General Bank and Trust Company vs Central Bank Facts: the monetary board granted the Genbank an emergency

loan initially from 150Million to 305 million and designated Arnulfo Aurellano to act as comptroller. The emergency loan was used to fixed the financial diffulculties of genbank resulted from of unsound banking practices employed by management. The all-out financial support given to Filcapital Development Corporation (a related interest of the Yujuico Family Group and directors and officers of Genbank) and the standing practice of extending DOSRI loans which reached a peak of P172.3 million of the total loan portfolio of P666.78 million. And 91.7% of such DOSRI accounts were unsecured leaving only 8% thereof secured. All these unsound practices occurred way before their resulting crippling effects became manifest sometime in December 1976, further leading the bank to resort to other unsound banking practices, like incurring daily overdrafts. On March 29, 1977, the Monetary Board adopted a Resolution determining and confirming that Genbank was insolvent and could not resume business with safety to its depositors, creditors and general public, and ordering the liquidation of Genbank, the designation of Arnulfo B. Aurellano as Liquidator and the approval of a liquidation plan whereby all the assets of Genbank should be purchased by the Lucio Tan Group which should also assume all the liabilities under certain terms and conditions. the Liquidator; Allied Banking Corporation ; and the individual members of the Lucio Tan Willy Co group executed a Memorandum of Agreement in implementation of Monetary Board Resolution, whereby the Liquidator sold and transferred to Allied Bank all the assets of Genbank and Allied Bank assumed all the liabilities of Genbank, subject to certain terms and conditions. On May 5, 1982, Worldwide Insurance & Surety Company;Midland Insurance Corporation; and Standard Insurance Co., Inc. filed a motion for intervention in the liquidation proceeding. Said motion alleged that the closure and liquidation of [Genbank] ' were done arbitrarily and in bad faith. On May 7, 1982, the court a quo issued an order approving the intervention. About a couple of years later, appellee Genbank joined the intervention Petitioner Genbank claims that it was not insolvent when the Resolution was issued on March 25, 1977, its assets at that time standing at P599,743,639.00, while its total liabilities only amounted to P586,640,450.00, thus having surplus assets over liabilities in the amount ofP13,103,189.00.Plodding on, it insists that the definition of insolvency in Section 29 of RA 265, as amended by PD 1937, should have been made the tipping factor for determining on whether or not the declaration made by respondent CB, acting through the Monetary Board, that petitioner Genbank is insolvent constitutes grave abuse of discretion.
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Genbank was ordered closed by the CB on March 25, 1977, when 'insolvency was defined under Section 29 of RA 265, as amended on September 22, 1976 by PD 1007,where and when the insolvency concept carried a slightly differentbut contextually significant connotation. As thus then defined, insolvency was understood to mean as 'the inability of a banking institution to pay its liabilities as they fall due in the ordinary course of business.Respondent CB found Genbank undoubtedly incapable to generate liquid funds by itself in order to meet drawdowns on its deposits and deposit substitutes and to pay for other maturing obligations, as well as advances from the Central Bank. Genbank also asserts the proviso that 'the inability to pay of an otherwise non-insolvent bank caused by extraordinary demands induced by financial panic commonly evidenced by a run on the bank in the banking community.While conceding that it was then not in a position to generate funds by itself in order to meet drawdowns on its deposits and deposit substitutes and to pay for other maturing obligations, as well as its advances from the Central Bank, petitioner Genbank nonetheless argues that it did not fall within the concept of insolvency contemplated in the amendatory PD No. 1007 since what it was then experiencing was a liquidity problem attributed to a bank run.

Issue: whether or not respondent CB violated any existing procedural or substantive law when its Monetary Board (MB) issued Resolution No. 675 dated March 25, 1977 ordering the closure of Genbank, and eventually MB Resolution No. 677 dated March 29, 1977, adopting the Lucio Tan Group's bid as liquidation plan of petitioner Genbank, or otherwise committed grave abuse of discretion which will justify reversal of the assailed MB resolutions.

Held: Petitioner Genbank cannot plausibly be allowed to

adopt a statutory definition of 'insolvency which was not set forth in the law when Resolution No. 675 was issued.The Monetary Board's action could not have run counter to a legal provision inexistent at the time when it issued the resolution in question. The aforementioned proviso thus relied upon by petitioner Genbank excludes from the definition of insolvency, 'the inability to pay of an otherwise non-insolvent bank caused by extraordinary demands induced by financial panic commonly evidenced by a run on the bank in the banking community. As it were, the applicability of that proviso presupposes that the struggling bank, Genbank in this case, should, in the first place be 'an otherwise non-insolvent bank and the existence of a bank run is the sole and exclusive cause of its inability to pay its obligations.In other words, the existence of a bank run is not, without more, a saving grace for any bank, absolutely preventing the CB or the Monetary Board from ordering its

