1 ROMARICO G. VITUG VS. THE HONORABLE COURT OF APPEALS, G.R. NO. 82027, 29 MARCH 2 KAREN E. SALVACION VS.
EN E. SALVACION VS. CENTRAL BANK OF THE PHILIPPINES, G.R. NO. 94723, 21 AUGUST
1990 [183 SCRA 755]
FACTS: Spouses Dolores and Romarico Vitug entered into a survivorship agreement with the
Bank of American National Trust and Savings Association. The sadi agreement contained the
following stipulations:
1. All money deposited and to be deposited with the bank in their joint savings current
account shall be both their property and shall be payable to and collectible or withdrawable by
either or any of them during their lifetime and
2. After the death of one of them, the same shall belong to and be the sole property of the
surviving spouse and payable to and collectible or withdrawable by such survivor Dolores died
naming Rowena Corona in her wills as executrix. Romarico later filed a motion asking authority
to sell certain shares of stock and real property belonging to the estate to cover his advances
to the estate which he claimed were personal funds withdrawn from their savings account.
Rowena opposed on the ground that the same funds withdrawn from the savings account
were conjugal partnership properties and part of the estate. Hence, there should be no
reimbursement. On the other hand, Romarico insists that the same are his exclusive property
acquired through the survivorship agreement.
ISSUE: WON the funds of the savings account subject of the survivorship agreement were
conjugal partnership properties and part of the estate
RULING: No. The court ruled that a Survivorship Agreement is neither a donation mortis causa
nor a donation inter vivos. It is in the nature of aleatory contract whereby one or both of the
parties reciprocally bind themselves to give or to do something in consideration of that the
other shall give or do upon the happening of an event which is to occur at an indeterminate
time or is uncertain, such as death. The court further ruled that a survivorship agreement is
per se not contrary to law and thus is valid unless its operation or effect may be violative of a
law such as in the following instances: (1) It is used as a mere cloak to hide an inofficious
donation; (2) it is used to transfer property in fraud of creditors; (3) It is used to defeat the
legitime of a compulsory heir. In the instant case, none of the foregoing instances were
present. Consequently, the Court upheld the validity of the survivorship agreement entered
into by the spouses Vitug. As such, Romarico, being the surviving spouse, acquire a vested
right over the amounts under the savings account, which became his exclusive property upon
death of his wife pursuant to the survivorship agreement.
1997 [278 SCRA 27]
FACTS: On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed and lured
petitioner Karen Salvacion, then 12 years old to go with him to his apartment. Therein, Greg
Bartelli detained Karen Salvacion for four days, or up to February 7, 1989 and was able to rape
the child once on February 4, and three times each day on February 5, 6, and 7, 1989. On
February 7, 1989, after policemen and people living nearby, rescued Karen, Greg Bartelli was
arrested and detained at the Makati Municipal Jail. The policemen recovered from Bartelli the
following items: 1.) Dollar Check 2.) COCOBANK Bank (Peso Acct.); 3.) Dollar Account — China
Banking Corp.,;4.) ID-122-30-8877; 5.) Philippine Money (P234.00) cash; 6.) Door Keys 6 pieces;
7.) Stuffed Doll (Teddy Bear) used in seducing the complainant.
Greg Bartelli was charged of four counts of rape and serious illegal detention against Karen
Salvacion. He however, able to escape from prison. In a civil case filed against him, the trial
court awarded Salvacion moral, exemplary and attorney’s fees amounting to almost
P1,000,000.00.
Salvacion tried to execute the judgment on the dollar deposit of Bartelli with the China
Banking Corp. but the latter refused arguing that Section 11 of Central Bank Circular No. 960
exempts foreign currency deposits from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any administrative body
whatsoever. Salvacion therefore filed this action for declaratory relief in the Supreme Court.
ISSUE: Whether the strict letter of Section 113 of Central Bank Circular No. 960 and Section 8
of the Foreign Currency Deposit Act on the secrecy of deposits be made applicable to this
foreigner.
RULING: NO.
The provisions of Section 113 of Central Bank Circular No. 960 and PD No. 1246, insofar as it
amends Section 8 of Republic Act No. 6426, are hereby held to be INAPPLICABLE to this case
because of its peculiar circumstances. Respondents are hereby required to comply with the
writ of execution issued in the civil case and to release to petitioners the dollar deposit of
Bartelli in such amount as would satisfy the judgment.
Supreme Court ruled that the questioned law makes futile the favorable judgment and award
of damages that Salvacion and her parents fully deserve. It then proceeded to show that the
economic basis for the enactment of RA No. 6426 is not anymore present; and even if it still
exists, the questioned law still denies those entitled to due process of law for being
unreasonable and oppressive. The intention of the law may be good when enacted. The law
failed to anticipate the iniquitous effects producing outright injustice and inequality such as
the case before us.
The SC adopted the comment of the Solicitor General who argued that the Offshore Banking
System and the Foreign Currency Deposit System were designed to draw deposits from foreign
lenders and investors and, subsequently, to give the latter protection. However, the foreign
currency deposit made by a transient or a tourist is not the kind of deposit encouraged by PD
Nos. 1034 and 1035 and given incentives and protection by said laws because such depositor
stays only for a few days in the country and, therefore, will maintain his deposit in the bank
only for a short time. Considering that Bartelli is just a tourist or a transient, he is not entitled
to the protection of Section 113 of Central Bank Circular No. 960 and PD No. 1246 against
attachment, garnishment or other court processes.
Further, the SC said: “the application of the law depends on the extent of its justice.
Eventually, if we rule that the questioned Section 113 of Central Bank Circular No. 960 which
exempts from attachment, garnishment, or any other order or process of any court, legislative
body, government agency or any administrative body whatsoever, is applicable to a foreign
transient, injustice would result especially to a citizen aggrieved by a foreign guest like accused
Greg Bartelli. This would negate Article 10 of the New Civil Code which provides that "in case
of doubt in the interpretation or application of laws, it is presumed that the lawmaking body
intended right and justice to prevail. "Ninguno non deue enriquecerse tortizeramente con
dano de otro." Simply stated, when the statute is silent or ambiguous, this is one of those
fundamental solutions that would respond to the vehement urge of conscience. (Padilla vs.
Padilla, 74 Phil. 377).
It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be
used as a device by accused Greg Bartelli for wrongdoing, and in so doing, acquitting the guilty
at the expense of the innocent.
Call it what it may — but is there no conflict of legal policy here? Dollar against Peso?
Upholding the final and executory judgment of the lower court against the Central Bank
Circular protecting the foreign depositor? Shielding or protecting the dollar deposit of a
transient alien depositor against injustice to a national and victim of a crime? This situation
calls for fairness against legal tyranny.
We definitely cannot have both ways and rest in the belief that we have served the ends of
justice.”
3 JOSEPH VICTOR G. EJERCITO VS. SANDIGANBAYAN (SPECIAL DIVISION) AND PEOPLE OF
THE PHILIPPINES, G.R. NO. 157294-95, 30 NOVEMBER 2006 [509 SCRA 190]
FACTS: The case at bar springs from the plunder case of former president Joseph Estrada.
During the course of the Estrada case, the Special Prosecution Panel filed before the
Sandiganbayan a request for issuance of subpoena duces tecum, directing the President of
Export and Industry Bank or his/her authorized representative to produce documents namely,
Trust Account and Savings Account belonging to petitioner Joseph Victor Ejercito (JV Ejercito),
and statement of accounts of one named "Jose Velarde" and to testify during the hearings.
The Sandiganbayan granted both requests and subpoenas were accordingly issued.
Sandiganbayan also granted and issued subpoenas duces tecum/ad testificandum prayed for
by the Prosecution Panel in another later date.
During one of the hearings, petitioner, not an accused in the Estrada case, expressed his
concern over the possible violations of the Prosecution's requests as to his bank accounts
relative to the Bank Secrecy Law. He filed a motion quash, which was denied.
Respondent People of the Philippines argued that the Trust Account may be inquired because
it falls under the exceptions to the coverage of the Bank Secrecy Law, as much as a "trust
account" is not even contemplated in the law. The People added that the law applies only to
deposits which strictly means the money delivered to the bank by which a creditor-debtor
relationship is created between the depositor and the bank. Hence, the petition.
ISSUES:
(1) Whether or not the trust accounts of petitioner are covered by the term “deposits” as used
in R.A. No. 1405
(2) Whether or not plunder is neither bribery nor dereliction of duty not exempted from
protection of R.A. No. 1405
(3) Whether or not the unlawful examination of bank accounts shall render the evidence
obtained therefrom inadmissible in evidence.
HELD:
(1) YES. The contention that trust accounts are not covered by the term deposits, as used in
R.A. 1405, by the mere fact that they do not entail a creditor-debtor relationship between the
trustor and the bank, does not lie. An examination of the law shows that the term deposits
used therein is to be understood broadly and not limited only to accounts which give rise to a
creditor- debtor relationship between the depositor and the bank.
Trust Account No. 858 is, without doubt, one such account. The Trust Agreement between
petitioner and Urban Bank provides that the trust account covers “deposit, placement or
investment of funds” by Urban Bank for and in behalf of petitioner. The money deposited
under the Trust Account was intended not merely to remain with the bank but to be invested
by it elsewhere. To hold that this type of account is not protected by R.A. 1405 would
encourage private hoarding of funds, contrary to the policy behind the law.
Section 2 of the same law also shows that the term “deposits” was intended to be understood
broadly. The phrase “of whatever nature” proscribes any restrictive interpretation of
“deposits.” It is clear that the law applies not only to deposited money, but also to those which
are invested. Clearly, R.A. 1405 is broad enough to cover Trust Account No. 858.
(2) NO. Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and
no reason is seen why these two classes of cases cannot be excepted from the rule which
makes bank deposits confidential. The policy as to one cannot be different from the policy as
to the other.
An examination of the overt or criminal acts as described in Section 1(d) of R.A. No. 7080
(Plunder Law) would make the similarity between plunder and bribery even more pronounced
since bribery is essentially included among these criminal acts.
All the overt acts in plunder are similar to bribery such that, in each case, it may be said that
no reason is seen why these two classes of cases cannot be excepted from the rule which
makes bank deposits confidential.
The crime of bribery and the overt acts constitutive of plunder are crimes committed by public
officers, and in either case the noble idea that a public office is a public trust and any person
who enters upon its discharge does so with the full knowledge that his life is open to public
scrutiny applies with equal force. Plunder being thus analogous to bribery, the exception to
R.A. 1405 applicable in cases of bribery must also apply to cases of plunder.
As regards petitioner's claim that the money in his bank accounts is not the subject matter of
the litigation, the meaning of the phrase subject matter of the litigation means that "where
the money deposited was the subject matter of the litigation . . . the money deposited was the
very thing in dispute."
(3) NO. Petitioner’s attempt to make the exclusionary rule applicable to the instant case fails.
R.A. 1405, it bears noting, nowhere provides that an unlawful examination of bank accounts
shall render the evidence obtained therefrom inadmissible in evidence. Section 5 of R.A. 1405
only states that “[a]ny violation of this law will subject the offender upon conviction, to an
imprisonment of not more than five years or a fine of not more than twenty thousand pesos or
both, in the discretion of the court.”
Even assuming arguendo, however, that the exclusionary rule applies in principle to cases
involving R.A. 1405, the Court finds no reason to apply the same in this particular case. Clearly,
the “fruit of the poisonous tree” doctrine presupposes a violation of law. If there was no
violation of R.A. 1405 in the instant case, then there would be no “poisonous tree” to begin
with, and, thus, no reason to apply the doctrine.
4 SPS. CESAR A. LARROBIS, JR. AND VIRGINIA S. LARROBIS VS. PHILIPPINE VETERANS BANK,
G.R. NO. 135706, 1 OCTOBER 2004 [440 SCRA 34]
On March 3, 1980, petitioner spouses contracted a monetary loan with respondent Philippine
Veterans Bank in the amount of P135,000.00, evidenced by a promissory note, secured by a
Real Estate Mortgage executed on their lot.
Respondent bank went bankrupt and was placed under receivership/liquidation by the Central
Bank. 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," which pertains to the
insurance premiums advanced by respondent bank over the mortgaged property of
petitioners.
On August 23, 1995, more than fourteen years from the time the loan became due and
demandable, respondent bank filed a petition for extrajudicial foreclosure of mortgage of
petitioners' property. The property was sold in a public auction with Philippine Veterans Bank
as the lone bidder.
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 for being filed out of time.
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.
On April 17, 1998, the RTC rendered its decision dismissing the complaint for lack of merit. It
reasoned that defendant bank was placed under receivership by the Central Bank from April
1985 until 1992. From April 1985 until July 1992, defendant bank was restrained from doing its
business. The defendant bank was given authority by the Central Bank to operate as a private
commercial bank and became fully operational only on August 3, 1992.
ISSUE: 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;
HELD: NO.
One characteristic of a fortuitous event is that its occurrence must be such as to render it
impossible for a party to fulfill his obligation in a normal manner.
Respondent's 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.

