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1/19/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 242

492 SUPREME COURT REPORTS ANNOTATED


Pacific Banking Corporation Employees Organization vs.
Court of Appeals

*
G.R. No. 109373. March 20, 1995.

PACIFIC BANKING CORPORATION EMPLOYEES


ORGANIZATION, PAULA S. PAUG, and its officers and
members, petitioners, vs. THE HONORABLE COURT OF
APPEALS and VITALIANO N. NAÑAGAS II, as
Liquidator of Pacific Banking Corporation, respondents.
*
G.R. No. 112991. March 20, 1995.

THE PRESIDENT OF THE PHILIPPINE DEPOSIT


INSURANCE CORPORATION, as Liquidator of the Pacific
Banking Corporation, petitioner, vs. COURT OF
APPEALS, HON. JUDGE REGINO T. VERIDIANO II,
DEPUTY SHERIFF RAMON ENRIQUEZ and ANG ENG
JOO, ANG KEONG LAN and E.J

_______________

* SECOND DIVISION.

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Pacific Banking Corporation Employees Organization vs.
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ANG INT’L., LTD. represented by their Attorney-in-fact,


GONZALO C. SY, respondents.

Remedial Law; Actions; Special Proceedings; Distinction


Between an Ordinary Action and a Special Proceeding.—
Elucidating the crucial distinction between an ordinary action
and a special proceeding, Chief Justice Moran states: Action is the
act by which one sues another in a court of justice for the
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enforcement or protection of a right, or the prevention or redress


of a wrong while special proceeding is the act by which one seeks
to establish the status or right of a party, or a particular fact.
Hence, action is distinguished from special proceeding in that the
former is a formal demand of a right by one against another,
while the latter is but a petition for a declaration of a status, right
or fact. Where a party litigant seeks to recover property from
another, his remedy is to file an action. Where his purpose is to
seek the appointment of a guardian for an insane, his remedy is a
special proceeding to establish the fact or status of insanity
calling for an appointment of guardianship.

Same; Same; Same; A petition for liquidation of an insolvent


corporation should be classified a special proceeding and not an
ordinary action.—Considering this distinction, a petition for
liquidation of an insolvent corporation should be classified a
special proceeding and not an ordinary action. Such petition does
not seek the enforcement or protection of a right nor the
prevention or redress of a wrong against a party. It does not pray
for affirmative relief for injury arising from a party’s wrongful act
or omission nor state a cause of action that can be enforced
against any person.

Same; Same; Same; The petition only seeks a declaration of


the corporation’s state of insolvency and the concomitant right of
creditors and the order of payment of their claims in the
disposition of the corporation’s assets.—What it seeks is merely a
declaration by the trial court of the corporation’s insolvency so
that its creditors may be able to file their claims in the settlement
of the corporation’s debts and obligations. Put in another way, the
petition only seeks a declaration of the corporation’s state of
insolvency and the concomitant right of creditors and the order of
payment of their claims in the disposition of the corporation’s
assets.

Same; Same; Same; Liquidation proceedings do not resemble


petitions for interpleader.—Contrary to the rulings of the
Fourteenth Division, liquidation proceedings do not resemble
petitions for inter-

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pleader. For one, an action for interpleader involves claims on a


subject matter against a person who has no interest therein. This
is not the case in a liquidation proceeding where the Liquidator,
as representative of the corporation, takes charge of its assets and
liabilities for the benefit of the creditors. He is thus charged with
insuring that the assets of the corporation are paid only to
rightful claimants and in the order of payment provided by law.

Same; Same; Same; A liquidation proceeding resembles the


proceeding for the settlement of estate of deceased persons under
Rules 73 to 91 of the Rules of Court.—Rather, a liquidation
proceeding resembles the proceeding for the settlement of estate
of deceased persons under Rules 73 to 91 of the Rules of Court.
The two have a common purpose: the determination of all the
assets and the payment of all the debts and liabilities of the
insolvent corporation or the estate. The Liquidator and the
administrator or executor are both charged with the assets for the
benefit of the claimants. In both instances, the liability of the
corporation and the estate is not disputed. The court’s concern is
with the declaration of creditors and their rights and the
determination of their order of payment.