closure due to insolvency. If the bank is not 'non-insolvent in contemplation of the definition under Section 29 of RA 265, as amended by PD No. 1007, because it cannot pay its liabilities as they fall due in the ordinary course of business, the presence or absence of a bank run is of no determinative moment on the issue of the justifiability of an order of closure. The CB had, as it were, ample basis other than the bank run to consider petitioner Genbank insolvent.Upon the issuance of an order of closure, which by express provision of law is final and executory, the burden of proving noninsolvency is upon the bank which challenges the validity of such closure. As regards the supposed denial of its right to due process: The root of its problem and eventual downfall is traceable to unsound banking practices employed by management. Mentioned in this regard may be made of the all-out financial support given to Filcapital Development Corporation (a related interest of the Yujuico Family Group and directors and officers of Genbank) and the standing practice of extending DOSRI loans which, at one point, reached a peak of P172.3 million or 26% of the total loan portfolio of P666.78 million. Of the final figure, 59.4% thereof was classified as doubtful and P0.505 million as uncollectible. And 91.7% of such DOSRI accounts were unsecured leaving only 8% thereof secured. All these unsound practices occurred way before their resulting crippling effects became manifest sometime in December 1976, further leading the bank to resort to other unsound banking practices, like incurring daily overdrafts. These problems, as earlier narrated in the assailed CA decision, were taken up by the then CB Governor with the Board of Directors of Genbank in a meeting held on December 27, 1976.Thus, when the crucial March 23, 1977 meeting was held, there can be no doubt that petitioner Genbank was totally aware of the predicament it has gotten itself into and the conditions which the CB had imposed to address the situation for the protection of the depositors and the banking public.

Central Bank vs CA Facts: Based on examination reports submitted by the Supervision and Examination Sector (SES), Department II, of the Central Bank (CB) "that the financial condition of TSB is one of insolvency and its continuance in business would involve probable loss to its depositors and creditors," 3 the Monetary Board (MB) issued on 31 May 1985 Resolution No. 596 ordering the closure of TSB, forbidding it from doing business in the Philippines, placing it under receivership, and appointing Ramon V. Tiaoqui as receiver. TSB filed a complaint against Central Bank and Ramon V. Tiaoqui to annul MB Resolution with prayer for injunction, challenging in the process the constitutionality of Sec. 29 of R.A. 269, otherwise known as "The Central Bank Act, insofar as it authorizes the Central Bank to take over a banking institution even if it is not charged with violation of any law or regulation, much less found guilty thereof. Central Bank and Ramon Tiaoqui filed a motion to dismiss the complaint for failure to state a cause of action it did not allege ultimate facts showing that the action was plainly arbitrary and made in bad faith, which are the only grounds for the annulment of Monetary Board resolutions placing a bank under conservatorship, and that TSB was without legal capacity to sue except through its receiver. the RTC in separate orders denied petitioners' motion to dismiss and ordered receiver Tiaoqui to restore the management of TSB to its elected board of directors and officers, subject to CB comptrollership. Court of Appeals upheld the orders of the trial court on the ground that there was an admission made by the CB that the Monetary Board resolution placing the Triumph Savings Bank under the receivership of the officials of the Central Bank was done without prior hearing, that is, without first hearing the side of the bank. They further admit that said resolution can be the subject of judicial review and may be set aside should it be found that the same was issued with arbitrariness and in bad faith. The charge of lack of due process in the complaint may be taken as constitutive of allegations of arbitrariness and bad faith. The respondents, on the other hand, allege that CB violated the rule on administrative due process which requires that prior notice and hearing be afforded to all parties in administrative proceedings. Since MB Resolution No. 596 was adopted without TSB being previously notified and heard, according to respondents, the same is void for want of due process; consequently, the bank's management should be restored to its board of directors and officers.

CB claim that it is the essence of Sec. 29 of R.A. 265 that prior notice and hearing in cases involving bank closures should not be required since in all probability a hearing would not only cause unnecessary delay but also provide bank "insiders" and stockholders the opportunity to further dissipate the bank's resources, create liabilities for the bank up to the insured amount of P40,000.00, and even destroy evidence of fraud or irregularity in the bank's operations to the prejudice of its depositors and creditors. Issue: May a Monetary Board resolution placing a private bank under receivership be annulled on the ground of lack of prior notice and hearing? Held: Sec. 29 does not contemplate prior notice and hearing before a bank may be directed to stop operations and placed under receivership. When par. 4 (now par. 5, as amended by E.O. 289) provides for the filing of a case within ten (10) days after the receiver takes charge of the assets of the bank, it is unmistakable that the assailed actions should precede the filing of the case. Plainly, the legislature could not have intended to authorize "no prior notice and hearing" in the closure of the bank and at the same time allow a suit to annul it on the basis of absence thereof. a previous hearing is nowhere required in Sec. 29 nor does the constitutional requirement of due process demand that the correctness of the Monetary Board's resolution to stop operation and proceed to liquidation be first adjudged before making the resolution effective. It is enough that a subsequent judicial review be provided. Sec. 29 does not altogether divest a bank or a non-bank financial institution placed under receivership of the opportunity to be heard and present evidence on arbitrariness and bad faith because within ten (10) days from the date the receiver takes charge of the assets of the bank, resort to judicial review may be had by filing an appropriate pleading with the court. This "close now and hear later" scheme is grounded on practical and legal considerations to prevent unwarranted dissipation of the bank's assets and as a valid exercise of police power to protect the depositors, creditors, stockholders and the general public. At any rate, the bank is given full opportunity to prove arbitrariness and bad faith in placing the bank under receivership, in which event, the resolution may be properly nullified and the receivership lifted as the trial court may determine. the law is explicit as to the conditions prerequisite to the action of the Monetary Board to forbid the institution to do business in the Philippines and to appoint a receiver to immediately take charge of the bank's assets and liabilities. They are: (a) an examination made by the examining
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department of the Central Bank; (b) report by said department to the Monetary Board; and (c) prima facie showing that its continuance in business would involve probable loss to its depositors or creditors. the absence of notice and hearing is not a valid ground to annul a Monetary Board resolution placing a bank under receivership. The absence of prior notice and hearing cannot be deemed acts of arbitrariness and bad faith. Thus, an MB resolution placing a bank under receivership, or conservatorship for that matter, may only be annulled after a determination has been made by the trial court that its issuance was tainted with arbitrariness and bad faith. Until such determination is made, the status quo shall be maintained, i.e., the bank shall continue to be under receivership.

