RECEIVERSHIP G.R. No. 157911 September 19, 2006 SPOUSES MANUEL A. AGUILAR and YOLANDA C. AGUILAR, vs.

THE MANILA BANKING CORPORATION AUSTRIA-MARTINEZ, J.: The sad and lamentable spectacle that this case presents, that is, the execution of a final and executory decision forestalled by perpetual dilatory tactics employed by a litigant, makes a blatant mockery of justice. The Court cannot countenance, and in fact, condemns, the outrageous abuse of the judicial process by Spouses Manuel A. Aguilar and Yolanda C. Aguilar (petitioners) and their counsel. CASE: Before the Court is a Petition for Review on Certiorari under Rule 45 assailing the Decision1 dated October 29, 2002 of theCA in CA-G.R. SP No. 71849 which dismissed petitioners' Petition for Certiorari, and the CA Resolution2 dated April 29, 2003 which denied petitioners' MR. FACTS: Sometime in 1979, petitioners obtained a P600,000.00 loan from the Manila Banking Corporation (respondent), secured by a real estate mortgage over their 419square meter property located at No. 8 Pia St., Valle Verde, Pasig City, covered by Transfer Certificate of Title (TCT) No. 11082. When petitioners failed to pay their obligation, the mortgaged property was extra-judicially foreclosed. Respondent was the winning bidder at public auction sale on May 20, 1982. Consequently, a Certificate of Sale was issued in its favor on June 23, 1982. Subsequently, on May 30, 1983, instead of redeeming the property, petitioners filed a complaint for annulment of the foreclosure sale of the property before RTC, Br165, Pasig City (Civil Case No. 49793). While the case was pending, the parties entered into a compromise agreement.3 Under the Compromise Agreement(January 23, 1987), the petitioners admitted the validity of the extra-judicial foreclosure and agreed to purchase the property from respondent for P2,548,000.00. Parties agreed that the amount of P100,000.00 shall be payable upon execution of the agreement and the balance of P2,448,000.00, which shall earn twenty-six per cent (26%) interest per annum, shall be payable in eighteen installments from February 23, 1987 to July 27, 1988. They further agreed that in case of default: (a) all outstanding installments and/or interest thereon shall be immediately due; (b) petitioners shall immediately vacate the property and deliver possession thereof to respondent; (c) respondent shall be entitled to register all documents needed to transfer title over the property in their favor; and, (d) respondent shall be entitled to ask for the execution of the judgment or an ancillary remedy necessary to place it in possession of the property. On January 30, 1987, RTC Branch 165 adopted and approved the Compromise Agreement.4 Petitioners failed to pay the balance of P2,448,000.00 within the eighteen-installment period from February 23, 1987 to July 27, 1988. A year and three months later, or on October 20, 1989, respondent filed a Motion for Issuance of Writ of Execution to enforce the Decision dated January 30, 1987.5 On November 28, 1989, RTC Branch 165 issued an Order granting the motion and issuing a writ of execution: (a) directing petitioners to immediately vacate the property and surrender possession to the respondent; (b) directing the Register of Deeds of Metro Manila, District II to register any and

all documents needed to transfer title over the property to respondent and to issue a new certificate of title respondent's favor free from any liens, adverse claims and/or encumbrances; (c) issuing a writ of possession in respondent's favor to place it in possession of the property.6 However, on January 22, 1990, petitioners filed a Manifestation praying for deferment of the enforcement of the writ of execution until July 31, 1990 because petitioners have a pending proposal for the settlement of their judgment debt.7 The manifestation was with the conformity of respondents.8 On January 24, 1990, RTC Branch 165 issued an Order granting the motion and holding in abeyance the enforcement of the writ of execution until July 31, 1990.9 However, no settlement was reached by the parties during the period. One year and four months later, petitioners still failed to settle their judgment debt. Consequently, respondent filed on December 2, 1991 a Manifestation reiterating its motion for the issuance of a writ of execution.10 On December 5, 1991, RTC Branch 165 issued an Order granting the manifestation and directing the issuance of a writ of execution to enforce the Decision dated January 30, 1987.11 To evade the implementation of the writ, petitioners filed on December 20, 1991 an Ex-Parte Motion to Recall the Court's Order dated December 5, 1991 claiming that their obligation was novated by the Letter dated June 7, 1991 from respondent's Statutory Receiver.12 In said letter, respondent's Statutory Receiver approved the purchase of the property on installment basis over a three-year period at an interest rate of twelve per cent (12%) withP481,265.00 due on September 30, 1991, P481,265.00 due on September 30, 1992, and P724,064.79 due on September 30, 1993.13 On December 2, 1992, respondent filed a Manifestation and Motion for Issuance of Alias Writ of Execution manifesting that the Letter dated June 7, 1991 did not novate the Decision dated January 30, 1987 but was a mere accommodation of the petitioners' request for a liberal mode of payment of their account and petitioners still failed to comply with such approved mode of payment.14 On December 14, 1992, petitioners filed their Comment and Manifestation praying for a humanitarian and liberal judicial dispensation since that they have been paying their obligations to respondent despite delay due to "financial restraints for family subsistence and their children's educational expenses".15 On February 1, 2000, respondent filed an Urgent ExParte Manifestation praying for resolution of the pending incidents.16 On March 3, 2000, petitioners filed their Opposition claiming that Section 6, Rule 39 of the Rules of Court bars execution, by mere motions, of judgment which is more than five years old. On March 14, 2000, respondent filed its Reply stating that the peculiar circumstances of the case warrant its exclusion from the scope of said Rule. On March 20, 2000, RTC Branch 165 issued its Order which resolved the pending motions with the Court. With respect to petitioner's ex-parte motion to recall, the Court said that for failure to comply with Sections 4, 5 and 6 of Rule 15 of the Revised Rules of Court and considering the nature of petitioners' motion, it treated petitioner's motion as a mere scrap of paper.17 As to respondent's motion for issuance of a writ of execution, it granted the same, holding that Section 6,

Rule 39 of the Rules of Court does not apply since the delay in the execution of the judgment was due to petitioners who made several alternative payment proposals, requested several extensions of time to pay their account, filed dilatory motions and pleadings and it would be a blatant injustice to allow them to profit from the delays they deliberately caused to escape completely and absolutely the satisfaction of their admitted and confessed obligation by sheer literal adherence to technicality.18 On March 30, 2000, petitioners filed their Motion for Reconsideration19 but RTC Branch 165 denied it in its Order dated May 30, 2000.20 On June 20, 2000, petitioners filed a Notice of Appeal21 but RTC Branch 165 denied it in its Order dated August 21, 2000 on the ground that an order of execution is not appealable.22 Thereafter, petitioners filed a six-page Petition for Review on Certiorari with this Court, docketed as G.R. No. 144719, reiterating that the Decision dated January 30, 1987 can no longer be executed on mere motion since it is more than five years old. 23 In a Resolution dated October 11, 2000, the First Division of this Court denied the petition for violation of the rule on hierarchy of courts and failure to show special and important reasons or exceptional and compelling circumstances that justify a disregard of the rule.24 Petitioners filed a Motion for Reconsideration but the Court denied it with finality in its Resolution dated December 11, 2000.25 Since the Resolution in G.R. No. 144719 became final and executory on January 16, 2001, RTC Branch 165 issued a writ of execution on February 19, 2001 to enforce the Decision dated January 30, 1987.26 On February 23, 2001, the Sheriff issued a Notice for Compliance of the said writ.27 Undaunted by their previous setbacks, petitioners filed on March 6, 2001 in RTC Branch 165 an Omnibus Motion to quash the Writ of Execution insisting anew on their novation and prescription theories.28 They also moved for consignation of the amount of their obligation under the Letter dated June 7, 1991 of respondent's Statutory Receiver. On March 14, 2001, respondent filed an Ex-Parte Motion for Order to Divest Plaintiffs' Title and to Direct the Register of Deeds to Transfer Title to Defendant29 based on Section 10, Rule 39 of the 1997 Rules of Civil Procedure. On March 19, 2001, respondent filed its Opposition (to petitioners' Omnibus Motion) and Motion to Cite Plaintiffs in Contempt claiming that the Omnibus Motion is nothing but petitioners' desperate attempt to thwart or delay the payment of their obligations and they should be declared guilty of indirect contempt for their improper conduct calculated to impede, obstruct and degrade the administration of justice.30 On May 2, 2001, petitioners filed an Urgent Motion for Inhibition.31 While RTC Branch 165 Presiding Judge Marietta A. Legaspi denied the motion for inhibition in her Order dated June 5, 2001, she voluntarily inhibited herself from further participating in the case to show that she has no interest therein.32 Respondent filed a Motion for Partial Reconsideration33 to no avail.34 The case was re-raffled and was assigned to Branch 268 presided by Judge Amelia C. Manalastas. On September 17, 2001 and January 4, 2002, respondent filed two Motions to Resolve Pending Incidents.35Despite the fact that Judge Manalastas has not actively participated in the case since she has not acted on the pending incidents,

