Subject: Special Proceedings

Doctrine: A petition for liquidation of an insolvent corporation should be classified a special proceeding
and not an ordinary action. It merely a declaration by the trial court of the corporation's
insolvency so that its creditors may be able to file their claims in the settlement of the
corporation's debts and obligations.
Topic: Rule 72 – Subject Matter of special Proceedings
Digester: Cañedo, PL.
_____________________________________________________________________________________
G.R. No. 109373 March 20, 1995
Pacific Banking Corporation Employees Organization v. CA

MENDOZA, J.:

SUMMARY:

Pacific Banking Corporation (PaBC) was placed under receivership and thereafter under liquidation. The Union
(Union case) filed a claim for payment of wages and benefits as employees to which the RTC granted. When the
Liquidator filed an appeal, it was denied. He then filed a Notice of Appeal and Record on Appeal but was
disallowed for filing late, more than 15 days after receipt of decision.
Ang Keong Lan and E.J. Ang Int'l. (Stockholders/Investors case) also filed claims for payment of their investment
in PaBC to which the RTC granted. The Liquidator filed an MR but was denied. He then filed on the 23rd day of
his receipt of the order appealed from.

Whether a petition for liquidation special proceeding or an ordinary civil action.

A petition for liquidation of an insolvent corporation is a special proceeding and not an ordinary action. Such
petition does not seek the enforcement or protection of a right nor the prevention or redress of a wrong against
a party. It does not pray for affirmative relief for injury arising from a party's wrongful act or omission nor state a
cause of action that can be enforced against any person. What it seeks is merely a declaration by the trial court
of the corporation's insolvency so that its creditors may be able to file their claims in the settlement of the
corporation's debts and obligations.

Under Interim Rules and Guidelines to implement BP Blg. 129, for special proceedings, the period of appeal is 30
days and the party appealing must, in addition to a notice of appeal, file with the trial court a record on
appeal in order to perfect his appeal.

Facts:
1. The Pacific Banking Corporation (PaBC) was placed under receivership by the Central Bank of the
Philippines and thereafter was placed under liquidation and a Liquidator was appointed
2. In the Union case, the Pacific Banking Corporation Employees Organization (Union) filed a complaint-in-
intervention seeking payment of holiday pay, 13th month pay differential, salary increase differential,
Christmas bonus, and cash equivalent of Sick Leave Benefit due its members as employees of PaBC. The
trial court ordered payment of the principal claims of the Union.
3. On September 16, 1991, the Liquidator received a copy of the order and filed an MR. The judge denied
the MR. On December 10, 1991, he filed a Notice of Appeal and a Motion for Additional Time to Submit
Record on Appeal.
a. Respondent judge disallowed the Liquidator’s Notice of Appeal on the ground that it was late,
i.e., more than 15 days after receipt of the decision. The judge declared his September 13, 1991
order and subsequent orders to be final and executory and denied reconsideration.
 4. In the Stockholders/Investors case, Ang Keong Lan and E.J. Ang Int'l. also filed claims for the payment of
investment in the PaBC allegedly in the form of shares of stocks and that their claim constituted foreign
exchange capital investment entitled to preference in payment under the Foreign Investments Law. On
September 11, 1992, respondent judge of the RTC directed the Liquidator to pay private respondents
the total amount of their claim as preferred creditors. The Liquidator received the order on September
16, 1992. He filed an MR but was denied. On October 14, 1992 he filed a Notice of Appeal from the
orders.
5. Court of Appeals Proceedings:
a. Fifth Division: Union Case
i. the proceeding before the trial court was a special proceeding and, therefore, the
period for appealing from any decision or final order rendered therein is 30 days. Since
the notice of appeal of the Liquidator was filed on the 30th day of his receipt of the
decision granting the Union's claims, the appeal was brought on time and directed the
trial court to give due course to the appeal of the Liquidator and set the Record on
Appeal he had filed for hearing.
b. ,Fourteenth Division: Stockholders/Investors case
i. A liquidation proceeding is an ordinary action. The period for appealing from any
decision or final order rendered therein is 15 days and that since the Liquidator's appeal
notice was filed on the 23rd day of his receipt of the order appealed from, the notice of
appeal was filed late. The appeal was dismissed.