5 PHILIPPINE NATIONAL BANK VS. JUAN F. VILA, G.R. NO. 213241, 1 AUGUST 2016 [799 SCRA
While it is true that foreclosure falls within the broad definition of "doing business," that is:
90]

. . . a continuity of commercial dealings and arrangements and contemplates to that extent,

FACTS: Sps Cornista obtained a loan from Traders Bank secured by a parcel of land registered
the performance of acts or words or the exercise of some of the functions normally incident to
under their name.
and in progressive prosecution of the purpose and object of its organization.

For failure of the Spouses Cornista to make good of their loan obligation after it has become
it should not be considered included, however, in the acts prohibited whenever banks are
due, Traders Bank foreclosed the mortgage constituted on the security of the loan.
"prohibited from doing business" during receivership and liquidation proceedings.
Respondent Vila emerged as the highest bidder.

This is consistent with the purpose of receivership proceedings, i.e., to receive collectibles and
Despite the lapse of the redemption period and the fact of issuance of a Certificate of Final
preserve the assets of the bank in substitution of its former management, and prevent the
Sale to Vila, the Spouses Cornista were nonetheless allowed to buy back the subject property.
dissipation of its assets to the detriment of the creditors of the bank.
A certificate of redemption was issued for this purpose.

Claiming that the Spouses Cornista already lost their right to redeem the subject property, Vila

filed an action for nullification of redemption. A Notice of Lis Pendens was issued for this
purpose and was duly recorded in the certificate of title of the property.

The action for nullification of redemption was ruled in favor of Vila.

By unfortunate turn of events, the Sheriff could not successfully enforce the decision because
the certificate of title covering the subject property was no longer registered under the names
of the Spouses Cornista.

Upon investigation it was found out that during the interregnum the Spouses Cornista were
able to secure a loan from the PNB using the same property subject of litigation as security.
The Real Estate Mortgage (REM) was recorded a month before the Notice of Lis Pendens was
annotated.

Eventually, the Spouses Cornista defaulted in the payment of their loan obligation with the
PNB prompting the latter to foreclose the property offered as security. The bank emerged as
the highest bidder during the public sale as shown at the Certificate of Sale issued by the
Sheriff. As with the prior mortgage, the Spouses Cornista once again failed to exercise their
right of redemption within the required period allowing PNB to consolidate its ownership over
the subject property. Accordingly, a TCT in the name of the Spouses Cornista was cancelled
and a new one under name of the PNB was issued.

The foregoing turn of events left Vila with no other choice but to commence another round of
litigation against the Spouses Cornista and PNB for the nullification of the TCT issued under the
name of PNB.
To refute the allegations of Vila, PNB pounded that it was a mortgagee in good faith pointing
the fact that at the time the subject property was mortgaged to it, the same was still free from
any liens and encumbrances and the Notice of Lis Pendens was registered only a month after
the REM was annotated on the title. PNB meant to say that at the time of the transaction, the
Spouses Cornista were still the absolute owners of the property possessing all the rights to
mortgage the same to third persons. PNB also harped on the fact that a close examination of
title was conducted and nowhere was it shown that there was any cloud in the title of the
Spouses Cornista, the latter having redeemed the property after they have lost it in a
foreclosure sale.
The trial and appellate courts ruled that PNB is a mortgagee in bad faith.
ISSUE: WON PNB is a mortgagee in good faith
RULING: The court ruled that the mortgagee is in bad faith.
Before approving a loan application, it is a standard operating practice for these institutions to
conduct an ocular inspection of the property offered for mortgage and to verify the
genuineness of the title to determine the real owner thereof. The apparent purpose of an
ocular inspection is to protect the "true owner" of the property as well as innocent third
parties with a right, interest or claim thereon from a usurper who may have acquired a
fraudulent certificate of title thereto.
In Land Bank of the Philippines v. Belle Corporation, it was held that When the purchaser or
the mortgagee is a bank, the rule on innocent purchasers or mortgagees for value is applied
more strictly. Being in the business of extending loans secured by real estate mortgage, banks
are presumed to be familiar with the rules on land registration. Since the banking business-is
impressed with public interest, they are expected to be more cautious, to exercise a higher
degree of diligence, care and prudence, than private individuals in their dealings, even those
involving registered lands. Banks may not simply rely on the face of the certificate of title.
Hence, they cannot assume that, xxx the title offered as security is on its face free of any
encumbrances or lien, they are relieved of the responsibility of taking further steps to verify
the title and inspect the properties to be mortgaged. As expected, the ascertainment of the
status or condition of a property offered to it as security for a loan must be a standard and
indispensable part of the bank's operations.
PNB clearly failed to observe the required degree of caution in readily approving the loan and
accepting the collateral offered by the Spouses Cornista without first ascertaining the real
ownership of the property. It should not have simply relied on the face of title but went
furthef to physically ascertain the actual condition of the property. That the propprty offered
as security was in the possession of the person other than the lone applying for the loan and
the taxes were declared not in their names could have raised a suspicion. A person who
deliberately ignores a significant fact that could create suspicion in an otherwise reasonable
person is not an innocent purchaser for value.
6 HILARIO P. SORIANO VS. PEOPLE OF THE PHILIPPINES, G.R. NO. 162336, 1 FEBRUARY 2010
[611 SCRA 191]
FACTS: The Office of Special Investigation (OSI) of the BSP transmitted a letter  to  the  DOJ,
which was attached  with five affidavits, which would allegedly serve as bases for filing criminal
charges for Estafa thru Falsification of Commercial Documents, in relation to PD No. 1689, and
for Violation of Section 83 of RA 337, as amended by PD 1795, against, inter alia, petitioner
Hilario P. Soriano. These five affidavits, along with other documents, stated that spouses
Enrico and Amalia Carlos appeared to have an outstanding loan of P8 million with the Rural
Bank of San Miguel, Inc. (RBSM), but had never applied for nor received such loan; that it was
petitioner, who was then president of RBSM who had ordered, facilitated, and received the
proceeds of the loan; and that the P8 million loan had never been authorized by RBSM’s Board
of Directors and no report thereof had ever been submitted to the Department of Rural Banks,
Supervision and Examination Sector of the BSP.
Two separate informations against petitioner.
Petitioner moved to quash this information.
Essentially, the petitioner theorized that the characterization of possession is different in the
two offenses. If petitioner acquired the loan as DOSRI, he owned the loaned money and
therefore, cannot misappropriate or convert it as contemplated in the offense of estafa.
Conversely, if petitioner committed estafa, then he merely held the money in trust for
someone else and therefore, did not acquire a loan in violation of DOSRI rules. The trial court
denied petitioner’s Motion to Quash for lack of merit. The MR was denied as well. Aggrieved,
petitioner filed a Petition for Certiorari before the CA which was also denied. Hence, this
petition.
ISSUE: Whether a loan transaction within the ambit of the DOSRI law (violation of Section 83
of RA 337, as amended) could also be the subject of Estafa under Article 315 (1) (b) of the
Revised Penal Code.
 
