Central Bank Board of Liquidators vs. Banco Filipino Savings and Mortgage Bank

An amendment to a pleading that sets up a new cause of action not existing at the time of the filing of the original complaint is not allowed, and a supplemental pleading must be germane to and intertwined with the cause of action in the original pleading; where the second pleading alleges acts or omissions by different parties occurring years after the original cause of action accrued, it constitutes an improper attempt to join unrelated causes of action in violation of Section 5 of Rule 2 and Section 6 of Rule 3 of the 1997 Rules of Civil Procedure.

In 1984, the Monetary Board of the then Central Bank of the Philippines placed Banco Filipino under conservatorship and, subsequently, receivership and liquidation. Banco Filipino commenced three civil actions in the Regional Trial Court of Makati to annul these actions. In 1991, the Supreme Court nullified the closure order and directed the bank's reopening, which occurred in 1994 under the supervision of the newly created Bangko Sentral ng Pilipinas. The New Central Bank Act of 1993 (R.A. No. 7653) had abolished the old Central Bank and created the Central Bank Board of Liquidators to administer its remaining assets. In 1995, Banco Filipino filed an Amended/Supplemental Complaint substituting the CB-BOL for the defunct Central Bank. In 2003, Banco Filipino sought to file a Second Amended/Supplemental Complaint to include the BSP and its Monetary Board as defendants, alleging post-1994 acts of oppression and harassment.

• Original Actions: In 1984 and 1985, Banco Filipino filed three complaints in the RTC of Makati (Civil Case Nos. 8108, 9675, and 10183) assailing Monetary Board Resolutions that placed the bank under conservatorship (July 1984), receivership (January 1985), and liquidation (March 1985). The Supreme Court consolidated these cases in Branch 136.
• Supreme Court Intervention: In G.R. No. 70054 (1991), the Supreme Court nullified the receivership order (MB Resolution No. 75) and ordered the defunct Central Bank to reorganize Banco Filipino and allow it to resume business. The bank reopened on July 1, 1994.
• Legislative Succession: Republic Act No. 7653, effective July 6, 1993, abolished the Central Bank and created the Bangko Sentral ng Pilipinas and the Central Bank Board of Liquidators to administer assets not transferred to the BSP.
• First Amendment: On May 29, 1995, Banco Filipino filed an Amended/Supplemental Complaint to substitute the CB-BOL for the defunct Central Bank, seeking damages for the 1984–1985 closure. The RTC admitted this on March 29, 1996.
• Second Amendment: On September 25, 2003, Banco Filipino filed a Motion to Admit Second Amended/Supplemental Complaint seeking to add the BSP and its Monetary Board as defendants. The proposed pleading alleged that: (1) the BSP refused to grant a universal banking license unless stringent conditions were met; (2) the BSP engaged in a smear campaign; (3) the BSP disqualified a board member to gain control; (4) the BSP conspired with minority stockholders to place the bank under receivership; and (5) the BSP refused settlement demands. These acts allegedly occurred after the 1994 reopening and involved the collection of advances under a 1999 Memorandum of Agreement. The pleading sought at least ₱18.8 billion in actual damages for these post-1994 acts.
• Opposition and Lower Court Rulings: The CB-BOL opposed the motion on grounds of lack of board authorization, new causes of action against new parties, improper joinder, and potential delay. The RTC granted the motion on January 27, 2004, and denied reconsideration on July 20, 2004. The Court of Appeals affirmed on January 27, 2006, treating the BSP as a transferee pendente lite and successor-in-interest, and denied the motion for reconsideration on June 27, 2006.

• New and Independent Causes of Action: The Second Amended/Supplemental Complaint raised causes of action that arose in 1994 and thereafter, involving acts of the BSP post-reopening, which were entirely different from and unrelated to the original causes of action arising from the 1984–1985 closure by the defunct Central Bank.
• Improper Amendment: An amendment is not permitted where its purpose is to set up a cause of action not existing at the time of the filing of the original complaint; no right existed at the commencement of the action in 1984–1985 regarding the alleged 1994 acts.
• Violation of Joinder Rules: The complaint violated Section 5 of Rule 2 and Section 6 of Rule 3 because the right to relief against the BSP did not arise from the same transaction or series of transactions as the right to relief against the defunct CB, and there was no common question of law or fact between these parties.
• Separate Legal Entities: The CB-BOL is a separate and distinct entity from the defunct Central Bank (abolished by R.A. 7653), and the BSP is a newly created entity with a different legal personality, not merely a continuation of the old CB.
• Not a Dilatory Tactic: The opposition was not a technicality but a plea to avoid a useless legal contest that should be litigated separately between Banco Filipino and the BSP.

• No New Causes of Action: The Second Amended/Supplemental Complaint did not alter the substance of the original demand or change the cause of action against the original defendants; it merely added the BSP and its Monetary Board as parties-defendants.
• Successor-in-Interest: The BSP is the successor-in-interest of the defunct Central Bank; the alleged acts merely demonstrated that the BSP adopted the same repressive attitude as its predecessor.
• Transferee Pendente Lite: The BSP was a transferee pendente lite of the CB's assets, making its joinder proper under Section 19, Rule 3.
• No New Relief: Respondent maintained it was not seeking new reliefs but merely demonstrating the BSP's adoption of its predecessor's alleged malice.

• Propriety of Amendment/Supplement: Whether the RTC erred in admitting Banco Filipino's Second Amended/Supplemental Complaint.
• New Causes of Action: Whether the Second Amended/Supplemental Complaint improperly raised new causes of action that arose after the filing of the original complaint.
• Joinder of Parties and Causes: Whether the admission violated the rules on joinder of parties and causes of action under the 1997 Rules of Civil Procedure.

