BANCO FILIPINO SAVINGS AND MORTGAGE BANK, PETITIONER, V.

BANGKO SENTRAL NG
PILIPINAS AND THE MONETARY BOARD, RESPONDENTS.

DOCTRINE:

A bank which has been ordered closed by the Bangko Sentral ng Pilipinas (Bangko Sentral) is placed under
the receivership of the Philippine Deposit Insurance Corporation. As a consequence of the receivership, the
closed bank may sue and be sued only through its receiver, the Philippine Deposit Insurance Corporation.
Any action filed by the closed bank without its receiver may be dismissed.

FACTS:

Banco Filipino subsequently filed several Complaints before the RTC among them a claim for damages in
the total amount of P18,800,000,000.00.

In 2002, Banco Filipino suffered from heavy withdrawals, prompting it to seek the help of BSP. BSP
informed Banco Filipino that it should first comply with certain conditions imposed by RA 7653 before
financial assistance could be extended. Banco Filipino was also required to submit a rehabilitation plan
approved by BSP before emergency loans could be granted. Banco Filipino submitted its Long-Term
Business Plan to BSP. In response, BSP informed Banco Filipino that its business plan could not be acted
upon since it was neither "confirmed nor approved by Banco Filipino's Board of Directors.

Banco Filipino filed a Petition for Revival of Judgment with the RTC Makati to compel BSP to approve its
business plan. During the pendency of its Petition, Banco Filipino entered into discussions and negotiations
with BSP, which resulted to seven (7) revisions in the business plan. Thus, Banco Filipino filed a Proposal
for Settlement. Banco Filipino submitted its 8th Revised Business Plan to BSP for evaluation.

BSP and the Monetary Board, through counsel CVC Law, informed Banco Filipino that its rejection of
certain portions of Resolution No. 1668, particularly its refusal to withdraw all cases filed against BSPl, was
deemed as a failure to reach a mutually acceptable settlement.

Banco Filipino filed a Petition For Certiorari and Mandamus with prayer for issuance of a temporary
restraining order and writ of preliminary injunction before RTC Makati. It assailed the alleged "arbitrary,
capricious and illegal acts" of BSP and of the Monetary Board in coercing Banco Filipino to withdraw all its
present suits in exchange of the approval of its Business Plan. BSP and the Monetary Board filed their
Motion to Dismiss Ad Cautelam, assailing the RTC's jurisdiction over the subject matter and over the
persons of BSP and the Monetary Board. Banco Filipino, on the other hand, filed its Opposition to this
Petition.

The trial court issued an Order denying the BSP and the Monetary Board's Motion to Dismiss Ad Cautelam,
stating that the acts complained of pertained to BSP's regulatory functions, not its adjudicatory functions.

BSP and the Monetary Board filed a Petition for Certiorari with prayer for temporary restraining
order and writ of preliminary injunction with the CA.

The CA rendered a Decision granting BSP and the Monetary Board's Amended Petition. According to the
CA, the trial court had no jurisdiction over the Petition for Certiorari and Mandamus filed by Banco Filipino
since special civil actions against quasi-judicial agencies are only cognizable by the CA. Banco Filipino
filed a MR, which was denied by the CA. Hence, it filed this Petition against BSP and the Monetary Board.

Petitioner points out that there was nothing in the PDIC Charter or in RA 7653 that precludes its Board of
Directors from suing on its behalf. It adds that there was an obvious conflict of interest in requiring it to seek
PDIC's authority to file the case considering that PDIC was under the control of herein respondent Monetary
Board.
Respondents, on the other hand, counter that the Petition should be dismissed outright for being filed
without PDIC'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, PDIC. They also point out that both the PDIC Charter and RA 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, the PDIC, as a party to the case.

HELD:

No. A closed bank under receivership can only sue or be sued through its receiver, the PDIC.

Under RA 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 PDIC and a closed bank is fiduciary in nature. Section 30 of RA 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."

Furthermore, RA 3591, or the Philippine Deposit Insurance Corporation Charter, as amended, grants PDIC
the following powers as a receiver:

(c) In addition to the powers of a receiver pursuant to existing laws, the Corporation is
empowered to:
(1) bring suits to enforce liabilities to or recoveries of the closed bank;
....
(6) hire or retain private counsels as may be necessary;
....
(9) exercise such other powers as are inherent and necessary for the effective discharge of the
duties of the Corporation as a receiver.

PDIC also safeguards the interests of the depositors in all legal proceedings. Most bank depositors are
ordinary people who have entrusted their money to banks in the hopes of growing their savings. When banks
become insolvent, depositors are secure in the knowledge that they can still recoup some part of their
savings through PDIC. Thus, PDIC's participation in all suits involving the insolvent bank is necessary and
imbued with the public interest.

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 filed 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.

The Court held that petitioner did not have the legal capacity to file this Petition absent any authorization
from its statutory receiver, PDIC.