Issue:
Whether a petition for liquidation under §29 of Rep. Act No. 265, otherwise known as the Central Bank
Act, is a special proceeding or an ordinary civil action.

Ruling:
The petition for liquidation is a special proceeding.

Rule 2 of the Rules of Court provide:

§1. Action defined. — Action means an ordinary suit in a court of justice, by which the party prosecutes
another for the enforcement or protection of a right, or the prevention or redress of a wrong.

§2. Special Proceeding Distinguished. — Every other remedy, including one to establish the status or
right of a party or a particular fact, shall be by special proceeding.

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

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

Liquidation proceedings do not resemble petitions for interpleader. Rather, a liquidation proceeding resembles
the proceeding for the settlement of estate of deceased persons under Rules 73 to 91 of the Rules of Court. The
two have a common purpose: the determination of all the assets and the payment of all the debts and liabilities
of the insolvent corporation or the estate

Moreover, under BP Blg. 19, for an ordinary action, the period of appeal is 15 days from notice of the
decision or final order appealed from. Under Interim Rules and Guidelines to implement BP Blg. 129, for special
proceedings, the period of appeal is 30 days and the party appealing must, in addition to a notice of appeal, file
with the trial court a record on appeal in order to perfect his appeal.

In the Labor Union case, the Liquidator filed a notice of appeal and a motion for extension to file a record on
appeal on December 10, 1991, i.e., within 30 days of his receipt of the order granting the Union's claim. Without
waiting for the resolution of his motion for extension, he filed on December 20, 1991 within the extension
sought a record on appeal. Respondent judge thus erred in disallowing the notice on appeal and denying the
Liquidator's motion for extension to file a record on appeal.

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

Because of the Liquidator's failure to perfect his appeal, the order granting the claims of the
Stockholders/Investors became final. Consequently. the Fourteenth Division's decision dismissing the
Liquidator's Petition for Certiorari, Prohibition and Mandamus  must be affirmed albeit for a different reason.
FULL TEXT AHEAD

G.R. No. 109373 March 20, 1995

PACIFIC BANKING CORPORATION EMPLOYEES ORGANIZATION, PAULA S. PAUG, and its officers
and members, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and VITALIANO N. NAÑAGAS II, as Liquidator of Pacific
Banking Corporation, respondents.

G.R. No. 112991 March 20, 1995

THE PRESIDENT OF THE PHILIPPINE DEPOSIT INSURANCE CORPORATION, as Liquidator of the

Pacific Banking Corporation , petitioner,
vs.
COURT OF APPEALS, HON. JUDGE REGINO T. VERIDIANO II, DEPUTY SHERIFF RAMON ENRIQUEZ
and ANG ENG JOO, ANG KEONG LAN and E.J ANG INT'L. LTD., represented by their Attorney-in-
fact, GONZALO C. SY, respondents.

MENDOZA, J.:

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

The facts are as follows:

I.

Proceedings in the CB and the RTC

On July 5, 1985, the Pacific Banking Corporation (PaBC) was placed under receivership by the Central Bank
of the Philippines pursuant to Resolution No. 699 of its Monetary Board. A few months later, it was placed
under liquidation  and a Liquidator was appointed.
1 2

On April 7, 1986, the Central Bank filed with the Regional Trial Court of Manila Branch 31, a petition entitled
"Petition for Assistance in the Liquidation of Pacific Banking Corporation."   The petition was approved, after
3

which creditors filed their claims with the court.

On May 17, 1991, a new Liquidator, Vitaliano N. Nañagas,  President of the Philippine Deposit Insurance
4

Corporation (PDIC), was appointed by the Central Bank.