Bacolor vs Banco Filipino Facts: spouses Zacarias and Catherine Bacolor obtained a loan ofP244,000.00 from Banco Filipino Savings and Mortgage Bank. As security for the loan, petitioners mortgaged with respondent bank their parcel of land. From March 11, 1982 to July 10, 1991, petitioners paid respondent bank P412, 199.36. Thereafter, they failed to pay the remaining balance of the loan. Due to petitioners failure to settle their obligation, respondent instituted, on March 5, 1993, an action for extrajudicial foreclosure of mortgage. Spouses Bacolor filed a complaint for violation of the Usury Law against the bank. In their amended complaint, petitioners further alleged that, during the closure of respondent bank, it ceased to be a banking institution and, therefore, could not charge interests and institute foreclosure proceeding. there is nothing in the said circular which grants respondent bank carte blanche authority to raise interest rates to levels which "either enslave the borrower or lead to a hemorrhaging of their assets. The Spouses further contend that during the closure of respondent bank, it lost its function as a banking institution and, therefore, could no longer charge interests and institute foreclosure proceedings. Issue: whether a pending case diminish the authority and powers of the designated liquidator to effectuate and carry on the administration of the bank Held: the bank s closure did not diminish the authority and powers of the designated liquidator to effectuate and carry on the administration of the bank. The Supreme Court did not prohibit however acts such as receiving collectibles and receivables or paying off creditors claims and other transactions pertaining to the normal operations of a bank. There is no doubt that that the prosecution of suits for collection and the foreclosure of mortgages against debtors of the bank by the liquidator are among the usual and ordinary transactions pertaining to the administration of a bank. A bank can collect interest on its loans during its period of liquidation and closure In one case, the pendency of the case did not diminish the authority of the designated liquidator to administer and continue the bank s transactions. The Court allowed the bank liquidator to continue receiving collectibles and receivables or paying off creditor s claims and other transactions pertaining to normal operations of a bank. Among these transactions
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were the prosecution of suits against debtors for collection and for foreclosure of mortgages. The bank was allowed to collect interests on its loans while under liquidation, provided that the interests were legal.

BANCO FILIPINO SAVINGS AND MORTGAGE BANK vs Ybanez Facts: the Ybanez obtained a loan secured by a Deed of Real Estate Mortgage from Banco Filipino. The loan was used for the construction of a commercial building. The Ybanez obtained an additional loan from the petitioner bank thus increasing their obligation to one million pesos. A corresponding Amendment of Real Estate Mortgage was thereafter executed. the loan was again re-structured with a stipulated interest of 21% per annum and that in case of default in the payment of any of the monthly amortization and interest, respondents shall pay a penalty equivalent to 3% of the amount due each month. The Ybanez did not pay a single centavo. They aver that Banco Filipino had ceased operations and/or was not allowed to continue business, having been placed under liquidation by the Central Bank. The Ybanez lawyer wrote Special Acting Liquidator, Renan Santos, and requested that plaintiff return the mortgaged property of the respondents since it had sufficiently profited from the loan and that the interest and penalty charges were excessive. Petitioner bank denied the request. Banco Filipino was closed on January 1, 1985 and re-opened for business on July 1, 1994. From its closure to its reopening, petitioner bank did not transact any business with its customers. August 24, 1994, respondents were served a Notice of Extra Judicial Sale of their property to satisfy their indebtedness The Ybanez filed a suit for Injunction, Accounting and Damages, alleging that there was no legal and factual basis for the foreclosure proceedings since the loan had already been fully paid. Issue: What is the effect of the temporary closure of Banco Filipino from January 1, 1985 to July 1, 1994 on the loan? Held: the pendency of closure or receivership of a bank did not diminish the authority of the designated liquidator to administer and continue the bank s transactions. The Court allowed the bank s liquidator to continue receiving collectibles and receivables or paying off creditor s claims and other transactions pertaining to normal operations of a bank. Among these transactions were the prosecution of suits against debtors for collection and for foreclosure of mortgages. The bank was allowed to collect interests on its loans while under liquidation, provided that the interests were legal.

