Ekistics Philippines, Inc. vs. Bangko Sentral ng Pilipinas

The RTC in a bank liquidation proceeding has no jurisdiction to issue a writ of preliminary injunction against the Bangko Sentral ng Pilipinas when the BSP was never impleaded, because an injunction action is in personam; and challenges to the Monetary Board’s liquidation action are final and executory and may be raised only through a petition for certiorari filed by majority stockholders-of-record in the Court of Appeals within the prescribed period.

Ekistics Philippines, Inc. is a stockholder-of-record of Banco Filipino Savings and Mortgage Bank, a banking corporation organized to engage in savings, mortgage banking, and trust business. The Bangko Sentral ng Pilipinas is the central monetary authority that exercises regulatory powers over all banking institutions pursuant to R.A. No. 7653. The dispute arises from the statutory framework governing receivership and liquidation of banks, under which actions of the Monetary Board are final and executory except on certiorari, and from the liquidation proceedings involving Banco Filipino.

Ekistics Philippines, Inc. is a stockholder-of-record of Banco Filipino Savings and Mortgage Bank, a corporation organized to engage in the general business of savings, mortgage banking, and of a trust company. The Bangko Sentral ng Pilipinas is a corporate entity and the central monetary authority that exercises regulatory powers over all banking institutions in the Philippines pursuant to R.A. No. 7653. On March 17, 2011, the BSP, through the Monetary Board, issued Resolution No. 372-A placing Banco Filipino under receivership of the Philippine Deposit Insurance Corporation based on the finding that the bank could not continue its business without obtaining probable losses to its depositors and creditors. Some stockholders of Banco Filipino filed a petition before the Court of Appeals, docketed as CA-G.R. SP No. 118599, assailing the validity of that Resolution. On October 27, 2011, the Monetary Board issued Resolution No. 1635 placing Banco Filipino under liquidation after the PDIC submitted a report declaring that the bank could no longer be rehabilitated. The majority stockholders of Banco Filipino then filed another petition before the Court of Appeals, docketed as CA-G.R. SP No. 122130, questioning the bank’s placement under liquidation.

While those petitions were pending, Ekistics filed a petition entitled “In Re: Petition for Assistance in the Liquidation of Banco Filipino Savings and Mortgage Bank,” docketed as Sp. Proc. No. M-7411, before the Regional Trial Court. The RTC gave due course to the petition and issued an Order dated April 3, 2013 directing its publication and requiring all claimants of Banco Filipino to file their claims within 30 days from publication of the Order. The stockholders who had filed the petitions before the Court of Appeals moved for the suspension of the liquidation proceedings before the RTC pending final determination of the cases before the Court of Appeals, and the RTC granted the motion.

During the suspension of the liquidation proceedings, the BSP posted on its website an Invitation to Bid for the sale of certain properties, including some properties of Banco Filipino. Ekistics filed a Motion for Leave for Intervention with Petition-in-Intervention, with an application for a Temporary Restraining Order and Writ of Preliminary Injunction, before the RTC, praying that the BSP be enjoined from selling and disposing of Banco Filipino assets. The BSP was not impleaded in the motion but was served with the notice of hearing; it failed to appear in the scheduled hearing. On September 27, 2016, the RTC issued an Order granting a 20-day TRO against the BSP and scheduled the hearing for the application of the WPI.

The RTC found that all the essential requisites for the issuance of a WPI were present: the posting of the Invitation to Bid was a material and substantial invasion of the rights of Ekistics as a stockholder-of-record of Banco Filipino; as a stockholder, Ekistics had clear and unmistakable rights in the preservation of the assets of Banco Filipino; and the dissipation of those assets through public bidding by the BSP would certainly cause serious damage to the bank’s stakeholders. On October 17, 2016, the RTC issued an Order granting a WPI upon Ekistics’ filing of a bond in the amount of Php1,200,000,000, restraining the BSP, its agents, assignees, representatives, or any person acting on its behalf from continuing the public bidding, selling, and disposal of the properties covered by TCT Nos. 218667, 7135, 7136, 7138, and 7139, including all acts leading to the disposal of assets it had acquired or foreclosed from Banco Filipino. The writ was to be implemented by the RTC’s Sheriff Leodel N. Roxas. Ekistics filed an Urgent Motion to Reduce Injunctive Bond, which the RTC granted through an Order dated October 25, 2016; on October 27, 2016, the RTC issued the WPI.

On the other hand, the CA later found that Ekistics, as a stockholder, had only an inchoate right over the corporate properties, contingent on the remaining assets after Banco Filipino had settled all debts and liabilities upon liquidation, and that the injury alleged by Ekistics was not irreparable damage within the contemplation of the rule. The possibility of irreparable damage without proof of an actual existing right was not a ground for injunction.

