precondition to the designation of a receiver. How assets are distributedSEC. 31. Distribution of Assets. _ In case of liquidation of a bank or quasi-bank, after payment of the cost of proceedings, including reasonable expenses and fees of the receiver to be allowed by the court, the receiver shall pay the debts of such institution, under order of the court, in accordance with the rules on concurrence and preference of credit as provided in the Civil Code. SEC. 32. Disposition of Revenues and Earnings. _ All revenues and earnings realized by the receiver in winding up the affairs and administering the assets of any bank or quasi-bank within the purview of this Act shall be used to pay the costs, fees and expenses mentioned in the preceding section, salaries of such personnel whose employment is rendered necessary in the discharge of the liquidation together with other additional expenses caused thereby. The balance of revenues and earnings, after the payment of all said expenses, shall form part of the assets available for payment to creditors. All claims file din liquidation court[G.R. No. 112830. February 1, 1996] JERRY ONG, petitioner, vs. COURT OF APPEALS and RURAL BANK OF OLONGAPO, INC., represented by its Liquidator, GUILLERMO G. REYES, JR. and Deputy Liquidator ABEL ALLANIGUE, respondents. DECISION BELLOSILLO, J.: The jurisdiction of a regular court over a bank undergoing liquidation is the issue in this petition for review of the decision of the Court of Appeals.[1] On 5 February 1991 Jerry Ong filed with the Regional Trial Court of Quezon City a petition for the surrender of TCT Nos. 13769 and 13770 pursuant to the provisions of Secs. 63(b) and 107 of P.D. 1529 [2] against Rural Bank of Olongapo, Inc. (RBO), represented by its liquidator Guillermo G. Reyes, Jr. and deputy liquidator Abel Allanigue.[3] The petition averred inter alia that 2. The RBO was the owner in fee simple of two parcels of land including the improvements thereon situated in Tagaytay City x x x particularly described in TCT Nos. 13769 and 13770 x x x 3. Said parcels of land were duly mortgaged by RBO in favor of petitioner on December 29, 1983 to guarantee the payment of Omnibus Finance, Inc., which is likewise now undergoing liquidation proceedings of its money market obligations to petitioner in the principal amount of P863,517.02 x x x 4. Omnibus Finance, Inc., not having seasonably settled its obligations to petitioner, the latter proceeded to effect the extrajudicial foreclosure of said mortgages, such that on March 23, 1984, the City Sheriff of Tagaytay City issued a Certificate of Sale in favor of petitioner xxx 5. Said Certificate of Sale x x x was duly registered with the Registry of Deeds of Tagaytay City on July 16, 1985, as shown in the certified true copies of the aforementioned titles x x x 6. Respondents failed to seasonably redeem said parcels of land, for which reason, petitioner has executed an Affidavit of Consolidation of Ownership which, to date, has not been

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submitted to the Registry of Deeds of Tagaytay City, in view of the fact that possession of the aforesaid titles or owners duplicate certificates of title remains with the RBO. 7. To date, petitioner has not been able to effect the registration of said parcels of land in his name in view of the persistent refusal of respondents, despite demand, to surrender RBOs copies of its owners certificates of title for the parcels of land covered by TCT Nos. 13769 and 13770.[4] Respondent RBO filed a motion to dismiss on the ground of res judicata alleging that petitioner had earlier sought a similar relief from Br. 18 of the Regional Trial Court ofTagaytay City, which case was dismissed with finality on appeal before the Court of Appeals. In a supplemental motion to dismiss, respondent RBO contended that it was undergoing liquidation and, pursuant to prevailing jurisprudence, it is the liquidation court which has exclusive jurisdiction to take cognizance of petitioners claim. On 7 May 1991 the trial court denied the motion to dismiss because it found that the causes of action in the previous and present cases were different although it was silent on the jurisdictional issue. Accordingly, respondent RBO filed a motion for reconsideration but the same was similarly rejected in the order of June 11, 1991 holding that: (a) subject parcels of land were sold to petitioner through public bidding on 23 March 1984 and, consequently, said pieces of realty were no longer part of the assets of respondent RBO; and, (b) in the same token, subject lots were no longer considered assets of respondent RBO when its liquidation was commenced by the Central Bank on 9 November 1984 and when the petition for assistance in its liquidation was approved by the Regional Trial Court of Olongapo City on 30 May 1985. On 5 July 1991 respondent RBO filed a manifestation and urgent motion for reconsideration arguing that the validity of the certificate of sale issued to petitioner was still at issue in another case between them and therefore the properties covered by said certificate were still part and parcel of its assets. Still unpersuaded by respondent RBOs arguments, the trial court denied reconsideration in its order of 18 September 1991 prompting the bank to elevate the case to respondent Court of Appeals by way of a petition for certiorari and prohibition. On 12 February 1992 respondent court rendered a decision annulling the challenged order of the court a quodated 19 June 1991 which sustained the jurisdiction of the trial court as well as the order of 18 September 1991 denying reconsideration thereof. Moreover, the trial judge was ordered to dismiss Civil Case No. Q-91-8019 without prejudice to the right of petitioner to file his claim in the liquidation proceedings (Sp. Proc. No. 170-0-85) pending before Br. 73 of the Regional Trial Court of Olongapo City.
[5]

In reversing the trial court the appellate court noted that Sec. 29, par. 3, of R.A. 265 as amended by P.D. 1827[6] does not limit the jurisdiction of the liquidation court to claims against the assets of the insolvent bank. The provision is general in that it clearly and unqualifiedly states that the liquidation court shall have jurisdiction to adjudicate disputed claims against the bank. Disputed claims refer to all claims, whether they be against the assets of the insolvent bank, for specific performance, breach of contract, damages, or whatever. To limit the jurisdiction of the liquidation court to those claims against the assets of the bank is to remove significantly and without basis the cases that may be brought against a bank in case of insolvency. Respondent court also noted that the certificates of title are still in the name of respondent RBO. As far as third persons are concerned (and these include claimants in the liquidation court), registration is the operative act which would convey title to the property. Petitioner submits that Civil Case No. Q-91-8019 may proceed independently of Sp. Proc. No. 170-0-85. He argues that the disputed parcels of land have been extrajudicially foreclosed and the corresponding certificate of sale issued in his favor; that considering that respondent RBO failed to redeem said properties he should now be allowed to consolidate his title thereto; that respondent RBOs mortgage of TCT Nos. 13769 and

13770 in favor of petitioner and its subsequent foreclosure are presumed valid and regular; and, that the liquidation court has no jurisdiction over subject parcels of land since they are no longer assets of respondent RBO. We find no merit in the petition. Section 29, par. 3, of R.A. 265 as amended by P. D. 1827 provides If the Monetary Board shall determine and confirm within (sixty days) that the bank x x x is insolvent or cannot resume business with safety to its depositors, creditors and the general public, it shall, if the public interest requires, order its liquidation, indicate the manner of its liquidation and approve a liquidation plan. The Central Bank shall, by the Solicitor General, file a petition in the Court of First Instance[7]reciting the proceedings which have been taken and praying the assistance of the court in the liquidation of such institution. The court shall have jurisdiction in the same proceedings to adjudicate disputed claims against the bank x x x and enforce individual liabilities of the stockholders and do all that is necessary to preserve the assets of such institution and to implement the liquidation plan approved by the Monetary Board (italics supplied). Applying the aforequoted provision in Hernandez v. Rural Bank of Lucena, Inc.,[8] this Court ruled The fact that the insolvent bank is forbidden to do business, that its assets are turned over to the Superintendent of Banks, as a receiver, for conversion into cash, and that its liquidation is undertaken with judicial intervention means that, as far as lawful and practicable, all claims against the insolvent bank should be filed in the liquidation proceeding (italics supplied). We explained therein the rationale behind the provision, i.e., the judicial liquidation is intended to prevent multiplicity of actions against the insolvent bank. It is a pragmatic arrangement designed to establish due process and orderliness in the liquidation of the bank, to obviate the proliferation of litigations and to avoid injustice and arbitrariness. The lawmaking body contemplated that for convenience only one court, if possible, should pass upon the claims against the insolvent bank and that the liquidation court should assist the Superintendent of Banks and regulate his operations. The phrase (T)he court shall have jurisdiction in the same proceedings to adjudicate disputed claims against the bank appears to have misled petitioner. He argues that to the best of his personal knowledge there is no pending action filed before any court or agency which contests his right over subject properties. Thus his petition before the Regional Trial Court of Quezon City cannot be considered a disputed claim as contemplated by law. It is not necessary that a claim be initially disputed in a court or agency before it is filed with the liquidation court. As may be gleaned in the Hernandez case, the term disputed claim in the provision simply connotes that [n] the course of the liquidation, contentious cases might arise wherein a full-dress hearing would be required and legal issues would have to be resolved. Hence, it would be necessary injustice to all concerned that a Court of First Instance (now Regional Trial Court) x x x assist and supervise the liquidation and x x x act as umpire or arbitrator in the allowance and disallowance of claims. Petitioner must have overlooked the fact that since respondent RBO is insolvent other claimants not privy to their transaction may be involved. As far as those claimants are concerned, in the absence of certificates of title in the name of petitioner, subject lots still form part of the assets of the insolvent bank. On the basis of the Hernandez case as well as Sec. 29, par. 3, of R.A. 265 as amended by P.D. 1827, respondent Court of Appeals was correct in holding that the Regional Trial Court of Quezon City, Br. 79, did not have jurisdiction over the petition, much less in ordering the dismissal of Civil Case No. Q-91-8019, without prejudice to petitioners right to file his claim in Sp. Proc. No. 170-0-85 before the Regional Trial Court of Olongapo City, Br. 73. WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals dated 12 February 1992 is AFFIRMED. Costs against petitioner. SO ORDERED. Manalo vs. Court of AppealsG.R. No. 141297, October 8, 2001 Facts:S. Villanueva Enterprises, represented by its president, Therese VillanuevaVargas, obtained a loan of three million pesos and one million pesos

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from therespondent PAIC Savings and Mortgage Bank and the Philippine AmericanInvestments Corporation (PAIC), respectively. To secure payment of both debts,Vargas executed in favor of the respondent and PAIC a joint first mortgage over twoparcels of land registered under her name. One of the lots is the subject of thepresent case. S. Villanueva Enterprises failed to settle its loan obligation.Accordingly, respondent instituted extrajudicial foreclosure proceedings over themortgaged lots and acquired the same as the highest bidder. After the lapse of oneyear, title was consolidated in respondent's name for failure of Vargas to redeem.Subsequently, Central Bank of the Philippines filed a petition for assistance inthe liquidation of the respondent PAIC with the Regional Trial Court. After a fewyears, respondent petitioned the Regional Trial Court of Pasay City for the issuanceof a writ of possession for the subject property. However, during the pendency of civil case for the issuance of a writ of possession, Vargas executed a deed of absolute sale selling, transferring, and conveying ownership of the disputed lot infavor of a certain Armando Angsico. Notwithstanding this sale, Vargas, stillrepresenting herself to be the lawful owner of the property, leased the same topetitioner Domingo R. Manalo. Later, Armando Angsico, as buyer of the property,assigned his rights therein to petitioner. The court subsequently issued the writ of possession but VillanuevaEnterprises and Vargas moved for its quashal. Petitioner, on the strength of thelease contract and deed of assignment made in his favor, submitted a permission tofile an exparte motion to intervene. Both motions were denied by the court. Courtof Appeals upheld the order of the lower court. Hence this petition.Issue:Whether or not the jurisdiction for the issuance of the writ of possession filedby the respondent bank is vested solely on the liquidation court.Held:No. Petition dismissed. Although the law provides that all claims against theinsolvent bank should be filed in the liquidation proceeding, such legal provisiononly finds operation in cases where there are claims against an insolvent bank. In fine, the exclusive jurisdiction of the liquidation court pertains only to theadjudication of claims against the bank. It does not cover the reverse situationwhere it is the bank which files a claim against another person or legal entity.Moreover, a bank which had been ordered closed by the monetary boardretains its juridical personality which can sue and be sued through its liquidator. Theonly limitation being that the prosecution or defense of the action must be donethrough the liquidator. Otherwise, no suit for or against an insolvent entity wouldprosper. In such situation, banks in liquidation would lose what justly belongs tothem through a mere technicality. Disposition of banking franchiseSEC. 33. Disposition of Banking Franchise. The Bangko Sentral may, if public interest so requires, award to an institution,upon such terms and conditions as the Monetary Board may approve, the banking franchise of a bank under liquidation to operate in the area where said bank or its branches were previously operating: Provided, That whatever proceeds may be realized from such award shall be subject to the appropriate exclusive disposition of the Monetary Board. Effects of ReceivershipRestriction on capacity to actSUPREME COURT FIRST DIVISION MIGUELA R. VILLANUEVA, RICHARD R. VILLANUEVA, and MERCEDITA VILLANUEVA-TIRADOS, Petitioners,

