Title
Central Bank Board of Liquidators vs. Banco Filipino Savings and Mortgage Bank
Case
G.R. No. 173399
Decision Date
Feb 21, 2017
Banco Filipino challenged CB's closure and liquidation, resumed operations, then sought damages against BSP for post-1994 acts. SC ruled improper amendment of complaint.

Case Summary (G.R. No. 173399)

Petitioner

CB-BOL contends that the RTC erred in admitting Banco Filipino’s Second Amended/Supplemental Complaint because that pleading impleaded new parties (the BSP and its MB) and asserted causes of action and reliefs different from those in the original consolidated complaints against the defunct CB and MB. Petitioner argues the proper procedure and limitations on amendment and joinder were not observed.

Respondent

Banco Filipino originally sued the CB and its MB to annul conservatorship, receivership, and liquidation orders issued in 1984–1985. After statutory reorganizations and intervening events, Banco Filipino sought to substitute or add the CB-BOL and later the BSP and its MB as defendants, and to recover substantial damages for conduct occurring both in 1984–1985 and in the 1990s and thereafter.

Key Dates and Procedural Posture

  • MB Resolution No. 223 (14 Feb 1963): authorization for Banco Filipino to operate; operations commenced 9 Jul 1964.
  • MB Resolution No. 955 (27 Jul 1984): conservatorship.
  • MB Resolution No. 75 (25 Jan 1985): closure and receivership; liquidation followed (22 Mar 1985).
  • Civil Case Nos. 8108, 9675, 10183 filed in RTC Makati contesting conservatorship, receivership, and liquidation; consolidated by Supreme Court direction in G.R. No. 70054.
  • Supreme Court decision (11 Dec 1991) nullified MB Resolution No. 75 and ordered reorganization, leading to BSP reopening Banco Filipino (1 Jul 1994).
  • R.A. No. 7653 (New Central Bank Act) took effect 6 Jul 1993, abolishing the CB, creating the BSP, and establishing the CB-BOL to administer retained assets and liabilities.
  • Banco Filipino’s Amended/Supplemental Complaint substituting CB-BOL admitted by RTC (Order dated 29 Mar 1996).
  • Banco Filipino’s Motion to Admit Second Amended/Supplemental Complaint filed 25 Sep 2003; RTC admitted it (Order 27 Jan 2004); reconsideration denied (20 Jul 2004).
  • CA dismissed CB-BOL’s certiorari petition and affirmed trial court (Decision 27 Jan 2006; denial of reconsideration 27 Jun 2006).
  • Petition for review filed with the Supreme Court; Supreme Court reversed CA (Decision dated 21 Feb 2017), directing RTC to proceed with trial.

Applicable Law and Guiding Authorities

  • Constitution: 1987 Philippine Constitution (applicable because the decision date is after 1990).
  • Statute: Republic Act No. 7653 (New Central Bank Act of 1993), especially the provisions on transfer of assets/liabilities and the continuing existence and role of the CB-BOL.
  • Rules: 1997 Revised Rules of Civil Procedure — Rule 10 (amendments and supplemental pleadings), Rule 2 Section 5 (joinder of causes of action), Rule 3 Section 6 (permissive joinder of parties).
  • Precedent and authorities cited by the Court: Leobrera v. CA; Planters Development Bank v. LZK Holdings & Development Corporation; Tiu v. Philippine Bank of Communications; Natalia Realty, Inc. v. Court of Appeals; Pantranco North Express, Inc. v. Standard Insurance Co., Inc.; and remedial-law doctrine limiting post-commencement amendments that assert causes of action not in existence at the time of filing.

Facts Relevant to the Procedural Question

Banco Filipino challenged the CB’s conservatorship, receivership, and liquidation (actions in 1984–1985). After R.A. No. 7653 and the BSP’s reopening of the bank in 1994, Banco Filipino sought to (a) substitute CB-BOL for the defunct CB and (b) add the BSP and its MB as defendants through a Second Amended/Supplemental Complaint, alleging new acts by the BSP/MB after 1994 (refusal to grant universal banking license unless onerous conditions imposed; smear campaigns; disqualification of a director; conspiracy with minority stockholders; coercive measures resulting in a Memorandum of Agreement; and unheeded settlement demands), and seeking at least P18 billion in actual damages and other reliefs.

Trial Court Proceedings and Relief Sought

The RTC first admitted Banco Filipino’s Amended/Supplemental Complaint substituting CB-BOL (1996). In 2004, the RTC admitted the Second Amended/Supplemental Complaint adding the BSP and MB. CB-BOL opposed admission on multiple grounds: lack of board authorization for the amendment, improper joinder of a new party and new causes of action not arising from the same transaction, violation of joinder rules, and that admission would expand and delay the consolidated cases. The RTC denied reconsideration.

Court of Appeals Disposition

The CA dismissed the CB-BOL’s certiorari petition, affirming the RTC. The CA reasoned that (a) the defunct CB continued in effect as the CB-BOL for purposes of retained assets/liabilities; (b) the BSP was successor-in-interest of the old CB and became a transferee pendente lite upon transfer of assets during the pendency of the cases; and (c) therefore no new parties were impleaded when the Second Amended/Supplemental Complaint was admitted. The CA also concluded that the Second Amended/Supplemental Complaint did not raise new issues against CB-BOL nor seek new reliefs from it but merely added the BSP/MB as successors-in-interest.

Issue Presented to the Supreme Court

Whether the RTC erred in admitting Banco Filipino’s Second Amended/Supplemental Complaint, given that it allegedly impleaded new parties (the BSP and its MB) and asserted causes of action that arose well after the filing of the original complaints and that differ in substance and relief from the original causes of action.

Legal Standards on Amendment and Supplemental Pleadings Applied by the Court

  • Rule 10 permits amendments to pleadings liberally to determine the merits expeditiously, but amendments cannot be used to set up a cause of action that did not exist at the time the original complaint was filed; suits cannot be maintained for rights that did not exist at commencement.
  • A supplemental pleading under Rule 10 Section 6 may set forth transactions, occurrences or events that happened since the date of the pleading to bolster the primary pleading but must be founded on the same cause of action; the supplemental matter must be germane and intertwined with the original cause so that the core issues remain the same.
  • Joinder of causes of action (Rule 2 §5) is permitted, but where multiple parties are involved, joinder is subject to permissive joinder rules (Rule 3 §6): the right to relief must arise out of the same transaction or series of transactions and there must be a common question of law or fact to all parties.

Supreme Court’s Analysis and Reasoning

  • The Court found the CB-BOL’s petition meritorious on procedural grounds. The Second Amended/Supplemental Complaint attempted to pursue causes of action that arose only after respondent was reopened in 1994, distinct from causes arising from the 1984–1985 closure/receivership/liquidation. Thus, the additional allegations and the claimed P18.8 billion in damages encompassed acts different in nature and time from those in the original complaints.
  • As an amendment, the Second Amended/Supplemental Complaint impermissibly sought to set up causes of action that did not exist at the time the original action commenced. As a supplement, the new allegations were not germane to the original causes because they related to separate acts and transactions occurring a decade later and involving different parties, so they were not the type of events a supplemental pleading is meant to cover.
  • Joinder analysis: the BSP and MB are legally distinct from the defunct CB and its MB (the CB was abolished by R.A. No. 7653 and BSP has separate legal personality; MB members are natural persons). Where multiple parties are joined, the two requirements must be satisfied: (1) the right to relief must arise out of the same transaction or series of transactions, and (2) there must be a common question of law or fact to all parties. Neither requirement was met

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