G.R. No. 132502 /G.R. No. 132503 September 19, 2007
BENIGNO M. PUNO, et al. and MERCEDES P. GONZALES, petitioners, vs. THE COURT OF APPEALS, et al., respondents.

FACTS

Petitioners Benigno Puno and Mercedes Gonzales, among others, assail the dismissal of their petitions for certiorari by the Court of Appeals. The controversy stems from a 1984 judgment in favor of Emiliana Doblon against Philippine Veterans Bank (PVB) for reformation of a lease contract and damages. After the decision became final, properties of PVB were levied and sold at auction, with Doblon as the highest bidder for several properties, including the Greenleaf Market. Subsequently, PVB was placed under liquidation. Puno, Doblon’s former counsel, filed a Joint Manifestation and later a letter with the liquidator, claiming a 50% interest in Doblon’s judgment claim and the purchased properties, including the market, based on an alleged partnership agreement.
The liquidator and the liquidation court (RTC Branch 39, Manila) recognized Doblon as the sole claimant and authorized her to manage and collect rentals from the Greenleaf Market. Petitioners Puno and Gonzales, claiming possession since 1984, filed motions to be recognized as co-owners and to collect the market rentals themselves. The liquidation court denied these motions and later issued orders directing the turnover of market collections to the liquidator and citing petitioners for contempt for disobeying court directives. Petitioners challenged these orders via certiorari in the CA, which dismissed their petitions.

ISSUE

Whether the Court of Appeals erred in dismissing the petitions and upholding the liquidation court’s orders which denied petitioners’ claims of ownership and possession over the Greenleaf Market and its income.

RULING

The Supreme Court denied the petitions and affirmed the CA’s dismissal. The liquidation court correctly exercised its exclusive jurisdiction over all claims against the insolvent PVB. Petitioners’ claim of a 50% interest, derived from a purported partnership with claimant Doblon, is a separate claim that must be duly proved in the liquidation proceedings. The liquidation court’s authority to determine the validity and priority of claims is paramount. It did not act with grave abuse of discretion in recognizing Doblon, the judgment creditor and auction purchaser of record, as the proper claimant entitled to collect rentals pending the final settlement of claims.
The court’s orders for the turnover of collections to the liquidator were proper to preserve the assets of the insolvent bank for equitable distribution among all creditors. Petitioners’ defiance of these orders justified the contempt citations. The CA correctly found no jurisdictional error or grave abuse of discretion by the liquidation court, as its actions were in line with its statutory duty to control and administer the bank’s assets for the benefit of all claimants. The Supreme Court emphasized that during liquidation, the court’s primary objective is the orderly and fair settlement of the institution’s affairs, which supersedes individual claims of possession not yet adjudicated as valid against the insolvent estate.