RULING: We have examined the two informations against petitioner and we find that they
contain allegations which, if hypothetically admitted, would establish the essential elements of
the crime of DOSRI violation and estafa thru falsification of commercial documents.
In Criminal Case No. 238-M-2001 for violation of DOSRI rules, the information alleged that
petitioner Soriano was the president of RBSM; that he was able to indirectly obtain a loan
from RBSM by putting the loan in the name of depositor Enrico Carlos; and that he did this
without complying with the requisite board approval, reportorial, and ceiling requirements.
In Criminal Case No. 237-M-2001 for estafa thru falsification of commercial documents, the
information alleged that petitioner, by taking advantage of his position as president of RBSM,
falsified various loan documents to make it appear that an Enrico Carlos secured a loan of P8
million from RBSM; that petitioner succeeded in obtaining the loan proceeds; that he later
converted the loan proceeds to his own personal gain and benefit; and that his action caused
damage and prejudice to RBSM, its creditors, the BSP, and the PDIC.
Petitioners theory is based on the false premises that the loan was extended to him by the
bank in his own name, and that he became the owner of the loan proceeds.
Under the circumstances, it cannot be said that petitioner became the legal owner of the P8
million. Thus, petitioner remained the banks fiduciary with respect to that money, which
makes it capable of misappropriation or conversion in his hands.
The prohibition in Section 83 is broad enough to cover various modes of borrowing. It covers
loans by a bank director or officer (like herein petitioner) which are made either: (1) directly,
(2) indirectly, (3) for himself, (4) or as the representative or agent of others.
It applies even if the director or officer is a mere guarantor, indorser or surety for someone
else’s loan or is in any manner an obligor for money borrowed from the bank or loaned by it.
The covered transactions are prohibited unless the approval, reportorial and ceiling
requirements under Section 83 are complied with.
The prohibition is intended to protect the public, especially the depositors, from the
overborrowing of bank funds by bank officers, directors, stockholders and related interests, as
such overborrowing may lead to bank failures.
It has been said that banking institutions are not created for the benefit of the directors [or
officers]. While directors have great powers as directors, they have no special privileges as
individuals. They cannot use the assets of the bank for their own benefit except as permitted
by law. Stringent restrictions are placed about them so that when acting both for the bank and
for one of themselves at the same time, they must keep within certain prescribed lines
regarded by the legislature as essential to safety in the banking business.
A direct borrowing is obviously one that is made in the name of the DOSRI himself or where
the DOSRI is a named party, while an indirect borrowing includes one that is made by a third
party, but the DOSRI has a stake in the transaction. The latter type indirect borrowing applies
here.
7 PHILIPPINE NATIONAL BANK VS. SPOUSES CHEAH CHEE CHONG AND OFELIA CAMACHO
CHEAH, G.R. NO. 170865, 25 APRIL 2012 [671 SCRA 49]
Ofelia Cheah (Ofelia) and her friend Adelina Guarin (Adelina) were having a conversation in the
latter’s office when Adelina’s friend, Filipina Tuazon (Filipina), approached her to ask if she
could have Filipina’s check cleared and encashed for a service fee of 2.5%. The check is Bank of
America under the account of Alejandria Pineda and Eduardo Rosales and drawn by Atty.
Eduardo Rosales against Bank of America Alhambra Branch in California, USA, with a face
amount of $300,000.00, payable to cash. Because Adelina does not have a dollar account in
which to deposit the check, she asked Ofelia if she could accommodate Filipina’s request since
she has a joint dollar savings account with her Malaysian husband Cheah Chee Chong (Chee
Chong) with PNB Buendia Branch. Ofelia agreed.
Ofelia and Adelina went to PNB Buendia Branch. PNB then sent it for clearing through its
correspondent bank, Philadelphia National Bank. Five days later, PNB received a credit advice8
from Philadelphia National Bank that the proceeds of the subject check had been temporarily
credited to PNB’s account. Filipina received all the proceeds.
A SWIFT message from PNB informing PNB of the return of the subject check for insufficient
funds. Informed about the bounced check and upon demand by PNB Buendia Branch to return
the money withdrawn, Ofelia immediately contacted Filipina to get the money back. But the
latter told her that all the money had already been given to several people who asked for the
check’s encashment. In their effort to recover the money, spouses Cheah then sought the help
of the NBI able to apprehend some of the beneficiaries of the proceeds of the check and
recover from them$20,000.00.
the spouses Cheah have been constantly meeting with the bank officials to discuss matters
regarding the incident and the recovery of the value of the check pending the case. Chee
Chong in the end signed a PNB drafted19 letter20 which states that the spouses Cheah are
offering their condominium units as collaterals for the amount withdrawn. Under this setup,
the amount withdrawn would be treated as a loan account.
Although some of the officers of PNB were amenable to the proposal,21 the same did not
materialize. Subsequently, PNB sent a demand letter to spouses Cheah for the return of the
amount of the check,22 froze their peso and dollar deposits in the amounts of ₱275,166.80
and $893.46,23and filed a complaint24against them for Sum of Money
The RTC ruled in PNB’s favor
CA - PNB is hereby ordered to credit to the peso and dollar accounts of the Cheah spouses the
amount due to them. the CA ratiocinated that PNB Buendia Branch’s non-receipt of the SWIFT
message from Philadelphia National Bank within the 15-day clearing period is not an
acceptable excuse. Applying the last clear chance doctrine, the CA held that PNB had the last
clear opportunity to avoid the impending loss of the money and yet, it glaringly exhibited its
negligence in allowing the withdrawal of funds without exhausting the 15-day clearing period
which has always been a standard banking practice as testified to by PNB’s own officers
ISSUE: W/N PNB is liable
HELD: Yes
PNB’s act of releasing the proceeds of the check prior to the lapse of the 15-day clearing
period was the proximate cause of the loss. Here,while PNB highlights Ofelia’s fault in
accommodating astranger’s check and depositing it to the bank, it remains mum in its release
of the proceeds thereof without exhausting the 15-dayclearingperiod,an act which
contravened established banking rules and practice. This Court already held that the payment
of the amounts of checks without previously clearing them with the drawee bank especially so
where the drawee bank is a foreign bank and the amounts involved were large is contrary to
normal or ordinary banking practice. The delay in the receipt by PNB Buendia Branch of the
November 13, 1992 SWIFT message notifying it of the dishonor of the subject check is of no
moment, because had PNB Buendia Branch waited for the expiration of the clearing period
and had never released during that time the proceeds of the check, it would have already
been duly notified of its dishonor. Clearly, PNB’s disregard of its preventive and protective
measure against the possibility of being victimized by bad checks had brought upon itself the
injury of losing a significant amount of money.
It bears stressing that "the diligence required of banks is more than that of a Roman pater
familias or a good father of a family. The highest degree of diligence is expected."39 PNB
miserably failed to do its duty of exercising extraordinary diligence and reasonable business
prudence. The disregard of its own banking policy amounts to gross negligence, which the law
defines as "negligence characterized by the want of even slight care, acting or omitting to act
in a situation where there is duty to act, not inadvertently but wilfully and intentionally with a
conscious indifference to consequences in so far as other persons may be affected."40 With
regard to collection or encashment of checks, suffice it to say that the law imposes on the
collecting bank the duty to scrutinize diligently the checks deposited with it for the purpose of
determining their genuineness and regularity." The collecting bank, being primarily engaged in
banking, holds itself out to the public as the expert on this field, and the law thus holds it to a
high standard of conduct." A bank is expected to be an expert in banking procedures and it has
the necessary means to ascertain whether a check, local or foreign, insufficiently funded.
The CA found Ofelia’s credulousness blameworthy. We agree. Indeed, Ofelia failed to observe
caution in giving her full trust in accommodating a complete stranger and this led her and her
husband to be swindled.
In any case, the complaint against the spouses Cheah could not be dismissed. As PNB’s client,
Ofelia was the one who dealt with PNB and negotiated the check such that its value was
credited in her and her husband’s account. Being the ones in privity with PNB, the spouses
Cheah are therefore the persons who should return to PNB the money released to them.
8 SPS. CRISTINO & EDNA CARBONELL VS. METROPOLITAN BANK AND TRUST COMPANY, G.R.
NO. 178467, 26 APRIL 2017 [825 SCRA 1]
FACTS: The petitioners alleged that they had experienced emotional shock, mental anguish,
public ridicule, humiliation, insults and embarrassment during their trip to Bangkok, Thailand
because of the respondent's release to them of five US$ 100 bills that turned out to be
counterfeit.
They withdrew US$ l, 000.00 in US$ 100 notes from their dollar account at the respondent's
Pateros branch. While in Bangkok, they had exchanged five US$ 100 bills into Baht, but only
four of the US$ 100 bills had been accepted by the foreign exchange dealer because the fifth
one was "no good." Because of currency’s rejection, they had asked a companion to exchange
the same bill at Norkthon Bank in Bangkok, thereat the dollar bill was declared “fake, and was
confiscated by the bank teller. On the next day, they had been confronted by the shop owner
at the hotel lobby because their four US$ 100 bills had turned out to be counterfeit after they
had bought jewelry.
Upon the petitioners’ return to the Philippines, they had confronted the manager of the
respondent's Pateros branch on the fake dollar bills, but the latter had insisted that the dollar
bills she had released to them were genuine, for the bills were certified by Bangko Sentral ng
Pilipinas (BSP) after examination. They had demanded moral damages of ₱10 Million and
exemplary damages.
Prior to the filing of the suit in the RTC, the petitioners had two meetings with the
respondent's representatives. In the course of the two meetings, the latter's representatives
reiterated their sympathy and regret over the troublesome experience that the petitioners
had encountered, and offered to reinstate US$500 in their dollar account, and, in addition, to
underwrite a round-trip all-expense-paid trip to Hong Kong, but they were adamant and
staged a walk-out.
The RTC ruled in favor of the respondent. The petitioners appealed, but the CA ultimately
promulgated its assailed decision affirming the judgment of the RTC with the modification of
deleting the award of attorney's fees.
ISSUE: Whether or not the CA gravely erred in affirming the judgment of the RTC.
HELD: No. The court affirmed with the judgment of the RTC. Injury is the illegal invasion of a
legal right, damage is the loss, hurt, or harm which results from the injury; and damages are
the recompense or compensation awarded for the damage suffered. Thus, there can be
damage without injury in those instances in which the loss or harm was not the result of a
violation of a legal duty. These situations are often called dmimum absque injuria.
In every situation of damnum absque injuria, therefore, the injured person alone bears the
consequences because the law affords no remedy for damages resulting from an act that does
not amount to a legal injury or wrong. For instance, in BP I Express Card Corporation v. Court
of Appeals, the Court turned down the claim for damages of a cardholder whose credit card
had been cancelled after several defaults in payment, holding therein that there could be
damage without injury where the loss or harm was not the result of a violation of a legal duty
towards the plaintiff. In such situation, the injured person alone should bear the consequences
because the law afforded no remedy for damages resulting from an act that did not amount to
a legal injury or wrong. Indeed, the lack of malice in the conduct complained of precluded the
recovery of damages.
Here, although the petitioners suffered humiliation resulting from their unwitting use of the
counterfeit US dollar bills, the respondent, by virtue of its having observed the proper
protocols and procedure in handling the US dollar bills involved, did not violate any legal duty
towards them. Being neither guilty of negligence nor remiss in its exercise of the degree of
diligence required by law or the nature of its obligation as a banking institution, the latter was
not liable for damages. Given the situation being one of damnum absque injuria, they could
not be compensated for the damage sustained.
9 SUBIDO PAGENTE CERTEZA MENDOZA AND BINAY LAW OFFICES VS. THE COURT OF
APPEALS, G.R. NO. 216914, 6 DECEMBER 2016 [813 SCRA 1]
Facts: Challenged in this petition for certiorari and prohibition under Rule 65 of the Rules of
Court is the constitutionality of Section 11 of R.A No. 9160, the Anti-Money Laundering Act, as
amended, specifically the Anti-Money Laundering Council's authority to file with the Court of
Appeals (CA) in this case, an ex-parte application for inquiry into certain bank deposits and
investments, including related accounts based on probable cause.
In 2015, a year before the 2016 presidential elections, reports abounded on the supposed
disproportionate wealth of then Vice President Jejomar Binay and the rest of his family, some
of whom were likewise elected public officers. The Office of the Ombudsman and the Senate
conducted investigations and inquiries thereon.
From various news reports announcing the inquiry into then Vice President Binay's bank
accounts, including accounts of members of his family, petitioner Subido Pagente Certeza
Mendoza & Binay Law Firm (SPCMB) was most concerned with the article published in the
Manila Times on 25 February 2015 entitled "Inspect Binay Bank Accounts" which read, in
pertinent part:
xxx The Anti-Money Laundering Council (AMLC) asked the Court of Appeals (CA) to allow the
[C]ouncil to peek into the bank accounts of the Binays, their corporations, and a law office
where a family member was once a partner.
xx xx
Also the bank accounts of the law office linked to the family, the Subido Pagente Certeza
Mendoza & Binay Law Firm, where the Vice President's daughter Abigail was a former partner.
By 8 March 2015, the Manila Times published another article entitled, "CA orders probe of
Binay 's assets" reporting that the appellate court had issued a Resolution granting the ex-
parte application of the AMLC to examine the bank accounts of SPCMB. Forestalled in the CA
thus alleging that it had no ordinary, plain, speedy, and adequate remedy to protect its rights
and interests in the purported ongoing unconstitutional examination of its bank accounts by
public respondent Anti-Money Laundering Council (AMLC), SPCMB undertook direct resort to
this Court via this petition for certiorari and prohibition on the following grounds that the he
Anti-Money Laundering Act is unconstitutional insofar as it allows the examination of a bank
account without any notice to the affected party: (1) It violates the person's right to due
process; and (2) It violates the person's right to privacy.
Issues:
1 Whether Section 11 of R.A No. 9160 violates substantial due process.
2 Whether Section 11 of R.A No. 9160 violates procedural due process.
3 Whether Section 11 of R.A No. 9160 is violative of the constitutional right to privacy
enshrined in Section 2, Article III of the Constitution.
Rulings
1. No. We do not subscribe to SPCMB' s position. Succinctly, Section 11 of the AMLA providing
for ex-parte application and inquiry by the AMLC into certain bank deposits and investments
does not violate substantive due process, there being no physical seizure of property involved
at that stage.
In fact, .Eugenio delineates a bank inquiry order under Section 11 from a freeze order under
Section 10 on both remedies' effect on the direct objects, i.e. the bank deposits and
investments:
On the other hand, a bank inquiry order under Section 11 does not necessitate any form of
physical seizure of property of the account holder. What the bank inquiry order authorizes is
the examination of the particular deposits or investments in banking institutions or non-bank
financial institutions. The monetary instruments or property deposited with such banks or
financial institutions are not seized in a physical sense, but are examined on particular details
such as the account holder's record of deposits and transactions. Unlike the assets subject of
the freeze order, the records to be inspected under a bank inquiry order cannot be physically
seized or hidden by the account holder. Said records are in the possession of the bank and
therefore cannot be destroyed at the instance of the account holder alone as that would
require the extraordinary cooperation and devotion of the bank.
At the stage in which the petition was filed before us, the inquiry into certain bank deposits
and investments by the AMLC still does not contemplate any form of physical seizure of the
targeted corporeal property.
2. No. The AMLC functions solely as an investigative body in the instances mentioned in Rule
5.b.26 Thereafter, the next step is for the AMLC to file a Complaint with either the DOJ or the
Ombudsman pursuant to Rule 6b. Even in the case of Estrada v. Office of the Ombudsman,
where the conflict arose at the preliminary investigation stage by the Ombudsman, we ruled
that the Ombudsman's denial of Senator Estrada's Request to be furnished copies of the
counter-affidavits of his co-respondents did not violate Estrada's constitutional right to due
process where the sole issue is the existence of probable cause for the purpose of determining
whether an information should be filed and does not prevent Estrada from requesting a copy
of the counter-affidavits of his co-respondents during the pre-trial or even during trial.
order is issued, ensuring adherence to the general state policy of preserving the absolutely
confidential nature of Philippine bank accounts:
1 The AMLC is required to establish probable cause as basis for its ex-parte application for
bank inquiry order;
2 The CA, independent of the AMLC's demonstration of probable cause, itself makes a finding
of probable cause that the deposits or investments are related to an unlawful
activity under Section 3(i) or a money laundering offense under Section 4 of the
AMLA;
3 A bank inquiry court order ex-parte for related accounts is preceded by a bank inquiry court
order ex-parte for the principal account which court order ex-parte for related
accounts is separately based on probable cause that such related account is
materially linked to the principal account inquired into; and
4 The authority to inquire into or examine the main or principal account and the related
accounts shall comply with the requirements of Article III, Sections 2 and 3 of the
Constitution. The foregoing demonstrates that the inquiry and examination into the
bank account are not undertaken whimsically and solely based on the investigative
discretion of the AMLC. In particular, the requirement of demonstration by the
AMLC, and determination by the CA, of probable cause emphasizes the limits of
such governmental action. We will revert to these safeguards under Section 11 as
we specifically discuss the CA' s denial of SPCMB' s letter request for information
concerning the purported issuance of a bank inquiry order involving its accounts.
All told, we affirm the constitutionality of Section 11 of the AMLA allowing the ex-parte
application by the AMLC for authority to inquire into, and examine, certain bank deposits and
investments.
WHEREFORE, the petition is DENIED. Section 11 of Republic Act No. 9160, as amended, is
declared VALID and CONSTITUTIONAL.