On March 13, 1989 the Pacific Banking Corporation Employees Organization (Union for short), petitioner in
G.R. No. 109373, filed a complaint-in-intervention seeking payment of holiday pay, 13th month pay
differential, salary increase differential, Christmas bonus, and cash equivalent of Sick Leave Benefit due its
members as employees of PaBC. In its order dated September 13, 1991, the trial court ordered payment of
the principal claims of the Union.
5
The Liquidator received a copy of the order on September 16, 1991. On October 16, 1991, he filed a Motion
for Reconsideration and Clarification of the order. In his order of December 6, 1991, the judge modified his
September 13, 1991  but in effect denied the Liquidator's motion for reconsideration. This order was
6

received by the Liquidator on December 9, 1991. The following day, December 10, 1991, he filed a Notice of
Appeal and a Motion for Additional Time to Submit Record on Appeal. On December 23, 1991, another
Notice of Appeal was filed by the Office of the Solicitor General in behalf of Nañagas.

In his order of February 10, 1992, respondent judge disallowed the Liquidator's Notice of Appeal on the
ground that it was late, i.e., more than 15 days after receipt of the decision. The judge declared his
September 13, 1991 order and subsequent orders to be final and executory and denied reconsideration. On
March 27, 1992, he granted the Union's Motion for issuance of a writ of Execution.

Ang Keong Lan and E.J. Ang Int'l., private respondents in G.R. No. 112991, likewise filed claims for the
payment of investment in the PaBC allegedly in the form of shares of stocks amounting to US$2,531,632.18.
The shares of stocks, consisting of 154,462 common shares, constituted 11% of the total subscribed capital
stock of the PaBC. They alleged that their claim constituted foreign exchange capital investment entitled to
preference in payment under the Foreign Investments Law.

In his order dated September 11, 1992, respondent judge of the RTC directed the Liquidator to pay private
respondents the total amount of their claim as preferred creditors.7

The Liquidator received the order on September 16, 1992. On September 30, 1992 he moved for
reconsideration, but his motion was denied by the court on October 2, 1992. He received the order denying
his Motion for Reconsideration on October 5, 1992. On October 14, 1992 he filed a Notice of Appeal from
the orders of September 16, 1992 and October 2, 1992. As in the case of the Union, however, the judge
ordered the Notice of Appeal stricken off the record on the ground that it had been filed without authority of
the Central Bank and beyond 15 days. In his order of October 28, 1992, the judge directed the execution of
his September 11, 1992 order granting the Stockholders/ Investors' claim.

II.

Proceedings in the Court of Appeals

The Liquidator filed separate Petitions for Certiorari, Prohibition and Mandamus in the Court of Appeals to
set aside the orders of the trial court denying his appeal from the orders granting the claims of Union and of
the Stockholders/Investors. The two Divisions of the Court of Appeals, to which the cases were separately
raffled, rendered conflicting rulings.

In its decision of November 17, 1992 in CA-G.R. SP No. 27751 (now G.R. No. 09373) the Fifth Division  held8

in the case of the Union that the proceeding before the trial court was a special proceeding and, therefore,
the period for appealing from any decision or final order rendered therein is 30 days. Since the notice of
appeal of the Liquidator was filed on the 30th day of his receipt of the decision granting the Union's claims,
the appeal was brought on time. The Fifth Division, therefore, set aside the orders of the lower court and
directed the latter to give due course to the appeal of the Liquidator and set the Record on Appeal he had
filed for hearing.

On the other hand, on December 16, 1993, the Fourteenth Division  ruled in CA-G.R. SP No. 29351 (now
9

G.R. No. 112991) in the case of the Stockholders/Investors that a liquidation proceeding is an ordinary
action. Therefore, the period for appealing from any decision or final order rendered therein is 15 days and
that since the Liquidator's appeal notice was filed on the 23rd day of his receipt of the order appealed from,
deducting the period during which his motion for reconsideration was pending, the notice of appeal was filed
late. Accordingly, the Fourteenth Division dismissed the Liquidator's petition.