petitioners filed on February 5, 2002 a Motion for Inhibition.36 A day later, on February 6, 2002, Judge Manalastas granted the motion for inhibition.37 Thus, the case was again re-raffled and was assigned to Branch 167 presided by Judge Jesus G. Bersamira. On February 13, 2002, respondent filed again a Motion to Resolve Pending Incidents.38 On March 22 and 26, 2002, both parties filed separate Urgent Motions to Resolve the case.39 Subsequently, petitioners filed a Manifestation and Motion that the Letter dated June 7, 1991 be marked as their exhibit.40 RTC Branch 167 in its Order dated April 30, 2002 admitted the exhibit over the objections of respondent.41 On May 24, 2002, RTC Branch 167 rendered its Omnibus Order denying the Omnibus Motion to quash the writ of execution and for consignation, as well as the motion to cite petitioners in contempt and the ex parte motion for an order to divest petitioners' title to respondent. It held that there was no novation because there was no incompatibility between the Letter dated June 7, 1991 and the Decision dated January 30, 1987 with the former only providing for a more liberal scheme of payment and grant of reduced interest; that petitioners' claim that respondent's receivership and the Letter dated June 7, 1991 are supervening events which rendered the execution unjust and impossible is unavailing since there is nothing on record to indicate that such circumstances resulted in unfairness and injustice to petitioners if execution of judgment is carried out; that petitioner's claim that the judgment could no longer be executed by mere motion after the five-year period had elapsed from its finality is specious since any interruption or delay occasioned by petitioners will extend the time within which the judgment may be executed by motion.42 No motion for reconsideration was filed by the petitioners. Accordingly, RTC Branch 167 issued a Writ of Execution on July 4, 2002.43 On July 23, 2002, the Sheriff issued the Notice for Compliance of the said writ.44 Petitioners filed on July 26, 2002 a petition for certiorari with the CA, docketed as CA-G.R. SP No. 71849.45 They reiterated that the Decision dated January 30, 1987 cannot be executed by mere motion filed on February 1, 2000 since more than five years have elapsed. On October 29, 2002, the CA denied the petition for certiorari.46 It held that since the delays were occasioned by petitioners' own initiative and for their own advantage, the fiveyear period allowed for the enforcement of the judgment by motion have been interrupted or suspended. On November 13, 2002, petitioners filed a Motion for Reconsideration47 but the CA denied it in its Resolution dated April 29, 2003.48 Hence, the present petition anchored on the following grounds: 1. THE HONORABLE COURT OF APPEALS ERRED IN NOT RECOGNIZING THAT PRESCRIPTION HAS SET IN IN THIS CASE CONSIDERING THAT MORE THAN FIVE (5) YEARS, NAY, MORE THAN TEN (10) YEARS, HAD ELAPSED SINCE THE DECISION BASED ON COMPROMISE AGREEMENT BECAME FINAL AND EXECUTORY. 2. THE HONORABLE COURT OF APPEALS ERRED IN NOT RECOGNIZING THAT EVENTS AND CIRCUMSTANCES IN THIS CASE HAVE TRANSPIRED

AFTER THE DECISION HAD BECOME FINAL AND EXECUTORY THAT WARRANTS AND CALLS FOR STAY OR PRECLUSION OF EXECUTION, CONSIDERING THAT THE LETTER-APPROVAL OF THE STATUTORY RECEIVER OF RESPONDENT PARTAKES OF AN EXCEPTION TO THE GENERAL RULE WHICH HAS BEEN CONSISTENTLY UPHELD BY THIS HONORABLE SUPREME COURT. 3. THE HONORABLE COURT OF APPEALS ERRED IN NOT RECOGNIZING THAT THE LETTER APPROVAL OF THE STATUTORY RECEIVER NOVATED THE COMPROMISE AGREEMENT AND DECISION BASED ON COMPROMISE AGREEMENT. 4. THE HONORABLE COURT OF APPEALS ERRED IN NOT RECOGNIZING THAT THE EQUITIES OF THE CASE FAVOR HEREIN PETITIONERS.49 Anent the first ground, petitioners reiterate that under Section 6 of Rule 39, Rules of Court, the execution of the judgment by mere motion was barred by prescription, given that more than five years had lapsed since the Decision dated January 30, 1987 became final and executory and they cannot be faulted for the delay as they have done nothing that warrants the conclusion that they employed unscrupulous machinations and dilatory tactics. As to the second ground, petitioners argue that respondent's receivership is a supervening event that rendered execution of the Decision dated January 30, 1987 impossible, if not unjust; that since a bank under receivership is relieved of its obligation to pay interest on the deposits of its depositors, they (petitioners) are also not obliged to pay interest on a loan due it and interest shall commence again only after respondent's resumption of banking operations. On the third ground, petitioners maintain that the Letter dated June 7, 1991 of respondent's Statutory Receiver novated the Decision dated January 30, 1987 considering the substantial differences in their principal terms and conditions. On the fourth ground, petitioners aver that the acceleration clause provision of the Compromise Agreement is iniquitous and void for being violative of morals and public policy. In their Comment, respondent contends that the present petition should be dismissed outright because it is barred by res judicata or the final judgment of this Court in G.R. No. 144719 and petitioners engaged in forum-shopping by deliberately failing to state that they previously filed G.R. No. 144719 where the issue of prescription was raised. Even if the petition is given due course, respondent argues that execution of the Decision dated January 30, 1987 is not barred by prescription; that respondent's receivership and the Letter dated June 7, 1991 of respondent's Statutory Receiver are not circumstances that would render the execution of the judgment unjust, inequitable or even merit a stay of execution; that the Letter dated June 7, 1991 of respondent's Statutory Receiver did not novate the Decision dated January 30, 1987 since there was no intent to novate petitioners' judgment obligation.50 In Reply, petitioners argue that res judicata is not applicable since the minute Resolution of the Court in G.R. No. 144719: (a) does not operate as adjudication on the merits, (b) was not rendered with jurisdiction over the parties; and (c) involved different subject matters and causes of action.51