-versusG.R. No. 114870 May 26, 1995 COURT OF APPEALS, CENTRAL BANK OF THE PHILIPPINES, ILDEFONSO C. ONG, and PHILIPPINE VETERANS BANK, Respondents. x---------------------------------------------------x DECISION DAVIDE, JR., J.: Do petitioners have a better right than private respondent Ildefonso Ong to purchase from the Philippine Veterans Bank (PVB) the two parcels of land described as Lot No. 210-D-1 and Lot No. 210-D-2 situated at Muntinglupa, Metro Manila, containing an area of 529 and 300 square meters, respectively? This is the principal legal issue raised in this petition. chanroblespublishingcompany In its Decision of 27 January 1994 in CA-G.R. CV No. 35890, [1] the Court of Appeals held for Ong, while the trial court, Branch 39 of the Regional Trial Court (RTC) of Manila, ruled for the petitioners in its joint decision of 31 October 1991 in Civil Case No. 87-42550[2] and Sp. Proc. No. 85-32311. [3] The operative antecedent facts are set forth in the challenged decision as follows: chanroblespublishingcompany The disputed lots were originally owned by the spouses Celestino Villanueva and Miguela Villanueva, acquired by the latter during her husbands sojourn in the United States since 1968. Sometime in 1975, Miguela Villanueva sought the help of one Jose Viudez, the then Officer-in-Charge of the PVB branch in Makati if she could obtain a loan from said bank. Jose Viudez told Miguela Villanueva to surrender the titles of said lots as collaterals. And to further facilitate a bigger loan, Viudez, in connivance with one Andres Sebastian, swayed Miguela Villanueva to execute a deed of sale covering the two (2) disputed lots, which she did but without the signature of her husband Celestino. Miguela Villanueva, however, never got the loan she was expecting. Subsequent attempts to contact Jose Viudez proved futile, until Miguela Villanueva thereafter found out that new titles over the two (2) lots were already issued in the name of the PVB. It appeared upon inquiry from the Registry of Deeds that the original titles of these lots were canceled and new ones were issued to Jose Viudez, which in turn were again canceled and new titles issued in favor of Andres Sebastian, until finally new titles were issued in the name of PNB [should be PVB] after the lots were foreclosed for failure to pay the loan granted in the name of Andres Sebastian. Miguela Villanueva sought to repurchase the lots from the PVB after being informed that the lots were about to be sold at auction. The

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PVB told her that she can redeem the lots for the price of P110,416.00. Negotiations for the repurchase of the lots nevertheless were stalled by the filing of liquidation proceedings against the PVB on August of 1985. chanroblespublishingcompany Plaintiff-appellant [Ong] on the other hand expounds on his claim over the disputed lots in this manner: In October 1984, plaintiff-appellant offered to purchase two pieces of land that had been acquired by PVB through foreclosure. To back-up plaintiff-appellants offer he deposited the sum of P10,000.00. In 23 November 1984, while appellant was still abroad, PVB approved his subject offer under Board Resolution No. 1090184. Among the conditions imposed by PVB is that: The purchase price shall be P110,000.00 (less deposit of P10,000.00) payable in cash within fifteen (15) days from receipt of approval of the offer. In mid-April 1985, appellant returned to the country. He immediately verified the status of his offer with the PVB, now under the control of CB, where he was informed that the same had already been approved. On 16 April 1985, appellant formally informed CB of his desire to pay the subject balance provided the bank should execute in his favor the corresponding deed of conveyance. The letter was not answered. Plaintiff-appellant sent follow-up letters that went unheeded, the last of which was on 21 May 1987. On 26 May 1987, appellants payment for the balance of the subject properties were accepted by CB under Official Receipt #0816. chanroblespublishingcompany On 17 September 1987, plaintiff-appellant through his counsel, sent a letter to CB demanding for the latter to execute the corresponding deed of conveyance in favor of appellant. CB did not bother to answer the same. Hence, the instant case. While appellants action for specific performance against CB was pending, Miguela Villanueva and her children filed their claims with the liquidation court. (Appellants Brief, pp. 3-4). [4] From the pleadings, the following additional or amplificatory facts are established: The efforts of Miguela Villanueva to reacquire the property began on 8 June 1983 when she offered to purchase the lots for P60,000.00 with a 20% downpayment and the balance payable in five years on a quarterly amortization basis. [5] Her offer not having been accepted, [6] Miguela Villanueva increased her bid to P70,000.00. It was only at this time that she disclosed to the bank her private transactions with Jose Viudez.

[7] After this and her subsequent offers were rejected, [8] Miguela sent her sealed bid of P110,417.00 pursuant to the written advice of the vice president of the PVB. [9] The PVB was placed under receivership pursuant to Monetary Board (MB) Resolution No. 334 dated 3 April 1985 and later, under liquidation pursuant to MB Resolution No. 612 dated 7 June 1985. Afterwards, a petition for liquidation was filed with the RTC of Manila, which was docketed as Sp. Proc. No. 8532311 and assigned to Branch 39 of the said court. chanroblespublishingcompany On 26 May 1987, Ong tendered the sum of P100,000.00 representing the balance of the purchase price of the litigated lots. [10] An employee of the PVB received the amount conditioned upon approval by the Central Bank liquidator. [11] Ongs demand for a deed of conveyance having gone unheeded, he filed on 23 October 1987 with the RTC of Manila an action for specific performance against the Central Bank. [12] It was raffled to Branch 47 thereof. Upon learning that the PVB had been placed under liquidation, the presiding judge of Branch 47 ordered the transfer of the case to Branch 39, the liquidation court. [13] On 15 June 1989, then Presiding Judge Enrique B. Inting issued an order allowing the purchase of the two lots at the price of P150,000.00. [14] The Central Bank liquidator of the PVB moved for the reconsideration of the order asserting that it is contrary to law as the disposal of the lots should be made through public auction. [15] chanroblespublishingcompanyOn 26 July 1989, Miguela Villanueva filed her claim with the liquidation court. She averred, among others, that she is the lawful and registered owner of the subject lots which were mortgaged in favor of the PVB thru the falsification committed by Jose Viudez, the manager of the PVB Makati Branch, in collusion with Andres Sebastian; that upon discovering this fraudulent transaction, she offered to purchase the property from the bank; and that she reported the matter to the PC/INP Criminal Investigation Service Command, Camp Crame, and after investigation, the CIS officer recommended the filing of a complaint for estafa through falsification of public documents against Jose Viudez and Andres Sebastian. She then asked

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that the lots be excluded from the assets of the PVB and be conveyed back to her. [16] Later, in view of the death of her husband, she amended her claim to include her children, herein petitioners Mercedita Villanueva-Tirados and Richard Villanueva. [17] On 31 October 1991, the trial court rendered judgment [18] holding that while the board resolution approving Ongs offer may have created in his favor a vested right which may be enforced against the PVB at the time or against the liquidator after the bank was placed under liquidation proceedings, the said right was no longer enforceable, as he failed to exercise it within the prescribed 15day period. As to Miguelas claim, the court ruled that the principle of estoppel bars from questioning the transaction with Viudez and the subsequent transactions because she was a co-participant thereto, though only with respect to her undivided one-half () conjugal share in the disputed lots and her one-third (1/3) hereditary share in the estate of her husband. Nevertheless, the trial court allowed her to purchase the lots if only to restore their status as conjugal properties. It further held that by reason of estoppel, the transactions having been perpetrated by a responsible officer of the PVB, and for reasons of equity, the PVB should not be allowed to charge interest on the price of the lots; hence, the purchase price should be the PVBs claim as of 29 August 1984 when it considered the sealed bids, i.e., P110,416.20, which should be borne by Miguela Villanueva alone. chanroblespublishingcompany The dispositive portion of the decision of the trial court reads as follows: WHEREFORE, judgment is hereby rendered as follows: 1. Setting aside the order of this court issued on June 15, 1989 under the caption Civil Case No. 87-42550 entitled Ildefonso Ong vs. Central Bank of the Phils., et al.; 2. Dismissing the claim of Ildefonso Ong over the two parcels of land originally covered by TCT No. 438073 and 366364 in the names of Miguela Villanueva and Celestino Villanueva, respectively which are now covered by TCT No. 115631 and 115632 in the name of the PVB; 3. Declaring the Deed of Absolute Sale bearing the signature of Miguela Villanueva and the falsified signature of Celestino [sic] Viudez under date May 6, 1975 and all transactions and related documents executed thereafter referring to the two lots covered by the above stated titles as null and void; 4. Ordering the Register of Deeds of Makati which has

jurisdiction over the two parcels of land in question to re-instate in his land records, TCT No. 438073 in the name of Miguela Villanueva and TCT No. 366364 in the name of Celestino Villanueva who were the registered owners thereof, and to cancel all subsequent titles emanating therefrom; and 5. Ordering the Liquidator to reconvey the two lots described in TCT No. 115631 and 115632 and executing the corresponding deed of conveyance of the said lots upon the payment of One Hundred Ten Thousand Four Hundred Sixteen and 20/100 (P110,416.20) Pesos without interest and less the amount deposited by the claimant, Miguela Villanueva in connection with the bidding where she had participated and conducted by the PVB on August 29, 1984. chanroblespublishingcompanyCost against Ildefonso Ong and the PVB. SO ORDERED. [19] Only Ong appealed the Decision to the Court of Appeals. The appeal was docketed as CA-G.R. CV No. 35890. In its decision of 27 January 1994, the Court of Appeals reversed the decision of the trial court and ruled as follows: WHEREFORE, premises considered, the assailed decision is hereby REVERSED and SET ASIDE, and a new one entered ordering the disputed lots be awarded in favor of plaintiffappellant Ildefonso Ong upon defendantappellee Central Banks execution of the corresponding deed of sale in his favor. [20] chanroblespublishingcompany In support thereof, the Court of Appeals declared that Ongs failure to pay the balance within the prescribed period was excusable because the PVB neither notified him of the approval of his bid nor answered his letters manifesting his readiness to pay the balance, for which reason he could not have known when to reckon the 15-day period prescribed under its resolution. It went further to suggest that the Central Bank was in estoppel because it accepted Ongs late payment of the balance. As to the petitioners claim, the Court of Appeals stated: The conclusion reached by the lower court favorable to Miguela Villanueva is, as aptly pointed out by plaintiffappellant, indeed confusing. While the lower courts decision declared Miguela Villanueva as estopped from recovering her proportionate share and interest in the two (2) disputed lots for being a coparticipant in the fraudulent scheme perpetrated by Jose Viudez and Andres Sebastian a factual finding which We conform to and which Miguela Villanueva does not controvert in this appeal by not filing her appellees brief, yet it ordered the