Same; Same; Same; As in the settlement of estates, multiple


appeals are allowed in proceedings for liquidation of an insolvent
corporation.—Furthermore, as in the settlement of estates,
multiple appeals are allowed in proceedings for liquidation of an
insolvent corporation.

Same; Same; Same; Appeals; A record on appeal is required


under the Interim Rules and Guidelines in special proceedings and
for cases where multiple appeals are allowed.—In G.R. No. 112991
(the case of the Stockholders/Investors), the Liquidator’s notice of
appeal was filed on time, having been filed on the 23rd day of
receipt of the order granting the claims of the
Stockholders/Investors. However, the Liquidator did not file a
record on appeal with the result that he failed to perfect his
appeal. As already stated, a record on appeal is required under
the Interim Rules and Guidelines in special proceedings and for
cases where multiple appeals are allowed. The reason for this is
that the several claims are actually separate ones and a decision
or final order with respect to any claim can be appealed.
Necessarily the original record on appeal must remain in the trial
court where other claims may still be pending.

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Pacific Banking Corporation Employees Organization vs. Court of


Appeals

Same; Same; Same; Same; In liquidation proceedings, the


function of the trial court is not limited to assisting in the
implementation of the orders of the Monetary Board.—The Union’s
contention is untenable. In liquidation proceedings, the function
of the trial court is not limited to assisting in the implementation
of the orders of the Monetary Board. Under the same section (§29)
of the law invoked by the Union, the court has authority to set
aside the decision of the Monetary Board “if there is a convincing
proof that the action is plainly arbitrary and made in bad faith.”

PETITIONS for review the decisions of the Court of


Appeals.

The facts are stated in the opinion of the Court.


          Potenciano A. Flores for petitioners in G.R. No.
109373.
     Puruganan, Chato, Tan & Geronimo for petitioner in
G.R. No. 112991.
          Marbibi Law Office for private respondent in G.R.
No. 112991.

MENDOZA, J.:

These cases have been consolidated because the principal


question involved is the same: whether a petition for
liquidation under §29 of Rep. Act No. 265, otherwise known
as the Central Bank Act, is a special proceeding or an
ordinary civil action. The Fifth and the Fourteenth
Divisions of the Court of Appeals reached opposite results
on this question and consequently applied different periods
for appealing.
The facts are as follows:

I. Proceedings in the CB and the RTC

On July 5, 1985, the Pacific Banking Corporation (PaBC)


was placed under receivership by the Central Bank of the
Philippines pursuant to Resolution No. 699 of its Monetary
Board. A few
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1
months later, it was placed 2
under liquidation and a
Liquidator was appointed.
On April 7, 1986, the Central Bank filed with the
Regional Trial Court of Manila, Branch 31, a petition
entitled “Petition for Assistance
3
in the Liquidation of
Pacific Banking Corporation.” The petition was approved,
after which creditors filed their claims with the court.
On May4
17, 1991, a new Liquidator, Vitaliano N.
Nañagas, President of the Philippine Deposit Insurance
Corporation (PDIC), was appointed by the Central Bank.
On March 13, 1989 the Pacific Banking Corporation
Employees Organization (Union for short), petitioner in
G.R. No. 109373, filed a complaint-in-intervention seeking
payment of holiday pay, 13th month pay differential, salary
increase differential, Christmas bonus, and cash equivalent
of Sick Leave Benefits due its members as employees of
PaBC. In its order dated September 13, 1991, the trial
court ordered
5
payment of the principal claims of the
Union.