In the Resolution dated May 15, 2003, upon motion of petitioner, the Court directed the parties to maintain the status quo until further orders from this Court.52 The petition is bereft of merit. Prefatorily, the Court notes that the petition for certiorari before the CA should have been dismissed outright since petitioners failed to file a motion for reconsideration from the RTC Omnibus Order dated May 24, 2002. Section 1 of Rule 65 of the 1997 Rules of Civil Procedure provides: SECTION 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasijudicial functions has acted without or in excess of his jurisdiction, or with grave abuse of discretion amounting to lack of or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of the law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require. (Emphasis supplied) The plain and adequate remedy referred to in the rule is a motion for reconsideration of the assailed decision or order. The purpose for this requirement is to grant an opportunity for the court or agency to correct any actual or perceived error attributed to it by the re-examination of the legal and factual circumstances of the case53 without the intervention of a higher court.54 Thus, the filing of a motion for reconsideration is a condition sine qua non to the institution of a special civil action for certiorari. While jurisprudence has recognized several exceptions to the rule, such as: (a) where the order is a patent nullity, as where the court a quo has no jurisdiction; (b) where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are the same as those raised and passed upon in the lower court; (c) where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of the Government or of the petitioner or the subject matter of the action is perishable; (d) where, under the circumstances, a motion for reconsideration would be useless; (e) where petitioner was deprived of due process and there is extreme urgency for relief; (f) where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable; (g) where the proceedings in the lower court are a nullity for lack of due process; (h) where the proceedings was ex parte or in which the petitioner had no opportunity to object; and (i) where the issue raised is one purely of law or where public interest is involved,55none of these exceptions apply here. In the present case, the petitioners not only failed to explain their failure to file a motion for reconsideration before the RTC, they also failed to show sufficient justification for dispensing with the requirement. A motion for reconsideration is not only expected to be but would actually have provided an adequate and more speedy remedy than the petition for certiorari.56 Certiorari cannot be resorted to as a shield from the adverse consequences of petitioners' own omission to file the required motion for reconsideration.57

In any case, even if petitioners' procedural faux pas is ignored, their contentions on the substantive aspect of the case fail to invite judgment in their favor. Petitioners are barred from raising the issue on the prescription of execution of the decision by mere motion under the principle of the "law of the case," which is the practice of courts in refusing to reopen what has been decided. It means that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court.58 The law of the case on the issue of prescription of the execution of the decision by mere motion or applicability of Section 6, Rule 39 of the Rules of Court has been settled in the Order dated March 20, 2000 of RTC Branch 165. Upon denial of petitioner's motion for reconsideration, they erroneously sought review with this Court which dismissed their petition for review on certiorari for violation of the rule on hierarchy of courts and for failure to show special and important reasons or exceptional and compelling circumstances that justify a disregard of the rule.59This Court's Resolution became final and executory on January 16, 2001. Thus, petitioners are bound thereby.The question of prescription has been settled with finality and may no longer be resurrected by petitioners. It is not subject to review or reversal in any court, even this Court. The CA failed to consider this principle of law of the case, which is totally different from the concept of res judicata. In Padillo v. Court of Appeals,60 the Court distinguished the two as follows: x x x Law of the case does not have the finality of the doctrine of res judicata, and applies only to that one case, whereas res judicata forecloses parties or privies in one case by what has been done in another case. In the 1975 case of Comilang v. Court of Appeals (Fifth Division.), a further distinction was made in this manner: The doctrine of law of the case is akin to that of former adjudication, but is more limited in its application. It relates entirely to questions of law, and is confined in its operation to subsequent proceedings in the same case. The doctrine of res judicata differs therefrom in that it is applicable to the conclusive determination of issues of fact, although it may include questions of law, and although it may apply to collateral proceedings in the same action or general proceeding, it is generally concerned with the effect of an adjudication in a wholly independent proceeding.61 To elucidate further, res judicata or bar by prior judgment is a doctrine which holds that a matter that has been adjudicated by a court of competent jurisdiction must be deemed to have been finally and conclusively settled if it arises in any subsequent litigation between the same parties and for the same cause.62 The four requisites forres judicata to apply are: (a) the former judgment or order must be final; (b) it must have been rendered by a court having jurisdiction over the

subject matter and the parties; (c) it must be a judgment or an order on the merits; and (d) there must be, between the first and the second actions, identity of parties, of subject matter and of cause of action.63 The fourth requisite is wanting in the present case. There is only one case involved. There is no second independent proceeding or subsequent litigation between the parties. The present petition concerns subsequent proceedings in the same case, with petitioners raising the same issue long settled by a prior appeal. On the matter of forum shopping, while the Court has held that forum shopping exists only where the elements oflitis pendentia are present or where a final judgment in one case will amount to res judicata in another,64 it must be recalled that the doctrines of law of the case and res judicata are founded on a public policy against reopening that which has previously been decided.65 Both doctrines share the policy consideration of putting an end to litigation.66 Thus, the principle of forum shopping should apply by analogy to a case involving the principle of law of the case. Moreover, although forum shopping exists when, as a result of an adverse opinion in one forum, a party seeks a favorable opinion, other than by appeal or certiorari, in another, or when a party institutes two or more suits indifferent courts, either simultaneously or successively, in order to ask the courts to rule on the same or related causes and/or to grant the same or substantially the same reliefs on the supposition that one or the other courtwould make a favorable disposition or increase a party's chances of obtaining a favorable decision or action,67 the peculiar circumstances attendant in this case bate out a situation akin to forum shopping - there is only one court involved, RTC Pasig City, but the issue of prescription was ultimately resolved by two different branches thereof Branches 165 and 167. Petitioners first raised before RTC Branch 165 the issue of prescription of the execution of the decision by mere motion. Said RTC Branch 165 ruled against petitioners and the court's order thereon became final and executory. Petitioners raised the issue again in an Omnibus Motion with the same RTC Branch 165. However, they moved for the inhibition of the presiding judge hearing the issue not only once, but twice, both motions granted in their favor and the case was successively raffled and assigned to two different branches of RTC Pasig, first to Branch 268 and then to Branch 167, which ruled against petitioners. Through the motions for inhibition of the presiding judges and the assignment of the case to different branches of the same court, petitioners sought to obtain from one branch a ruling more favorable than the ruling of another branch. They deliberately sought a friendly branch of the same court to grant them the relief that they wanted, despite the finality of the resolution of one branch on the matter. This is a permutation of forum shopping. It trifles with the courts, abuses their processes, degrades the administration of justice, and congests court dockets.68 Be it remembered that the grave evil sought to be avoided by the rules against forum shopping is the rendition by two competent tribunals of two separate, and contradictory decisions. Unscrupulous party-litigants, taking advantage of a variety of competent tribunals, may repeatedly try their luck in several different fora until a favorable result is reached. This would make a complete mockery of the judicial system.69