Plainly, the AMLC's investigation of money laundering offenses and its determination of
possible money laundering offenses, specifically its inquiry into certain bank accounts allowed
by court order, does not transform it into an investigative body exercising quasi-judicial
powers. Hence, Section 11 of the AMLA, authorizing a bank inquiry court order, cannot be said
to violate SPCMB's constitutional right to due process.

3. No. We now come to a determination of whether Section 11 is violative of the constitutional

right to privacy enshrined in Section 2, Article III of the Constitution. SPCMB is adamant that
the CA's denial of its request to be furnished copies of AMLC's ex-parte application for a bank
inquiry order and all subsequent pleadings, documents and orders filed and issued in relation
thereto, constitutes grave abuse of discretion where the purported blanket authority under
Section 11: ( 1) partakes of a general warrant intended to aid a mere fishing expedition; (2)
violates the attorney-client privilege; (3) is not preceded by predicate crime charging SPCMB of
a money laundering offense; and ( 4) is a form of political harassment [of SPCMB' s] clientele.

We thus subjected Section 11 of the AMLA to heightened scrutiny and found nothing arbitrary
in the allowance and authorization to AMLC to undertake an inquiry into certain bank
accounts or deposits. Instead, we found that it provides safeguards before a bank inquiry
 10 PHILIPPINE BANKING CORPORATION VS. ARTURO DY, G.R. NO. 183774
Cipriana was the registered owner of a 58,129-square meter (sq.m.) lot, denominated as Lot
No. 6966, situated in Barrio Tongkil, Minglanilla, Cebu, covered by TCT No. 18568. She and her
husband, respondent Jose Delgado (Jose), entered into an agreement with a certain Cecilia
Tan (buyer) for the sale of the said property for a consideration of P10.00/sq.m. It was agreed
that the buyer shall make partial payments from time to time and pay the balance when
Cipriana and Jose (Sps. Delgado) are ready to execute the deed of sale and transfer the title to
her.
At the time of sale, the buyer was already occupying a portion of the property where she
operates a noodle (bihon) factory while the rest was occupied by tenants which Sps. Delgado
undertook to clear prior to full payment. After paying the total sum of P147,000.00 and being
then ready to pay the balance, the buyer demanded the execution of the deed, which was
refused. Eventually, the buyer learned of the sale of the property to the Dys and its
subsequent mortgage to petitioner Philippine Banking Corporation (Philbank), prompting the
filing of the Complaint5Ï‚rνll for annulment of certificate of title, specific performance and/or
reconveyance with damages against Sps. Delgado, the Dys and Philbank.
In their Answer, Sps. Delgado, while admitting receipt of the partial payments made by the
buyer, claimed that there was no perfected sale because the latter was not willing to pay their
asking price of P17.00/sq.m. They also interposed a cross-claim against the Dys averring that
the deeds of absolute sale in their favor dated June 28, 1982 6Ï‚rνll and June 30,
19827Ï‚rνll covering Lot No. 6966 and the adjoining Lot No. 4100-A (on which Sps. Delgado's
house stands), were fictitious and merely intended to enable them (the Dys) to use the said
properties as collateral for their loan application with Philbank and thereafter, pay the true
consideration of P17.00/sq.m. for Lot No. 6966. However, after receiving the loan proceeds,
the Dys reneged on their agreement, prompting Sps. Delgado to cause the annotation of an
adverse claim on the Dys' titles and to inform Philbank of the simulation of the sale. Sps.
Delgado, thus, prayed for the dismissal of the complaint, with a counterclaim for damages and
a cross-claim against the Dys for the payment of the balance of the purchase price plus
damages.
For their part, the Dys denied knowledge of the alleged transaction between cross-claimants
Sps. Delgado and buyer. They claimed to have validly acquired the subject property from Sps.
Delgado and paid the full consideration therefor as the latter even withdrew their adverse
claim and never demanded for the payment of any unpaid balance.
On the other hand, Philbank filed its Answer8Ï‚rνll asserting that it is an innocent mortgagee
for value without notice of the defect in the title of the Dys. It filed a cross-claim against Sps.
Delgado and the Dys for all the damages that may be adjudged against it in the event they are
declared seller and purchaser in bad faith, respectively.
In answer to the cross-claim, Sps. Delgado insisted that Philbank was not a mortgagee in good
faith for having granted the loan and accepted the mortgage despite knowledge of the
simulation of the sale to the Dys and for failure to verify the nature of the buyers physical
possession of a portion of Lot No. 6966. They thereby prayed for the cancellation of the
mortgage in Philbank's favor.
Subsequently, Sps. Delgado amended their cross-claim against the Dys to include a prayer for
the nullification of the deeds of absolute sale in the latter's favor and the corresponding
certificates of title, and for the consequent reinstatement of Ciprianas title. 9ςrνll
The complaints against the Dys and Philbank were subsequently withdrawn. On the other
hand, both the buyer and Sps. Delgado never presented any evidence in support of their
respective claims. Hence, the RTC limited itself to the resolution of the claims of Sps. Delgado,
Philbank and the Dys against one another.
The RTC Ruling
In the Decision10Ï‚rνll dated October 5, 1994, the RTC dismissed the cross-claims of Sps.
Delgado against the Dys and Philbank. It noted that other than Sps. Delgado's bare allegation
of the Dys' supposed non-payment of the full consideration for Lot Nos. 6966 and 4100-A, they
failed to adduce competent evidence to support their claim. On the other hand, the Dys
presented a cash voucher11Ï‚rνll dated April 6, 1983 duly signed by Sps. Delgado
acknowledging receipt of the total consideration for the two lots.
The RTC also observed that Sps. Delgado notified Philbank of the purported simulation of the
sale to the Dys only after the execution of the loan and mortgage documents and the release
of the loan proceeds to the latter, negating their claim of bad faith. Moreover, they
subsequently notified the bank of the Dys' full payment for the two lots mortgaged to it.
The CA Ruling
However, on appeal, the CA set aside12Ï‚rνll the RTC's decision and ordered the cancellation of
the Dys' certificates of title and the reinstatement of Cipriana's title. It ruled that there were
no perfected contracts of sale between Sps. Delgado and the Dys in view of the latter's
admission that the deeds of sale were purposely executed to facilitate the latter's loan
application with Philbank and that the prices indicated therein were not the true
consideration. Being merely simulated, the contracts of sale were, thus, null and void,
rendering the subsequent mortgage of the lots likewise void.
The CA also declared Philbank not to be a mortgagee in good faith for its failure to ascertain
how the Dys acquired the properties and to exercise greater care when it conducted an ocular
inspection thereof. It thereby canceled the mortgage over the two lots.
The Petition
In the present petition, Philbank insists that it is a mortgagee in good faith. It further contends
that Sps. Delgado are estopped from denying the validity of the mortgage constituted over the
two lots since they participated in inducing Philbank to grant a loan to the Dys.
On the other hand, Sps. Delgado maintain that Philbank was not an innocent mortgagee for
value for failure to exercise due diligence in transacting with the Dys and may not invoke the
equitable doctrine of estoppel to conceal its own lack of diligence.
For his part, Arturo Dy filed a Petition-in-Intervention 13Ï‚rνll arguing that while the deeds of
absolute sale over the two properties were admittedly simulated, the simulation was only a
relative one involving a false statement of the price. Hence, the parties are still bound by their
true agreement. The same was opposed/objected to by both Philbank 14Ï‚rνll and Sps.
Delgado15Ï‚rνll as improper, considering that the CA judgment had long become final and
executory as to the Dys who neither moved for reconsideration nor appealed the CA Decision.
The Ruling of the Court
The petition is meritorious.
At the outset, the Court takes note of the fact that the CA Decision nullifying the questioned
contracts of sale between Sps. Delgado and the Dys had become final and executory.
Accordingly, the Petition-in-Intervention filed by Arturo Dy, which seeks to maintain the
subject contracts' validity, can no longer be entertained. The cancellation of the Dys'
certificates of title over the disputed properties and the issuance of new TCTs in favor of
Cipriana must therefore be upheld.
However, Philbank's mortgage rights over the subject properties shall be maintained. While it
is settled that a simulated deed of sale is null and void and therefore, does not convey any
right that could ripen into a valid title, 16Ï‚rνll it has been equally ruled that, for reasons of
public policy,17Ï‚rνll the subsequent nullification of title to a property is not a ground to annul
the contractual right which may have been derived by a purchaser, mortgagee or other
transferee who acted in good faith.18ςrνll
The ascertainment of good faith or lack of it, and the determination of whether due diligence
and prudence were exercised or not, are questions of fact 19Ï‚rνll which are generally improper
in a petition for review on certiorari under Rule 45 of the Rules of Court (Rules) where only
questions of law may be raised. A recognized exception to the rule is when there are
conflicting findings of fact by the CA and the RTC, 20Ï‚rνll as in this case.
Primarily, it bears noting that the doctrine of "mortgagee in good faith" is based on the rule
that all persons dealing with property covered by a Torrens Certificate of Title are not required
to go beyond what appears on the face of the title. This is in deference to the public interest in
upholding the indefeasibility of a certificate of title as evidence of lawful ownership of the land
or of any encumbrance thereon.21Ï‚rνll In the case of banks and other financial institutions,
however, greater care and due diligence are required since they are imbued with public
interest, failing which renders the mortgagees in bad faith. Thus, before approving a loan
application, it is a standard operating practice for these institutions to conduct an ocular
inspection of the property offered for mortgage and to verify the genuineness of the title to
determine the real owner(s) thereof.22Ï‚rνll The apparent purpose of an ocular inspection is to
protect the "true owner" of the property as well as innocent third parties with a right, interest
or claim thereon from a usurper who may have acquired a fraudulent certificate of title
thereto.23ςrνll
In this case, while Philbank failed to exercise greater care in conducting the ocular inspection
of the properties offered for mortgage, 24Ï‚rνll its omission did not prejudice any innocent
third parties. In particular, the buyer did not pursue her cause and abandoned her claim on the
property. On the other hand, Sps. Delgado were parties to the simulated sale in favor of the
Dys which was intended to mislead Philbank into granting the loan application. Thus, no
amount of diligence in the conduct of the ocular inspection could have led to the discovery of
the complicity between the ostensible mortgagors (the Dys) and the true owners (Sps.
Delgado). In fine, Philbank can hardly be deemed negligent under the premises since the
ultimate cause of the mortgagors' (the Dys') defective title was the simulated sale to which
Sps. Delgado were privies.
Indeed, a finding of negligence must always be contextualized in line with the attendant
circumstances of a particular case. As aptly held in Philippine National Bank v. Heirs of
Estanislao Militar,25Ï‚rνll "the diligence with which the law requires the individual or a
corporation at all times to govern a particular conduct varies with the nature of the situation in
which one is placed, and the importance of the act which is to be performed." 26ςrνllThus,
without diminishing the time-honored principle that nothing short of extraordinary diligence is
required of banks whose business is impressed with public interest, Philbank's inconsequential
oversight should not and cannot serve as a bastion for fraud and deceit.
To be sure, fraud comprises "anything calculated to deceive, including all acts, omissions, and
concealment involving a breach of legal duty or equitable duty, trust, or confidence justly
reposed, resulting in damage to another, or by which an undue and unconscientious
advantage is taken of another."27Ï‚rνll In this light, the Dys' and Sps. Delgado's deliberate
simulation of the sale intended to obtain loan proceeds from and to prejudice Philbank clearly
constitutes fraudulent conduct. As such, Sps. Delgado cannot now be allowed to deny the
validity of the mortgage executed by the Dys in favor of Philbank as to hold otherwise would
effectively sanction their blatant bad faith to Philbank's detriment.
Accordingly, in the interest of public policy, fair dealing, good faith and justice, the Court
accords Philbank the rights of a mortgagee in good faith whose lien to the securities posted
must be respected and protected. In this regard, Philbank is entitled to have its mortgage
carried over or annotated on the titles of Cipriana Delgado over the said properties.
WHERFORE, the assailed January 30, 2008 Decision of the Court of Appeals in CA-G.R. CV No.
51672 is hereby AFFIRMED with MODIFICATION upholding the mortgage rights of petitioner
Philippine Banking Corporation over the subject properties.ςrαlαωlιbrαr
11 APEX BANCRIGHTS HOLDINGS, INC. VS. BANGKO SENTRAL NG PILIPINAS AND PHILIPPINE
DEPOSIT INSURANCE CORPORATION, G.R. NO. 214866, 2 OCTOBER 2017 [841 SCRA 436]
Sometime in July 2001, EIB entered into a three-way merger with Urban Bank, Inc. (UBI) and
Urbancorp Investments, Inc. (UII) in an attempt to rehabilitate UBI which was then under
receivership.4 In September 2001, following the said merger, EIB itself encountered financial
difficulties which prompted respondent the Philippine Deposit Insurance Corporation (PDIC) to
