Case Summary (G.R. No. 217938)
Case History
In 1991, CAP entered into a trust agreement with BOC concerning preferred shares. Following CAP's petition for rehabilitation in 2005, BOC redeemed these preferred shares in 2008, which led to legal disputes regarding the payment of dividends. The Rehabilitation Court had ordered BOC to remit dividends to PVB, as CAP’s new trustee. However, BOC contended that payment required approval from the Bangko Sentral ng Pilipinas (BSP).
Legal Proceedings and Initial Rulings
The Rehabilitation Court issued orders in April and September 2008 directing BOC to pay accrued dividends, which BOC contested later, asserting that BSP approval was necessary for dividend declarations. However, upon request for BSP guidance, the court was informed in 2008 that only a report on the intended dividend declaration was required for compliance, not explicit approval.
BSP Denial and Its Implications
On November 14, 2011, the BSP denied BOC's request to pay dividends, citing BOC’s negative surplus and violations of banking regulations, arguing that these circumstances constituted a supervening event that justified setting aside prior orders. This denial was contested by PVB and CAP, asserting that previous orders had already become final and executory, and thus immutable.
Court of Appeals Decision
The Court of Appeals sided with BOC, affirming that the BSP’s denial of dividend payments constituted a supervening event altering the execution of the earlier orders. It declared that continuing to execute these orders would risk imposing unjust consequences on BOC, potentially harming its creditors.
Supreme Court Ruling
The Supreme Court reversed the Court of Appeals decision. It upheld the principle of immutability of final judgments, asserting that the BSP's denial did not fulfill the requirements to be classified as a supervening event that could alter a judgment that had been finalized. The Court clarified that BOC had previously admitted to having the means to cover dividend payments, thereby undermining its claim abou
...continue readingCase Syllabus (G.R. No. 217938)
Case Background
- The case involves consolidated petitions for review filed by the Philippine Veterans Bank (PVB) and the College Assurance Plan Philippines, Inc. (CAP) against the Bank of Commerce (BOC).
- The petitions challenge the Court of Appeals (CA) Decision dated September 30, 2014, and Resolution dated April 16, 2015, which set aside an Order issued by the Rehabilitation Court on May 9, 2013.
- The Rehabilitation Court had previously directed BOC to remit accrued interest on preferred shares to PVB, acting as CAP’s new trustee bank.
Legal Context
- A decision that becomes final is deemed immutable and cannot be altered, modified, or nullified, barring recognized exceptions.
- The case examines whether the denial of BOC's application to pay dividends by the Bangko Sentral ng Pilipinas (BSP) constitutes a supervening event that would allow for the alteration of final judgments.
Facts of the Case
- CAP entered into a trust agreement with BOC in 1991, subscribing to Series A and Series B preferred shares.
- CAP filed a rehabilitation petition in 2005, and BOC redeemed the preferred shares in 2008 with BSP approval.
- The Rehabilitation Court ordered BOC to remit accrued interest to PVB for the preferred shares, noting BOC's previous failure to pay such interest.
Court Proceedings
- BOC attempted to delay payment by filing a Motion for Partial Reconsi