Manalo vs CA Facts: S. Villanueva Enterprises, represented by its president, Therese Villanueva Vargas, obtained a loan of three million pesos (P3,000,000.00) and one million pesos (P1,000,000.00) from the respondent PAIC Savings and Mortgage Bank and the Philippine American Investments Corporation (PAIC), respectively. To secure payment of both debts, Vargas executed in favor of the respondent and PAIC a Joint First Mortgage1 over two parcels of land registered under her name. Section 2 of the mortgage contract states that "the properties mortgaged therein shall include all buildings and improvements existing on the mortgaged property at the time of the execution of the mortgage contract and thereafter. S. Villanueva Enterprises defaulted in paying the amortizations due. Despite repeated demands, it failed to settle its loan obligation. Accordingly, respondent instituted extrajudicial foreclosure proceedings over the mortgaged lots. The property was sold at a public auction to the respondent itself, after tendering the highest bid. On October 29, 1986, the Central Bank of the Philippines filed a Petition4 for assistance in the liquidation of the respondent with the Regional Trial Court. Vargas negotiated with the respondent (through its then liquidator, the Central Bank) for the repurchase of the foreclosed property. The negotiations, however, fizzled out as Vargas cannot afford the repurchase price fixed by the respondent based on the appraised value of the land at that time. Vargas filed a case for annulment of mortgage and extrajudicial foreclosure sale respondent petitioned the Regional Trial Court for the issuance of a writ of possession for the subject property During the pendency of Civil Case, Vargas executed a Deed of Absolute Sale selling, transferring, and conveying ownership of the disputed lot in favor of a certain Armando Angsico. Notwithstanding this sale, Vargas, still representing herself to be the lawful owner of the property, leased the same to petitioner Domingo R. Manalo Later Armando Angsico, as buyer of the property, assigned his rights therein to Manalo The a quo granted the petition for the issuance of the Writ of Possession S. Villanueva Enterprises and Vargas moved for its quashal. Thereafter, Manalo on the strength of the lease contract and Deed of Assignment made in his favor,
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submitted a Permission to File an Ex-parte Motion to Intervene. Petitioner postulates that the lower court should have dismissed respondent's "Ex-Parte Petition for Issuance of Writ of Possession" in Civil Case No. P-9011 for want of jurisdiction over the subject matter of the claim. The power to hear the same, he insists, exclusively vests with the Liquidation Court pursuant to Section 29 of Republic Act No. 265, otherwise known as The Central Bank Act. Petitioner next casts doubt on the capacity of the respondent to continue litigating the petition for the issuance of the writ. He asserts that, being under liquidation, respondent bank is already a "dead" corporation that cannot maintain the suit in the RTC. Hence, no writ may be issued in its favor. Issue: Whether the lower court may issue a writ of possession for want of jurisdiction on the ground that section 29 of RA 265 vests jurisdiction on the matter to the liquidation court Issue2: Whether the bank has the capacity to continue litigating the petition for the issuance of the writ on the ground that it is under liquidation Held: Section 29 only finds operation in cases where there are claims against an insolvent bank. In fine, the exclusive jurisdiction of the liquidation court pertains only to the adjudication of claims against the bank. It does not cover the reverse situation where it is the bank which files a claim against another person or legal entity. The requirement that all claims against the bank be pursued in the liquidation proceedings filed by the Central Bank is intended to prevent multiplicity of actions against the insolvent bank and designed to establish due process and orderliness in the liquidation of the bank, to obviate the proliferation of litigations and to avoid injustice and arbitrariness. The Petition for the Issuance of a Writ of Possession in Civil Case No. 9011 is not in the nature of a disputed claim against the bank. On the contrary, it is an action instituted by the respondent bank itself for the preservation of its asset and protection of its property. Held2: A bank which had been ordered closed by the monetary board retains its juridical personality which can sue and be sued through its liquidator. The only limitation being that the prosecution or defense of the action must be done through the liquidator.31 Otherwise, no suit for or against an insolvent entity would prosper. In such situation, banks in liquidation would lose what justly belongs to them through a mere technicality. Therefore, respondent was legally capacitated to petition the court a quo for the issuance of the writ.
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Abacus Real Estate Development Center vs Manila Banking Corp