III.
 Present Proceedings

The Union and the Liquidator then separately filed petitions before this Court.

In G.R. No. 109373 the Union contends that:

1. The Court of Appeals acted without jurisdiction over the subject matter or nature of the
suit.

2. The Court of Appeals gravely erred in taking cognizance of the petition for certiorari filed
by Nañagas who was without any legal authority to file it.

3. The Court of Appeals erred in concluding that the case is a special proceeding governed
by Rules 72 to 109 of the Revised Rules of Court.

4. The Court of Appeals erred seriously in concluding that the notice of appeal filed by
Nañagas was filed on time.

5. The Court of Appeals erred seriously in declaring that the second notice of appeal filed on
December 23, 1991 by the Solicitor General is a superfluity.

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

1. The Petition for Assistance in the Liquidation of the Pacific Banking Corporation s a
Special Proceeding case and/or one which allows multiple appeals, in which case the period
of appeal is 30 days and not 15 days from receipt of the order/judgment appealed from.

2. Private respondents are not creditors of PaBC but are plain stockholders whose right to
receive payment as such would accrue only after all the creditors of the insolvent bank have
been paid.

3. The claim of private respondents in the amount of US$22,531,632.18 is not in the nature
of foreign investment as it is understood in law.

4. The claim of private respondents has not been clearly established and proved.

5. The issuance of a writ of execution against the assets of PaBC was made with grave
abuse of discretion.

The petitions in these cases must be dismissed.

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

BP Blg. 129 provides:

§39. Appeals. — The period for appeal from final orders, resolutions, awards, judgments, or
decisions of any court in all cases shall be fifteen (15) days counted from the notice of the
final order, resolution, award, judgment or decision appealed from: Provided, however, that
 in habeas corpus cases the period for appeal shall be forty-eight (48) hours from the notice
of the judgment appealed from.

No record on appeal shall be required to take an appeal. In lieu thereof, the entire record
shall be transmitted with all the pages prominently numbered consecutively, together with an
index of the contents thereof.

This section shall not apply in appeals in special proceedings and in other cases wherein
multiple appeals are allowed under applicable provisions of the Rules of Court.

The Interim Rules and Guidelines to implement BP Blg. 129 provides:

19. Period of Appeals. —

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

(b) In appeals in special proceedings in accordance with Rule 109 of the

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

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

The petition filed is akin to an interpleader under Rule 63 of the Rules of Court where there
are conflicting claimants or several claims upon the same subject matter, a person who
claims no interest thereon may file an action for interpleader to compel the claimants to
"interplead" and litigate their several claims among themselves. (Section I Rule 63).

An interpleader is in the category of a special civil action under Rule 62 which, like an
ordinary action, may be appealed only within fifteen (15) days from notice of the judgment or
order appealed from. Under Rule 62, the preceding rules covering ordinary civil actions
which are not inconsistent with or may serve to supplement the provisions of the rule relating
to such civil actions are applicable to special civil actions. This embraces Rule 41 covering
appeals from the regional trial court to the Court of Appeals.

xxx xxx xxx

Thus, under Section 1 Rule 2 of the Rules of Court, an action is defined as "an ordinary suit
in a court of justice by which one party prosecutes another for the enforcement or protection
of a right or the prevention or redress of a wrong." On the other hand, Section 2 of the same
Rule states that "every other remedy including one to establish the status or right of a party
or a particular fact shall be by special proceeding."

