Hermosa Savings and Loan Bank, Inc. vs. Development Bank of the Philippines

G.R. No. 222972
DBP sued Hermosa Bank for loan fraud; court ruled Liquidation Court has exclusive jurisdiction over claims, including officers' liabilities, dismissing DBP's complaint.
unpaid loans two banks consolidate claims

Case Summary (G.R. No. 222972)

Factual Background

Development Bank of the Philippines (DBP) obtained a loan from the National Economic Development Authority through the Industrial Guarantee and Loan Fund and made the proceeds available to participating financial institutions by way of subsidiary loans. Hermosa Savings and Loan Bank, Inc. became an accredited participating financial institution and, through its president, executed subsidiary loan agreements with DBP. Hermosa Bank applied for IGLF loans on various dates, submitted supporting documents, and received loan proceeds from DBP. Hermosa Bank in turn issued certificates of time deposit, promissory notes, deeds of undertaking, and other loan documents to DBP. DBP alleged that Hermosa Bank failed to remit amortizations and that the subsidiary loans were in default. A regular examination by the Bangko Sentral ng Pilipinas aroused suspicions of tampering and alterations of loan and collateral documents. DBP’s verification disclosed alleged fraudulent and falsified documents and schemes involving Hermosa Bank officers, and DBP alleged an aggregate availment of P438,235,392.60 as of June 30, 2001.

Procedural History

DBP filed a complaint for sum of money and damages on September 25, 2001, impleading Hermosa Bank and several bank officers, and the case was docketed as Civil Case No. 01-1438 before RTC Branch 136, Makati City. Upon DBP’s posting of bond, RTC Branch 136 issued a Writ of Preliminary Attachment on November 13, 2001. The writ was dissolved by RTC Branch 136 on October 14, 2003 but was later reinstated pursuant to the Court of Appeals decision in CA-GR SP No. 84762. The Monetary Board of the Bangko Sentral closed Hermosa Bank and designated the Philippine Deposit Insurance Corporation (PDIC) as receiver on February 5, 2005. PDIC filed an ex parte petition for assistance in the liquidation of Hermosa Bank on June 7, 2005 before Branch 5, RTC, Dinalupihan, Bataan. Hermosa Bank and the bank officers moved to dismiss the complaint in Civil Case No. 01-1438 on the ground that the Liquidation Court had exclusive jurisdiction under Section 30 of Republic Act No. 7653. RTC Branch 136 initially dismissed the complaint on October 6, 2008, reinstated it on March 18, 2009, and then again dismissed it for lack of jurisdiction in an Order dated April 30, 2010. The case was re-raffled to RTC Branch 57, which denied DBP’s motion for reconsideration on October 18, 2011. DBP appealed to the Court of Appeals.

Ruling of the Court of Appeals

The Court of Appeals reversed and set aside the RTC Orders in its Decision dated February 26, 2015. The CA reasoned that jurisdiction, once acquired, continued until termination of the case and was not lost by the institution of receivership. The CA observed that DBP’s complaint had been pending with RTC Branch 136 since 2001, predating the 2005 receivership. The CA further held that the Liquidation Court lacked jurisdiction over the bank officers sued in their personal capacities for alleged bad faith and gross negligence, and that definitive rulings on their liabilities should be made by the RTC where the complaint was pending. The CA reinstated DBP’s complaint and the Writ of Preliminary Attachment and ordered RTC Branch 57 to proceed with dispatch. The CA denied motions for reconsideration in its Resolution dated February 15, 2016.

Issue

Whether RTC Branch 136 and RTC Branch 57 retained jurisdiction over DBP’s complaint despite the pendency of the petition for assistance in the liquidation of Hermosa Bank before the Liquidation Court.

Ruling of the Supreme Court

The Supreme Court granted the petition and ruled that the Court of Appeals erred. The Court held that the rule on the adherence of jurisdiction is not absolute and that one of its exceptions applies when the change in jurisdiction is curative in character. The Court found that Section 30 of Republic Act No. 7653 is curative because it vests the liquidation court with jurisdiction to adjudicate disputed claims against the institution and to assist enforcement of individual liabilities of stockholders, directors, and officers. The Court explained that consolidation of claims in the liquidation court prevents multiplicity of suits, secures due process and orderliness in liquidation, obviates proliferation of litigation, and avoids injustice to depositors and creditors. The Court further held that the time of filing of the complaint is immaterial because execution of a claim outside the liquidation proceeding would prejudice other depositors and creditors by giving priority to a single claimant. The Court also rejected the CA’s conclusion that the Liquidation Court lacked power to resolve liabilities of bank officers sued in their personal capacities, citing Section 30 of Republic Act No. 7653 which authorizes the liquidation court to assist enforcement of individual liabilities. Finally, the Court treated the Writ of Preliminary Attachment as a provisional remedy that lost its basis upon dismissal of the complaint and, therefore, should be dissolved.

Legal Basis and Reasoning

The Court relied on its precedent that the adherence of jurisdiction is not absolute, as discussed in Barrameda v. Rural Bank of Canaman, Inc., 650 Phil. 476 (2010), and on prior decisions emphasizing the curative and consolidating purpose of liquidation jurisdiction. The Court read Section 30 of Republic Act No. 7653 to require that, upon receivership or liquidation, the recei

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