Facts: Manila Bank owns a parcel of land. Prior to 1984, the bank began constructing on said land a 14-storey building. Not long after, however, the bank encountered financial difficulties that rendered it unable to finish construction of the building. the Central Bank ordered the closure of Manila Bank and placed it under receivership, with Feliciano Miranda, Jr. being initially appointed as Receiver. The legality of the closure was contested by the bank before the proper court. the Central Bank, by virtue of Monetary Board (MB) Resolution, ordered the liquidation of Manila Bank and designated Atty. Renan V. Santos as Liquidator. The liquidation, however, was held in abeyance pending the outcome of the earlier suit filed by Manila Bank regarding the legality of its closure. Manila Bank s then acting president, the late Vicente G. Puyat, in a bid to save the bank s investment, started scouting for possible investors who could finance the completion of the building earlier mentioned. a group of investors, represented by Calixto Y. Laureano (hereafter referred to as Laureano group), wrote Vicente G. Puyat offering to lease the building for ten (10) years and to advance the cost to complete the same, with the advanced cost to be amortized and offset against rental payments during the term of the lease. Likewise, the letter-offer stated that in consideration of advancing the construction cost, the group wanted to be given the "exclusive option to purchase" the building and the lot on which it was constructed. Since no disposition of assets could be made due to the litigation concerning Manila Bank s closure, an arrangement was thought of whereby the property would first be leased to Manila Equities Corporation (MEQCO, for brevity), a wholly-owned subsidiary of Manila Bank, with MEQCO thereafter subleasing the property to the Laureano group. Vicente G. Puyat accepted the Laureano group s offer and granted it an "exclusive option to purchase" Later, the building was leased to MEQCO for a period of ten (10) years pursuant to a contract of lease bearing that date. On March 1, 1990, MEQCO subleased the property to petitioner Abacus Real Estate Development Center, Inc. (Abacus, for short), a corporation formed by the Laureano group The Laureano group was, however, unable to finish the building due to the economic crisis brought about by the failed December 1989 coup attempt. On account thereof, the Laureano group offered its rights in Abacus and its "exclusive option to purchase" to Benjamin Bitanga.

Bitanga further alleged that, over lunch, Atty. Santos then verbally approved his entry into Abacus and his take-over of the sublease and option to purchase. the Laureano group transferred and assigned to Bitanga all of its rights in Abacus and the "exclusive option to purchase" the subject land and building. Abacus sent a letter to Manila Bank informing the latter of its desire to exercise its "exclusive option to purchase". However, Manila Bank refused to honor the same Abacus Real Estate Development Center, Inc. filed a complaint3 for specific performance and damages against Manila Bank and/or the Estate of Vicente G. Puyat. petitioner insists that the option to purchase the lot and building in question granted to it by the late Vicente G. Puyat, then acting president of Manila Bank, was binding upon the latter. respondent has consistently maintained that the late Vicente G. Puyat had no authority to act for and represent Manila Bank, the latter having been placed under receivership by the Central Bank at the time of the granting of the "exclusive option to purchase." Issue: WHETHER OR NOT PETITIONER ABACUS HAS ACQUIRED THE RIGHT TO PURCHASE THE LOT AND BUILDING IN QUESTION. Held: Manila Bank was under receivership, pursuant to Central Bank s MB Resolution No. 505 dated May 22, 1987, at the time the late Vicente G. Puyat granted the "exclusive option to purchase" to the Laureano group of investors. the assets of the bank pass beyond its control into the possession and control of the receiver whose duty it is to administer the assets for the benefit of the creditors of the bank. Thus, the appointment of a receiver operates to suspend the authority of the bank and of its directors and officers over its property and effects, such authority being reposed in the receiver, and in this respect, the receivership is equivalent to an injunction to restrain the bank officers from intermeddling with the property of the bank in any way. With respondent bank having been already placed under receivership, its officers, inclusive of its acting president, Vicente G. Puyat, were no longer authorized to transact business in connection with the bank s assets and property. Clearly then, the "exclusive option to purchase" granted by Vicente G. Puyat was and still is unenforceable against Manila Bank. the receiver appointed by the Central Bank to take charge of the properties of Manila Bank only had authority to administer the same for the benefit of its creditors.
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Granting or approving an "exclusive option to purchase" is not an act of administration, but an act of strict ownership, involving, as it does, the disposition of property of the bank. Not being an act of administration, the so-called "approval" by Atty. Renan Santos amounts to no approval at all, a bank receiver not being authorized to do so on his own.

guarantee the payment of Omnibus Finance, Inc. of its money market obligations to petitioner Ong. Omnibus Finance, Inc., not having seasonably settled its obligations to petitioner, the latter proceeded to effect the extrajudicial foreclosure of said mortgages Respondents failed to seasonably redeem said parcels of land, for which reason, petitioner has executed an Affidavit of Consolidation of Ownership which, to date, has not been submitted to the Registry of Deeds of Tagaytay City, in view of the fact that possession of the aforesaid titles or owner's duplicate certificates of title remains with the RBO. Ong filed a petition for the surrender of TCT pursuant to the provisions of Secs. 63(b) and 107 of P.D. 15292 against Rural Bank of Olongapo, Inc. (RBO), represented by its liquidator Guillermo G. Reyes, Jr. and deputy liquidator Abel Allanigue. Respondent RBO filed a motion to dismiss on the ground of res judicata alleging that petitioner had earlier sought a similar relief which case was dismissed with finality on appeal before the Court of Appeals. In a supplemental motion to dismiss, respondent RBO contended that it was undergoing liquidation and, pursuant to prevailing jurisprudence, it is the liquidation court which has exclusive jurisdiction to take cognizance of petitioner's claim. The trial court dismissed the petition without prejudice to the right of Ong to file his claim in the liquidation proceeding The CA reverse the ruling of the trial court noting Sec. 29, par. 3, of R.A. 265 as amended by P.D. 18276does not limit the jurisdiction of the liquidation court to claims against the assets of the insolvent bank. The term Disputed claims" refer to all claims, whether they be against the assets of the insolvent bank, for specific performance, breach of contract, damages, or whatever. To limit the jurisdiction of the liquidation court to those claims against the asset's of the bank is to remove significantly and without basis the cases that may be brought against a bank in case of insolvency. Respondent court also noted that the certificates of title are still in the name of respondent RBO. As far as third persons are concerned (and these include claimants in the liquidation court), registration is the operative act which would convey title to the property. Petitioner submits that Civil Case No. Q-91-8019 may proceed independently of Sp. Proc. No. 170-0-85. He argues that the disputed parcels of land have been extrajudicially foreclosed and the corresponding certificate of sale issued in his favor; that considering that respondent RBO failed to redeem said properties he should now be allowed to consolidate his title thereto; that respondent RBO's mortgage of TCT Nos. 13769 and 13770 in favor of petitioner and its subsequent
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Ong vs CA Facts: The RBO was the owner in fee simple of two parcels of land including the improvements. Said parcels of land were duly mortgaged by RBO in favor of petitioner Ong to