As to petitioners' arguments on the inequity of the acceleration clause of the Compromise Agreement, respondent's receivership as a supervening event, and novation of the Compromise Agreement by the Letter dated June 7, 1991, the Court holds that these were raised as mere afterthought. If petitioners sincerely believed in the merits of their arguments, they should have raised them at the earliest opportunity and pursued their ultimate resolution. However, petitioners did not. Petitioners are barred from raising arguments concerning the inequity of the acceleration clause of the Compromise Agreement since they only raised it for the first time before the CA in their Petition for Certiorari70 in CA-G.R. SP No. 71849. To consider the argument raised belatedly in a pleading filed in the appellate court, especially in the executory stage of the proceedings, would amount to trampling on the basic principles of fair play, justice and due process. In addition, after adopting and agreeing to the terms and conditions of the Compromise Agreement, petitioners cannot be permitted to subsequently make a complete volte face and attack the validity of the said agreement when they miserably failed to comply with its provisions. Our law and policy do not sanction such a somersault. What's more, petitioners also failed to comply with the reduced purchase amount and interest rate granted in the Letter dated June 7, 1991. They can hardly evoke judicial compassion. On the arguments relating to the effect of respondent's receivership, petitioners brought this matter for the first time in RTC Branch 165 in their Omnibus Motion dated March 5, 2001, fourteen years after respondent was placed under receivership and was ordered to close operation in 1987. The belated invocation of such circumstance speaks strongly of the staleness of their claim. Besides, it would be absurd to adopt petitioners' position that they are not obliged to pay interest on their obligation when respondent was placed under receivership. When a bank is placed under receivership, it would only not be able to do new business, that is, to grant new loans or to accept new deposits. However, the receiver of the bank is in fact obliged to collect debts owing to the bank, which debts form part of the assets of the bank.71Thus, petitioners' obligation to pay interest subsists even when respondent was placed under receivership. The respondent's receivership is an extraneous circumstance and has no effect on petitioners' obligation. On the claim of novation, petitioners raised it for the first time before RTC Branch 165 in their Ex-Parte Motion to Recall the Court's Order dated December 5, 199172 but they did not pursue the matter after their ex-parte motion was denied. They did not raise said issue in their motion for reconsideration or in their first petition for review on certiorari with this Court in G.R. No. 144719. Thus, they are deemed to have abandoned their claim of novation. They cannot be allowed to revive the issue as it is offensive to basic rules of fair play, justice and due process. Moreover, the Court cannot see how novation can take place considering that the surrounding circumstances negate the same. The established rule is that novation is never presumed; it must be clearly and unequivocally shown.73 Novation will not be allowed unless it is clearly shown by express agreement, or by acts of equal import. Thus, to effect an objective novation it is imperative that the new obligation expressly declares that the old obligation is thereby

extinguished or that the new obligation be on every point incompatible with the new one.74 In the present case, there is no clear intent of the parties to make the Letter dated June 7, 1991 completely supersede and abolish the Compromise Agreement adopted and approved by the RTC in its Decision dated January 30, 1987. Petitioners were merely granted a more liberal scheme of payment and reduced rate of interest but the conditions relating to the consequences of default in payment remained, such that when petitioners' failed to comply with the approved mode of payment in the Letter dated June 7, 1991, respondents were entitled to call for enforcement of the Decision dated January 30, 1987 and eject petitioners from the property. The well-settled rule is that, with respect to obligations to pay a sum of money, the obligation is not novated by an instrument that expressly recognizes the old, changes only the terms of payment, adds other obligations not incompatible with the old ones, or the new contract merely supplements the old one.75 Hence, there is no merit to petitioners' claim of novation. Without a doubt, the present case is an instance where the due process routine vigorously pursued by petitioners is but a clear-cut devise meant to perpetually forestall execution of an otherwise final and executory decision. Aside from clogging court dockets, the strategy is deplorably a common course resorted to by losing litigants in the hope of evading manifest obligations. The Court condemns this outrageous abuse of the judicial process by the petitioners and their counsels. It is an important fundamental principle in the judicial system that every litigation must come to an end. Access to the courts is guaranteed. But there must be a limit thereto. Once a litigant's rights have been adjudicated in a valid and final judgment of a competent court, he should not be granted an unbridled license to come back for another try. The prevailing party should not be harassed by subsequent suits. For, if endless litigations were to be encouraged, then unscrupulous litigants will multiply to the detriment of the administration of justice.76 The Court reminds petitioners' counsel of the duty of lawyers who, as officers of the court, must see to it that the orderly administration of justice must not be unduly impeded. It is the duty of a counsel to advise his client, ordinarily a layman on the intricacies and vagaries of the law, on the merit or lack of merit of his case. If he finds that his client's cause is defenseless, then it is his bounden duty to advise the latter to acquiesce and submit, rather than traverse the incontrovertible. A lawyer must resist the whims and caprices of his client, and temper his client's propensity to litigate. A lawyer's oath to uphold the cause of justice is superior to his duty to his client; its primacy is indisputable.77 There should be a greater awareness on the part of litigants and counsels that the time of the judiciary, much more so of this Court, is too valuable to be wasted or frittered away by efforts, far from commendable, to evade the operation of a decision final and executory, especially so, where, as shown in the present case, the clear and manifest absence of any right calling for vindication, is quite obvious and indisputable. Verily, by the undue delay in the execution of a final judgment in their favor, respondents have suffered an injustice. The Court views with disfavor the unjustified delay in the enforcement of the final decision and orders in the present case. Once a judgment becomes final and executory, the prevailing party should not be denied the fruits of his victory by some

subterfuge devised by the losing party.78 Unjustified delay in the enforcement of a judgment sets at naught the role of courts in disposing justiciable controversies with finality. WHEREFORE, the present petition is DENIED. The assailed Decision and Resolution of the CA in CA-G.R. SP No. 71849 are AFFIRMED. The status quo order issued by this Court on May 15, 2003 is LIFTED. The RTC, Br167, Pasig City, is directed to issue the corresponding writ of execution and the Sheriff of the court is ordered to enforce the same to its ultimate conclusion. Triple costs against petitioners. SO ORDERED. Panganiban, C.J., Chairperson, Ynares-Santiago, Callejo, Sr., Chico-Nazario, J.J., concur. G.R. No. 135706 October 1, 2004

operate as a private commercial bank and became fully operational only on August 3, 1992. From April 1985 until July 1992, defendant bank was restrained from doing its business. Doing business as construed by Justice Laurel in 222 SCRA 131 refers to:".a continuity of commercial dealings and arrangements and contemplates to that extent, the performance of acts or words or the exercise of some of the functions normally incident to and in progressive prosecution of the purpose and object of its organization." The defendant banks right to foreclose the mortgaged property prescribes in ten (10) years but such period was interrupted when it was placed under receivership. Article 1154 of the New Civil Code to this effect provides: "The period during which the obligee was prevented by a fortuitous event from enforcing his right is not reckoned against him." In the case of Provident Savings Bank vs. Court of Appeals, 222 SCRA 131, the Supreme Court said. "Having arrived at the conclusion that a foreclosure is part of a banks activity which could not have been pursued by the receiver then because of the circumstances discussed in the Central Bank case, we are thus convinced that the prescriptive period was legally interrupted by fuerza mayor in 1972 on account of the prohibition imposed by the Monetary Board against petitioner from transacting business, until the directive of the Board was nullified in 1981. Indeed, the period during which the obligee was prevented by a caso fortuito from enforcing his right is not reckoned against him. (Art. 1154, NCC) When prescription is interrupted, all the benefits acquired so far from the possession cease and when prescription starts anew, it will be entirely a new one. This concept should not be equated with suspension where the past period is included in the computation being added to the period after the prescription is presumed (4 Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines 1991 ed. pp. 18-19), consequently, when the closure of the petitioner was set aside in 1981, the period of ten years within which to foreclose under Art. 1142 of the N.C.C. began to run and, therefore, the action filed on August 21, 1986 to compel petitioner to release the mortgage carried with it the mistaken notion that petitioners own suit for foreclosure has prescribed." Even assuming that the liquidation of defendant bank did not affect its right to foreclose the plaintiffs mortgaged property, the questioned extrajudicial foreclosure was well within the ten (10) year prescriptive period. It is noteworthy to mention at this point in time, that defendant bank through authorized Deputy Francisco Go made the first extrajudicial demand to the plaintiffs on August 1985. Then on March 24, 1995 defendant bank through its officer-in-charge Llanto made the second extrajudicial demand. And we all know that a written extrajudicial demand wipes out the period that has already elapsed and starts anew the prescriptive period. (Ledesma vs. C.A., 224 SCRA 175.)10 Petitioners filed a MR which the RTC denied. Thus, the present petition for review where petitioners claim that the RTC erred: IIN RULING THAT THE PERIOD WITHIN WHICH RESPONDENT BANK WAS PUT UNDER RECEIVERSHIP AND LIQUIDATION WAS A FORTUITOUS EVENT THAT