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reconveyance of the disputed lots to Miguela Villanueva as the victorious party upon her payment of P110,416.20. Would not estoppel defeat the claim of the party estopped? If so, which in fact must be so, would it not then be absurd or even defiant for the lower court to finally entitle Miguela Villanueva to the disputed lots after having been precluded from assailing their subsequent conveyance in favor of Jose Viudez by reason of her own negligence and/or complicity therein? The intended punitive effect of estoppel would merely be a dud if this Court leaves the lower courts conclusion unrectified. [21] chanroblespublishingcompany Their Motion for Reconsideration[22] having been denied, [23] the petitioners filed this petition for review on certiorari. [24] Subsequently, the respondent Central Bank apprised this Court that the PVB was no longer under receivership or liquidation and that the PVB has been back in operation since 3 August 1992. It then prayed that it be dropped from this case or at least be substituted by the PVB, which is the real party in interest. [25] In its Manifestation and Entry of Appearance, the PVB declared that it submits to the jurisdiction of this Court and that it has no objection to its inclusion as a party respondent in this case in lieu of the Central Bank. [26] The petitioners did not object to the substitution. [27] Later, in its Comment dated 10 October 1994, the PVB stated that it submits to and shall abide by whatever judgment this Honorable Supreme Tribunal may announce as to whom said lands may be awarded without any touch of preference in favor of one or the other party litigant in the instant case. [28] In support of their contention that the Court of Appeals gravely erred in holding that Ong is better entitled to purchase the disputed lots, the petitioners maintain that Ong is a disqualified bidder, his bid of P110,000.00 being lower than the starting price of P110,417.00 and his deposit of P10,000.00 being less than the required 10% of the bid price; that Ong failed to pay the balance of the price within the 15-day period from notice of the approval of his bid; and that his offer of payment is ineffective since it was conditioned on PVBs execution of the deed of absolute sale in his favor. On the other hand, Ong submits that his offer, though lower than Miguela Villanuevas bid by P417.00, is much better, as the same is

payable in cash, while Villanuevas bid is payable in installment; that his payment could not be said to have been made after the expiration of the 15-day period because this period has not even started to run, there being no notice yet of the approval of his offer; and that he has a legal right to compel the PVB or its liquidator to execute the corresponding deed of conveyance. chanroblespublishingcompany There is no doubt that the approval of Ongs offer constitutes an acceptance, the effect of which is to perfect the contract of sale upon notice thereof to Ong. [29] The peculiar circumstances in this case, however, pose a legal obstacle to his claim of a better right and deny support to the conclusion of the Court of Appeals. Ong did not receive any notice of the approval of his offer. It was only sometime in mid-April 1985 when he returned from the United States and inquired about the status of his bid that he came to know of the approval. It must be recalled that the PVB was placed under receivership pursuant to the MB Resolution of 3 April 1985 after a finding that it was insolvent, illiquid, and could not operate profitably, and that its continuance in business would involve probable loss to its depositors and creditors. The PVB was then prohibited from doing business in the Philippines, and the receiver appointed was directed to immediately take charge of its assets and liabilities, as expeditiously as possible collect and gather all the assets and administer the same for the benefit of its creditors, exercising all the powers necessary for these purposes. Under Article 1323 of the Civil Code, an offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party before acceptance is conveyed. The reason for this is that: The contract is not perfected except by the concurrence of two wills which exist and continue until the moment that they occur. The contract is not yet perfected at any time before acceptance is conveyed; hence, the disappearance of either party or his loss of capacity before perfection prevents the contractual tie from being formed. [30] It has been said that where upon the insolvency of a bank a receiver therefor is appointed, the assets of the bank pass beyond its control into the possession and control of the receiver whose duty it is to administer to assets for the benefit of the creditors of the bank. [31] Thus, the appointment of a receiver operates to suspend the authority of the bank and of its directors and officers over its property and effects, such authority being reposed in the receiver, and in this respect, the receivership is equivalent to an injunction to restrain the

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bank officers from intermeddling with the property of the bank in any way. [32] chanroblespublishingcompany Section 29 of the Central Bank Act, as amended, provides thus: SEC. 29. Proceedings upon insolvency. Whenever, upon examination by the head of the appropriate supervising or examining department or his examiners or agents into the condition of any bank or non-bank financial intermediary performing quasi-banking functions, it shall be disclosed that the condition of the same is one of insolvency, or that its continuance in business would involve probable loss to its depositors or creditors, it shall be the duty of the department head concerned forthwith, in writing, to inform the Monetary Board of the facts. The Board may, upon finding the statements of the department head to be true, forbid the institution to do business in the Philippines and designate an official of the Central Bank or a person of recognized competence in banking or finance as receiver to immediately take charge of its assets and liabilities, as expeditiously as possible collect and gather all the assets and administer the same for the benefit of its creditors exercising all the powers necessary for these purposes. x x x The assets of an institution under receivership or liquidation shall be deemed in custodia legis in the hands of the receiver or liquidator and shall, from the moment of such receivership or liquidation, be exempt from any order or garnishment, levy, attachment, or execution. In a nutshell, the insolvency of a bank and the consequent appointment of a receiver restrict the banks capacity to act, especially in relation to its property. Applying Article 1323 of the Civil Code, Ongs offer to purchase the subject lots became ineffective because the PVB became insolvent before the banks acceptance of the offer came to his knowledge. Hence, the purported contract of sale between them did not reach the stage of perfection. Corollarily, he cannot invoke the resolution of the bank approving his bid as basis for his alleged right to buy the disputed properties. chanroblespublishingcompany Nor may the acceptance by an employee of the PVB of Ongs payment of P100,000.00 benefit him since the receipt of the payment was made subject to the approval by the Central Bank liquidator of the PVB thus: Payment for the purchase of the former property of Andres Sebastian per approved BR No. 10902-84 dated 11/13/84, subject to the approval of CB liquidator. [33] chanroblespublishingcompany

This payment was disapproved on the ground that the subject property was already in custodia legis, and hence, disposable only by public auction and subject to the approval of the liquidation court. [34] The Court of Appeals therefore erred when it held that Ong had a better right than the petitioners to the purchase of the disputed lots. Considering then that only Ong appealed the decision of the trial court, the PVB and the Central Bank, as well as the petitioners, are deemed to have fully and unqualifiedly accepted the judgment, which thus became final as to them for their failure to appeal. WHEREFORE, the instant Petition is GRANTED and the challenged Decision of the Court of Appeals of 27 January 1994 in CA-G.R. CV No. 35890 is hereby SET ASIDE. The Decision of Branch 39 of the Regional Trial Court of Manila of 31 October 1991 in Civil Case No. 87-42550 and Sp. Proc. No. 8532311 is hereby REINSTATED. Respondent Philippine Veterans Bank is further directed to return to private respondent Ildefonso C. Ong the amount of P100,000.00. No pronouncement as to costs. SUPREME COURT FIRST DIVISION MIGUELA R. VILLANUEVA, RICHARD R. VILLANUEVA, and MERCEDITA VILLANUEVA-TIRADOS, Petitioners, -versusG.R. No. 114870 May 26, 1995 COURT OF APPEALS, CENTRAL BANK OF THE PHILIPPINES, ILDEFONSO C. ONG, and PHILIPPINE VETERANS BANK, Respondents. x---------------------------------------------------x DECISION DAVIDE, JR., J.: Do petitioners have a better right than private respondent Ildefonso Ong to purchase from the Philippine Veterans Bank (PVB) the two parcels of land described as Lot No. 210-D-1 and Lot No. 210-D-2 situated at Muntinglupa, Metro Manila, containing an area of 529 and 300 square meters, respectively? This is the principal legal issue raised in this petition. chanroblespublishingcompany In its Decision of 27 January 1994 in CA-G.R. CV No. 35890, [1] the Court of Appeals held for Ong, while the trial court, Branch 39 of the Regional Trial Court (RTC) of Manila, ruled for the petitioners in its joint decision of 31 October 1991 in Civil Case No. 87-42550[2] and Sp. Proc. No. 85-32311. [3] The operative antecedent facts are set forth in the challenged decision as follows: chanroblespublishingcompany The disputed lots were originally owned by the spouses Celestino

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Villanueva and Miguela Villanueva, acquired by the latter during her husbands sojourn in the United States since 1968. Sometime in 1975, Miguela Villanueva sought the help of one Jose Viudez, the then Officer-in-Charge of the PVB branch in Makati if she could obtain a loan from said bank. Jose Viudez told Miguela Villanueva to surrender the titles of said lots as collaterals. And to further facilitate a bigger loan, Viudez, in connivance with one Andres Sebastian, swayed Miguela Villanueva to execute a deed of sale covering the two (2) disputed lots, which she did but without the signature of her husband Celestino. Miguela Villanueva, however, never got the loan she was expecting. Subsequent attempts to contact Jose Viudez proved futile, until Miguela Villanueva thereafter found out that new titles over the two (2) lots were already issued in the name of the PVB. It appeared upon inquiry from the Registry of Deeds that the original titles of these lots were canceled and new ones were issued to Jose Viudez, which in turn were again canceled and new titles issued in favor of Andres Sebastian, until finally new titles were issued in the name of PNB [should be PVB] after the lots were foreclosed for failure to pay the loan granted in the name of Andres Sebastian. Miguela Villanueva sought to repurchase the lots from the PVB after being informed that the lots were about to be sold at auction. The PVB told her that she can redeem the lots for the price of P110,416.00. Negotiations for the repurchase of the lots nevertheless were stalled by the filing of liquidation proceedings against the PVB on August of 1985. chanroblespublishingcompany Plaintiff-appellant [Ong] on the other hand expounds on his claim over the disputed lots in this manner: In October 1984, plaintiff-appellant offered to purchase two pieces of land that had been acquired by PVB through foreclosure. To back-up plaintiff-appellants offer he deposited the sum of P10,000.00. In 23 November 1984, while appellant was still abroad, PVB approved his subject offer under Board Resolution No. 1090184. Among the conditions imposed by PVB is that: The purchase price shall be P110,000.00 (less deposit of P10,000.00) payable in cash within fifteen (15) days from receipt of approval of the offer. In mid-April 1985, appellant returned to the country. He immediately verified the status of his offer with the PVB, now under the control of CB, where he was informed that the same had already been approved. On 16 April 1985, appellant formally informed CB of his desire to pay the subject balance provided the bank should execute in his favor the corresponding deed of conveyance. The letter was not

answered. Plaintiff-appellant sent follow-up letters that went unheeded, the last of which was on 21 May 1987. On 26 May 1987, appellants payment for the balance of the subject properties were accepted by CB under Official Receipt #0816. chanroblespublishingcompany On 17 September 1987, plaintiff-appellant through his counsel, sent a letter to CB demanding for the latter to execute the corresponding deed of conveyance in favor of appellant. CB did not bother to answer the same. Hence, the instant case. While appellants action for specific performance against CB was pending, Miguela Villanueva and her children filed their claims with the liquidation court. (Appellants Brief, pp. 3-4). [4] From the pleadings, the following additional or amplificatory facts are established: The efforts of Miguela Villanueva to reacquire the property began on 8 June 1983 when she offered to purchase the lots for P60,000.00 with a 20% downpayment and the balance payable in five years on a quarterly amortization basis. [5] Her offer not having been accepted, [6] Miguela Villanueva increased her bid to P70,000.00. It was only at this time that she disclosed to the bank her private transactions with Jose Viudez. [7] After this and her subsequent offers were rejected, [8] Miguela sent her sealed bid of P110,417.00 pursuant to the written advice of the vice president of the PVB. [9] The PVB was placed under receivership pursuant to Monetary Board (MB) Resolution No. 334 dated 3 April 1985 and later, under liquidation pursuant to MB Resolution No. 612 dated 7 June 1985. Afterwards, a petition for liquidation was filed with the RTC of Manila, which was docketed as Sp. Proc. No. 8532311 and assigned to Branch 39 of the said court. chanroblespublishingcompany On 26 May 1987, Ong tendered the sum of P100,000.00 representing the balance of the purchase price of the litigated lots. [10] An employee of the PVB received the amount conditioned upon approval by the Central Bank liquidator. [11] Ongs demand for a deed of conveyance having gone unheeded, he filed on 23 October 1987 with the RTC of Manila an action for specific performance against the Central Bank. [12] It was raffled to Branch 47 thereof. Upon learning that the PVB had