foreclosure are presumed valid and regular; and, that the liquidation court has no jurisdiction over subject parcels of land since they are no longer assets of respondent RBO. Issue: whether the claim should be filed in the liquidation court Held: the judicial liquidation is intended to prevent multiplicity of actions against the insolvent bank. It is a pragmatic arrangement designed to establish due process and orderliness in the liquidation of the bank, to obviate the proliferation of litigations and to avoid injustice and arbitrariness. The lawmaking body contemplated that for convenience only one court, if possible, should pass upon the claims against the insolvent bank and that the liquidation court should assist the Superintendent of Banks and regulate his operations. It is not necessary that a claim be initially disputed in a court or agency before it is filed with the liquidation court. the term "disputed claim" in the provision simply connotes that in the course of the liquidation, contentious cases might arise wherein a full-dress hearing would be required and legal issues would have to be resolved. Petitioner Ong must have overlooked the fact that since respondent RBO is insolvent other claimants not privy to their transaction may be involved. As far as those claimants are concerned, in the absence of certificates of title in the name of petitioner, subject lots still form part of the assets of the insolvent bank.

Facts: private respondent Emiliana C. Doblon filed an action against petitioner Philippine Veterans Bank for reformation of instrument and damages After petitioner bank had filed its answer, the court, on September 20, 1984, rendered a summary judgment in favor of Doblon Meanwhile, the Monetary Board of the Central Bank issued a Resolution placing Philippine Veterans Bank under receivership Doblon filed an ex-parte motion for alias writ of execution which was opposed by the petitioner bank on the ground that the latter is under receivership and that all claims against it cannot be enforced until after liquidation. the Monetary Board of the Central Bank issued a report on the receivership of Philippine Veterans Bank and confirmed that the latter can no longer resume business with safety to its depositors, creditors and the general public. It also ordered the liquidation of PVB On July 8 and 9, 1985, the deputy Sheriff proceeded to conduct the sales at public auction of the real properties of petitioner PVB pursuant to the order of alias writ of execution issued by the respondent judge petitioner PVB filed with the Intermediate Appellate Court a petition for prohibition, mandamus and certiorari (AC-G.R. SP No. 06558) to nullify and set aside the sales at public auction of petitioner's properties conducted by respondent deputy sheriff and to enjoin the respondent judge from taking cognizance of or taking any future action in Civil Case. In the meantime, the Central Bank filed with the Regional Trial Court of Manila, a petition for assistance in the liquidation of the Philippine Veterans Bank. private respondent Emiliana Doblon filed a motion for payment or satisfaction of deficiency judgment. the trial court approved and granted the petition of the Central Bank for assistance in the liquidation of petitioner and ordered all claimants on September 17, 1985 to file their claims with the Liquidator Antonio Castro of the Supervision and Examination Sector of the Central Bank. IAC denied the petition for prohibition, mandamus and certiorari filed by PVB Petitioner contends that the final judgment in Civil Case No. 84-23585 must be satisfied in the liquidation proceedings considering that the assets of petitioner are already in custodia legis of the liquidator, and that the sales at public auction conducted by the respondent sheriff to enforce the writ of execution issued by respondent judge are illegal and void.
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Philippine Veterans Bank vs IAC