SPS. CESAR A. LARROBIS, JR. and VIRGINIA S. LARROBIS vs. PHILIPPINE VETERANS BANK AUSTRIA-MARTINEZ, J.: CASE:a petition for review of the decision of the RTC Cebu City, Br 24, (April 17, 1998),1 and the order denying petitioners MR (August 25, 1998), raising pure questions of law.2 FACTS: Petitioner spouses contracted a monetary loan with respondent Philippine Veterans Bank in the amount of P135,000.00, evidenced by a promissory note, due and demandable on February 27, 1981, and secured by a Real Estate Mortgage executed on their lot together with the improvements thereon. On March 23, 1985, the respondent bank went bankrupt and was placed under receivership/liquidation by the Central Bank from April 25, 1985 until August 1992.3 On August 23, 1985, the bank, through Francisco Go, sent the spouses a demand letter for "accounts receivable in the total amount of P6,345.00 as of August 15, 1984,"4 which pertains to the insurance premiums advanced by respondent bank over the mortgaged property of petitioners.5 On August 23, 1995, more than 14 years from the time the loan became due and demandable, respondent bank filed a petition for extrajudicial foreclosure of mortgage of petitioners property.6 On October 18, 1995, the property was sold in a public auction by Sheriff Cabigon with Philippine Veterans Bank as the lone bidder. On April 26, 1996, petitioners filed a complaint with the RTC, Cebu City, to declare the extra-judicial foreclosure and the subsequent sale thereof to respondent bank null and void.7 In the pre-trial conference, the parties agreed to limit the issue to whether or not the period within which the bank was placed under receivership and liquidation was a fortuitous event which suspended the running of the ten-year prescriptive period in bringing actions.8 RTC Ruling: the RTC rendered its decision dismissing the complaint for lack of merit. Likewise the compulsory counterclaim of defendant is dismissed for being unmeritorious.9 It reasoned that:defendant bank was placed under receivership by the Central Bank from April 1985 until 1992. The defendant bank was given authority by the Central Bank to

INTERRUPTED THE RUNNING OF THE PRESCRIPTIVE PERIOD. IIIN RULING THAT THE WRITTEN EXTRAJUDICIAL DEMAND MADE BY RESPONDENT ON PETITIONERS WIPED OUT THE PERIOD THAT HAD ALREADY ELAPSED. IIIIN DENYING PETITIONERS MOTION FOR RECONSIDERATION OF ITS HEREIN ASSAILED DECISION.12 Petitioners argue that: since the extra-judicial foreclosure of the real estate mortgage was effected by the bank on October 18, 1995, which was fourteen years from the date the obligation became due on February 27, 1981, said foreclosure and the subsequent sale at public auction should be set aside and declared null and void ab initio since they are already barred by prescription; the court a quo erred in sustaining the respondents theory that its having been placed under receivership by the Central Bank between April 1985 and August 1992 was a fortuitous event that interrupted the running of the prescriptive period;13 the court a quos reliance on the case of ProvidentSavings Bank vs. Court of Appeals14 is misplaced since they have different sets of facts; in the present case, a liquidator was duly appointed for respondent bank and there was no judgment or court order that would legally or physically hinder or prohibit it from foreclosing petitioners property; despite the absence of such legal or physical hindrance, respondent banks receiver or liquidator failed to foreclose petitioners property and therefore such inaction should bind respondent bank;15 foreclosure of mortgages is part of the receivers/liquidators duty of administering the banks assets for the benefit of its depositors and creditors, thus, the ten-year prescriptive period which started on February 27, 1981, was not interrupted by the time during which the respondent bank was placed under receivership; and the Monetary Boards prohibition from doing business should not be construed as barring any and all business dealings and transactions by the bank, otherwise, the specific mandate to foreclose mortgages under Sec. 29 of R.A. No. 265 as amended by Executive Order No. 65 would be rendered nugatory.16Said provision reads: Section 29. Proceedings upon Insolvency Whenever, upon examination by the head of the appropriate supervising or examining department or his examiners or agents into the condition of any bank or non-bank financial intermediary performing quasibanking functions, it shall be disclosed that the condition of the same is one of insolvency, or that its continuance in business would involve probable loss to its depositors or creditors, it shall be the duty of the department head concerned forthwith, in writing, to inform the Monetary Board of the facts. The Board may, upon finding the statements of the department head to be true, forbid the institution to do business in the Philippines and designate the official of the Central Bank or a person of recognized competence in banking or finance, as receiver to immediately take charge its assets and liabilities, as expeditiously as possible, collect and gather all the assets and administer the same for the benefit of its creditors, and represent the bank personally or through counsel as he may retain in all actions or proceedings for or against the institution, exercising all the powers necessary for these purposes

including, but not limited to, bringing and foreclosing mortgages in the name of the bank. Petitioners further contend that: the demand letter, dated March 24, 1995, was sent after the ten-year prescriptive period, thus it cannot be deemed to have revived a period that has already elapsed; it is also not one of the instances enumerated by Art. 1115 of the Civil Code when prescription is interrupted;17 and the August 23, 1985 letter by Francisco Go demanding P6,345.00, refers to the insurance premium on the house of petitioners, advanced by respondent bank, thus such demand letter referred to another obligation and could not have the effect of interrupting the running of the prescriptive period in favor of herein petitioners insofar as foreclosure of the mortgage is concerned.18 Petitioners then prayed that respondent bank be ordered to pay them P100,000.00 as moral damages,P50,000.00 as exemplary damages and P100,000.00 as attorneys fees.19 Respondent for its part asserts that: the period within which it was placed under receivership and liquidation was a fortuitous event that interrupted the running of the prescriptive period for the foreclosure of petitioners mortgaged property; within such period, it was specifically restrained and immobilized from doing business which includes foreclosure proceedings; the extra-judicial demand it made on March 24, 1995 wiped out the period that has already lapsed and started anew the prescriptive period; respondent through its authorized deputy Francisco Go made the first extra-judicial demand on the petitioners on August 23, 1985; while it is true that the first demand letter of August 1985 pertained to the insurance premium advanced by it over the mortgaged property of petitioners, the same however formed part of the latters total loan obligation with respondent under the mortgage instrument and therefore constitutes a valid extra-judicial demand made within the prescriptive period.20 In their Reply, petitioners reiterate their earlier arguments and add that it was respondent that insured the mortgaged property thus it should not pass the obligation to petitioners through the letter dated August 1985.21 To resolve this petition, two questions need to be answered: (1) Whether or not the period within which the respondent bank was placed under receivership and liquidation proceedings may be considered a fortuitous event which interrupted the running of the prescriptive period in bringing actions; and (2) Whether or not the demand letter sent by respondent banks representative on August 23, 1985 is sufficient to interrupt the running of the prescriptive period. Anent the first issue, we answer in the negative. One characteristic of a fortuitous event, in a legal sense and consequently in relations to contract, is that its occurrence must be such as to render it impossible for a party to fulfill his obligation in a normal manner.22 Respondents claims that because of a fortuitous event, it was not able to exercise its right to foreclose the mortgage on petitioners property; and that since it was banned from pursuing its business and was placed under receivership from April 25, 1985 until August 1992, it could not foreclose the mortgage on petitioners property within such period since foreclosure is embraced in the phrase "doing business," are without merit.