_______________

1 MB Resolution No. 1233 issued on November 22, 1985.


2 Renan V. Santos, Special Assistant to the Governor of the Central
Bank of the Philippines.
3 Docketed as SP. Proc. No. 86-35313.
4 MB Resolution No. 537.
5 The dispositive portion of the order, dated September 13, 1991, reads:

WHEREFORE, the Court hereby directs the Liquidator to immediately compute


and pay the following monetary claims of the plaintiffs/intervenors:

a) Holiday pay covering the period from November 1, 1974 to October 31,
1985;
b) 13th month pay in 1985 and salary differential pay to employees with
permanent appointments as of January 1982 including the 28% salary
increase under the 1982 CBA; and
c) 1985 Christmas bonus;
d) Commutation and payment of all unused sick leave credits; and
e) The payment of 10% of the total claims as computed, due and paid to the
plaintiffs/intervenors’ counsel, Atty. Potenciano

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The Liquidator received a copy of the order on September


16, 1991. On October 16, 1991, he filed a Motion for
Reconsideration and Clarification of the order. In his order
of December
6
6, 1991, the judge modified his September 13,
1991 but in effect denied the Liquidator’s motion for
reconsideration. This order was re-

_______________

A. Flores, as attorney’s fees through the Branch Clerk of Court.


The Monetary Claims of the plaintiffs/intervenors for the Emergency Leave
credits, Hospital Assistance Funds, and Anniversary Increase are DENIED
unless supporting documents are presented by claimants/intervenors as attested
by PaBC’s physician and/or responsible officers of the PaBC that they are
entitled to said claims.
SO ORDERED.

6 The dispositive portion of the order, dated December 6, 1991, reads:

WHEREFORE, the Order of this Court dated September 13, 1991 is hereby
modified and the Liquidator is ordered to immediately compute and pay the
following monetary claims of the plaintiffs/intervenors:

a) The claim for holiday pay covering the period from November 1, 1974 to
October 31, 1985;
b) The claim for 28% salary differential pursuant to the CBA increase;
c) The claim for Christmas Bonus which should be pro rated based on the
employees’ length of service rendered up to 1985 when the Pacific Banking
Corporation was placed under liquidation; and
d) The claim for unused sick leave benefits which should be computed and
paid accordingly.

Furthermore, this Court orders:

a) The prorata payment of 13th month pay in accordance with the


position taken by the Liquidator provided in the Implementing
Rules of the Department of Labor; and
b) Consistent with the previous orders of this Court payment of 10%
attorney’s fees should be deducted from the total claims afforded to
the plaintiffs/intervenors and other employees of the bank (PaBC).

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Pacific Banking Corporation Employees Organization vs.
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ceived by the Liquidator on December 9, 1991. The


following day, December 10, 1991, he filed a Notice of
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Appeal and a Motion for Additional Time to Submit Record


on Appeal. On December 20, 1991, he filed the Record on
Appeal. On December 23, 1991, another Notice of Appeal
was filed by the Office of the Solicitor General in behalf of
Nañagas.
In his order of February 10, 1992, respondent judge
disallowed the Liquidator’s Notice of Appeal on the ground
that it was late, i.e., more than 15 days after receipt of the
decision. The judge declared his September 13, 1991 order
and subsequent orders to be final and executory and denied
reconsideration. On March 27, 1992 he granted the Union’s
Motion for Issuance of a Writ of Execution.
Ang Keong Lan and E.J. Ang Int’l., private respondents
in G.R. No. 112991, likewise filed claims for the payment of
investment in the PaBC allegedly in the form of shares of
stocks amounting to US$2,531,632.18. The shares of stocks,
consisting of 154,462 common shares, constituted 11% of
the total subscribed capital stock of the PaBC. They alleged
that their claim constituted foreign exchange capital
investment entitled to preference in payment under the
Foreign Investments Law.
In his order dated September 11, 1992, respondent judge
of the RTC directed the Liquidator to pay private
respondents7
the total amount of their claim as preferred
creditors.
The Liquidator received the order on September 16,
1992. On September 30, 1992 he moved for reconsideration,
but his motion was denied by the court on October 2, 1992.
He received the order denying his Motion for
Reconsideration on October 5, 1992. On

_______________

7 The dispositive portion of the trial court’s order, dated September 11,
1992, reads:
WHEREFORE, premises considered, the Liquidator of PaBC is ordered
to pay claimants, through their Attorney-in-Fact Gonzalo C. Sy, their total
investment of US$2,531,632.18 as preferred creditors. Dividends and/or
interest that accrued in favor of claimants is hereby deferred pending
study by the Liquidator who is hereby ordered to submit his report and
recommendation within thirty (30) days from receipt of this Order.