Issue: whether or not the judgment of the Regional Trial Court of Manila in Civil Case No. 84-23585 which awarded damages to private respondent Emiliana Doblon, can be legally enforced against petitioner by execution, after petitioner has been placed under liquidation by the Monetary Board of the Central Bank. Held: In the instant case, there is no doubt that the decision of the trial court in Civil Case has become final and executor however, that respondent judge issued on May 15, 1985, a writ of execution to enforce the judgment against petitioner, after the petitioner Philippine Veterans Bank has already been placed under receivership by the Monetary Board of the Central Bank by virtue of Resolution. The fact that petitioner was placed under receivership is a supervening event that renders a judgment, notwithstanding its finality, unenforceable by attachment or execution. Section 29 of the Central Bank's charter explicitly provides that when a bank is found to be insolvent, the Monetary Board shall forbid it to do business and shall take charge of all its assets. Furthermore, the Board, ordered the liquidation of the bank's properties upon confirming that it can no longer do business with safety to its depositors, creditors and general public. This has the effect of placing the bank's properties under the custody and jurisdiction of the Monetary Board, thereby removing it from the jurisdiction and authority of the trial court to enforce its judgment. Evidently, the sale at public auction of the properties of petitioner conducted by respondent sheriff on July 8 and 9, 1985, while it is in the process of liquidation, is not authorized under the law. that the stay of an execution of judgment is justified and warranted by the fact that respondent bank was placed under receivership. To execute the judgment would unduly deplete the assets of respondent bank to the obvious prejudice of other creditors. After the Monetary Board has declared that a bank is insolvent and has ordered it to cease operations, the Board becomes the trustee of its assets for the equal benefit of all the depositors and creditors. After its insolvency, one creditor cannot obtain an advantage or preference over another by an attachment, execution or otherwise.

Facts: the Central Bank of the Philippines through the Monetary Board approved Resolution No. 122 requesting the Solicitor General to file the necessary petition for liquidation of the Rural Bank of Lucena. the Solicitor General filed a petition for liquidation in the CFI of Manila. The court ordered the liquidator of the Central Bank to take over the assets, books, papers and properties of the Rural Bank of Lucena, Inc. An inventory of the assets, properties, books, etc. of the said bank was conducted and a corresponding list was prepared. The assets include among others the uncollected loan allegedly procured by herein petitioners Carandang. Said loan appears to have been secured by a real estate mortgage on a parcel of land The documents of the insolvent bank show that petitioners filed an application for agricultural loan for P5,000.00 with 9% interest per annum covered by a promissory note allegedly executed by petitioners. According to respondent Central Bank, several demand letters were sent to petitioners but to no avail. Thus, for failure to settle the said obligation, the designated receiver * of the bank petitioned the Sheriff of Laguna to sell the subject property. The Carandangs, upon Teaming of the petition for the sale of their coconut land, flied a complaint for nullification and cancellation of the promissory note and the mortgage deed with damages and with prayer for a temporary restraining order with the Court of First Instance (CFI) of Laguna on the ground that the said documents were forgeries. respondent Central Bank of the Philippines filed a motion for intervention stating its legal interest in the case in that for reasons of insolvency, Rural Bank of Lucena is under receivership of the Central Bank. The CFI of laguna rendered a decision in favor of CB and declared itself to be without jurisdiction to entertain the action and dismissed the complaint and counterclaims. Petitioners contend that since the land in question is within the territorial jurisdiction of Laguna, then it is the Court of First Instance of Laguna that has jurisdiction over the case. respondent Central Bank contends that the pendency of the liquidation proceedings before the Court of First Instance of Manila vested in the said court exclusive jurisdiction over all matters pertaining to the assets, properties, funds, etc. of the Rural Bank of Lucena, Inc. It argued further that the action for cancellation and nullification of the contract of loan is a personal action and hence the jurisdiction of the Court of First Instance of Laguna is only concurrent with the liquidation court, and that since it was the liquidation court
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Carandang Vs CA

that first acquired jurisdiction over the subject matter of the instant case, it should retain the same to the exclusion of others. Issue: whether the CFI of laguna has jurisdiction over the case Held: the subject property herein was already foreclosed extrajudicially. the action for nullification of the mortgage documents petitioners questioned the validity of the mortgage in favor of the insolvent bank over which respondent Central Bank claimed title seeking the collection and eventually the foreclosure of the mortgaged property. Thus, it is a real action as the action affects the title to a property. Applying the rules on venue of the matter, the action should be brought before the court having jurisdiction over the territory in which the subject Property or part thereof lies which in this case should properly be in the then Court of First Instance of Laguna. 11 On the other hand, it should be recalled that the subject property appears to be included in the assets of the Rural Bank of Lucena, Inc., which is an insolvent bank. The Laguna court has jurisdiction over the case because the role of the liquidation court (CFI of Manila) which is a court of limited jurisdiction is to assist the Central Bank in the liquidation of a certain bank. It cannot pass upon the validity of all contracts as the mortgage deed in question in this case. This matter should be litigated before the regular courts with general jurisdiction.