• Res Judicata: Ekistics argued that the final and executory CA Decision in CA-G.R. SP No. 148237, affirmed by the Supreme Court in G.R. No. 239993, declared the RTC to have jurisdiction over its Petition-in-Intervention, and that this bars the CA from dismissing it in the Second Amended Decision; the Petition-in-Intervention sought an honest accounting of Banco Filipino assets, not restraint of the Monetary Board’s liquidation decision.
• Scope of CA Certiorari: Ekistics maintained that the CA’s certiorari review in CA-G.R. SP No. 148787 was limited to the validity of the WPI and the reduction of the injunctive bond, and that the CA exceeded the issues raised by dismissing the Petition-in-Intervention, which was neither raised by BSP nor sought as relief.
• Requisites for WPI: Ekistics argued that the requisites for a writ of preliminary injunction were present in the case.
• Judicial Courtesy: Ekistics contended that judicial courtesy applied because continuation of the lower court proceedings would render moot the issues pending before the higher courts.

• Non-Party Status: BSP countered that it was never made a party to the RTC liquidation case, so any order or WPI cannot be enforced against it.
• Collateral Not Assets of Closed Bank: BSP argued that under Section 13(e)(3) of R.A. No. 3591, or the PDIC Charter, collaterals securing loans and advances granted by BSP shall not be included in the assets of a closed bank for distribution to other creditors; the subject properties were not assets of Banco Filipino but were mortgaged by their registered owners to BSP, and thus cannot be included in the assets deemed in custodia legis in the hands of the PDIC.
• Absence of WPI Requisites: BSP maintained that the CA correctly ruled that the elements to justify the issuance of a WPI are not present.
• True Intent: BSP asserted that Ekistics’ true intention was to restrain the enforcement of the Monetary Board Resolution directing Banco Filipino’s liquidation and to enjoin the liquidation process.

• RTC Jurisdiction over Petition-in-Intervention: Whether the CA erred in ruling that the RTC had no jurisdiction over the Petition-in-Intervention filed by Ekistics.
• Validity of Lifting the WPI: Whether the lifting of the WPI issued by the RTC against BSP was valid.
• Judicial Courtesy: Whether the principle of judicial courtesy applies in the present case.

• RTC Jurisdiction over Petition-in-Intervention: No. The RTC had no jurisdiction over the Petition-in-Intervention insofar as it sought injunctive relief against the BSP, because the BSP was never impleaded or made a party and an injunction action is in personam; moreover, Monetary Board liquidation actions are final and executory and may only be challenged via certiorari by majority stockholders-of-record before the CA.
• Validity of Lifting the WPI: Yes. The lifting of the WPI was valid because the RTC never acquired jurisdiction over the BSP and the essential requisites for a preliminary injunction were absent.
• Judicial Courtesy: No. Judicial courtesy is the exception rather than the rule and does not apply because the pending cases would not be mooted and the BSP’s right as mortgagee over the collaterals is unaffected by the outcome of the liquidation cases.