extend financial assistance to it. However, EIB still failed to overcome its financial problems,
thereby causing PDIC to release in May 2005 additional financial assistance to it, conditioned
upon the infusion by EIB stockholders of additional capital whenever EIB' s adjusted Risk Based
Capital Adequacy Ratio falls below 12.5%. Despite this, EIB failed to comply with the BSP's
capital requirements, causing EIB's stockholders to commence the process of selling the bank. 5
Initially, Banco de Oro (BDO) expressed interest in acquiring EIB. However, certain issues
derailed the acquisition, including BDO's unwillingness to assume certain liabilities of EIB,
particularly the claim of the Pacific Rehouse Group against it. In the end, BDO's acquisition of
EIB did not proceed and the latter's financial condition worsened. Thus, in a letter 6 dated April
26, 2012, EIB 's president and chairman voluntarily turned-over the full control of EIB to BSP,
and informed the latter that the former will declare a bank holiday on April 27, 2012. 7
On April 26, 2012, the BSP, through the Monetary Board, issued Resolution No.
6868 prohibiting EIB from doing business in the Philippines and placing it under the
receivership of PDIC, in accordance with Section 30 of Republic Act No. (RA) 7653, otherwise
known as "The New Central Bank Act." 9 Accordingly, PDIC took over EIB.10
In due course, PDIC submitted its initial receivership report to the Monetary Board which
contained its finding that EIB can be rehabilitated or permitted to resume
business; provided, that a bidding for its rehabilitation would be conducted, and that the
following conditions would be met: (a) there are qualified interested banks that will comply
with the parameters for rehabilitation of a closed bank, capital strengthening, liquidity,
sustainability and viability of operations, and strengthening of bank governance; and (b) all
parties (including creditors and stockholders) agree to the rehabilitation and the revised
payment terms and conditions of outstanding liabilities. 11 Accordingly, the Monetary Board
issued Resolution No. 1317 on August 9, 2012 noting PDIC's initial report, and its request to
extend the period within which to submit the final determination of whether or not EIB can be
rehabilitated. Pursuant to the rehabilitation efforts, a public bidding was scheduled by PDIC on
October 18, 2012, but the same failed as no bid was submitted. A re-bidding was then set on
March 20, 2013 which also did not materialize as no bids were submitted. 12
On April 1, 2013, PDIC informed BSP that EIB can hardly be rehabilitated. 13 Based on PDIC's
report that EIB was insolvent, the Monetary Board passed Resolution No. 571 on April 4, 2013
directing PDIC to proceed with the liquidation of EIB.14
On April 29, 2013, petitioners, who are stockholders representing the majority stock of
EIB,15 filed a petition for certiorari 16 before the CA challenging Resolution No. 571. In essence,
petitioners blame PDIC for the failure to rehabilitate EIB, contending that PDIC: (a) imposed
unreasonable and oppressive conditions which delayed or frustrated the transaction between
BDO and EIB; (b) frustrated EIB's efforts to increase its liquidity when PDIC disapproved EIB's
proposal to sell its MRT bonds to a private third party and, instead, required EIB to sell the
same to government entities; (c) imposed impossible and unnecessary bidding requirements;
and (d) delayed the public bidding which dampened investors' interest. 17
In defense, PDIC countered18 that petitioners were already estopped from assailing the
placement of EIB under receivership and its eventual liquidation since they had already
surrendered full control of the bank to the BSP as early as April 26, 2012. 19 For its part, BSP
maintained20 that it had ample factual and legal bases to order EIB's liquidation. 21
The CA Ruling
In a Decision22 dated January 21, 2014, the CA dismissed the petition for lack of merit. It ruled
that the Monetary Board did not gravely abuse its discretion in ordering the liquidation of EIB
pursuant to the PDIC's findings that the rehabilitation of the bank is no longer feasible. In this
regard, the CA held that there is nothing in Section 30 of RA 7653 that requires the Monetary
Board to make its own independent factual determination on the bank's viability before
ordering its liquidation. According to the CA, the law only provides that the Monetary Board
"shall notify in writing the board of directors of its findings and direct the receiver to proceed
with the liquidation of the institution," 23which it did in this case.
Undaunted, petitioners moved for reconsideration 24 which was, however, denied by the CA in
its Resolution25 dated October 10, 2014; hence, this petition.
The Issue Before the Court
The sole issue before the Court is whether or not the CA correctly ruled that the Monetary
Board did not gravely abuse its discretion in issuing Resolution No. 571 which directed the
PDIC to proceed with the liquidation of EIB.
The Court's Ruling
The petition is without merit. Section 30 of RA 7653 provides for the proceedings in the
receivership and liquidation of banks and quasi-banks, the pertinent portions of which read:
Section 30. Proceedings in Receivership and Liquidation. - Whenever, upon report of the head
of the supervising or examining department, the Monetary Board finds that a bank or quasi-
bank:
(a) is unable to pay its liabilities as they become due in the ordinary course of
business: Provided, That this shall not include inability to pay caused by
extraordinary demands induced by financial panic in the banking community;
(b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet
its liabilities; or
 (c) cannot continue in business without involving probable losses to its depositors or
creditors; or
(d) has willfully violated a cease and desist order under Section 37 that has become
final, involving acts or transactions which amount to fraud or a dissipation of the
assets of the institution; in which cases, the Monetary Board may summarily and
without need for prior hearing forbid the institution from doing business in the
Philippines and designate the Philippine Deposit Insurance Corporation as receiver
of the banking institution.
x x x x The receiver shall immediately gather and take charge of all the assets and liabilities of
the institution, administer the same for the benefit of its creditors, and exercise the general
powers of a receiver under the Revised Rules of Court x x x[.]
If the receiver determines that the institution cannot be rehabilitated or permitted to resume
business in accordance with the next preceding paragraph, the Monetary Board shall notify in
writing the board of directors of its findings and direct the receiver to proceed with the
liquidation of the institution. The receiver shall: x x x x
The actions of the Monetary Board taken under this section or under Section 29 of this Act
shall be final and executory, and may not be restrained or set aside by the court except on
petition for certiorari on the ground that the action taken was in excess of jurisdiction or with
such grave abuse of discretion as to amount to lack or excess of jurisdiction. The petition
for certiorari may only be filed by the stockholders of record representing the majority of the
capital stock within ten (10) days from receipt by the board of directors of the institution of
the order directing receivership, liquidation or conservatorship.
The designation of a conservator under Section 29 of this Act or the appointment of a receiver
under this section shall be vested exclusively with the Monetary Board.1âwphi1 Furthermore,
the designation of a conservator is not a precondition to the designation of a receiver.
(Emphases and underscoring supplied)
It is settled that "[t]he power and authority of the Monetary Board to close banks and
liquidate them thereafter when public interest so requires is an exercise of the police power of
the State. Police power, however, is subject to judicial inquiry. It may not be exercised
arbitrarily or unreasonably and could be set aside if it is either capricious, discriminatory,
whimsical, arbitrary, unjust, or is tantamount to a denial of due process and equal protection
clauses of the Constitution."26 Otherwise stated and as culled from the above provision, the
actions of the Monetary Board shall be final and executory and may not be restrained or set
aside by the court except on petition for certiorari on the ground that the action taken was in
excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of
jurisdiction. "There is grave abuse of discretion when there is an evasion of a positive duty or a
virtual refusal to perform a duty enjoined by law or to act in contemplation of law as when the
judgment rendered is not based on law and evidence but on caprice, whim and despotism." 27
In line with the foregoing considerations, the Court agrees with the CA that the Monetary
Board did not gravely abuse its discretion in ordering the liquidation of EIB through its
Resolution No. 571.
To recount, after the Monetary Board issued Resolution No. 686 which placed EIB under the
receivership of PDIC, the latter submitted its initial findings to the Monetary Board, stating that
EIB can be rehabilitated or permitted to resume business; provided, that a bidding for its
rehabilitation would be conducted, and that the following conditions would be met: (a) there
are qualified interested banks that will comply with the parameters for rehabilitation of a
closed bank, capital strengthening, liquidity, sustainability and viability of operations, and
strengthening of bank governance; and (b) all parties (including creditors and stockholders)
agree to the rehabilitation and the revised payment terms and conditions of outstanding
liabilities.28 However, the foregoing conditions for EIB 's rehabilitation "were not met because
the bidding and re-bidding for the bank's rehabilitation were aborted since none of the pre-
qualified Strategic Third Party Investors (STPI) submitted a letter of interest to participate in
the bidding,"29 thereby resulting in the PDIC's finding that EIB is already insolvent and must
already be liquidated - a finding which eventually resulted in the Monetary Board's issuance of
Resolution No. 571.
In an attempt to forestall EIB's liquidation, petitioners insist that the Monetary Board must
first make its own independent finding that the bank could no longer be rehabilitated - instead
of merely relying on the findings of the PDIC - before ordering the liquidation of a bank. 30
Such position is untenable.
As correctly held by the CA, nothing in Section 30 of RA 7653 requires the BSP, through the
Monetary Board, to make an· independent determination of whether a bank may still be
rehabilitated or not. As expressly stated in the afore-cited provision, once the receiver
determines that rehabilitation is no longer feasible, the Monetary Board is simply obligated
to: (a) notify in writing the bank's board of directors of the same; and (b) direct the PDIC to
proceed with liquidation, viz.:
If the receiver determines that the institution cannot be rehabilitated or permitted to resume
business in accordance with the next preceding paragraph, the Monetary Board shall notify in
writing the board of directors of its findings and direct the receiver to proceed with the
liquidation of the institution. x x x. x x x x31
Suffice it to say that if the law had indeed intended that the Monetary Board make a separate
and distinct factual determination before it can order the liquidation of a bank or quasi-bank,
then there should have been a provision to that effect. There being none, it can safely be
concluded that the Monetary Board is not so required when the PDIC has already made such
determination. It must be stressed that the BSP (the umbrella agency of the Monetary Board),
in its capacity as government regulator of banks, and the PDIC, as statutory receiver of banks
under RA 7653, are the principal agencies mandated by law to determine the financial viability
of banks and quasi-banks, and facilitate the receivership and liquidation of closed financial
institutions, upon a factual determination of the latter's insolvency. 32 Thus, following the
maxim verba legis non est recedendum - which means "from the words of a statute there
should be no departure" - a statute that is clear, plain, and free from ambiguity must be given 13 BALAYAN BAY RURAL BANK, INC., REPRESENTED BY ITS STATUTORY LIQUIDATOR, THE
its literal meaning and applied without any attempted interpretation, 33 as in this case. PHILIPPINE DEPOSIT INSURANCE CORPORATION VS. NATIONAL LIVELIHOOD DEVELOPMENT
CORPORATION, G.R. NO. 194589, 21 SEPTEMBER 2015 [771 SCRA 139]
In sum, the Monetary Board's issuance of Resolution No. 571 ordering the liquidation of EIB
cannot be considered to be tainted with grave abuse of discretion as it was amply supported
This is a Petition for Review on Certiorari[1] filed by petitioner Balayan Bay Rural Bank
by the factual circumstances at hand and made in accordance with prevailing law and
(Batangas), Inc. (petitioner bank), seeking to reverse and set aside the 11 June 2010 Order [2] of
jurisprudence. To note, the "actions of the Monetary Board in proceedings on insolvency are
the Regional Trial Court (RTC) of Makati City, Branch 147. In its assailed Order, the RTC granted
explicitly declared by law to be 'final and executory.' They may not be set aside, or restrained,
the Motion for Substitution of parties filed by respondent National Livelihood Development
or enjoined by the courts, except upon 'convincing proof that the action is plainly arbitrary and
Corporation (NLDC) and ordered that the Philippine Deposit Insurance Corporation (PDIC) be
made in bad faith,"[['34]] which is absent in this case.
substituted or joined as co-defendant in Civil Case No. 09-917. The dispositive portion of the
assailed RTC Order reads:
WHEREFORE, the petition is hereby DENIED. The Decision dated January 21, 2014 and the
Resolution dated October 10, 2014 of the Court of Appeals in CA-G.R. SP No. 129674 are
WHEREFORE, premises considered, the Motion for Substitution of Part is hereby GRANTED.
hereby AFFIRMED. SO ORDERED.
Accordingly, PDIC is hereby ordered substituted or joined as co-defendant in this case. [3]
The Facts