While it is true that foreclosure falls within the broad definition of "doing business," that is: a continuity of commercial dealings and arrangements and contemplates to that extent, the performance of acts or words or the exercise of some of the functions normally incident to and in progressive prosecution of the purpose and object of its organization.23 it should not be considered included, however, in the acts prohibited whenever banks are "prohibited from doing business" during receivership and liquidation proceedings. This we made clear in Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of the Philippines24 where we explained that: Section 29 of the Republic Act No. 265, as amended known as the Central Bank Act, provides that when a bank is forbidden to do business in the Philippines and placed under receivership, the person designated as receiver shall immediately take charge of the banks assets and liabilities, as expeditiously as possible, collect and gather all the assets and administer the same for the benefit of its creditors, and represent the bank personally or through counsel as he may retain in all actions or proceedings for or against the institution, exercising all the powers necessary for these purposes including, but not limited to, bringing and foreclosing mortgages in the name of the bank.25 This is consistent with the purpose of receivership proceedings, i.e., to receive collectibles and preserve the assets of the bank in substitution of its former management, and prevent the dissipation of its assets to the detriment of the creditors of the bank.26 When a bank is declared insolvent and placed under receivership, the Central Bank, through the Monetary Board, determines whether to proceed with the liquidation or reorganization of the financially distressed bank. A receiver, who concurrently represents the bank, then takes control and possession of its assets for the benefit of the banks creditors. A liquidator meanwhile assumes the role of the receiver upon the determination by the Monetary Board that the bank can no longer resume business. His task is to dispose of all the assets of the bank and effect partial payments of the banks obligations in accordance with legal priority. In both receivership and liquidation proceedings, the bank retains its juridical personality notwithstanding the closure of its business and may even be sued as its corporate existence is assumed by the receiver or liquidator. The receiver or liquidator meanwhile acts not only for the benefit of the bank, but for its creditors as well.27 In Provident Savings Bank vs. Court of Appeals,28 we further stated that: When a bank is prohibited from continuing to do business by the Central Bank and a receiver is appointed for such bank, that bank would not be able to do new business, i.e., to grant new loans or to accept newdeposits. However, the receiver of the bank is in fact obliged to collect debts owing to the bank, which debts form part of the assets of the bank. The receiver must assemble the assets and pay the obligation of the bank under receivership, and take steps to prevent dissipation of such assets.

Accordingly, the receiver of the bank is obliged to collect pre-existing debts due to the bank, and in connection therewith, to foreclose mortgages securing such debts.29 (Emphasis supplied.) It is true that we also held in said case that the period during which the bank was placed under receivership was deemed fuerza mayor which validly interrupted the prescriptive period.30 This is being invoked by the respondent and was used as basis by the trial court in its decision. Contrary to the position of the respondent and court a quohowever, such ruling does not find application in the case at bar. A close scrutiny of the Provident case, shows that the Court arrived at said conclusion, which is an exception to the general rule, due to the peculiar circumstances of Provident Savings Bank at the time. In said case, we stated that: Having arrived at the conclusion that a foreclosure is part of a banks business activity which could not have been pursued by the receiver then because of the circumstances discussed in the Central Bank case, we are thus convinced that the prescriptive period was legally interrupted by fuerza mayor in 1972 on account of the prohibition imposed by the Monetary Board against petitioner from transacting business, until the directive of the Board was nullified in 1981.31 (Emphasis supplied.) Further examination of the Central Bank case reveals that the circumstances of Provident Savings Bank at the time were peculiar because after the Monetary Board issued MB Resolution No. 1766 on September 15, 1972, prohibiting it from doing business in the Philippines, the banks majority stockholders immediately went to the Court of First Instance of Manila, which prompted the trial court to issue its judgment dated February 20, 1974, declaring null and void the resolution and ordering the Central Bank to desist from liquidating Provident. The decision was appealed to and affirmed by this Court in 1981. Thus, the Superintendent of Banks, which was instructed to take charge of the assets of the bank in the name of the Monetary Board, had no power to act as a receiver of the bank and carry out the obligations specified in Sec. 29 of the Central Bank Act.32 In this case, it is not disputed that Philippine Veterans Bank was placed under receivership by the Monetary Board of the Central Bank by virtue of Resolution No. 364 on April 25, 1985, pursuant to Section 29 of the Central Bank Act on insolvency of banks.33 Unlike Provident Savings Bank, there was no legal prohibition imposed upon herein respondent to deter its receiver and liquidator from performing their obligations under the law. Thus, the ruling laid down in the Providentcase cannot apply in the case at bar. There is also no truth to respondents claim that it could not continue doing business from the period of April 1985 to August 1992, the time it was under receivership. As correctly pointed out by petitioner, respondent was even able to send petitioners a demand letter, through Francisco Go, on August 23, 1985 for "accounts receivable in the total amount of P6,345.00 as of August 15, 1984" for the insurance premiums advanced by respondent bank over the mortgaged property of petitioners. How it could send a demand letter on unpaid insurance premiums and not foreclose the mortgage during the time it was

"prohibited from doing business" was not adequately explained by respondent. Settled is the principle that a bank is bound by the acts, or failure to act of its receiver.34 As we held in Philippine Veterans Bank vs. NLRC,35 a labor case which also involved respondent bank, all the acts of the receiver and liquidator pertain to petitioner, both having assumed petitioners corporate existence. Petitioner cannot disclaim liability by arguing that the non-payment of MOLINAs just wages was committed by the liquidators during the liquidation period.36 However, the bank may go after the receiver who is liable to it for any culpable or negligent failure to collect the assets of such bank and to safeguard its assets.37 Having reached the conclusion that the period within which respondent bank was placed under receivership and liquidation proceedings does not constitute a fortuitous event which interrupted the prescriptive period in bringing actions, we now turn to the second issue on whether or not the extrajudicial demand made by respondent bank, through Francisco Go, on August 23, 1985 for the amount of P6,345.00, which pertained to the insurance premiums advanced by the bank over the mortgaged property, constitutes a valid extra-judicial demand which interrupted the running of the prescriptive period. Again, we answer this question in the negative. Prescription of actions is interrupted when they are filed before the court, when there is a written extra-judicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor.38 Respondents claim that while its first demand letter dated August 23, 1985 pertained to the insurance premium it advanced over the mortgaged property of petitioners, the same formed part of the latters total loan obligation with respondent under the mortgage instrument, and therefore, constitutes a valid extra-judicial demand which interrupted the running of the prescriptive period, is not plausible. The real estate mortgage signed by the petitioners expressly states that: This mortgage is constituted by the Mortgagor to secure the payment of the loan and/or credit accommodation granted to the spouses Cesar A. Larrobis, Jr. and Virginia S. Larrobis in the amount of ONE HUNDRED THIRTY FIVE THOUSAND (P135,000.00) PESOS ONLY Philippine Currency in favor of the herein Mortgagee.39 The promissory note, executed by the petitioners, also states that: FOR VALUE RECEIVED, I/WE, JOINTLY AND SEVERALLY, PROMISE TO PAY THE PHILIPPINE VETERANS BANK, OR ORDER, AT ITS OFFICE AT CEBU CITY THE SUM OF ONE HUNDRED THIRTY FIVE THOUSAND PESOS (P135,000.00), PHILIPPINE CURRENCY WITH INTEREST AT THE RATE OF FOURTEEN PER CENT (14%) PER ANNUM FROM THIS DATE UNTIL FULLY PAID.40 Considering that the mortgage contract and the promissory note refer only to the loan of petitioners in the amount of P135,000.00, we have no reason to hold that the insurance premiums, in the amount of P6,345.00, which was the