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October 14, 1992 he filed a Notice of Appeal from the orders


of September 16, 1992 and October 2, 1992. As in the case
of the Union, however, the judge ordered the Notice of
Appeal stricken off the record on the ground that it had
been filed without authority of the Central Bank and
beyond 15 days. In his order of October 28, 1992, the judge
directed the execution of his September 11, 1992 order
granting the Stockholders/Investors’ claim.

II. Proceedings in the Court of Appeals

The Liquidator filed separate Petitions for Certiorari,


Prohibition and Mandamus in the Court of Appeals to set
aside the orders of the trial court denying his appeal from
the orders granting the claims of Union and of the
Stockholders/Investors. The two Divisions of the Court of
Appeals, to which the cases were separately raffled,
rendered conflicting rulings.
In its decision of November 17, 1992 in CA-G.R.
8
SP No.
27751 (now G.R. No. 109373) the Fifth Division held in the
case of the Union that the proceeding before the trial court
was a special proceeding and, therefore, the period for
appealing from any decision or final order rendered therein
is 30 days. Since the notice of appeal of the Liquidator was
filed on the 30th day of his receipt of the decision granting
the Union’s claims, the appeal was brought on time. The
Fifth Division, therefore, set aside the orders of the lower
court and directed the latter to give due course to the
appeal of the Liquidator and set the Record on Appeal he
had filed for hearing.
On the other hand, 9
on December 16, 1993, the
Fourteenth Division ruled in CA-G.R. SP No. 29351 (now
G.R. No. 112991) in the case of the Stockholders/Investors
that a liquidation pro-

_______________

8 Justice Serafin E. Camilon, ‘Chairman and ponente; Justices Serafin


V.C. Guingona and Cancio C. Garcia, Members, concurring.
9 Justice Antonio M. Martinez, Chairman and ponente; Justices
Artemon D. Luna and Ma. Alicia Austria-Martinez, Members, concurring.

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ceeding is an ordinary action. Therefore, the period for


appealing from any decision or final order rendered therein
is 15 days and that since the Liquidator’s appeal notice was
filed on the 23rd day of his receipt of the order appealed
from, deducting the period during which his motion for
reconsideration was pending, the notice of appeal was filed
late. Accordingly, the Fourteenth Division dismissed the
Liquidator’s petition.

III. Present Proceedings

The Union and the Liquidator then separately filed


petitions before this Court.
In G.R. No. 109373 the Union contends that:

1. The Court of Appeals acted without jurisdiction


over the subject matter or nature of the suit.
2. The Court of Appeals gravely erred in taking
cognizance of the petition for certiorari filed by
Nañagas who was without any legal authority to
file it.
3. The Court of Appeals erred in concluding that the
case is a special proceeding governed by Rules 72 to
109 of the Revised Rules of Court.
4. The Court of Appeals erred seriously in concluding
that the notice of appeal filed by Nañagas was filed
on time.
5. The Court of Appeals erred seriously in declaring
that the second notice of appeal filed on December
23, 1991 by the Solicitor General is a superfluity.

On the other hand, in G.R. No. 112991 the Liquidator


contends that:

1. The Petition for Assistance in the Liquidation of the


Pacific Banking Corporation is a Special Proceeding
case and/or one which allows multiple appeals, in
which case the period of appeal is 30 days and not
15 days from receipt of the order/judgment
appealed from.
2. Private respondents are not creditors of PaBC but
are plain stockholders whose right to receive
payment as such would accrue only after all the
creditors of the insolvent bank have been paid.