12 PHILIPPINE DEPOSIT INSURANCE CORPORATION (R.A. NO. 3591, AS AMENDED BY R.A. Petitioner bank is a banking institution duly authorized by the Central Bank to engage in
NO. 10846) banking business before it was placed under receivership by the Bangko Sentral ng Pilipinas on
26 November 2009.

NLDC, on the other hand, is a government institution created to promote and generate the
development of livelihood and community-based enterprises by virtue of Executive Order No.
715 (1981).

On 12 October 2009, NLDC filed a complaint for collection of sum of money against petitioner
bank for the latter's unpaid obligation in the amount of P1,603,179.86 before the RTC of
Makati City. The case was docketed as Civil Case No. 09-917 and was raffled to Branch 147 of
the trial court.[4]

During the pendency of the case before the RTC, the Bangko Sentral ng Pilipinas, thru the
Monetary Board, issued MIN-70-26 November 2009,[5] placing the petitioner bank under
receivership and appointed the PDIC as receiver of the bank pursuant to Section 30 of Republic
Act (R.A.) No. 7653.[6]

After the petitioner bank was placed under receivership, NLDC filed a Motion for Substitution
of Party and Set the Case for Pre-Trial.[7]Invoking Section 19, Rule 3 of the Revised Rules of
Court, the NLDC claimed that by virtue of transfer of interest of the petitioner bank to the
PDIC, the latter may be substituted as party or joined with the original party.

The motion was duly opposed by the petitioner bank contending that the PDIC is not the real
party in interest in the instant case because it does not stand to be benefited or injured by the
judgment in the suit. It argued that the PDIC is merely the Statutory Receiver/Liquidator of all
banks placed by the Monetary Board under receivership and is merely a representative of the
petitioner bank which remains as the real party in interest. The substitution of the PDIC as
defendant in this case is therefore not proper.[8]

