G.R. No. 217938 /G.R. No. 217945, September 15, 2021
PHILIPPINE VETERANS BANK, SUBSTITUTED BY EAST WEST BANKING CORPORATION, PETITIONER, VS. BANK OF COMMERCE, RESPONDENT. [G.R. No. 217945] COLLEGE ASSURANCE PLAN PHILIPPINES, INC., PETITIONER, VS. BANK OF COMMERCE, RESPONDENT.

FACTS

College Assurance Plan Philippines, Inc. (CAP) executed a trust agreement with Bank of Commerce (BOC). Through BOC, CAP subscribed to Series A and Series B preferred shares of BOC. CAP filed a petition for rehabilitation. Philippine Veterans Bank (PVB) became CAP’s new trustee bank. BOC redeemed the preferred shares with Bangko Sentral ng Pilipinas (BSP) approval. The Rehabilitation Court issued an Order dated April 24, 2008, directing BOC to remit to PVB the accrued interest on the redeemed shares. BOC filed a Motion for Partial Reconsideration, stating it needed BSP approval to declare dividends per BSP Circular. The Rehabilitation Court sought BSP’s comment. The BSP, in a Letter dated September 9, 2008, cited banking regulations requiring a report to the BSP for dividend declaration, and payment could proceed if no adverse advice was received within 30 banking days. Guided by this, the Rehabilitation Court denied BOC’s motion via an Order dated September 24, 2008, reiterating its April 24, 2008 Order. BOC’s Board set up a Sinking Fund for dividend payment. BOC later sought BSP approval for payment from this fund. Meanwhile, PVB and BOC entered into a Settlement and Escrow Agreement for the payment. However, the BSP, in a Letter-Denial dated November 14, 2011, denied BOC’s application to pay accrued dividends, citing BOC’s negative surplus/retained earnings and unsafe banking practices. BOC informed the Rehabilitation Court of this denial and filed an Urgent Motion to Vacate the April 24, 2008 and September 24, 2008 Orders. The Rehabilitation Court denied the motion. BOC filed a petition for certiorari with the Court of Appeals (CA). The CA granted the petition, setting aside the Rehabilitation Court’s Orders, ruling that the BSP’s denial was a supervening event that rendered the execution of the final Orders unjust. PVB and CAP filed the present petitions for review.

ISSUE

Whether the Court of Appeals erred in setting aside the Rehabilitation Court’s Orders dated April 24, 2008 and September 24, 2008, which had already attained finality, based on a supervening event.

RULING

The Supreme Court GRANTED the petitions. The Court REVERSED and SET ASIDE the Court of Appeals Decision and Resolution. The Orders dated April 24, 2008 and September 24, 2008 of the Rehabilitation Court are REINSTATED.
The Court ruled that the CA gravely erred in setting aside the Rehabilitation Court’s Orders which had long become final and executory. A final and executory judgment is immutable and unalterable. The exceptions to this rule do not apply. The BSP’s denial letter dated November 14, 2011 did not constitute a supervening event that warranted the modification of the final Orders. The BSP’s 2008 letter, upon which the Rehabilitation Court based its September 24, 2008 Order, already outlined the procedure for dividend declaration and payment, which included the condition that the bank must have adequate accumulated profits and must not have committed major violations. The 2011 denial letter merely confirmed BOC’s failure to meet these pre-existing conditions; it did not introduce a new rule or requirement. The right to the dividends had already been established by the final Orders. BOC’s obligation to pay was not extinguished by the BSP’s denial; BOC must still comply with the final Orders by paying the dividends once it obtains the necessary BSP approval, as it is required to rectify its financial condition to meet the regulatory requirements for dividend declaration.