• Improper Amendment: The Second Amended/Supplemental Complaint was improper as an amendment because it sought to set up causes of action (acts of the BSP in 1994 and thereafter) that did not exist at the time of the filing of the original complaint in 1984–1985; a suit cannot be maintained for a right that accrued after the action was commenced.
• Improper Supplement: The pleading was also improper as a supplemental complaint because the new facts (post-1994 acts of oppression) were not germane to or intertwined with the original cause of action (the 1984–1985 closure); they constituted a separate and distinct cause of action unrelated to the original transaction.
• Violation of Joinder Rules: The admission violated Section 5 of Rule 2 and Section 6 of Rule 3. The causes of action against the BSP (post-1994 acts) and those against the defunct CB (1984–1985 closure) did not arise from the same transaction or series of transactions. Furthermore, there was no common question of law or fact between the parties (defunct CB/CB-BOL vs. BSP) because the acts attributed to each occurred in different time periods and involved different conduct.
• Separate Legal Personalities: The BSP and its MB possess different legal personalities from the defunct CB and its MB; the CB was abolished by R.A. 7653, and the BSP was created as a new entity.
• Limitation of Ruling: The ruling was confined to procedural issues regarding the admission of the Second Amended/Supplemental Complaint; the Court did not address whether the BSP was a successor-in-interest or transferee pendente lite for purposes of the original causes of action, noting that if the BSP was indeed a transferee, it could be held liable for the original causes of action without need for the improper amendment.

• Amendment of Pleadings — Amendments are allowed to add or strike allegations or parties, or correct mistakes, but not to set up new causes of action that did not exist at the time of filing. If no right existed at the commencement of the action, the suit cannot be maintained even if the right accrued thereafter.
• Supplemental Pleadings — A supplemental pleading sets forth transactions, occurrences, or events happening since the date of the pleading sought to be supplemented. It must be founded on the same cause of action as the original pleading; the matter stated must be germane and intertwined with the original cause of action so that the principal issues remain the same. A supplemental pleading that states a new and distinct cause of action is improper.
• Joinder of Causes of Action and Parties — Under Section 5 of Rule 2 and Section 6 of Rule 3, joinder requires: (1) the right to relief must arise out of the same transaction or series of transactions; and (2) there must be a question of law or fact common to all parties. These requisites must be satisfied before causes of action against multiple parties can be joined in one complaint.
• Transferee Pendente Lite — A transferee pendente lite stands in the shoes of the predecessor-in-interest and is bound by the proceedings and judgment, but this principle does not justify adding the transferee as a defendant for new causes of action arising after the transfer and unrelated to the original action.

• "If the purpose is to set up a cause of action not existing at the time of the filing of the complaint, amendment is not allowed. If no right existed at the time the action was commenced, the suit cannot be maintained, even if the right of action may have accrued thereafter." — Articulates the limitation on amendments to pleadings.
• "A supplemental complaint must be founded on the same cause of action as that raised in the original complaint... the matter stated in the supplemental complaint must have a relation to the cause of action set forth in the original pleading. That is, the matter must be germane and intertwined with the cause of action stated in the original complaint..." — Defining the scope of supplemental pleadings.
• "The only common factor in all these allegations is respondent bank itself as the alleged aggrieved party. Since the BSP and its MB cannot be joined as parties, then neither can the causes of action against them be joined." — Explaining the failure to meet the requisites for joinder of parties and causes of action.

• Leobrera v. Court of Appeals, G.R. No. 80001, 27 February 1989, 170 SCRA 711 — Controlling precedent establishing that a supplemental complaint must be founded on the same cause of action as the original complaint.
• Planters Development Bank v. LZK Holdings & Development Corporation, 496 Phil. 263 (2005) — Followed for the clarification that a supplemental pleading technically stating a new cause of action is not barred if it has a relation to the original cause of action.
• Pantranco North Express Inc. v. Standard Insurance Co. Inc., 493 Phil. 616 (2005) — Cited for the requisites of joinder of parties under Section 6, Rule 3.
• Natalia Realty, Inc. v. Court of Appeals, 440 Phil. 1 (2002) — Cited regarding the nature of a transferee pendente lite as standing in the shoes of the predecessor-in-interest.

• Rule 10, Section 1, 1997 Rules of Civil Procedure — Amendments in general; pleadings may be amended to determine actual merits without regard to technicalities, but not to set up new causes of action not existing at the time of filing.
• Rule 10, Section 6, 1997 Rules of Civil Procedure — Supplemental pleadings; setting forth transactions occurring since the date of the pleading sought to be supplemented.
• Rule 2, Section 2, 1997 Rules of Civil Procedure — Definition of cause of action as the act or omission violating a right of another.
• Rule 2, Section 5, 1997 Rules of Civil Procedure — Joinder of causes of action subject to rules on joinder of parties.
• Rule 3, Section 6, 1997 Rules of Civil Procedure — Permissive joinder of parties requiring same transaction/series of transactions and common question of law or fact.
• Republic Act No. 7653, Section 132 — Transfer of Assets and Liabilities under the New Central Bank Act; creation of the CB Board of Liquidators and the Bangko Sentral ng Pilipinas.

Antonio T. Carpio (No part), Presbitero J. Velasco, Jr., Teresita J. Leonardo-De Castro, Diosdado M. Peralta (No part), Lucas P. Bersamin, Mariano C. Del Castillo, Jose Catral Mendoza, Bienvenido L. Reyes (On official leave), Estela M. Perlas-Bernabe, Marvic M.V.F. Leonen, Francis H. Jardeleza, Alfredo Benjamin S. Caguioa.