On 11 June 2010, the RTC issued an Order granting the Motion for Substitution filed by NLDC
and directed that the PDIC be substituted or joined as co-defendant in the case. In sustaining
the NLDC, the court a quo ruled that the prosecution or defense of the action must be done
thru the liquidator, lest, no suit for or against the insolvent entity would prosper.
Arguing that the substitution is not proper in the instant case since the PDIC is not the real
party in interest but was merely tasked to conserve the assets of the bank for the benefit of its
creditors, petitioner bank elevated the matter before the Court on question of law via this
instant Petition for Review on Certiorari.[9]
In the interregnum, the RTC issued a Decision[10] in Civil Case No. 09-917 dated 18 June 2010 in
favor of the NLDC thereby ordering the petitioner bank to pay the former the amount of
P1,603,179.86 representing its unpaid loan obligation. The RTC disposed in this wise:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the [NLDC] and
against [petitioner bank], ordering the [petitioner bank] to pay [NLDC] the amount of
P1,603,179.86 inclusive of interest and surcharges as actual damages and P30,000.00 as
attorney's fees.[11]
While the petitioner bank made no objection to the afore-quoted ruling, it maintained that the
lower court committed an error of law in issuing the 11 June 2010 Order. [12] For the resolution
of the Court is the sole issue of:
Issue
WHETHER OR NOT THE 11 JUNE 2010 RTC ORDER WHICH DIRECTED THE SUBSTITUTION OF
THE PDIC AS DEFENDANT OR ITS INCLUSION THEREIN AS CO-DEFENDANT IS CONTRARY TO
LAW.
The Court's Ruling
We deny the petition.
The instant case involves a disputed claim of sum of money against a closed financial
institution. After the Monetary Board has declared that a bank is insolvent and has ordered it
to cease operations, the Board becomes the trustee of its assets for the equal benefit of all the
creditors, including depositors.[13] The assets of the insolvent banking institution are held in
trust for the equal benefit of all creditors, and after its insolvency, one cannot obtain an
advantage or a preference over another by an attachment, execution or otherwise. [14] Towards
this end, the PDIC, as the statutory receiver/liquidator of the bank, is mandated to
immediately gather and take charge of all the assets and liabilities of the institution and
administer the same for the benefit of its creditors. [15]
As the fiduciary of the properties of a closed bank, the PDIC may prosecute or defend the case
by or against the said bank as a representative party while the bank will remain as the real
party in interest pursuant to Section 3, Rule 3 of the Revised Rules of Court which provides:
SEC. 3. Representatives as parties.- Where the action is allowed to be prosecuted or defended
by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included
in the title of the case and shall be deemed to be the real party in interest. A representative
may be a trustee of an express trust, a guardian, an executor or administrator, or a party
authorized by law or these Rules. An agent acting in his own name and for the benefit of an
undisclosed principal may sue or be sued without joining the principal except when the
contract involves things belonging to the principal.
The inclusion of the PDIC as a representative party in the case is therefore grounded on its
statutory role as the fiduciary of the closed bank which, under Section 30 [16] of R.A. 7653 (New
Central Bank Act), is authorized to conserve the latter's property for the benefit of its
creditors.
While we agree with the conclusion reached by the RTC that the PDIC should be included in
Civil Case No. 09-917, its reliance on Section 19, Rule 3 of the Revise Rules of Court on transfer
of interest pendente lite as justification for its directive to include the PDIC in the case is
erroneous.
For one, the properties of an insolvent bank are not transferred by operation of law to the
statutory receiver/liquidator but rather these assets are just held in trust to be distributed to
its creditors after the liquidation proceedings in accordance with the rules on concurrence and
preference of credits.[17] The debtors properties are then deemed to have been conveyed to
the Liquidator in trust for the benefit of creditors, stockholders and other persons in interest.
[18]
 This notwithstanding, any lien or preference to any property shall be recognized by the
Liquidator in favor of the security or lienholder, to the extent allowed by law, in the
implementation of the liquidation plan. [19]
In addition, the insolvent bank's legal personality is not dissolved by virtue of being placed
under receivership by the Monetary Board. It must be stressed here that a bank retains its
juridical personality even if placed under conservatorship; it is neither replaced nor
substituted by the conservator who shall only take charge of the assets, liabilities and the
management of the institution.[20]
It being the fact that the PDIC should not be considered as a substitute or as a co-defendant of
the petitioner bank but rather as a representative party or someone acting in fiduciary
capacity, the insolvent institution shall remain in the case and shall be deemed as the real
party in interest.[21] Nowhere in Section 3, Rule 3 of the Revised Rules of Court is it stated or, at
the very least implied, that the representative is likewise deemed as the real party in interest.
[22]
 The said rule simply states that, in actions which are allowed to be prosecuted or defended
by a representative, the beneficiary shall be deemed the real party in interest and, hence,
should be included in the title of the case.
In Manalo v. Court of Appeals,[23] the Court validated the right of a bank which was placed
under receivership to continue litigating the petition for the issuance of writ of possession and
dismissed the position assumed by petitioner therein that a closed bank cannot maintain a suit
against its debtor, thus:
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.
The argument is devoid of merit. 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. 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.[24] (Emphasis supplied)
In fine, the legal personality of the petitioner bank is not ipso facto dissolved by insolvency; it
is not divested of its capacity to sue and be sued after it was ordered by the Monetary Board
to cease operation. The law mandated, however, that the action should be brought through its
statutory liquidator/receiver which in this case is the PDIC. The authority of the PDIC to
represent the insolvent bank in legal actions emanates from the fiduciary relation created by
statute which reposed upon the receiver the task of preserving and conserving the properties
of the insolvent for the benefit of its creditors.
WHEREFORE, premises considered, the instant petition is hereby DENIED.
SO ORDERED.
14 BANCO FILIPINO SAVINGS AND MORTGAGE BANK VS. BSPILIPINAS AND MONETARY BOARD
A closed bank under receivership can only sue or be sued through its receiver, the Philippine
Deposit Insurance Corporation (PDIC). Hence, the petition filed by the petitioner bank which
has been placed under receivership is dismissible as it did not join PDIC as a party to the case.
Petitioner bank has been placed under receivership when it filed a Petition for Certiorari with
the Supreme Court. Said Petition was assailed by the respondent that contended that the
same should be dismissed outright for being led without Philippine Deposit Insurance
Corporation's authority. It asserts that petitioner was placed under receivership on March 17,
2011, and thus, petitioner's Executive Committee would have had no authority to sign for or
on behalf of petitioner absent the authority of its receiver, Philippine Deposit Insurance
Corporation. They also point out that both the Philippine Deposit Insurance Corporation
Charter and Republic Act No. 7653 categorically state that the authority to file suits or retain
counsels for closed banks is vested in the receiver. Thus, the verification and certification of
non-forum shopping signed by petitioner's Executive Committee has no legal effect.
ISSUE: Whether or not petitioner Banco Filipino, as a closed bank under receivership, could file
this Petition for Review without joining its statutory receiver, PDIC, as a party to the case.
RULING: A closed bank under receivership can only sue or be sued through its receiver, the
Philippine Deposit Insurance Corporation. Under Republic Act No. 7653, when the Monetary
Board finds a bank insolvent, it may "summarily and without need for prior hearing forbid the
institution from doing business in the Philippines and designate the Philippine Deposit
Insurance Corporation as receiver of the banking institution."
The relationship between the Philippine Deposit Insurance Corporation and a closed bank is
fiduciary in nature. Section 30 of Republic Act No. 7653 directs the receiver of a closed bank to
"immediately gather and take charge of all the assets and liabilities of the institution" and
"administer the same for the benefit of its creditors." The law likewise grants the receiver "the
general powers of a receiver under the Revised Rules of Court." Under Rule 59, Section 6 of
the Rules of Court, "a receiver shall have the power to bring and defend, in such capacity,
actions in his [or her] own name." Thus, Republic Act No. 7653 provides that the receiver shall
also "in the name of the institution, and with the assistance of counsel as [it] may retain,
institute such actions as may be necessary to collect and recover accounts and assets of, or
defend any action against, the institution." Considering that the receiver has the power to take
charge of all the assets of the closed bank and to institute for or defend any action against it,
only the receiver, in its fiduciary capacity, may sue and be sued on behalf of the closed bank.
When petitioner was placed under receivership, the powers of its Board of Directors and its
officers were suspended. Thus, its Board of Directors could not have validly authorized its
Executive Vice Presidents to file the suit on its behalf. The Petition, not having been properly
verified, is considered an unsigned pleading. A defect in the certification of non-forum
shopping is likewise fatal to petitioner's cause. Considering that the Petition was led by
signatories who were not validly authorized to do so, the Petition does not produce any legal
effect. Being an unauthorized pleading, this Court never validly acquired jurisdiction over the
case. The Petition, therefore, must be dismissed.
 15 PETER L. SO VS. PHILIPPINE DEPOSIT INSURANCE CORPORATION, G.R. NO. 230020
Petitioner opened an account with the Cooperative Rural Bank Bulacan (CRBB) on April 17,
2013, amounting to P300,000, for which he was assigned the Special Incentive Savings Account
(SISA) No. 05-15712-1.5
On the same year, however, petitioner learned that CRBB closed its operations and was placed
under Philippine Deposit Insurance Corporation's (PDIC's) receivership. This prompted
petitioner, together with other depositors, to file an insurance claim with the PDIC on
November 8, 2013.6
Acting upon such claim, PDIC sent a letter/notice dated November 22, 2013, requiring
petitioner to submit additional documents, which petitioner averred of having complied with. 7
Upon investigation, the PDIC found that petitioner's account originated from and was funded
by the proceeds of a terminated SISA (mother account), jointly owned by a certain Reyes
family.8 Thus, based on the determination that petitioner's account was among the product of
the splitting of the said mother account which is prohibited by law, PDIC denied petitioner's
claim for payment of deposit insurance. 9 Petitioner filed a Request for Reconsideration, which
was likewise denied by the PDIC on January 6, 2016.10
Aggrieved, petitioner filed a Petition for Certiorari11 under Rule 65 before the RTC.  The actions of the Corporation taken under this section shall be final and executory, and
RTC Ruling
In its November 7, 2016 assailed Decision, the RTC upheld the factual findings and conclusions
of the PDIC. According to the RTC, based on the records, the PDIC correctly denied petitioner's
claim for insurance on the ground of splitting of deposits which is prohibited by law. 12
It also declared that, pursuant to its Charter (RA 3591), PDIC is empowered to determine and
pass upon the validity of the insurance deposits claims, it being the deposit insurer. As such,
when it rules on such claims, it is exercising a quasi-judicial function. Thus, it was held that
petitioner's remedy to the dismissal of his claim is to file a petition for  certiorari with the Court
of Appeals under Section 4,13 Rule 65, stating that if the petition involves the acts or omissions
of a quasi-judicial agency, unless otherwise provided by law or the rules, it shall be filed in and
cognizable only by the Court of Appeals (CA).14
In addition, the RTC also cited Section 22 15 of Republic Act (RA) No. 3591, as amended, which
essentially states that only the CA shall issue temporary restraining orders, preliminary
injunctions or preliminary mandatory injunctions against the PDIC for any action under the
said Act.  such petition for certiorari.
The RTC disposed, thus:  We do not agree.
WHEREFORE, in view of the foregoing, for lack of jurisdiction, the petition for certiorari filed by
the petitioner is hereby DISMISSED.  entitled to the benefits of insurance under the said Act to promote and safeguard the interests
SO ORDERED.16
In its February 17, 2017 Order, the RTC denied petitioner's motion for reconsideration. 
Hence, this petition, filed directly to this Court on pure question of law. 
Issue
Does the RTC have jurisdiction over a petition for certiorari filed under Rule 65, assailing the
PDIC's denial of a deposit insurance claim? 
Our Ruling
The petition lacks merit. 
There is no controversy as to the proper remedy to question the PDIC's denial of petitioner's
deposit insurance claim. Section 4(f) of its Charter, as amended, clearly provides that: 
xxx
may not be restrained or set aside by the court, except on appropriate petition
for certiorari  on the ground that the action was taken in excess of jurisdiction or with such
grave abuse of discretion as to amount to a lack or excess of jurisdiction. The petition
for certiorari  may only be filed within thirty (30) days from notice of denial of claim for deposit
insurance. (emphasis supplied) 
The issue, however, is which court has jurisdiction over such petition.
Petitioner's stance is that the petition for certiorari, questioning PDIC's action, denying a
deposit insurance claim should be filed with the RTC, arguing in this manner: PDIC is not a
quasi-judicial agency and it does not possess any quasi-judicial power under its Charter; It
merely performs fact-finding functions based on its regulatory power. As such, applying
Section 4, Rule 65 of the Rules of Court, as amended by A.M. 07-7-12-SC, which in part states
that if the petition relates to an act or omission of a corporation, such as the PDIC, it shall be
filed with the RTC exercising jurisdiction over the territorial area as defined by this Court; Also,
Batas Pambansa Blg. 129 or the Judiciary Reorganization Act provides that this Court, the CA,
and the RTC have original concurrent jurisdiction over petitions for certiorari, prohibition, and
mandamus. Applying the principle of hierarchy of courts, the RTC indeed has jurisdiction over
 