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been placed under liquidation, the presiding judge of Branch 47 ordered the transfer of the case to Branch 39, the liquidation court. [13] On 15 June 1989, then Presiding Judge Enrique B. Inting issued an order allowing the purchase of the two lots at the price of P150,000.00. [14] The Central Bank liquidator of the PVB moved for the reconsideration of the order asserting that it is contrary to law as the disposal of the lots should be made through public auction. [15] chanroblespublishingcompanyOn 26 July 1989, Miguela Villanueva filed her claim with the liquidation court. She averred, among others, that she is the lawful and registered owner of the subject lots which were mortgaged in favor of the PVB thru the falsification committed by Jose Viudez, the manager of the PVB Makati Branch, in collusion with Andres Sebastian; that upon discovering this fraudulent transaction, she offered to purchase the property from the bank; and that she reported the matter to the PC/INP Criminal Investigation Service Command, Camp Crame, and after investigation, the CIS officer recommended the filing of a complaint for estafa through falsification of public documents against Jose Viudez and Andres Sebastian. She then asked that the lots be excluded from the assets of the PVB and be conveyed back to her. [16] Later, in view of the death of her husband, she amended her claim to include her children, herein petitioners Mercedita Villanueva-Tirados and Richard Villanueva. [17] On 31 October 1991, the trial court rendered judgment [18] holding that while the board resolution approving Ongs offer may have created in his favor a vested right which may be enforced against the PVB at the time or against the liquidator after the bank was placed under liquidation proceedings, the said right was no longer enforceable, as he failed to exercise it within the prescribed 15day period. As to Miguelas claim, the court ruled that the principle of estoppel bars from questioning the transaction with Viudez and the subsequent transactions because she was a co-participant thereto, though only with respect to her undivided one-half () conjugal share in the disputed lots and her one-third (1/3) hereditary share in the estate of her husband. Nevertheless, the trial court allowed her to purchase the lots if only to restore their status as conjugal properties. It further held that by

reason of estoppel, the transactions having been perpetrated by a responsible officer of the PVB, and for reasons of equity, the PVB should not be allowed to charge interest on the price of the lots; hence, the purchase price should be the PVBs claim as of 29 August 1984 when it considered the sealed bids, i.e., P110,416.20, which should be borne by Miguela Villanueva alone. chanroblespublishingcompany The dispositive portion of the decision of the trial court reads as follows: WHEREFORE, judgment is hereby rendered as follows: 1. Setting aside the order of this court issued on June 15, 1989 under the caption Civil Case No. 87-42550 entitled Ildefonso Ong vs. Central Bank of the Phils., et al.; 2. Dismissing the claim of Ildefonso Ong over the two parcels of land originally covered by TCT No. 438073 and 366364 in the names of Miguela Villanueva and Celestino Villanueva, respectively which are now covered by TCT No. 115631 and 115632 in the name of the PVB; 3. Declaring the Deed of Absolute Sale bearing the signature of Miguela Villanueva and the falsified signature of Celestino [sic] Viudez under date May 6, 1975 and all transactions and related documents executed thereafter referring to the two lots covered by the above stated titles as null and void; 4. Ordering the Register of Deeds of Makati which has jurisdiction over the two parcels of land in question to re-instate in his land records, TCT No. 438073 in the name of Miguela Villanueva and TCT No. 366364 in the name of Celestino Villanueva who were the registered owners thereof, and to cancel all subsequent titles emanating therefrom; and 5. Ordering the Liquidator to reconvey the two lots described in TCT No. 115631 and 115632 and executing the corresponding deed of conveyance of the said lots upon the payment of One Hundred Ten Thousand Four Hundred Sixteen and 20/100 (P110,416.20) Pesos without interest and less the amount deposited by the claimant, Miguela Villanueva in connection with the bidding where she had participated and conducted by the PVB on August 29, 1984. chanroblespublishingcompanyCost against Ildefonso Ong and the PVB. SO ORDERED. [19] Only Ong appealed the Decision to the Court of Appeals. The appeal was docketed as CA-G.R. CV No. 35890. In its decision of 27 January 1994, the Court of Appeals reversed the decision of the trial court and ruled as follows: WHEREFORE, premises considered, the assailed decision is hereby REVERSED and SET ASIDE, and a new one entered

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ordering the disputed lots be awarded in favor of plaintiffappellant Ildefonso Ong upon defendantappellee Central Banks execution of the corresponding deed of sale in his favor. [20] chanroblespublishingcompany In support thereof, the Court of Appeals declared that Ongs failure to pay the balance within the prescribed period was excusable because the PVB neither notified him of the approval of his bid nor answered his letters manifesting his readiness to pay the balance, for which reason he could not have known when to reckon the 15-day period prescribed under its resolution. It went further to suggest that the Central Bank was in estoppel because it accepted Ongs late payment of the balance. As to the petitioners claim, the Court of Appeals stated: The conclusion reached by the lower court favorable to Miguela Villanueva is, as aptly pointed out by plaintiffappellant, indeed confusing. While the lower courts decision declared Miguela Villanueva as estopped from recovering her proportionate share and interest in the two (2) disputed lots for being a coparticipant in the fraudulent scheme perpetrated by Jose Viudez and Andres Sebastian a factual finding which We conform to and which Miguela Villanueva does not controvert in this appeal by not filing her appellees brief, yet it ordered the reconveyance of the disputed lots to Miguela Villanueva as the victorious party upon her payment of P110,416.20. Would not estoppel defeat the claim of the party estopped? If so, which in fact must be so, would it not then be absurd or even defiant for the lower court to finally entitle Miguela Villanueva to the disputed lots after having been precluded from assailing their subsequent conveyance in favor of Jose Viudez by reason of her own negligence and/or complicity therein? The intended punitive effect of estoppel would merely be a dud if this Court leaves the lower courts conclusion unrectified. [21] chanroblespublishingcompany Their Motion for Reconsideration[22] having been denied, [23] the petitioners filed this petition for review on certiorari. [24] Subsequently, the respondent Central Bank apprised this Court that the PVB was no longer under receivership or liquidation and that the PVB has been back in operation since 3 August 1992. It then prayed that it be dropped from this case or at least be substituted by the PVB, which is the real party in interest. [25]

In its Manifestation and Entry of Appearance, the PVB declared that it submits to the jurisdiction of this Court and that it has no objection to its inclusion as a party respondent in this case in lieu of the Central Bank. [26] The petitioners did not object to the substitution. [27] Later, in its Comment dated 10 October 1994, the PVB stated that it submits to and shall abide by whatever judgment this Honorable Supreme Tribunal may announce as to whom said lands may be awarded without any touch of preference in favor of one or the other party litigant in the instant case. [28] In support of their contention that the Court of Appeals gravely erred in holding that Ong is better entitled to purchase the disputed lots, the petitioners maintain that Ong is a disqualified bidder, his bid of P110,000.00 being lower than the starting price of P110,417.00 and his deposit of P10,000.00 being less than the required 10% of the bid price; that Ong failed to pay the balance of the price within the 15-day period from notice of the approval of his bid; and that his offer of payment is ineffective since it was conditioned on PVBs execution of the deed of absolute sale in his favor. On the other hand, Ong submits that his offer, though lower than Miguela Villanuevas bid by P417.00, is much better, as the same is payable in cash, while Villanuevas bid is payable in installment; that his payment could not be said to have been made after the expiration of the 15-day period because this period has not even started to run, there being no notice yet of the approval of his offer; and that he has a legal right to compel the PVB or its liquidator to execute the corresponding deed of conveyance. chanroblespublishingcompany There is no doubt that the approval of Ongs offer constitutes an acceptance, the effect of which is to perfect the contract of sale upon notice thereof to Ong. [29] The peculiar circumstances in this case, however, pose a legal obstacle to his claim of a better right and deny support to the conclusion of the Court of Appeals. Ong did not receive any notice of the approval of his offer. It was only sometime in mid-April 1985 when he returned from the United States and inquired about the status of his bid that he came to know of the approval. It must be recalled that the PVB was placed under receivership pursuant to the MB Resolution of 3 April 1985 after a finding that it was insolvent, illiquid, and could not operate profitably, and that its continuance in business would involve probable loss to its depositors and creditors. The PVB was then prohibited from doing business in

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the Philippines, and the receiver appointed was directed to immediately take charge of its assets and liabilities, as expeditiously as possible collect and gather all the assets and administer the same for the benefit of its creditors, exercising all the powers necessary for these purposes. Under Article 1323 of the Civil Code, an offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party before acceptance is conveyed. The reason for this is that: The contract is not perfected except by the concurrence of two wills which exist and continue until the moment that they occur. The contract is not yet perfected at any time before acceptance is conveyed; hence, the disappearance of either party or his loss of capacity before perfection prevents the contractual tie from being formed. [30] It has been said that where upon the insolvency of a bank a receiver therefor is appointed, the assets of the bank pass beyond its control into the possession and control of the receiver whose duty it is to administer to assets for the benefit of the creditors of the bank. [31] Thus, the appointment of a receiver operates to suspend the authority of the bank and of its directors and officers over its property and effects, such authority being reposed in the receiver, and in this respect, the receivership is equivalent to an injunction to restrain the bank officers from intermeddling with the property of the bank in any way. [32] chanroblespublishingcompany Section 29 of the Central Bank Act, as amended, provides thus: SEC. 29. Proceedings upon insolvency. Whenever, upon examination by the head of the appropriate supervising or examining department or his examiners or agents into the condition of any bank or non-bank financial intermediary performing quasi-banking functions, it shall be disclosed that the condition of the same is one of insolvency, or that its continuance in business would involve probable loss to its depositors or creditors, it shall be the duty of the department head concerned forthwith, in writing, to inform the Monetary Board of the facts. The Board may, upon finding the statements of the department head to be true, forbid the institution to do business in the Philippines and designate an official of the Central Bank or a person of recognized competence in banking or finance as receiver to immediately take charge of its assets and liabilities, as expeditiously as possible collect and gather all

the assets and administer the same for the benefit of its creditors exercising all the powers necessary for these purposes. x x x The assets of an institution under receivership or liquidation shall be deemed in custodia legis in the hands of the receiver or liquidator and shall, from the moment of such receivership or liquidation, be exempt from any order or garnishment, levy, attachment, or execution. In a nutshell, the insolvency of a bank and the consequent appointment of a receiver restrict the banks capacity to act, especially in relation to its property. Applying Article 1323 of the Civil Code, Ongs offer to purchase the subject lots became ineffective because the PVB became insolvent before the banks acceptance of the offer came to his knowledge. Hence, the purported contract of sale between them did not reach the stage of perfection. Corollarily, he cannot invoke the resolution of the bank approving his bid as basis for his alleged right to buy the disputed properties. chanroblespublishingcompany Nor may the acceptance by an employee of the PVB of Ongs payment of P100,000.00 benefit him since the receipt of the payment was made subject to the approval by the Central Bank liquidator of the PVB thus: Payment for the purchase of the former property of Andres Sebastian per approved BR No. 10902-84 dated 11/13/84, subject to the approval of CB liquidator. [33] chanroblespublishingcompany This payment was disapproved on the ground that the subject property was already in custodia legis, and hence, disposable only by public auction and subject to the approval of the liquidation court. [34] The Court of Appeals therefore erred when it held that Ong had a better right than the petitioners to the purchase of the disputed lots. Considering then that only Ong appealed the decision of the trial court, the PVB and the Central Bank, as well as the petitioners, are deemed to have fully and unqualifiedly accepted the judgment, which thus became final as to them for their failure to appeal. WHEREFORE, the instant Petition is GRANTED and the challenged Decision of the Court of Appeals of 27 January 1994 in CA-G.R. CV No. 35890 is hereby SET ASIDE. The Decision of Branch 39 of the Regional Trial Court of Manila of 31 October 1991 in Civil Case No. 87-42550 and Sp. Proc. No. 8532311 is hereby REINSTATED. Respondent Philippine Veterans Bank is further directed to return to private respondent Ildefonso C. Ong the amount of P100,000.00. chanroblespublishingcompany No pronouncement as to costs.