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3. The claim of private respondents in the amount of


US$22,531,632.18 is not in the nature of foreign
investment as it is understood in law.
4. The claim of private respondents has not been
clearly established and proved.
5. The issuance of a writ of execution against the
assets of PaBC was made with grave abuse of
discretion.

The petitions in these cases must be dismissed. First. As


stated in the beginning, the principal question in these
cases is whether a petition for liquidation under §29 of Rep.
Act No. 265 is in the nature of a special proceeding. If it is,
then the period of appeal is 30 days and the party
appealing must, in addition to a notice of appeal, file with
the trial court a record on appeal in order to perfect his
appeal. Otherwise, if a liquidation proceeding is an
ordinary action, the period of appeal is 15 days from notice
of the decision or final order appealed from.
BP Blg. 129 provides:

§39. Appeals.—The period of appeal from final orders, resolutions,


awards, judgments, or decisions of any court in all cases shall be
fifteen (15) days counted from the notice of the final order,
resolution, award, judgment, or decision appealed from: Provided,
however, that in habeas corpus cases the period for appeal shall
be forty-eight (48) hours from the notice of the judgment appealed
from.
No record on appeal shall be required to take an appeal. In lieu
thereof, the entire record shall be transmitted with all the pages
prominently numbered consecutively, together with an index of
the contents thereof.
This section shall not apply in appeals in special proceedings
and in other cases wherein multiple appeals are allowed under
applicable provisions of the Rules of Court.

The Interim Rules and Guidelines to implement BP Blg.


129 provides:

19. Period of Appeals.—


(a) All appeals, except in habeas corpus cases and in the cases
referred to in paragraph (b) hereof, must be taken within fifteen
(15) days from notice of the judgment, order, resolution or award
appealed from.

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Pacific Banking Corporation Employees Organization vs.
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(b) In appeals in special proceedings in accordance with Rule 109


of the Rules of Court and other cases wherein multiple appeals
are allowed, the period of appeals shall be thirty (30) days, a
record on appeal being required.

The Fourteenth Division of the Court of Appeals held that


the proceeding is an ordinary action
10
similar to an action for
interpleader under Rule 63. The Fourteenth Division
stated:

The petition filed is akin to an interpleader under Rule 63 of the


Rules of Court where there are conflicting claimants or several
claims upon the same subject matter, a person who claims no
interest thereon may file an action for interpleader to compel the
claimants to “interplead” and litigate their several claims among
themselves. (Section 1, Rule 63).
An interpleader is in the category of a special civil action under
Rule 62 which, like an ordinary action, may be appealed only
within fifteen (15) days from notice of the judgment or order
appealed from. Under Rule 62, the preceding rules covering
ordinary civil actions which are not inconsistent with or may
serve to supplement the provisions of the rule relating to such
civil actions are applicable to special civil actions. This embraces
Rule 41 covering appeals from the regional trial court to the Court
of Appeals.
....
Thus, under Section 1 Rule 2 of the Rules of Court, an action is
defined as “an ordinary suit in a court of justice by which one
party prosecutes another for the enforcement or protection of a
right or the prevention or redress of a wrong.” On the other hand,
Section 2 of the same Rule states that “every other remedy
including one to establish the status or right of a party or a
particular fact shall be by special proceeding.”
To our mind, from the aforequoted definitions of an action and
a special proceeding, the petition for assistance of the court in the
liquidation of an asset of a bank is not “one to establish the status
or right of a party or a particular fact.” Contrary to the
submission of the

_______________

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10 §1. Interpleader when proper.—Whenever conflicting claims upon the same


subject matter are or may be made against a person, who claims no interest
whatever in the subject matter, or an interest which in whole or in part is not
disputed by the claimants, he may bring an action against the conflicting
claimants to compel them to interplead and litigate their several claims among
themselves.