On June 22, 1963, PDIC was created under RA 3591 as an insurer of deposits in all banks
of the depositing public.17 As such, PDIC has the duty and authority to determine the validity of
and grant or deny deposit insurance claims. Section 16(a) of its Charter, as amended, provides
that PDIC shall commence the determination of insured deposits due the depositors of a
closed bank upon its actual take over of the closed bank. Also, Section 1 of PDIC's Regulatory
Issuance No. 2011-03, provides that as it is tasked to promote and safeguard the interests of
the depositing public by way of providing permanent and continuing insurance coverage on all
insured deposits, and in helping develop a sound and stable banking system at all times, PDIC
shall pay all legitimate deposits held by bona fide depositors and provide a mechanism by
which depositors may seek reconsideration from its decision, denying a deposit insurance
claim. Further, it bears stressing that as stated in Section 4(f) of its Charter, as amended,
PDIC's action, such as denying a deposit insurance claim, is considered as final and executory
and may be reviewed by the court only through a petition for certiorari on the ground of grave
abuse of discretion.  jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed with
Considering the foregoing, the legislative intent in creating the PDIC as a quasi-judicial agency
is clearly manifest.
In the case of Lintang Bedol v. Commission on Elections,18 cited in Carlito C. Encinas v. PO1
Alfredo P. Agustin, Jr. and PO1 Joel S. Caubang,19 this Court explained the nature of a quasi-
judicial agency, viz.:  PDIC's Charter, as amended, which states that:
Quasi-judicial or administrative adjudicatory power on the other hand is the power of the
administrative agency to adjudicate the rights of persons before it. It is the power to hear and
determine questions of fact to which the legislative policy is to apply and to decide in
accordance with the standards laid down by the law itself in enforcing and administering the
same law. The administrative body exercises its quasi-judicial power when it performs in a
judicial manner an act which is essentially of an executive or administrative nature, where the
power to act in such manner is incidental to or reasonably necessary for the performance of
the executive or administrative duty entrusted to it. In carrying out their quasi-judicial
functions the administrative officers or bodies are required to investigate facts or ascertain
the existence of facts, hold hearings, weigh evidence, and draw conclusions from them as
basis for their official action and exercise of discretion in a judicial nature.
The Court has laid down the test for determining whether an administrative body is exercising
judicial or merely investigatory functions: adjudication signifies the exercise of the power and
authority to adjudicate upon the rights and obligations of the parties. Hence, if the only
purpose of an investigation is to evaluate the evidence submitted to an agency based on the
facts and circumstances presented to it, and if the agency is not authorized to make a final
pronouncement affecting the parties, then there is an absence of judicial discretion and
judgment. (emphasis supplied)
Thus, the legislative intent in creating PDIC as a quasi-judicial agency is clearly manifest.
Indeed, PDIC exercises judicial discretion and judgment in determining whether a claimant is
entitled to a deposit insurance claim, which determination results from its investigation of
facts and weighing of evidence presented before it. Noteworthy also is the fact that the law
considers PDIC's action as final and executory and may be reviewed only on the ground of
grave abuse of discretion.
That being established, We proceed to determine where such petition for certiorari should be
filed. In this matter, We cite the very provision invoked by the petitioner, i.e., Section 4, Rule
65 of the Rules, as amended by A.M. No. 07-7-12-SC: 
Sec. 4. When and where to file the petition. - The petition shall be filed not later than sixty (60)
days from notice of the judgment, order or resolution. In case a motion for reconsideration or
new trial is timely filed, whether such motion is required or not, the petition shall be filed not
later than sixty (60) days counted from the notice of the denial of the motion.
If the petition relates to an act or an omission of a municipal trial court or of a corporation, a
board, an officer or a person, it shall be filed with the Regional Trial Court exercising
the Court of Appeals or with the Sandiganbayan, whether or not the same is in aid of the
court's appellate jurisdiction. If the petition involves an act or an omission of a quasi-judicial
agency, unless otherwise provided by law or these rules, the petition shall be filed with and
be cognizable only by the Court of Appeals. (emphasis supplied)
Clearly, a petition for certiorari, questioning the PDIC's denial of a deposit insurance claim
should be filed before the CA, not the RTC. This further finds support in Section 22 of the
 
Section 22. No court, except the Court of Appeals, shall issue any temporary restraining order,
preliminary injunction or preliminary mandatory injunction against the Corporation for any
action under this Act. xxx. 
This prohibition shall apply in all cases, disputes or controversies instituted by a private party,
the insured bank, or any shareholder of the insured bank. xxx. xxxx
Finally, the new amendment in PDIC's Charter under RA 10846, specifically Section 5(g)
thereof, confirms such conclusion, viz.: 
The actions of the Corporation taken under Section 5(g) shall be final and executory, and may
only be restrained or set aside by the Court of Appeals, upon appropriate petition
for certiorari on the ground that the action was taken in excess of jurisdiction or with such
grave abuse of discretion as to amount to a lack or excess of jurisdiction. The petition
for certiorari may only be filed within thirty (30) days from notice of denial of claim for deposit
insurance. (Emphasis Ours)
As it stands, the controversy as to which court has jurisdiction over a petition
for certiorari filed to question the PDIC's action is already settled. Therefore, We find no
reversible error from the findings and conclusion of the court a quo.  WHEREFORE, the instant
petition is DENIED for lack of merit. SO ORDERED.
16 DEVELOPMENT BANK OF THE PHILIPPINES VS. FELIPE P. ARCILLA, JR., G.R. NO. 161397, 30 “After a careful perusal of the records, We find that the appellee had been sufficiently
JUNE 2005 [462 SCRA 599] informed of the terms and the requisite charges necessarily included in the subject loan.
FACTS: Atty. Felipe P. Arcilla, Jr. was employed by the Development Bank of the Philippines
It must be stressed that the Truth in Lending Act (R.A. No. 3765), was enacted primarily "to
(DBP) in October 1981. About five or six months thereafter, he was assigned to the legal
protect its citizens from a lack of awareness of the true cost of credit to the user by using a full
department, and thereafter, decided to avail of a loan under the Individual Housing Project
disclosure of such cost with a view of preventing the uninformed use of credit to the
(IHP) of the bank. On September 12, 1983, DBP and Arcilla executed a Deed of Conditional
detriment of the national economy" (Emata vs. Intermediate Appellate Court, 174, SCRA 464
Sale over a parcel of land, as well as the house to be constructed thereon, for the price of
[1989]; Sec. 2, R.A. No. 3765).
P160,000.00. Arcilla borrowed the said amount from DBP for the purchase of the lot and the
construction of a residential building thereon. He obliged himself to pay the loan in 25 years,
Contrary to appellee's claim that he was not sufficiently informed of the details of the loan,
with a monthly amortization of P1,417.91, with 9% interest per annum, to be deducted from
the records disclose that the required informations were readily available in the three (3)
his monthly salary. The monthly amortization was increased to P1,468.92 in November 1984,
promissory notes he executed. Precisely, the said promissory notes were executed to apprise
and to P1,691.51 beginning January 1985. However, Arcilla opted to resign from the bank in
appellee of the remaining balance on his loan when the same was converted into a regular
December 1986. Conformably with the Deed of Conditional Sale, the bank informed him, on
housing loan. And on its face, the promissory notes signed by no less than the appellee
June 11, 1987, that the balance of his loan account with the bank had been converted to a
readily shows all the data required by the Truth in Lending Act (R.A. No. 3765).
regular housing loan.
Apropos, We agree with the appellant that appellee, a lawyer, would not be so gullible or
On July 24, 1987, Arcilla signed three Promissory Notes for the total amount of P186,364.15.
negligent as to sign documents without knowing fully well the legal implications and
He was also obliged to pay service charge and interests. However, he failed to pay his loan
consequences of his actions, and that appellee was a former employee of appellant. As such
account, advances, penalty charges and interests which, as of October 31, 1990, amounted to
employee, he is as well presumed knowledgeable with matters relating to appellant's business
P241,940.93. DBP rescinded the Deed of Conditional Sale by notarial act on November 27,
and fully cognizant of the terms of the loan he applied for, including the charges that had to be
1990. Nevertheless, it wrote Arcilla, on January 3, 1992, giving him until October 24, 1992,
paid.”
within which to repurchase the property upon full payment of the current appraisal or
updated total, whichever is lesser; in case of failure to do so, the property would be advertised
the case at bar, considering appellee's education and training, We must hold, in the light of the
for bidding. DBP reiterated the said offer on October 7, 1992. Arcilla failed to respond.
evidence at hand, that he was duly informed of the necessary charges and fully understood
Consequently, the property was advertised for sale at public bidding on February 14, 1994.
their implications and effects. Consequently, the trial court's annulment of the rescission
anchored on this ground was unjustified.
Arcilla filed a complaint against DBP with the Regional Trial Court (RTC) of Antipolo, Rizal, on
February 21, 1994. He alleged that DBP failed to furnish him with the disclosure statement
required by Republic Act (R.A.) No. 3765 and Central Bank (CB) Circular No. 158 prior to the
execution of the deed of conditional sale and the conversion of his loan account with the bank
into a regular housing loan account.
In its answer to the complaint, the DBP alleged that it substantially complied with R.A. No.
3765 and CB Circular No. 158 because the details required in said statements were particularly
disclosed in the promissory notes, deed of conditional sale and the required notices sent to
Arcilla. In any event, its failure to comply strictly with R.A. No. 3765 did not affect the validity
and enforceability of the subject contracts or transactions. DBP interposed a counterclaim for
the possession of the property.

ISSUE: whether or not petitioner DBP complied with the disclosure requirement of R.A. No.
3765 and CB Circular No. 158, Series of 1978, in the execution of the deed of conditional sale,
the supplemental deed of conditional sale, as well as the promissory notes.

Ruling: The petition of Arcilla has no merit.

The Court is convinced that Arcilla's claim of not having been furnished the data/information
required by R.A. No. 3765 and CB Circular No. 158 was but an afterthought. Despite the
notarial rescission of the conditional sale in 1990, and DBP's subsequent repeated offers to
repurchase the property, the latter maintained his silence. Arcilla filed his complaint only on
February 21, 1994, or four years after the said notarial rescission.