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Penalties for transaction after bank becomes insolventSec. 70. Penalty for Transactions After a Bank Becomes Insolvent. Any director or officer of any bank declared insolvent or placed under receivership by the Monetary Board who refuses to turn over the banks records and assets to the designated receivers, or who tampers with banks records, or who appropriates for himself for another party or destroys or causes the misappropriation and destruction of the banks assets, or who receives or permits or causes to be received in said bank any deposit, collection of loans and/or receivables, or who pays out or permits or causes to be transferred any securities or property of said bank shall be subject to the penal provisions of the New Central Bank Act. Effect on garnishment, levy on attachment or executionSee sec30 NCBA G.R. No. 73884 September 24, 1987 SPOUSES ROMEO LIPANA and MILAGROS LIPANA, petitioners, vs. DEVELOPMENT BANK OF RIZAL, respondent. Lipana v. Development Bank of Rizal, 154 SCRA 257 (1987) FACTS: - Spouses Lipana opened and maintained both time and savings deposits with Development Bank of Rizal.-When some of the Time Deposit Certificates matured, Sps. Lipana were not able to cash them but instead wereissued a manager's check which was dishonored upon presentment. Demands for the payment of both time andsavings deposits having failed, Sps Lipana filed a Complaint With Prayer For Issuance of a Writ of Preliminary Attachment for collection of a sum of money with damages Respondent Judge, ordered the issuance of a writ of attachment, and pursuant thereto, a writ of was issued in favor of the Sps. Lipana..-Meanwhile, the Monetary Board, finding that the condition Development Bank Of Rizal was one of insolvency andthat its continuance in business would result in probable loss to its depositors and creditors, decided to place itunder receivership-Sps. Lipana filed a Motion for Execution Pending Appeal, which was opposed by Development Bank Of Rizal-In an order, respondent judge ordered the issuance of a writ of execution.-Development Bank Of Rizal filed a Motion for Reconsideration of order and to Stay Writ of Execution, which,respondent judge stayed the execution.-When the motion to lift stay of execution was denied, the Sps. Lipana filed the instant petition. ISSUE: -Whether or not respondent judge could legally stay execution of judgment that has already become final andexecutory. HELD: - The rule that once a decision becomes final and executory, it is the ministerial duty of the court to order itsexecution, admits of certain exceptions as in cases of special and exceptional nature where it becomes imperativein the higher interest of justice to direct the suspension of its execution; whenever it is necessary to accomplish theaims of justice; or when certain facts and circumstances transpired after the judgment became final which couldrender the execution of the judgment unjust.In the instant case, the stay of the execution of judgment is warranted by the fact that respondent bank was placedunder receivership. To execute the judgment would unduly deplete the assets of respondent bank to the obviousprejudice of other depositors and creditors, after the Monetary Board has declared that a bank is insolvent and hasordered it to cease operations, the Board becomes the trustee of its assets for the equal benefit of all the creditors,including depositors. The assets of the insolvent banking institution are held in trust for the

equal benefit of all creditors, and after its insolvency, one cannot obtain an advantage or a preference over another by an attachment,execution or otherwise. Rural Bank of Olonggapo was the owner in fee simple of two parcels of land including the improvementsthereon situated in Tagaytay City.-Said parcels of land were duly mortgaged by RBO in favor Ong to guarantee the payment of OmnibusFinance, Inc., which is likewise now undergoing liquidation proceedings of its money market obligations to Ong.-Omnibus Finance, Inc., not having seasonably settled its obligations to Ong, the latter proceeded to effect theextrajudicial foreclosure of said mortgages, such that the City Sheriff of Tagaytay City issued a Certificate of Sale in favor of Ong.-Respondents failed to seasonably redeem said parcels of land, for which reason, Ong has executed an Affidavit of Consolidation of Ownership which, to date, has not been submitted to the Registry of Deeds of Tagaytay City, in view of the fact that possession of the aforesaid titles or owners duplicate certificates of titleremains with the RBO.-To date, Ong has not been able to effect the registration of said parcels of land in his name in view of thepersistent refusal of RBO, despite demand, to surrender RBOs copies of its owners certificates of title for theparcels of land.-RBO filed a motion to dismiss on the ground of res judicata alleging that petitioner had earlier sought a similar relief which case was dismissed with finality on appeal before the Court of Appeals.-RBO contended that it was undergoing liquidation and, pursuant to prevailing jurisprudence, it is the liquidationcourt which has exclusive jurisdiction to take cognizance of Ongs claim. PARAS, J.: This is a petition for review on certiorari of the August 30, 1985 Order of the Regional Trial Court of Pasig denying petitioners' Motion to Lift Stay of Execution in Civil Case No. 50802. During the period from 1982 to January, 1984, herein petitioners opened and maintained both time and savings deposits with the herein respondent Development Bank of Rizal all in the aggregate amount of P939,737.32. When some of the Time Deposit Certificates matured, petitioners were not able to cash them but instead were issued a manager's check which was dishonored upon presentment. Demands for the payment of both time and savings deposits having failed, on March 14, 1984, petitioners filed with the Regional Trial Court of Pasig a Complaint With Prayer For Issuance of a Writ of Preliminary Attachment for collection of a sum of money with damages, docketed therein as Civil Case No. 50802 (Record, pp. 3-11). Respondent Judge, in an Order dated March 19, 1984 (Ibid., p. 19-21), ordered the issuance of a writ of attachment, and pursuant thereto, a writ of attachment dated March 20, 1984 was issued in favor of the petitioners (Ibid., p. 33). On June 27, 1984, respondent bank filed its Answer ( Ibid., p. 58-61). On July 23, 1984, petitioners filed a Motion For Judgment on the Pleadings (Ibid., pp. 68-73), opposed by respondent bank (Ibid., pp. 74-76), but respondent judge, in a Decision dated November 13, 1984, rendered judgment in favor of petitioners. The dispositive portion of the said Decision, reads: IN VIEW OF ALL THE FOREGOING, the Court renders judgment in favor of the plaintiffs, ordering the defendant to pay the total sum of P939,737.32 plus stipulated interest; the sum equivalent to 15% of the amount due as attorney's fees; and costs of suit. The counterclaim is dismissed, for lack of merit. Meanwhile, on August 10, 1984, the Monetary Board, in its Resolution No. 1009, finding that the condition of respondent bank was one of insolvency and that its continuance in business would result in probable loss to its depositors and creditors, decided to place it under receivership (Rollo, p. 84). On December 7, 1984, petitioners filed a Motion for Execution Pending Appeal (Rcd., pp. 91-93), which was opposed by respondent bank (Ibid., p. 94-96). On

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December 27, 1984, petitioners filed their Reply to the opposition (Ibid., pp. 98-101), to which respondent bank filed its Rejoinder on January 1, 1985 (Ibid., pp. 102-105). In an order dated January 29, 1985, respondent judge ordered the issuance of a writ of execution (Ibid., p. 106). On February 11, 1985, respondent bank filed a Motion for Reconsideration of order dated January 29, 1985 and to Stay Writ of Execution (Ibid., pp. 109-110), opposed by petitioners (Ibid., p. 111) but in an Order dated March 6, 1985, respondent judge stayed the execution ( Ibid., p. 113). On August 7, 1985, petitioners filed a Motion to Lift Stay of Execution (Ibid., pp. 119-122), opposed by respondent bank (Ibid., pp. 123-127), and in an Order dated August 30, 1985, respondent judge denied the said motion ( Ibid., p. 130). Hence, the instant petition (Rollo, pp. 8-17). The Second Division of the Court, in a resolution dated May 5, 1986, resolved to require the respondent to comment (Ibid., p. 52). In compliance therewith, respondent bank filed its Comment on June 9, 1986 ( Ibid., pp. 53-58). The petition was given due course in a resolution dated August 11, 1986, and the parties were required to file their respective memoranda (Ibid., p. 61). In compliance therewith, petitioners filed their Memorandum on September 19, 1986 (Ibid., p. 63-75), while respondent bank filed its Memorandum on September 25, 1986 ( Ibid., pp. 76-83), and the case was considered submitted for deliberation in the Resolution dated October 8, 1986 (Ibid., p. 88) Petitioners raised the following issues: 1. Respondent judge cannot legally stay execution of judgement that has already become final and executory; 2. The placing under receivership by the Central Bank of the respondent bank, long after the complaint was filed removed it from the application of the doctrine in Re: Central Bank vs. Morfe (63 SCRA 113); 3. The filing of the complaint for a sum of money With damages against respondent bank and the subsequent attachment of its property in Pasig, Metro Manila long before the receivership took place render inapplicable the doctrine laid down by this Honorable Supreme Court in the said Morfe case; 4. The indefinite stay of execution without a ruling as to how long it will last, amounts to deprivation of petitioners of their property without due process of law. The instant petition is without merit. I. The main issue in this case is whether or not respondent judge could legally stay execution of judgment that has already become final and executory. The answer is in the affirmative. The rule that once a decision becomes final and executory, it is the ministerial duty of the court to order its execution, admits of certain exceptions as in cases of special and exceptional nature where it becomes imperative in the higher interest of justice to direct the suspension of its execution (Vecine vs. Geronimo, 59 O.G. 579); whenever it is necessary to accomplish the aims of justice (Pascual vs. Tan, 85 Phil. 164); or when certain facts and circumstances transpired after the judgment became final which could render the execution of the judgment unjust (Cabrias vs. Adil, 135 SCRA 354). In the instant case, the stay of the execution of judgment is warranted by the fact that respondent bank was placed under receivership. To execute the judgment would unduly deplete the assets of respondent bank to the obvious prejudice of other depositors and creditors, since, as aptly stated in Central Bank of the Philippines vs. Morfe (63 SCRA 114), after the Monetary Board has declared that a bank is insolvent and has ordered it to cease operations, the Board becomes the trustee of its assets for the equal benefit of all the creditors, including depositors. The assets of the insolvent banking institution are held in trust for the equal benefit of all creditors, and after its insolvency, one cannot obtain an advantage or a preference over another by an attachment, execution or otherwise. Moreover, it will be noted that respondent bank was placed under receivership on August 10, 1984, and the Decision of respondent judge is dated November 13, 1984. Accordingly, in line with the ruling in the aforesaid Morfe case, which reads:

The circumstance that the Fidelity Savings Bank, having stopped operations since February 19, 1969, was forbidden to do business (and that ban would include the payment of time deposits) implies that suits for the payment of such deposits were prohibited. What was directly prohibited should not be encompassed indirectly. ... petitioners 'complaint should have been dismissed. II. It is the contention of petitioners, however, that the placing under receivership of respondent bank long after the filing of the complaint removed it from the doctrine in the said Morfe case. This contention is untenable. The time of the filing of the complaint is immaterial. It is the execution that win obviously prejudice the other depositors and creditors. Moreover, as stated in the said Morfe case, the effect of the judgment is only to fix the amount of the debt, and not give priority over other depositors and creditors. III. Anent the contention of petitioners that the attachment of one of the properties of respondent bank was erased by virtue of the delayed receivership is to expand the power of the Central Bank, Suffice it to say that in the case ofCentral Bank of the Philippines, et al. vs. Court of Appeals, et al. (Resolution of this Court dated September 17, 1984 in G.R. No. 33302), wherein the original plaintiff Algue Inc. was able to obtain a writ of preliminary attachment against the original defendant Island Savings Bank, this Court refused to recognize any preference resulting from such attachment and ruled that after a declaration of insolvency, the remedy of the depositors is to intervene in the liquidation proceedings. IV. It is also contended by the petitioners that the indefinite stay of execution without ruling as to how long it will last, amounts to a deprivation of their property without due process of law. Said contention, likewise, is devoid of merit. Apart from the fact that the stay of execution is not only in accordance with law but is also supported by jurisprudence, such staying of execution is not without a time limit. In fact, the Monetary Board, in its resolution No. 4-33 approved the liquidation of respondent bank on April 26, 1985 and ordered, among others, the filing of a petition in the Regional Trial Court praying for assistance of said court in the liquidation of the bank. (Rollo, p. 81). The staying of the writ of execution will be lifted after approval by the liquidation court of the project of distribution, and the liquidator or his deputy will authorize payments to all claimants concerned in accordance with the approved project of distribution. PREMISES CONSIDERED, the instant petition is hereby DISMISSED. SO ORDERED. Stoppage of businessWhen a bank is prohibited from continuing to do business by the Central Bank and a receiver is appointed for such bank, that bank would not be able to donew business,i.e.,to grantnew loans or to acceptnew deposits. However,the receiver of the bank is in fact obliged to collect debts owing to the bank, which debts form part of theassets of the bank. The receiver must assemble the assets and pay the obligation of the bank under receivership, and take steps to prevent dissipation of suchassets. Accordingly, the receiver of the bank is obliged to collect pre-existing debts due to the bank, and in connection therewith, to foreclose mortgagessecuring such debt G.R. No. 97218 May 17, 1993 PROVIDENT SAVINGS BANK, petitioner, vs. COURT OF APPEALS, Former SPECIAL EIGHTH DIVISION and WILSON CHUA, respondents. Gonzales, Batiller, Bilog & Associates for petitioner. Resty R. Villanueva for private respondent. MELO, J.:

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The error, if error it be, of respondent Court of Appeals which petitioner seeks to rectify via the petitioner forcertiorari before us refers to respondent court's major conclusion arrived at in CA-G.R. CV No. 21312 (Javellana (P), Kalalo, Dayrit, JJ) barring petitioner from foreclosing the subject realty on account of prescription. Petitioner begs to differ, insisting that the period during which it was placed under receivership by the Central Bank is akin to a caso fortuito and should not thus be reckoned against it. Both petitioner and private respondent accepted the synthesized factual backdrop formulated by respondent court, to wit: This an appeal by both plaintiff and defendant from the decision of the Regional Trial Court of the National Capital Judicial 29 September 1988, in Civil Case No. 977-NW, which directed plaintiff-appellant to pay defendantappellant the personal obligation of the spouses Guarin to defendant-appellant in the amount of P62,500.00, together with the interest, penalties, and bank charges due thereon, and ordering defendant-appellant thereafter to: (1) release the real estate mortgage executed by the spouses Lorenzo K. Guarin and Liwayway J. Guarin in favor of defendant bank on 16 February 1967; (2) return to surrender to plaintiff-appellant, as successor-in-interest of the spouses Guarin, the latter's Owner's Duplicate of Title No. 177014; (3) pay plaintiff-appellant P20,000.00 as and for attorney's fees; and, (4) pay the costs of suit. The established fact are: On 16 February 1967, the spouses Lorenzo K. Guarin and Liwayway J. Guarin (Guarins) obtained a loan from defendant-appellant in the amount of P62,500.00 payable on or before 20 June 1967. As security for the loan, they executed a real estate mortgage in favor of defendantappellant over a parcel of land covered by TCT No. 177014. (Exhs. C and D). In September, 1972, defendant-appellant was placed under receivership by the Central Bank of the Philippines until 27 July 1981 when the receivership was set aside by the Honorable Supreme Court. On 11 December 1984, Lorenzo K. Guarin, in reply to the letter of latter's counsel informing that the mortgaged property would be sold at public auction on 27 December 1984, assured he and his wife had every intention of paying their obligation and requesting for a recomputation of their account and a postponement of the foreclosure sale. (Exh. 1). On 10 February 1986, the Guarins received a Statement of Account from defendant-appellant showing two outstanding accounts as of 15 February 1986. One was account of Lorenzo K. Guarin in the amount of P591,088.80, and the other was the account of L.K. Guarin Manufacturing Co., Inc. in the amount of P6,287,380.27 (Attachment to Exh. 2) On 26 February 1986, Lorenzo K. Guarin wrote defendant-appellant stating that he was ready and willing to pay his obligation in the total amount of P591,088.80 as recomputed by defendant-appellant whenever defendantappellant was already to receive the payment and inquiring as to when his mortgaged title would be available for him to pick up. (Exh. 2) Defendant-appellant replied on 27 February 1986 that Lorenzo K. Guarin may make payment at its office in Makati, Metro Manila, but that the mortgaged title could not be released to him even after the payment of the obligation of P591,088.80 as it also served as security for the indebtedness of L.Y. Guarin Manufacturing Co., Inc., to defendant-appellant which was undertaken by Lorenzo K. Guarin in his personal capacity and as president of the corporation. (Exh. 3) On 20 May 1986, plaintiff-appellant wrote defendantappellant saying that the mortgaged property of the Guarins had been offered to him as payment of the judgment he obtained against the Guarins in Civil Case No. Q-47465 entitled, "Wilson Chua vs. Lorenzo K. Guarin", and requesting for defendant-appellant's conformity to the assignment and expressing his willingness to pay for the obligation of Mr. Guarin so that the title could be released by defendant-appellant. (Exh. 4) On 10 July 1986, the Guarins and plaintiff-appellant executed a Deed of Absolute Sale With Assumption of Mortgaged whereby the Guarins sold the mortgaged property to Guarins sold the appellant for the sum of

P250,000.00 and plaintiff-appellant undertook to assume the mortgaged obligation of the Guarins with defendantappellant which as of 15 February 1985 amounted to P591,088.80.(Exh. B). On 5 August 1986, plaintiff-appellant informed defendantappellant that as a result of the judgment in Civil Case No. Q-47645, the mortgaged property had been sold to him by the Guarins, as evidenced by the Deed of Sale enclosed for guidance and information of defendant-appellant. He requested that he be allowed to pay the loan secured by the mortgaged, otherwise, he would be constrained to bring the matter to court. (Exh. 5) In reply, defendantappellant, on 11 August 1986, informed plaintiff-appellant that his request could be granted if he would settle the obligation of L.K. Guarin Manufacturing Co., Inc., as well and defendant-appellant's letter to Mr. Guarin dated 27 February 1986. (Exh. 6) On 3 August 1987, counsel for plaintiff-appellant addressed a letter to defendant-appellant informing that plaintiff-appellant had purchased the mortgaged property from the Guarin's and requesting that the owner's copy of TCT No. 177014 in the possession of defendant-appellant be released to him so that he can register the sale and have the title to the property transferred in his name. He likewise, informed defendant-appellant that it had lost whatever right or action had against the Guarins because of prescription. (Exh. E) Defendant-appellant replied on 10 August 1987 stating the reasons why they could not comply with plaintiff-appellant's demands. (Exh. F) On 21 August 1986, plaintiff-appellant filed a complaint against defendant-appellant to compel the latter to: (1) release the real estate mortgaged executed by the Guarins in favor of defendant-appellant on 16 February 1967; (2) return or surrender to plaintiff-appellant, as successor-in-interest of the Guarins, the latter's owner's duplicate of TCT No. 177014; and (3) pay plaintiffappellant P2,750,000.00 as actual and/or consequential damages, moral damages as may be proved during the trial, exemplary damages as may be reasonably assessed by the court, and attorney's fees of P50,00.00. Defendantappellant answered the complaint thereof and setting up special and affirmative defenses. After trial, judgment was rendered as stated in the opening paragraph hereof from which both parties appealed . . . . (pp. 35-37, Rollo.) Concerning the challenge posed by Provident Saving Bank against the personality of Wilson Chua to initiate the action to compel the release of the real estate mortgage and the delivery of the owner's duplicate copy of the certificate of title, respondent court noted that Wilson Chua can be considered a real-property-in-interest because he is the successor-in-interest of the Guarins who is naturally entitled to the realty as against the socalled right of Provident Savings Bank, as mortgagee, to foreclose the mortgage which had become stale through sheer lapse of time. The matter of novation in the form of substitution of the debtor without corresponding acquiesence of the mortgagee was viewed by respondent court to be legally inconsequential due to the demeanor of the mortgagee-bank in requiring Wilson Chua to pay the indebtedness of Lorenzo Guarin, posterior to the change of obligors, which act was construed as equivalent to consent. To the question of whether petitioner can still foreclose the subject realty, respondent court gave a negative response on account of the absence of proof to indicate that the bank was precluded from collecting indebtedness while it was under receivership from September, 1972 until July 20,1981. Thus, there was no legal interruption of the prescriptive period to speak of, said respondent court, which intervened between June 20, 1967, the date the mortgage matured, and June 20, 1977 the last day within which petitioner could have foreclosed the mortgage. Respondent court did not also heed the suggestion of the petitioner bank to interpret Wilson Chua's assumption of the mortgage on July 10, 1986 as tantamount to an explicit acknowledgement that the obligation was outstanding and had not yet prescribed. As a result of these observations, respondent court reversed the decision of the trial court insofar as it ordered Wilson Chua to pay the sum of P591,088.80 to the bank and affirmed the other dispositions made the court of origin (p. 42, Rollo).

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Following the unfavorable judgment, the bank filed a motion for reconsideration and a motion for new trial premised on newly discovered evidence relative to a statement of account unearthed by the bank's liaison officer from the loose folders on October 18, 1990 which it believed to be of legal significance to the case. But respondent court was unperturbed, observing that the vital piece of document could have been located in the course of trial had the slightest degree of prudence been exercised, considering that the statement of account sprouted the same day the liaison officer was advised to take an inventory of the records ( p. 45, Rollo). Hence, the petitioner at bar. Consistent with its theory premised on fuerza major, petitioner insists that it can not be blamed for not lifting a finger, so speak, during the period when it was enjoined by the Central Bank on September 15, 1972 from transacting business until this Court affirmed on July 27,1981 the decision of the Court of Appeals annulling the proscription against petitioner in Central Bank vs. Court of Appeals (106 SCRA 143 [1981]. We are not unaware of the rule laid down in Teal Motor Co. vs. Court of First Instance of Manila (51 Phil. 549 [1928]; Martin, Commentaries and Jurisprudence on the Philippine Commercial Laws, 1986 Revised ed., p.125) that the appointment of a receiver does not dissolve the corporation nor does it interfere with the exercise of its corporate rights. But this principles is, of course, applicable to a situation where there is no restraint imposed on the corporation, unlike in the case at bar where petitioner Provident Savings Bank was specifically forbidden and immobilized from doing business in the Philippines on September 15, 1972 through Monetary Board Resolution No. 1766 until 1981 when the decision in Central Bank vs. Court of Appeals (supra, at p. 150) was rendered. The question which immediately crops up is whether a foreclose proceeding falls within the purview of the phrase "doing business". In Mentholatum Co., Inc., et al. vs. Mangaliman, et al. (72 Phil. 524 [1941]; Moreno, Philippine Law Dictionary, Second ed., 1972, p. 186), the term was construed by Justice Laurel to refer to: . . . a continuity of commercial dealings and arrangements, and contemplates to that extent, the exercise of some of the words or the normally incident to, and in progressive prosecution of, the purpose ands object of its organizations. (p. 528; emphasis supplied.) Withal, we believe that a foreclose is deemed embraced by the phrase "doing business" as a preparatory measure to acquiring or holding property for petitioner as a saving bank under Section 34 of the General Banking Act. Like any other banking institution, petitioner is vested with the usual attributes and powers of a corporation under Section 36 of the Corporation Code (Vitug, Pandect of Commercial Law and Jurisprudence, 1990 ed., p. 475). The prerogative of a bank to foreclose is implicit from and is even necessary to enforce collection of secured debts under Section 36(11) and 45 of the Corporation Code, in conjunction with Section 29 of the General Banking Act (6 Fletcher, 206; Agbayani, Commentaries and Jurisprudence on the Commercial Laws of the Philippines, 1990 ed., p. 325). When a bank is prohibited to do business by the Central Bank and a receiver is appointed for such bank, that bank would not be able to do new business, i.e., to grant new loans or to accept new deposits. However, the receiver of the bank is obliged to collect debts owing to the bank, which debts form part of the assets of the bank. The receiver must assemble the assets and pay the obligation of the bank under receivership, and take steps to prevent dissipation of such assets. Accordingly, the the receiver of the bank is obliged to collect pre-existing debts due to the bank, and in connection therewith, to foreclose mortgages securing debts. This is not to ignore The Philippine Trust Co. vs. HSBC (67 Phil. 204 [1939], for in that case, the Court simply rejected the objections of certain creditors to the report of a receiver, that is, objections that the receiver did not report the collection made before the beginning of his receivership. It would follow that the bank is bound by the acts, or failure to act, of the receiver. At the same time, the receiver is liable to the bank for culpable or negligent failure to collect the assets of such bank and to safeguard said assets.

