G.R. No. 217938/G.R. No. 217945, September 15, 2021
Philippine Veterans Bank, Substituted by East West Banking Corporation, and College Assurance Plan Philippines, Inc., Petitioners, vs. Bank of Commerce, Respondent.

FACTS

The case involves the execution of final and executory Orders dated April 24, 2008 and September 24, 2008 issued by the Regional Trial Court of Makati City, Branch 149 (Rehabilitation Court). The Bangko Sentral ng Pilipinas (BSP) issued a denial letter dated November 14, 2011, which the Court of Appeals treated as a supervening event that would render the execution of the Rehabilitation Court’s Orders “unjust, impossible, or inequitable.” The execution was premised on BSP’s own guidance that if it did not issue any advice against payment within 30 days from a bank’s request for clearance, the payment would be deemed approved. Bank of Commerce (BOC) requested clearance, and after roughly two years without a response, the parties set up a Sinking Fund and signed an Escrow Agreement to facilitate payment of accrued interests. The funds (₱90,703,943.92) were subsequently released to College Assurance Plan Philippines, Inc. (CAP), which distributed them to its policyholders. BOC’s appeal to the CA was based on the BSP’s belated denial letter, which claimed BOC had negative surplus/retained earnings, though BOC had previously admitted in July 2008 that it had sufficient surplus and profits to pay the interest.

ISSUE

Whether the Court of Appeals correctly treated the BSP’s belated denial letter as a supervening event sufficient to stay the execution of a final and executory judgment.

RULING

No. The CA committed a reversible error. The principle of immutability of final judgments must remain undisturbed. For a supervening event to stay execution, it must: (a) transpire after finality of judgment, and (b) affect the substance of the judgment, rendering its execution unjust, impossible, or inequitable. Here, while the BSP letter was issued after finality, it does not meet the second requirement. First, the execution relied on BSP’s own effective representation (through its non-reply within the stipulated period) that the release was deemed approved. Second, the BSP’s allegation of BOC’s negative financial condition was unsubstantiated by evidence and contradicted by BOC’s prior admission of sufficient funds. The party alleging a supervening event must establish the facts by competent evidence. Third, the funds had already been released to CAP and distributed to its policyholders for educational expenses; undoing the executed judgment would unjustly punish these innocent third parties. Therefore, the petitions are GRANTED. The CA Decision and Resolution are REVERSED and SET ASIDE.