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petitioner, the petition is not intended to establish the fact of


insolvency of the bank. The insolvency of the bank had already
been previously determined by the Central Bank in accordance
with Section 9 of the CB Act before the petition was filed. All that
needs to be done is to liquidate the assets of the bank and thus
the assistance of the respondent court is sought for that purpose.
It should be pointed out that this petition filed is not among
the cases categorized as a special proceeding under Section 1,
Rule 72 of the Rules of Court, nor among the special proceedings
that may be appealed under Section 1, Rule 109 of the Rules.

We disagree with the foregoing view of the Fourteenth


Division. Rule 2 of the Rules of Court provide:

§1. Action defined.—Action means an ordinary suit in a


court of justice, by which one party prosecutes
another for the enforcement or protection of a right,
or the prevention or redress of a wrong.
§2. Special proceeding distinguished.—Every other
remedy, including one to establish the status or
right of a party or a particular fact, shall be by
special proceeding.

Elucidating the crucial distinction between an ordinary


action 11and a special proceeding, Chief Justice Moran
states:

Action is the act by which one sues another in a court of justice for
the enforcement or protection of a right, or the prevention or
redress of a wrong while special proceeding is the act by which
one seeks to establish the status or right of a party, or a
particular fact. Hence, action is distinguished from special
proceeding in that the former is a formal demand of a right by one
against another, while the latter is but a petition for a declaration
of a status, right or fact. Where a party litigant seeks to recover
property from another, his remedy is to file an action. Where his
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purpose is to seek the appointment of a guardian for an insane,


his remedy is a special proceeding to establish the fact or status of
insanity calling for an appointment of guardianship.

Considering this distinction, a petition for liquidation of an


insolvent corporation should be classified a special
proceeding

_______________

11 1 MORAN, COMMENTS ON THE RULES OF COURT 119-120


(1979), citing Hagans v. Wislizenus, 42 Phil. 880, 882 (1922).

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and not an ordinary action. Such petition does not seek the
enforcement or protection of a right nor the prevention or
redress of a wrong against a party. It does not pray for
affirmative relief for injury arising from a party’s wrongful
act or omission nor state a cause of action that can be
enforced against any person.
What it seeks is merely a declaration by the trial court
of the corporation’s insolvency so that its creditors may be
able to file their claims in the settlement of the
corporation’s debts and obligations. Put in another way, the
petition only seeks a declaration of the corporation’s state
of insolvency and the concomitant right of creditors and the
order of payment of their claims in the disposition of the
corporation’s assets.
Contrary to the rulings of the Fourteenth Division,
liquidation proceedings do not resemble petitions for
interpleader. For one, an action for interpleader involves
claims on a subject
12
matter against a person who has no
interest therein. This is not the case in a liquidation
proceeding where the Liquidator, as representative of the
corporation, takes charge 13
of its assets and liabilities for the
benefit of the creditors. He is thus charged with insuring
that the assets of the corporation are paid only to rightful
claimants and in the order of payment provided by law.
Rather, a liquidation proceeding resembles the
proceeding for the settlement of estate of deceased persons
under Rules 73 to 91 of the Rules of Court. The two have a
common purpose: the determination of all the assets and
the payment of all the debts and liabilities of the insolvent

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corporation or the estate. The Liquidator and the


administrator or executor are both charged with the assets
for the benefit of the claimants. In both instances, the
liability of the corporation and the estate is not disputed.
The court’s concern is with the declaration of creditors and
their rights and the determination of their order of
payment.
Furthermore, as in the settlement of estates, multiple
appeals are allowed in proceedings for liquidation of an
insolvent corporation. As the Fifth Division of the Court of
Appeals, quoting the Liquidator, correctly noted:

