PHILIPPINE VETERANS BANK, SUBSTITUTED BY EAST WEST BANKING CORPORATION, PETITIONER, VS. BANK OF COMMERCE, RESPONDENT. AND COLLEGE ASSURANCE PLAN PHILIPPINES, INC., PETITIONER, 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 final orders “unjust, impossible, or inequitable.” The execution was premised on a BSP procedure wherein if the BSP does not issue any advice against a bank’s proposed payment within 30 banking days from the submission of a report requesting clearance, the payment is deemed approved. Bank of Commerce (BOC) requested clearance, and roughly two years later, the BSP issued its denial letter. During the interim, the parties had set up a Sinking Fund and signed an Escrow Agreement to facilitate the payment of accrued interests. The funds placed in escrow (₱90,703,943.92) were already released to College Assurance Plan Philippines, Inc. (CAP), which distributed them to its policyholders.
ISSUE
Whether the BSP’s belated issuance of its denial letter constitutes a supervening event sufficient to stay the execution of a final and executory judgment.
RULING
No. The BSP’s denial letter does not constitute a valid supervening event that would stay the execution of the final judgment. A supervening event must: (a) transpire after the judgment becomes final and executory and not exist prior to such finality; and (b) affect or change the substance of the judgment, rendering its execution inequitable. The party alleging the supervening event must establish the facts by competent evidence. In this case, while the denial letter was issued after finality, it does not render execution inequitable. First, the parties relied on the BSP’s own procedure and effective representation (through its non-reply within the 30-day period) that the payment was deemed approved. Second, the BSP’s allegation in its denial letter regarding BOC’s negative surplus/retained earnings was unsubstantiated by evidence and contradicted by BOC’s earlier admission in July 2008 that it had sufficient surplus to pay the interest. Third, the subject 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 principle of immutability of final judgments applies, and the Court of Appeals committed reversible error. The petitions are GRANTED, and the assailed Court of Appeals Decision and Resolution are REVERSED and SET ASIDE.