To our mind, from the aforequoted definitions of an action and a special proceeding, the
petition for assistance of the court in the liquidation of an asset of a bank is not "one to
establish the status or right of a party or a particular fact." Contrary to the submission of the
petitioner, the petition is not intended to establish the fact of insolvency of the bank. The
insolvency of the bank had already been previously determined by the Central Bank in
accordance with Section 9 of the CB Act before the petition was filed. All that needs to be
done is to liquidate the assets of the bank and thus the assistance of the respondent court is
sought for that purpose.
 It should be pointed out that this petition filed is not among the cases categorized as a
special proceeding under Section 1, Rule 72 of the Rules of Court, nor among the special
proceedings that may be appealed under Section 1, Rule 109 of the Rules.

We disagree with the foregoing view of the Fourteenth Division. Rule 2 of the Rules of Court provide:

§1. Action defined. — Action means an ordinary suit in a court of justice, by which the party
prosecutes another for the enforcement or protection of a right, or the prevention or redress
of a wrong.

§2. Special Proceeding Distinguished. — Every other remedy, including one to establish the
status or right of a party or a particular fact, shall be by special proceeding.

Elucidating the crucial distinction between an ordinary action and a special proceeding, Chief Justice Moran
states:" 
11

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

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

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

Contrary to the rulings of the Fourteenth Division, liquidation proceedings do not resemble petitions for
interpleader. For one, an action for interpleader involves claims on a subject matter against a person who
has no interest therein.   This is not the case in a liquidation proceeding where the Liquidator, as
12

representative of the corporation, takes charge of its assets and liabilities for the benefit of the creditors.  He
13

is thus charged with insuring that the assets of the corporation are paid only to rightful claimants and in the
order of payment provided by law.

Rather, a liquidation proceeding resembles the proceeding for the settlement of estate of deceased persons
under Rules 73 to 91 of the Rules of Court. The two have a common purpose: the determination of all the
assets and the payment of all the debts and liabilities of the insolvent corporation or the estate. The
Liquidator and the administrator or executor are both charged with the assets for the benefit of the
claimants. In both instances, the liability of the corporation and the estate is not disputed. The court's
concern is with the declaration of creditors and their rights and the determination of their order of payment.
Furthermore, as in the settlement of estates, multiple appeals are allowed in proceedings for liquidation of
an insolvent corporation. As the Fifth Division of the Court of Appeals, quoting the Liquidator, correctly
noted:

A liquidation proceeding is a single proceeding which consists of a number of cases properly

classified as "claims." It is basically a two-phased proceeding. The first phase is concerned
with the approval and disapproval of claims. Upon the approval of the petition seeking the
assistance of the proper court in the liquidation of a close entity, all money claims against the
bank are required to be filed with the liquidation court. This phase may end with the
declaration by the liquidation court that the claim is not proper or without basis. On the other
hand, it may also end with the liquidation court allowing the claim. In the latter case, the
claim shall be classified whether it is ordinary or preferred, and thereafter included
Liquidator. In either case, the order allowing or disallowing a particular claim is final order,
and may be appealed by the party aggrieved thereby.

The second phase involves the approval by the Court of the distribution plan prepared by the
duly appointed liquidator. The distribution plan specifies in detail the total amount available
for distribution to creditors whose claim were earlier allowed. The Order finally disposes of
the issue of how much property is available for disposal. Moreover, it ushers in the final
phase of the liquidation proceeding — payment of all allowed claims in accordance with the
order of legal priority and the approved distribution plan.

Verily, the import of the final character of an Order of allowance or disallowance of a

particular claim cannot be overemphasized. It is the operative fact that constitutes a
liquidation proceeding a "case where multiple appeals are allowed by law." The issuance of
an Order which, by its nature, affects only the particular claims involved, and which may
assume finality if no appeal is made therefrom, ipso facto creates a situation where multiple
appeals are allowed.