_______________

12 Alvarez v. Commonwealth, 65 Phil. 302 (1938).


13 Rep. Act No. 265, §29, as amended.

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A liquidation proceeding is a single proceeding which consists of a


number of cases properly classified as “claims.” It is basically a
two-phased proceeding. The first phase is concerned with the
approval and disapproval of claims. Upon the approval of the
petition seeking the assistance of the proper court in the
liquidation of a closed entity, all money claims against the bank
are required to be filed with the liquidation court. This phase may
end with the declaration by the liquidation court that the claim is
not proper or without basis. On the other hand, it may also end
with the liquidation court allowing the claim. In the latter case,
the claim shall be classified whether it is ordinary or preferred,
and thereafter included Liquidator. In either case, the order
allowing or disallowing a particular claim is final order, and may
be appealed by the party aggrieved thereby.
The second phase involves the approval by the Court of the
distribution plan prepared by the duly appointed liquidator. The
distribution plan specifies in detail the total amount available for
distribution to creditors whose claim were earlier allowed. The
Order finally disposes of the issue of how much property is
available for disposal. Moreover, it ushers in the final phase of the
liquidation proceeding—payment of all allowed claims in
accordance with the order of legal priority and the approved
distribution plan.
Verily, the import of the final character of an Order of
allowance or disallowance of a particular claim cannot be
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overemphasized. It is the operative fact that constitutes a


liquidation proceeding a “case where multiple appeals are allowed
by law.” The issuance of an Order which, by its nature, affects
only the particular claims involved, and which may assume
finality if no appeal is made therefrom, ipso facto creates a
situation where multiple appeals are allowed.
A liquidation proceeding is commenced by the filing of a single
petition by the Solicitor General with a court of competent
jurisdiction entitled, “Petition for Assistance in the Liquidation of
e.g., Pacific Banking Corporation. All claims against the insolvent
are required to be filed with the liquidation court. Although the
claims are litigated in the same proceeding, the treatment is
individual. Each claim is heard separately. And the Order issued
relative to a particular claim applies only to said claim, leaving
the other claims unaffected, as each claim is considered separate
and distinct from the others. Obviously, in the event that an
appeal from an Order allowing or disallowing a particular claim is
made, only said claim is affected, leaving the others to proceed
with their ordinary course. In such case, the original records of
the proceeding are not elevated to the appellate court. They
remain with the liquidation court. In lieu of the original record, a
record of appeal is instead required to be prepared and
transmitted to the appellate court.

506

506 SUPREME COURT REPORTS ANNOTATED


Pacific Banking Corporation Employees Organization vs. Court of
Appeals

Inevitably, multiple appeals are allowed in liquidation


proceedings. Consequently, a record on appeal is necessary in
each and every appeal made. Hence, the period to appeal
therefrom should be thirty (30) days, a record on appeal being
required. (Record, pp. 162-164).

In G.R. No. 112991 (the case of the Stockholders/Investors),


the Liquidator’s notice of appeal was filed on time, having
been filed on the 23rd day of receipt of the order granting
the claims of the Stockholders/Investors. However, the
Liquidator did not file a record on appeal with the result
that he failed to perfect his appeal. As already stated, a
record on appeal is required under the Interim Rules and
Guidelines in special proceedings and for cases where
multiple appeals are allowed. The reason for this is that
the several claims are actually separate ones and a decision
or final order with respect to any claim can be appealed.

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Necessarily the original record on appeal must remain in


the trial court where other claims may still be pending.
Because of the Liquidator’s failure to perfect his appeal,
the order granting the claims of the Stockholders/Investors
became final. Consequently, the Fourteenth Division’s
decision dismissing the Liquidator’s Petition for Certiorari,
Prohibition and Mandamus must be affirmed albeit for a
different reason.
On the other hand, in G.R. No. 109373 (case of the Labor
Union), we find that the Fifth Division correctly granted
the Liquidator’s Petition for Certiorari, Prohibition and
Mandamus. As already noted, the Liquidator filed a notice
of appeal and a motion for extension to file a record on
appeal on December 10, 1991, i.e., within 30 days of his
receipt of the order granting the Union’s claim. Without
waiting for the resolution of his motion for extension, he
filed on December 20, 1991 within the extension sought a
record on appeal. Respondent judge thus erred in
disallowing the notice on appeal and denying the
Liquidator’s motion for extension to file a record on appeal.
The Fifth Division of the Court of Appeals correctly
granted the Liquidator’s Petition for Certiorari, Prohibition
and Mandamus and its decision should, therefore, be
affirmed.
Second. In G.R. No. 109373, The Union claims that
under §29 of Rep. Act No. 265, the court merely assists in
adjudicating the claims of creditors, preserves the assets of
the institution, and