Having arrived at the conclusion that the foreclosure is part of bank's business activity which could not have been pursued by the receiver then because of the circumstances discussed in the Central Bank case, we are thus convinced that the prescriptive period was legally interrupted by fuerza mayor in 1972 on account on the prohibition imposed by the Monetary Board against petitioner from transacting business, until the directive of the board was nullified in 1981. Indeed, the period during which the obligee was prevented by a caso fortuito from enforcing his right is not reckoned against him (Article 1154, New Civil Code). When prescription is interrupted, all the benefits acquired so far from the possession cease and when prescription starts anew, it will be entirely a new one. This concept should not be equated with suspension where the past period is included in the computation being added to the period after prescription is resumed (4 Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, 1991 ed., pp. 18-19). Consequently, when the closure of was set aside in 1981, the period of ten years within which to foreclose under Article 1142 of the New Civil Code began to run again and, therefore, the action filed on August 21, 1986 to compel petitioner to release the mortgage carried with it the mistaken notion that petitioner's own suit foreclosure had prescribed. What exacerbates the situation is the letter of private respondent requesting petitioner on August 6, 1986 that private respondent be allowed to pay the loan secured by the mortgage as the result of the Deed of Sale executed by the Guarins in his favor on July 10, 1986 (pp. 36-37, Rollo). In point of law, this written communication is synonymous to an express acknowledgment of the obligation and had the effect of interrupting the prescription for the second time (Article 1155, New Civil Code; Osmea vs. Rama, 14 Phil. 99 [1909]; 4 Tolentino, supra at p. 50). And this piece of document necessarily estops private respondent from setting up prescription vis-a-vis his unfounded supposition that acknowledgment of the debt is of no moment because the right of the petitioner to foreclose had long prescribed in 1977 (p. 13, Petition; p. 7, Comment; pp. 19 and 58, Rollo). Contrary to respondent court's prescription of the existence of novation, the evidence at hand does not buttress a finding along this line from the mere fact that petitioner supposedly did not question the substitution when the bank reacted to private respondent's offer to pay the loan (p. 39, Rollo). What seems to have escaped respondent court's attention was the condition imposed by the petitioner that it will grant private respondent's request if the latter will also shoulder the obligation incurred by Lorenzo Guarin in his capacity as president of the corporation (p.37, Rollo). The consent of the petitioner to the substitution, as creditor, was thus erroneously appreciated. With the conclusions reached, we need not discuss the other issues raised in the petition. WHEREFORE, the petition is hereby GRANTED. The decision dated August 31, 1990, including the resolution dated February 6, 1991 of respondent court are hereby set aside and another one entered dismissing Wilson Chua's complaint. No special pronouncement is made to costs. Interests in bank depositsFidelity and Savings and Mortgage Bank c. Cenzon, 184 SCRA 141 (1990) FACTS: -Spouses Santiago deposited P50,000 with Fidelity Savings Bank under a savings account, and subsequently,another P50,000 under a certificate of time deposit.-Unfortunately, Fidelity Savings and Mortgage Bank was declared insolvent.-A resolution was issued by the Monetary Board prohibiting Fidelity to continue with its banking operations.-Pursuant also to the instructions of the Monetary Board, the Superintendent of Banks took charge in the name of the Monetary Board, the assets of Fidelity.-PDIC paid the spouses PP10,000 only, thereby leaving a balance of P90,000.-In another resolution, the Monetary Board directed the liquidation of the affairs of Fidelity.-While the liquidation proceedings is still pending, the spouses demanded the immediate payment of the

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savingsand time deposits.-When demand was not met, the spouses instituted an action for sum of money with damages against Fidelity. TC: -Ordered Fidelity to pay the spouses Santiago P90,000 with accrued INTEREST, as well as damages. ISSUE: -Whether or not the bank forbidden by the Central Bank to do business has obligation to pay interest on deposit. HELD: -Insolvent banking institution and closed by the Central Bank is not liable to pay interest on bank deposits.-It is settled jurisprudence that a banking institution which has been ordered close by the Central Bank cannot beheld liable to pay interest on bank deposits which accrued during the period when the bank is actually closed andnonoperational.-However, Fidelity Savings and Mortgage Bank is liable, ONLY for the interest on bank deposits which had alreadyaccrued until the time it was prohibited by the Central Bank to continue its banking operation.-The reason is that, a bank cannot be expected to pay interest of the said deposit when at the time the bank wasprohibited to transact business operation, the bank no longer derives income Rural Bank of Sta. Catalina v. Land Bank of the Philippines, 435 SCRA 183 (2004) FACTS: -Land Bank of the Philippines, filed a complaint against Sta. Catalina Rural Bank, Inc, for the collection of the sum of money, capitalized and accrued interests, penalties and surcharges, and for such other equitable reliefs.-On motion of the LBP, the trial court issued an Order declaring Sta. Catalina Rural Bank, Inc in default for itsfailure to file its answer to the complaint. Despite its receipt of the copy of the said order, Sta. Catalina RuralBank, Inc failed to file a motion to set aside the order of default. -In the meantime, the Monetary Board of the Central Bank of the Philippines approved the placement of the Sta.Catalina Rural Banks assets under receivership under Section 29 of Republic Act No. 7653, as recommended by itsSupervision and Management Section. The Philippine Deposit Insurance Corporation (PDIC) was designated asreceiver (conservator) of the Sta. Catalina Rural Bank, and the latter was prohibited from doing business in thePhilippines.-Unaware of the action of the Central Bank of the Philippines, the trial court, rendered judgment by default againstSta. Catalina Rural Bank ordering it to pay LBP.-Sta. Catalina Rural Bank, through the PDIC, appealed the decision to the Court of Appeals. PDIC submitted aReport to the Monetary Board of the Central Bank of the Philippines that Sta. Catalina Rural Bank remainedinsolvent, and that its management failed to rehabilitate the said bank.-Sta. Catalina Rural Bank cited the ruling of this Court in Overseas Bank of Manila vs. Court of Appeals to supportits claim that since it was placed under receivership, and prohibited from doing business in the Philippines, it shouldno longer be held liable for interests and penalties on its account LBP.-CA rendered judgment affirming the decision of the RTC. The CA ruled that having failed to file a motion for reconsideration of the trial courts order declaring it in default before such court rendered judgment, compounded byits failure to do so in the Court of Appeals, Sta. Catalina Rural Bank was precluded from invoking in the appellatecourt the placement of its assets and affairs under receivership and its exemption from liability for interests andpenalties on its account with the LBP after the said date. The CA ruled that if it acquiesced to the contention of Sta.Catalina Rural Bank, it would defeat the very principle behind the declaration of default of a party for failing to file ananswer to the complaint within the reglementary period therefore. The CA further declared that a contrary rulingwould render nugatory the effect of the trial courts declaration of default on the part of the Sta. Catalina Rural Bank. ISSUE: -Whether or not it is liable for interests and penalties on its account with the Land Bank of the Philippines, when itsassets and affairs were placed under receivership by the Central

Bank of the Philippines, and was prohibited fromdoing business. HELD: -The records show that Sta. Catalina Rural Bank was served with a copy of summons and the complaint, but failedto file its answer thereto. It also failed to file a verified motion to set aside the Order of default despite its receipt of acopy thereof. We note that the trial court rendered more than a year after the issuance of the default order; yet, Sta.Catalina Rural Bank failed to file any verified motion to set aside the said order before the rendition of the judgmentof default. The PDIC was designated by the Central Bank of the Philippines as receiver (conservator), and in thecourse of its management of the Sta. Catalina Rural Banks affairs, it should have known of the pendency of thecase against the latter in the trial court. Moreover, Sta. Catalina Rural Bank, through the PDIC, received a copy of the decision of the trial court on June 2, 1998, but did not bother filing a motion for partial reconsideration, under Rule 37 of the Rules of Court, appending thereto the orders of the Monetary Board or a motion to set aside theorder of default. Instead, Sta. Catalina Rural Bank appealed the decision, and even failed to assign as an error thedefault order of the trial court. Sta. Catalina Rural Bank is, thus, barred from relying on the orders of the MonetaryBoard of the Central Bank of the Philippines placing its assets and affairs under receivership and ordering itsliquidation.-It bears stressing that a defending party declared in default loses his standing in court and his right to adduceevidence and to present his defense. He, however, has the right to appeal from the judgment by default and assailsaid judgment on the ground, inter alia , that the amount of the judgment is excessive or is different in kind from thatprayed for, or that the plaintiff failed to prove the material allegations of his complaint, or that the decision is contrary to law. Such party declared in default is proscribed from seeking a modification or reversal of the assailed decisionon the basis of the evidence submitted by him in the Court of Appeals, for if it were otherwise, he would thereby beallowed to regain his right to adduce evidence, a right which he lost in the trial court when he was declared indefault, and which he failed to have vacated. In this case, the petitioner sought the modification of the decision of the trial court based on the evidence submitted by it only in the Court of Appeals.-The Sta. Catalina Rural Bank cannot, likewise, rely on the ruling of the Court in Overseas Bank of Manila vs. Court of Appeals , because in the said case, the issue of whether a party who had been declared in default is entitled torelief from the judgment by default based on evidence presented only in the appellate court, when such order of default was not vacated by the trial court prior to the appeal from the judgment of default was not raised therein,much less resolved by the Court . JUDICIAL REVIEW Availability of Remedy See Sec 30 NCBA Grounds Grave Abuse of Discretion Central Bank v. Court of Appeals, 106 SCRA 143 (1981) FACTS: -Provident Savings Bank experienced a bank run. Due to unusually heavy withdrawals of depositors, Providentrequested from Central Bank emergency loans. Initially, CB denied such request which resulted to temporaryclosure of Provident. But later on, CB extended emergency loans. Unfortunately, such were not sufficient to cover withdrawals of depositors.-Fernando and Jayme, Providents major stockholders, appealed to CB for its continued assistance.-CB Deputy declared that assistance would continue, provided that Fernandez and Jayme would turnover themanagement and control of Provident to Iglesia ni Cristo.-Fernandez and Jayme complied with such condition. However, INC had no intention of restoring the bank butmerely to recover its deposit.-Monetary Board ordered the closure of Provident.-Provident filed a petition for certiorari, prohibition and mandamus.-CB contended that Closure is an exercise of Police Power, which the court cannot pass upon.-CFI, Affirmed by CA granted the petition. ISSUE:

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-Whether or not the Closure and Liquidation of Bank which is considered an exercise of Police Power may besubject of judicial inquiry. HELD: -While closure and liquidation of a bank may be considered an exercise of police power, the validity of such exerciseof police power is subject to judicial inquiry and could be set aside if it is either capricious, discriminatory, whimsical,unjust or a denial of the due process and equal protection clauses of the Constitution. Banco Filipino Savings and Mortgage Bank v. Central Bank, 204 SCRA 767 (1991) FACTS: -On different occasions, Top Management Program Corporation, Pilar Development Corpora tion, El GrandeDevelopment Corporation obtained a loan from Banco Filipino and Savings and Mortgage Bank secured by RealEstate Mortgages.When the bank suffered serious financial proble ms, the Monetary Board issued resolution finding the bankinsolvent and placed it under receivership.-Banco Filipino filed a complaint to set aside the said action of MB.-Subsequently, MB issued another resolution placing the bank under liquidation and designating a liquidator.-Banco Filipino filed another petition questioning the validity of the said resolution.A temporary restraining order was issued, however, acts pertaining to normal operations of a bank are notenjoined.-A resolution was also issued ordering the conduct of hearings.-In the meantime, Top Management Program Corporation, Pilar Development Corporation, El Grande DevelopmentCorporation failed to pay their obligations.-The liquidator extra judicially foreclosed the Real Estate Mortgages.-Each filed separately a petition for injunction and prohibition seeking to enjoin the sheriff from proceeding with theforeclosure sale.-Petitions were dismissed. Hence, petitions were filed by Top Management Program Corporation, Pilar DevelopmentCorporation, El Grande Development Corporation alleging that the liquidator has no authority to proceed with theforeclosure sale pending the resolution of the issue on the validity of the closure and liquidation of Banco Filipino. ISSUE: -Whether or not the liquidator has the authority to prosecute as well as to defend suits and foreclose mortgages for and in behalf of the bank while the issue on the validity of the receivership and liquidation is still pending resolution. HELD: -The Central bank is vested with the authority to take charge and administer the monetary and banking systems of the country and this authority includes the power to examine and determine the financial condition of banks for thepurpose of closure ion the ground of insolvency.-Even if the bank is questioning the validity of its closure, during the pendency of the case, the liquidator cancontinue prosecution suits for collection and foreclosure of mortgages, as they are acts done In the usual course of administration of the banks. JurisdictionSec. 4. Where petition filed.

Central Bank of the Philippines v. Court of Appeals, 208 SCRA 652 (1992) FACTS: - At the height of the controversy surrounding the discovery of the anomalous loans, several blind items about afamily-owned bank in Binondo which granted fictitious loans to its stockholders appeared in major newspapers.These news items triggered a bank-run in PBP which resulted in continuous over-drawings on the bank's demanddeposit account with the Central Bank. Hence, on the basis of the report submitted by the Supervision andExamination Sector, Department I of the CB, the Monetary Board (MB), pursuant to its authority under Section 28-Aof R.A. No. 265 and by virtue of MB Board Resolution No. 164, placed PBP under conservatorship.-While PBP admits that it had no choice but to submit to the conservatorship, it nonetheless requested that thesame be lifted by the CB. Consequently, the MB issued Resolution directing the principal stockholders of PBP toincrease its capital accounts by such an amount that would be necessary for the elimination of PBP's negative networth. CB senior deputy Governor Gabriel Singson informed PBP that pursuant to MB Resolution, the CB would bewilling to lift the conservatorship under the following conditions: (a) PBP's unsecured overdraft with the Central Bankwill be converted into an emergency loan, to be secured by sufficient collateral, including but not limited to theproperties offered by PBP's principal stockholders.- MB adopted Resolution approving the consolidation of PBP's other unsecured obligations to the CB with itsoverdraft and authorizing the conversion thereof into an emergency loan. The same resolution authorized the CBGovernor to lift the conservatorship and return PBP's management to its principal stockholders upon completion of the documentation and full collateralization of the emergency loan, but directed PBP to pay the emergency loan infive (5) equal annual installments, with interest and penalty rates at MRR 180 days plus 48% per annum , andliquidated damages of 5% for delayed payments.- PBP submitted a rehabilitation plan to the CB which proposed the transfer to PBP of three (3) buildings owned byProducers Properties, Inc. (PPI), its principal stockholder and the subsequent mortgage of said properties to the CBas collateral for the bank's overdraft obligation. Although said proposal was explored and discussed, no programacceptable to both the CB and PPI was arrived at because of disagreements on certain matters such as interestrates, penalties and liquidated damages.-No other rehabilitation program was submitted by PBP for almost three (3) years; as a result thereof, its overdraftswith the CB continued to accumulate. The CB Monetary Board decided to approve in principle what it considered aviable rehabilitation program for PBP.-PBP, without responding to the communications of the CB, filed a complaint verified against the CB, the MB andCB Governor Jose B. Fernandez, Jr., asserting that the conservatorship was unwarranted, ill-motivated, illegal,utterly unnecessary and unjustified; that the appointment of the conservator was arbitrary; that herein petitioners acted in bad faith; that the CB-designated conservators committed bank frauds and abuses; that the CB is guilty of promissory estoppel; and that by reason of the conservatorship, it suffered losses exclusive of loss of profits andloss of goodwill.-The trial court and the Court of Appeals is into lifting the conservatorship. (However, there is nothing in theamended complaint to reflect an unequivocal intention to ask for its lifting.) HELD: -If it were to lift the conservatorship because it was arbitrarily imposed, then the case should have been dismissedon the grounds of prescription and lack of personality to bring action.The following requisites must be present before the order of conservatorship may be set aside by a court:1.The appropriate pleading must be filed by the stockholders of record representing majority of the capitalstock of the bank in the proper court;2.Said pleading must be filed within 10 days from receipt of notice by said majority stockholders of theorder placing the bank under conservatorship; and3.There must be convincing proof after hearing that the action is plainly arbitrary and made in bad faith.

The petition may be filed not later than sixty (60) days from notice of the judgment, order or resolution sought to be assailed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed in the Court of Appeals whether or not the same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its jurisdiction. If it involves the acts or omissions of a quasi-judicial agency, and unless otherwise provided by law or these Rules, the petition shall be filed in and cognizable only by the Court of Appeals. WHO MAY QUESTION-

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ACTIONS OF THE MB FINAL AND EXECUTORY; INJUNCTION SECTION 22. No court, except the Court of Appeals, shall issue any temporary restraining order, preliminary injunction or preliminary mandatory injunction against the Corporation for any action under this Act. (As added by R.A. 9302, 12 August 2004) This prohibition shall apply in all cases, disputes or controversies instituted by a private party, the insured bank, or any shareholder of the insured bank. (As added by R.A. 9302, 12 August 2004) The Supreme Court may issue a restraining order or injunction when the matter is of extreme urgency involving a constitutional issue, such that unless a temporary restraining order is issued, grave injustice and irreparable injury will arise. The party applying for the issuance of a restraining order or injunction shall file a bond in an amount to be fixed by the Supreme Court, which bond shall accrue in favor of the Corporation if the court should finally decide that the applicant was not entitled to the relief sought. (As added by R.A. 9302, 12 August 2004) Any restraining order or injunction issued in violation of this Section is void and of no force and effect and any judge who has issued the same shall suffer the penalty of suspension of at least sixty (60) days without pay. (As added by R.A. 9302, 12 August 2004) Central Bank vs Dela cruz Effect of Filing Pet. For Review Banco fil savings and mort bnk vs ybanez Liability of MB and PDIC Miranda v. PDIC, 501 SCRA 288 (2006) FACTS: -Leticia G. Miranda was a depositor of Prime Savings Bank, Santiago City Branch. She withdrew substantialamounts from her account, but instead of cash she opted to be issued a crossed cashiers check. She was thusissued cashiers check.-Miranda deposited the two checks into her account in another bank on the same day, however, Bangko Sentral ng Pilipinas (BSP) suspended the clearing privileges of Prime Savings Bank effective 2:00 p.m. of June 3, 1999. Thetwo checks of petitioner were returned to her unpaid.-Prime Savings Bank declared a bank holiday. BSP placed Prime Savings Bank under the receivership of thePhilippine Deposit Insurance Corporation (PDIC).-Miranda filed a civil action for sum of money to recover the funds from her unpaid checks against Prime SavingsBank, PDIC and the BSP.-Trial Court rendered judgment against Philippine Deposit Insurance Corporation, Bangko Sentral ng Pilipinas andPrime Bank, to pay jointly and solidarily the amount of the checks to Miranda.-On appeal, the Court of Appeals reversed the trial court and ruled in favor of the PDIC and BSP, dismissing thecase against them, without prejudice to the right of Miranda to file her claim before the court designated toadjudicate on claims against Prime Savings Bank.-Miranda contends that she ceased to be a depositor upon withdrawal of her deposit and the issuance of the twocashiers checks to her. As a holder in due course of the cashiers checks as defined under Sections 52 and 191 of the Negotiable Instruments Law, she is an assignee of the funds of Prime Savings Bank as drawer thereof andentitled to its immediate payment. ISSUE: -Whether or not Mirandas claim is entitled to preference in the assets of the bank on its liquidation. HELD: -The two cashiers checks issued by Prime Savings Bank do not constitute an assignment of funds in the hands of the petitioner as there were no funds to speak of in the first place. The bank was financially insolvent for sometime,even before the issuance of

the checks. As the Court of Appeals correctly ruled, the issuance of the cashiers SPCL- BANKING Comia, Antonette Tud checks to Miranda did not constitute an assignment of funds, of which there was practically none at the timethese were issued, as the bank was in dire financial straits for some time.-However, the claim lodged by the Miranda qualifies as a disputed claim subject to the jurisdiction of the liquidationcourt. Regular courts do not have jurisdiction over actions filed by claimants against an insolvent bank, unless thereis a clear showing that the action taken by the BSP, through the Monetary Board in the closure of financial institutions was in excess of jurisdiction, or with grave abuse of discretion-In the absence of fraud, the purchase of a cashiers check, like the purchase of a draft on a correspondent bank,creates the relation of creditor and debtor, not that of principal and agent, with the result that the purchaser or holder thereof is not entitled to a preference over general creditors in the assets of the bank issuing the check, when it failsbefore payment of the check. However, in a situation involving the element of fraud, where a cashiers check is purchased from a bank at a time when it is insolvent, as its officers know or are bound to know by the exercise of reasonable diligence, it has been held that the purchase is entitled to a preference in the assets of the bank on itsliquidation before the check is paid How bsp handles ecchange crisis Legal lender PowerSEC. 52. Legal Tender Power. _ All notes and coins issued by the Bangko Sentral shall be fully guaranteed by the Government of the Republic of the Philippines and shall be legal tender in the Philippines for all debts, both public and private: Provided, however, That, unless otherwise fixed by the Monetary Board, coins shall be legal tender in amounts not exceeding Fifty pesos (P50) for denominations of twenty-five centavos and above, and in amounts not exceeding Twenty pesos (P20) for denominations of ten centavos or less. BSP CIRCULAR NO. 537 Series of 2006 Pursuant to Section 52 of Republic Act No. 7653 and Monetary Board Resolution No. 862 dated 6 July 2006, the maximum amount of coins to be considered as legal tender is adjusted as follows: 1. One thousand pesos (P1,000.00) for denominations of 1-Piso, 5-Piso and 10-Piso coins; and 2. One hundred pesos (P100.00) for denominations of 1-sentimo, 5-sentimo, 10sentimo, and 25-sentimo coins. Role on Exchange NCBA SEC. 74. Exchange Rates. _ The Monetary Board shall determine the exchange rate policy of the country. The Monetary Board shall determine the rates at which the Bangko Sentral shall buy and sell spot exchange, and shall establish deviation limits from the effective exchange rate or rates as it may deem proper. The Bangko Sentral shall not collect any additional commissions or charges of any sort, other than actual telegraphic or cable costs incurred by it. The Monetary Board shall similarly determine the rates for other types of foreign exchange transactions by the Bangko Sentral, including purchases and sales of foreign notes and coins,

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but the margins between the effective exchange rates and the rates thus established may not exceed the corresponding margins for spot exchange transactions by more than the additional costs or expenses involved in each type of transactions.

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