A liquidation proceeding is commenced by the filing of a single petition by the Solicitor

General with a court of competent jurisdiction entitled, "Petition for Assistance in the
Liquidation of e.g., Pacific Banking Corporation. All claims against the insolvent are required
to be filed with the liquidation court. Although the claims are litigated in the same proceeding,
the treatment is individual. Each claim is heard separately. And the Order issued relative to a
particular claim applies only to said claim, leaving the other claims unaffected, as each claim
is considered separate and distinct from the others. Obviously, in the event that an appeal
from an Order allowing or disallowing a particular claim is made, only said claim is affected,
leaving the others to proceed with their ordinary course. In such case, the original records of
the proceeding are not elevated to the appellate court. They remain with the liquidation court.
In lieu of the original record, a record of appeal is instead required to be prepared and
transmitted to the appellate court.

Inevitably, multiple appeals are allowed in liquidation proceedings. Consequently, a record

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

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

On the other hand, in G.R. No. 109373 (case of the Labor Union), we find that the Fifth Division correctly
granted the Liquidator's Petition for Certiorari. Prohibition and Mandamus. As already noted, the Liquidator
filed a notice of appeal and a motion for extension to file a record on appeal on December 10, 1991, i.e.,
within 30 days of his receipt of the order granting the Union's claim. Without waiting for the resolution of his
motion for extension, he filed on December 20, 1991 within the extension sought a record on appeal.
Respondent judge thus erred in disallowing the notice on appeal and denying the Liquidator's motion for
extension to file a record on appeal.

The Fifth Division of the Court of Appeals correctly granted the Liquidator's Petition for Certiorari, Prohibition
and Mandamus and its decision should, therefore, be affirmed.

Second. In G.R. No. 109373, The Union claims that under §29 of Rep. Act No. 265, the court
merely assists in adjudicating the claims of creditors, preserves the assets of the institution,
and implements the liquidation plan approved by the Monetary Board and that, therefore, as representative
of the Monetary Board, the Liquidator cannot question the order of the court or appeal from it. It contends
that since the Monetary Board had previously admitted PaBC's liability to the laborers by in fact setting aside
the amount of P112,234,292.44 for the payment of their claims, there was nothing else for the Liquidator to
do except to comply with the order of the court.

The Union's contention is untenable. In liquidation proceedings, the function of the trial court is not limited to
assisting in the implementation of the orders of the Monetary Board. Under the same section (§29) of the
law invoked by the Union, the court has authority to set aside the decision of the Monetary Board "if there is
a convincing proof that the action is plainly arbitrary and made in bad faith."   As this Court held in Rural
14

Bank of Buhi, Inc. v. Court of Appeals:  15

There is no question, that the action of the monetary Board in this regard may be subject to
judicial review. Thus, it has been held that the Court's may interfere with the Central Bank's
exercise of discretion in determining whether or not a distressed bank shall be supported or
liquidated. Discretion has its limits and has never been held to include arbitrariness,
discrimination or bad faith (Ramos v. Central Bank of the Philippines, 41 SCRA 567 [1971]).

In truth, the Liquidator is the representative not only of the Central Bank but also of the insolvent bank.
Under §§28A-29 of Rep. Act No. 265 he acts in behalf of the bank "personally or through counsel as he may
retain, in all actions or proceedings or against the corporation" and he has authority "to do whatever may be
necessary for these purposes." This authority includes the power to appeal from the decisions or final orders
of the court which he believes to be contrary to the interest of the bank.

Finally the Union contends that the notice of appeal and motion for extension of time to file the record on
appeal filed in behalf of the Central Bank was not filed by the office of the Solicitor General as counsel for
the Central Bank. This contention has no merit. On October 22, 1992, as Assistant Solicitor General Cecilio
O. Estoesta informed the trial court in March 27, 1992, the OSG had previously authorized lawyers of the
PDIC to prepare and sign pleadings in the case.   Conformably thereto the Notice of Appeal and the Motion
16

for Additional Time to submit Record on Appeal filed were jointly signed by Solicitor Reynaldo I. Saludares in
behalf of the OSG and by lawyers of the PDIC.  17

WHEREFORE, in G.R. No. 109373 and G.R. No 112991, the decisions appealed from are AFFIRMED.

SO ORDERED.