507

VOL. 242, MARCH 20, 1995 507


Pacific Banking Corporation Employees Organization vs.
Court of Appeals

implements the liquidation plan approved by the Monetary


Board and that, therefore, as representative of the
Monetary Board, the Liquidator cannot question the order
of the court or appeal from it. It contends that since the
Monetary Board had previously admitted PaBC’s liability
to the laborers by in fact setting aside the amount of
P112,234,292.44 for the payment of their claims, there was
nothing else for the Liquidator to do except to comply with
the order of the court.
The Union’s contention is untenable. In liquidation
proceedings, the function of the trial court is not limited to
assisting in the implementation of the orders of the
Monetary Board. Under the same section (§29) of the law
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invoked by the Union, the court has authority to set aside


the decision of the Monetary Board “if there is a convincing
proof that
14
the action is plainly arbitrary and made in bad
faith.” As this Court
15
held in Rural Bank of Buhi, Inc. v.
Court of Appeals:

There is no question that the action of the Monetary Board in this


regard may be subject to judicial review. Thus, it has been held
that the courts may interfere with the Central Bank’s exercise of
discretion in determining whether or not a distressed bank shall
be supported or liquidated. Discretion has its limits and has never
been held to include arbitrariness, discrimination or bad faith
(Ramos v. Central Bank of the Philippines, 41 SCRA 567 [1971]).

In truth, the Liquidator is the representative not only of


the Central Bank but also of the insolvent bank. Under
§§28A-29 of Rep. Act No. 265 he acts in behalf of the bank
“personally or through counsel as he may retain, in all
actions or proceedings for or against the corporation” and
he has authority “to do whatever may be necessary for
these purposes.” This authority includes the power to
appeal from the decisions or final orders of the court which
he believes to be contrary to the interest of the bank.
Finally the Union contends that the notice of appeal and
motion for extension of time to file the record on appeal
filed in

_______________

14 Salud v. Central Bank of the Philippines, 143 SCRA 590 (1986).


15 162 SCRA 288 (1988).

508

508 SUPREME COURT REPORTS ANNOTATED


Pacific Banking Corporation Employees Organization vs.
Court of Appeals

behalf of the Central Bank was not filed by the Office of the
Solicitor General as counsel for the Central Bank. This
contention has no merit. On October 22, 1992, as Assistant
Solicitor General Cecilio O. Estoesta informed the trial
court on March 27, 1992, the OSG had previously
authorized lawyers of 16
the PDIC to prepare and sign
pleadings in the case. Conformably thereto the Notice of
Appeal and the Motion for Additional Time to Submit
Record on Appeal filed were jointly signed by Solicitor

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Reynaldo I. Saludares
17
in behalf of the OSG and by lawyers
of the PDIC.
WHEREFORE, in G.R. No. 109373 and G.R. No. 112991,
the decisions appealed from are AFFIRMED.
SO ORDERED.

Narvasa (C.J., Chairman), Bidin, Regalado and Puno,


JJ., concur.

Judgment affirmed.

Note.—Perfection of an appeal within the time provided


by law is jurisdictional and failure to observe the period is
fatal. (Kabushi Kaisha Isetan vs. Intermediate Appellate
Court, 203 SCRA 583 [1991])

——o0o——

_______________

16 Rollo, p. 41, G.R. No. 112991.


17 Annexes “H” and “I”, Rollo, CA-G.R. SP No. 27751.

509

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