Facts: After BANCO FILIPINO SAVINGS AND MORTGAGE BANK was placed under receivership, and later ordered liquidated by the Monetary Board of the Central Bank, FORTUNATO M. DIZON. Jr., who was then holding the position of Executive Vice President and Chief Operating Officer of the bank, received a letter from the Central Bank appointed liquidator, MS. CARLOTA P. VALENZUELA, informing him that all management authority in the bank had been assumed by the Central Bank appointed liquidators and that his employment is being terminated. Mr. Dizon filed with the liquidator a request for the payment to him of the cash equivalent of his vacation and sick leave credits and unexpended/unused reimbursable allowance. His claims were not paid by the liquidator upon counsel's advice that Dizon's claim should be treated as a claim of a creditor and should therefore be processed pursuant to the liquidation plan as approved by the Monetary Board. Dizon filed a complaint with the labor arbiter against the bank for recovery of unpaid salary, and other monetary claims Representing the bank, the liquidator moved for the dismissal of the complaint refuting the legal and factual bases thereof as well as the jurisdiction of the labor arbiter to entertain Dizon's money claims because such pertains to the Regional Trial Court of Makati, Branch 146, acting as the liquidation court. the labor arbiter upheld her jurisdiction and promulgated a decision in favor of Dizon. NLRC affirmed the liquidator assails the foregoing decisions Firstly, she maintains that "[a]ll disputed claims against banks under liquidation pertain to the exclusive jurisdiction of the liquidation court and may not be adjudicated by the Labor Arbiters and the NLRC. She submits that "the statutory status of employees as preferred creditors with respect to 'wages due them for services rendered during the period prior to the bankruptcy or liquidation' does not in itself entitle them to advance paymentoutside of the liquidation proceedings and while said proceedings are in progress. Issue: whether the NLRC has jurisdiction over the case Held: it is the NLRC which has jurisdiction over Dizon's money claims. There is nothing in Section 29 which suggests that the jurisdiction of the liquidation court to adjudicate claims against the insolvent bank is exclusive. this jurisdiction would be lost simply because a former employer had been placed under liquidation. The legislature deemed it wise to confer jurisdiction over labor disputes to a body exclusively of others and We are not prepared to divest

Banco Filipino vs NLRC

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such authority from the labor arbiter and the NLRC absent any clear provision of law to that effect. it is not a legal aberration that certain claims against an insolvent bank be litigated in another court where to do so would be more practical; and more so in this case where it is not legally possible to litigate Dizon's claims other than with the Labor Arbiter and the NLRC because of the express provision of the Labor Code.

Bangko Sentral vs Antonio-Valenzuela Facts: the Supervision and Examination Department (SED) of the Bangko Sentral ng Pilipinas (BSP) conducted examinations of the books of the following banks: Rural Bank of Paraaque, Inc. (RBPI), Rural Bank of San Jose (Batangas), Inc., Rural Bank of Carmen (Cebu), Inc., Pilipino Rural Bank, Inc., Philippine Countryside Rural Bank, Inc., Rural Bank of Calatagan (Batangas), Inc. (now Dynamic Rural Bank), Rural Bank of Darbci, Inc., Rural Bank of Kananga (Leyte), Inc. (now First Interstate Rural Bank), Rural Bank de Bisayas Minglanilla (now Bank of East Asia), and San Pablo City Development Bank, Inc. After the examinations, exit conferences were held with the officers or representatives of the banks wherein the SED examiners provided them with copies of Lists of Findings/Exceptions containing the deficiencies discovered during the examinations. These banks were then required to comment and to undertake the remedial measures stated in these lists within 30 days from their receipt of the lists, which remedial measures included the infusion of additional capital. Though the banks claimed that they made the additional capital infusions, petitioner Chuchi Fonacier, officer-in-charge of the SED, sent separate letters to the Board of Directors of each bank, informing them that the SED found that the banks failed to carry out the required remedial measures. In response, the banks requested that they be given time to obtain BSP approval to amend their Articles of Incorporation, that they have an opportunity to seek investors. They requested as well that the basis for the capital infusion figures be disclosed, and noted that none of them had received the Report of Examination (ROE) which finalizes the audit findings. the RBPI filed a complaint for nullification of the BSP ROE with application for a TRO and writ of preliminary injunction before the RTC the RTC ruled in favor of the Banks Ca affirmed Issue: Held: The respondent banks have failed to show that they are entitled to copies of the ROEs. They can point to no provision of law, no section in the procedures of the BSP that shows that the BSP is required to give them copies of the ROEs. The respondent banks cannot claim a violation of their right to due process if they are not provided with copies of the ROEs. The same ROEs are based on the lists of findings/exceptions containing the deficiencies found by the SED examiners when they examined the books of the respondent banks.

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The issuance by the RTC of writs of preliminary injunction is an unwarranted interference with the powers of the MB. Secs. 29 and 30 of RA 765310 refer to the appointment of a conservator or a receiver for a bank, which is a power of the MB for which they need the ROEs done by the supervising or examining department. The writs of preliminary injunction issued by the trial court hinder the MB from fulfilling its function under the law. The actions of the MB under Secs. 29 and 30 of RA 7653 "may not be restrained or set aside by the court except on petition forcertiorari on the ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction." The writs of preliminary injunction order are precisely what cannot be done under the law by preventing the MB from taking action under either Sec. 29 or Sec. 30 of RA 7653. It is well-settled that the closure of a bank may be considered as an exercise of police power. The action of the MB on this matter is final and executory. Such exercise may nonetheless be subject to judicial inquiry and can be set aside if found to be in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction.12 The respondent banks cannot through seeking a writ of preliminary injunction by appealing to lack of due process, in a roundabout manner prevent their closure by the MB. Their remedy, as stated, is a subsequent one, which will determine whether the closure of the bank was attended by grave abuse of discretion. Judicial review enters the picture only after the MB has taken action; it cannot prevent such action by the MB. The threat of the imposition of sanctions, even that of closure, does not violate their right to due process, and cannot be the basis for a writ of preliminary injunction.

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