subject of the August 1985 demand letter, should be considered as pertaining to the entire obligation of petitioners. In Quirino Gonzales Logging Concessionaire vs. Court of Appeals,41 we held that the notices of foreclosure sent by the mortgagee to the mortgagor cannot be considered tantamount to written extrajudicial demands, which may validly interrupt the running of the prescriptive period, where it does not appear from the records that the notes are covered by the mortgage contract.42 In this case, it is clear that the advanced payment of the insurance premiums is not part of the mortgage contract and the promissory note signed by petitioners. They pertain only to the amount of P135,000.00 which is the principal loan of petitioners plus interest. The arguments of respondent bank on this point must therefore fail. As to petitioners claim for damages, however, we find no sufficient basis to award the same. For moral damages to be awarded, the claimant must satisfactorily prove the existence of the factual basis of the damage and its causal relation to defendants acts.43 Exemplary damages meanwhile, which are imposed as a deterrent against or as a negative incentive to curb socially deleterious actions, may be awarded only after the claimant has proven that he is entitled to moral, temperate or compensatory damages.44 Finally, as to attorneys fees, it is demanded that there be factual, legal and equitable justification for its award.45 Since the bases for these claims were not adequately proven by the petitioners, we find no reason to grant the same. WHEREFORE, the decision of the RTC and the order denying petitioners MR are hereby REVERSED and SET ASIDE. The extra-judicial foreclosure of the real estate mortgage is hereby declared null and void and respondent is ordered to return to petitioners their owners duplicate certificate of title. Costs against respondent. SO ORDERED. Puno, Callejo, Sr., Tinga, and Chico-Nazario*, JJ., concur. (3) ANA MARIA KORUGA vs.TEODORO ARCENAS, JR., et al. G.R. No. 168332 June 19, 2009 x - - - - - - - - - - - - - - - - - - - - - - -x TEODORO O. ARCENAS, JR., et al. vs. SIXTO MARELLA, JR., Presiding Judge, Br 138, RTC Makati City, and ANA MARIA KORUGA G.R. No. 169053 June 19, 2009 NACHURA, J.: CASE: Two petitions that originated from a Complaint filed by Koruga before the RTC Makati City against the Board of Directors of Banco Filipino and the Members of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) for violation of the Corporation Code, for inspection of records of a corporation by a stockholder, for receivership, and for the creation of a management committee. FACTS:

G.R. No. 168332: A Petition for Certiorari under Rule 65 praying for the annulment of the CA Resolution (April 18, 2005) granting the prayer for a Writ of Preliminary Injunction of therein petitioners Arcenas, et al. Koruga is a minority stockholder of Banco Filipino Savings and Mortgage Bank. She filed a complaint against Arcenas, et al. Korugas Complaint charged defendants with violation of Sections 31 to 34 of the Corporation Code, prohibiting selfdealing and conflict of interest of directors and officers; invoked her right to inspect the corporations records under Sections 74 and 75 of the Corporation Code; and prayed for Receivership and Creation of a Management Committee, pursuant to Rule 59 of the Rules of Civil Procedure, the Securities Regulation Code, the Interim Rules of Procedure Governing Intra-Corporate Controversies, the General Banking Law of 2000, and the New Central Bank Act. She accused the directors and officers of Banco Filipino of engaging in unsafe, unsound, and fraudulent banking practices, more particularly, acts that violate the prohibition on self-dealing. On September 12, 2003, Arcenas, et al. filed their Answer raising, among others, the trial courts lack of jurisdiction to take cognizance of the case. They also filed a Manifestation and Motion seeking the dismissal of the case on the following grounds: (a) lack of jurisdiction over the subject matter; (b) lack of jurisdiction over the persons of the defendants; (c) forum-shopping; and (d) for being a nuisance/harassment suit. They then moved that the trial court rule on their affirmative defenses, dismiss the intra-corporate case, and set the case for preliminary hearing. Ruling of the RTC: Denied the Manifestation and Motion. The RTC ruled that the result of the procedure sought by defendants Arcenas, et al. is for the Court to conduct a preliminary hearing on the affirmative defenses raised by them in their Answer. This [is] proscribed by the Interim Rules of Procedure on Intracorporate (sic) Controversies because when a preliminary hearing is conducted it is "as if a Motion to Dismiss was filed" (Rule 16, Section 6, 1997 Rules of Civil Procedure). A Motion to Dismiss is a prohibited pleading under the Interim Rules, for which reason, no favorable consideration can be given to the Manifestation and Motion of defendants, Arcenas, et al. Arcenas, et al. moved for reconsideration but the RTC denied the motion. Arcenas, et al. filed before the CA a Petition for Certiorari and Prohibition under Rule 65 of the Rules of Court with a prayer for the issuance of a writ of preliminary injunction and a temporary retraining order (TRO). Ruling of the CA: The CA issued a 60-day TRO enjoining Judge Marella from conducting further proceedings in the case. The RTC issued a Notice of Pre-trial setting the case for pre-trial. Arcenas, et al. filed a Manifestation and Motion before the CA, reiterating their application for a writ of preliminary injunction. Thus, the CA issued the assailed Resolution granting a writ of preliminary injunction. Dissatisfied, Koruga filed this Petition for Certiorari under Rule 65 of the Rules of Court. Koruga alleged that the CA effectively gave due course to Arcenas, et al.s petition when it issued a writ of preliminary injunction without factual or legal basis. She prayed that the Court restrain the CA from implementing the writ of preliminary injunction and, after due

proceedings, make the injunction against the assailed CA Resolution permanent. In their Comment, Arcenas, et al. allege, among others, that the Petition may have already been rendered moot and academic by the July 20, 2005 CA Decision, which denied their Petition, and held that the RTC did not commit grave abuse of discretion in issuing the assailed orders, and thus ordered the RTC to proceed with the trial of the case. Meanwhile, this Court issued a Resolution granting the prayer for a TRO and enjoining the Presiding Judge of Makati RTC from proceeding with the hearing of the case upon the filing by Arcenas, et al. of a P50,000.00 bond. Koruga filed a motion to lift the TRO, which this Court denied on July 5, 2006. G.R. No. 169053: A Petition for Review on Certiorari under Rule 45, with prayer for the issuance of a TRO and a writ of preliminary injunction filed by Arcenas, et al. In their Petition, Arcenas, et al. asked the Court to set aside the Decision (July 20, 2005) of the CA which denied their petition, having found no grave abuse of discretion on the part of the Makati RTC. Arcenas, et al. anchored their prayer on the ground, among others that jurisdiction over the subject matter of the case is vested by law in the BSP. ISSUE 1: Whether the writ of preliminary injunction should be annulled. HELD: The Petition in G.R. No. 168332 has become moot and academic. The writ of preliminary injunction being questioned had effectively been dissolved by the CAs July 20, 2005 Decision. Accordingly, there is no necessity to restrain the implementation of the writ of preliminary injunction issued by the CA on April 18, 2005, since it no longer exists.However, this Court finds that the CA erred in upholding the jurisdiction of, and remanding the case to, the RTC. ISSUE 2: Whether the RTC has jurisdiction to proceed with the complaint filed by Koruga against Arcenas, et al. HELD: NO. The CA erred in upholding the jurisdiction of, and remanding the case to, the RTC. It is the BSP that has jurisdiction over the case. RATIO: It is clear that the acts complained of pertain to the conduct of Banco Filipinos banking business. A bank, as defined in the General Banking Law, refers to an entity engaged in the lending of funds obtained in the form of deposits. In this country, that task is delegated to the BSP, which pursuant to its Charter, is authorized to administer the monetary, banking, and credit system of the Philippines. It is further authorized to take the necessary steps against any banking institution if its continued operation would cause prejudice to its depositors, creditors and the general public as well. The law vests in the BSP the supervision over operations and activities of banks. Koruga's allegations call for the examination of the allegedly questionable loans. Whether these loans are covered by the prohibition on self-dealing is a matter for the BSP to determine. These are not ordinary intra-corporate matters; rather, they involve banking activities which are, by law, regulated and supervised by the BSP. Furthermore, the authority to determine whether a bank is conducting business in an unsafe or unsound manner is also vested in the Monetary Board as provided by the General Banking Law of 2000.

Finally, the New Central Bank Act grants the Monetary Board the power to impose administrative sanctions on the erring bank. ISSUE 3: Whether the provisions of the Corporation Code is applicable to the Koruga's complaint and whether the Interim Rules of Procedure on Intra-Corporate Controversies, or Rule 59 of the Rules of Civil Procedure on Receivership would apply to this case HELD: NO. Korugas invocation of the provisions of the Corporation Code is misplaced. RATIO: In an earlier case with similar antecedents, the Court ruled that the Corporation Code is a general law applying to all types of corporations, while the New Central Bank Act regulates specifically banks and other financial institutions, including the dissolution and liquidation thereof. As between a general and special law, the latter shall prevail generalia specialibus non derogant. Consequently, it is not the Interim Rules of Procedure on Intra-Corporate Controversies, or Rule 59 of the Rules of Civil Procedure on Receivership, that would apply to this case. Instead, Sections 29 and 30 of the New Central Bank Act should be followed. On the strength of these provisions, it is the Monetary Board that exercises exclusive jurisdiction over proceedings for receivership of banks. Crystal clear in Section 30 is the provision that says the "appointment of a receiver under this section shall be vested exclusively with the Monetary Board." The term "exclusively" connotes that only the Monetary Board can resolve the issue of whether a bank is to be placed under receivership and, upon an affirmative finding, it also has authority to appoint a receiver. This is further affirmed by the fact that the law allows the Monetary Board to take action "summarily and without need for prior hearing." And, as a clincher, the law explicitly provides that "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 a 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."1avvphi1 From the foregoing disquisition, there is no doubt that the RTC has no jurisdiction to hear and decide a suit that seeks to place Banco Filipino under receivership. The courts jurisdiction could only be invoked after the Monetary Board had taken action on the matter and only 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. Finally, there is one other reason why Korugas complaint before the RTC cannot prosper. Given her own admission and the same is likewise supported by evidence that she is merely a minority stockholder of Banco Filipino, she would not have the standing to question the Monetary Boa rds action. Section 30 of the New Central Bank Act provides: 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.

All the foregoing discussion yields the inevitable conclusion that the CA erred in upholding the jurisdiction of, and remanding the case to, the RTC. Given that the RTC does not have jurisdiction over the subject matter of the case, its refusal to dismiss the case on that ground amounted to grave abuse of discretion. (4) EVELINA CHAVEZ and AIDA CHAVEZ-DELES vs. COURT OF APPEALS and ATTY. FIDELA VARGAS G.R. No. 174356 January 20, 2010 ABAD, J. CASE: This case is about the propriety of the CA, which hears the case on appeal, placing the property in dispute under receivership upon a claim that the defendant has been remiss in making an accounting to the plaintiff of the fruits of such property. FACTS: Respondent Fidela Vargas owned a 5-hectare mixed coconut land and rice fields in Sorsogon. Petitioner Evelina Chavez had been staying in a remote portion of the land with her family, planting coconut seedlings on the land and supervising the harvest of coconut and palay. Fidela and Evelina agreed to divide the gross sales of all products from the land between themselves. Fidela claimed that Evelina had failed to remit her share of the profits and, despite demand to turn over the administration of the property to Fidela, had refused to do so. Consequently, Fidela filed a complaint against Evelina and her daughter, Aida Deles, who was assisting her mother, for recovery of possession, rent, and damages with prayer for the immediate appointment of a receiver before the RTC. In their answer, Evelina and Aida claimed that the RTC did not have jurisdiction over the subject matter of the case since it actually involved an agrarian dispute. Ruling of the RTC: After hearing, the RTC dismissed the complaint for lack of jurisdiction based on Fidelas admission that Evelina and Aida were tenants. As tenants, the defendants also shared in the gross sales of the harvest. The court threw out Fidelas claim that, since Evelina and her family received the land already planted with fruit-bearing trees, they could not be regarded as tenants. Cultivation, said the court, included the tending and caring of the trees. The court also regarded as relevant Fidelas pending application for a 5hectare retention and Evelinas pending protest relative to her 3-hectare beneficiary share. Dissatisfied, Fidela appealed to the CA. She also filed with that court a motion for the appointment of a receiver. Ruling of the CA: On April 12, 2006 the CA granted the motion and ordained receivership of the land, noting that there appeared to be a need to preserve the property and its fruits in light of Fidelas allegation that Evelina and Aida failed to account for her share of such fruits. Parenthetically, Fidela also filed 3 estafa cases with the RTC, Olongapo City and a complaint for dispossession with the Department of Agrarian Reform Adjudication Board (DARAB) against Evelina and Aida. In all these cases, Fidela asked for the immediate appointment of a receiver for the property. Issue 1: Whether or not respondent Fidela is guilty of forum shopping considering that she had earlier filed identical applications for receivership over the subject properties in the

criminal cases she filed with the RTC, Olongapo City against petitioners Evelina and Aida and in the administrative case that she filed against them before the DARAB Held: No. Ratio: By forum shopping, a party initiates two or more actions in separate tribunals, grounded on the same cause, trusting that one or the other tribunal would favorably dispose of the matter.4 The elements of forum shopping are the same as in litis pendentia where the final judgment in one case will amount to res judicata in the other. The elements of forum shopping are: (1) identity of parties, or at least such parties as would represent the same interest in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding particulars such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration. Here, however, the various suits Fidela initiated against Evelina and Aida involved different causes of action and sought different reliefs. The present civil action that she filed with the RTC sought to recover possession of the property based on Evelina and Aidas failure to account for its fruits. The estafa cases she filed with the RTC accused the two of misappropriating and converting her share in the harvests for their own benefit. Her complaint for dispossession under Republic Act 8048 with the DARAB sought to dispossess the two for allegedly cutting coconut trees without the prior authority of Fidela or of the Philippine Coconut Authority. The above cases are similar only in that they involved the same parties and Fidela sought the placing of the properties under receivership in all of them. But receivership is not an action. It is but an auxiliary remedy, a mere incident of the suit to help achieve its purpose. Consequently, it cannot be said that the grant of receivership in one case will amount to res judicata on the merits of the other cases. The grant or denial of this provisional remedy will still depend on the need for it in the particular action. Issue 2: Whether or not the CA erred in granting respondent Fidelas application for receivership. Held: The CA erred in granting receivership over the property in dispute in this case. Ratio: For one thing, a petition for receivership under Section 1(b), Rule 59 of the Rules of Civil Procedure requires that the property or fund subject of the action is in danger of being lost, removed, or materially injured, necessitating its protection or preservation. Its object is the prevention of imminent danger to the property. If the action does not require such protection or preservation, the remedy is not receivership. Here Fidelas main gripe is that Evelina and Aida deprived her of her share of the lands produce. She does not claim that the land or its productive capacity would disappear or be wasted if not entrusted to a receiver. Nor does Fidela claim that the land has been materially injured, necessitating its protection and preservation. Because receivership is a harsh remedy that can be granted only in extreme situations,7 Fidela must prove a clear right to its issuance. But she has not. Indeed, in none of the other cases she filed against Evelina and Aida has that remedy been granted her.8 Besides, the RTC dismissed Fidelas action for lack of jurisdiction over the case, holding that the issues it raised properly belong to the DARAB. The case before the CA is but an

offshoot of that RTC case. Given that the RTC has found that it had no jurisdiction over the case, it would seem more prudent for the CA to first provisionally determine that the RTC had jurisdiction before granting receivership which is but an incident of the main action. The Court GRANTS the petition. The receivership is LIFTED.