• RTC Jurisdiction over Petition-in-Intervention: As a threshold matter, the Court noted that a Rule 45 petition is limited to questions of law and that no exception warranted re-assessment of factual findings. On res judicata, the Court explained that res judicata by conclusiveness of judgment requires (1) a final judgment; (2) a court with jurisdiction over the subject matter and parties; (3) a judgment on the merits; and (4) identity of issues and parties, but not identity of causes of action. The fourth element was absent. In CA-G.R. SP No. 148237, PDIC assailed the RTC Order admitting Ekistics’ Petition-in-Intervention and the grant of the TRO against PDIC. In CA-G.R. SP No. 148787, BSP, which was not a party to the liquidation case, assailed the RTC Orders granting the WPI against BSP and reducing the injunction bond. There was no identity of issues or parties. The Court also agreed with the CA that the RTC Orders were void because the RTC never acquired jurisdiction over the person of BSP. While liquidation proceedings are in rem, suits for injunctive relief are in personam. Jurisdiction over the person of the respondent in an in personam action is acquired through summons or voluntary appearance; knowledge of the pending case is not enough. BSP was not impleaded or made a party, so the RTC could not issue an injunctive writ against it. The CA properly took the jurisdictional issue motu proprio in resolving the validity of the WPI and TRO. Under Section 30 of R.A. No. 7653, actions of the Monetary Board are final and executory and may not be restrained or set aside except on certiorari for excess of jurisdiction or grave abuse of discretion; the petition may only be filed by stockholders-of-record representing the majority of the capital stock within 10 days from receipt by the board of directors of the order directing receivership, liquidation, or conservatorship. Under Section 4, Rule 65, certiorari against a quasi-judicial body like the Monetary Board is cognizable only by the CA. Ekistics could not use the Petition-in-Intervention to restrain the final and executory liquidation order, and as a minority stockholder it lacked standing to file the proper certiorari petition.
• Validity of Lifting the WPI: Because an action for injunctive relief is in personam, the RTC had to acquire jurisdiction over the person of BSP to enforce the WPI. Since BSP was not impleaded or made a party, the injunctive writ could not be validly imposed upon it. Even assuming no procedural infirmity, the essential requisites for a WPI were absent. Rule 58, Section 3 requires that the applicant be entitled to the relief demanded, that the act complained of probably work injustice, and that the act probably violate the applicant’s rights and tend to render judgment ineffectual. Jurisprudence adds the requisites of a clear and unmistakable right in esse, a material and substantial invasion of that right, an urgent need to prevent irreparable injury, and no other ordinary, speedy, and adequate remedy. An injunctive writ is an extraordinary remedy issued with utmost caution. Ekistics, a minority stockholder, failed to demonstrate a right in esse. A stockholder’s interest over corporate properties on dissolution is purely inchoate or a sheer expectancy; corporate assets are owned by the corporation, and a share merely represents a proportionate interest without vesting legal title to corporate property. A stockholder receives only the remaining assets after all liabilities and creditors are paid. Ekistics also failed to establish irreparable injury. Fear of potential loss, future litigation, or having to relitigate recovery of properties sold at public auction is not irreparable injury. When a bank is declared insolvent, its assets are held in trust for the equal benefit of depositors and creditors, whose claims have preference over stockholders. The injunction delayed payment to creditors and depositors and did more harm than good. The CA properly lifted the WPI because its issuance was tainted with grave abuse of discretion amounting to lack or excess of jurisdiction.
• Judicial Courtesy: The issue was mooted by the finding that Ekistics had no right to an injunctive writ, but the Court discussed it for academic purposes. Judicial courtesy applies when suspension of the lower court proceedings is necessary to avoid mooting the matter raised in the higher court; it is the exception rather than the rule. The pending cases before the CA and the Court concerned the validity of the BSP Resolutions placing Banco Filipino under receivership and ordering its liquidation. Regardless of the outcome of those cases, the BSP was not precluded from enforcing its right as a mortgagee of Banco Filipino. Under Section 13(e)(3) of R.A. No. 3591, as amended by R.A. No. 10846, collaterals securing loans and advances granted by the BSP are not included in the assets of a closed bank for distribution to other creditors. The properties disposed of through public auction were collaterals used to secure loans from the BSP and were therefore beyond the jurisdiction of the liquidation court. Thus, judicial courtesy did not apply.

• Res judicata by conclusiveness of judgment — Requires (1) a final judgment; (2) a court with jurisdiction over the subject matter and parties; (3) a judgment on the merits; and (4) identity of issues and parties, but not identity of causes of action. The Court found the fourth element absent because the PDIC case involved the RTC order admitting Ekistics’ intervention and the TRO against PDIC, while the BSP case involved the WPI against BSP and the bond reduction, and BSP was not a party to the liquidation case.
• In rem vs. in personam for injunctive relief — Liquidation proceedings are in rem, but suits for injunctive relief are in personam. Jurisdiction over the person of the respondent in an in personam action is acquired by summons or voluntary appearance; knowledge of the case is not enough. Because BSP was not impleaded, the RTC never acquired jurisdiction over it and the WPI was void.
• Finality of Monetary Board actions — Under Section 30, R.A. No. 7653, actions of the Monetary Board on receivership, liquidation, or conservatorship are final and executory and may not be restrained or set aside except by certiorari on grounds of excess jurisdiction or grave abuse of discretion. The petition may only be filed by stockholders-of-record representing the majority of the capital stock within 10 days from receipt by the board of directors of the order. Ekistics, a minority stockholder, could not use intervention to restrain the liquidation.
• Exclusive certiorari jurisdiction over quasi-judicial bodies — Under Section 4, Rule 65, petitions for certiorari involving acts or omissions of quasi-judicial bodies, like the Monetary Board, shall be filed in and cognizable only by the Court of Appeals. The RTC therefore could not restrain the BSP’s liquidation action.
• Requisites for writ of preliminary injunction — Rule 58, Section 3 requires that the applicant be entitled to the relief demanded, that the act complained of probably work injustice, and that the act probably violate the applicant’s rights and tend to render judgment ineffectual. Jurisprudence adds: a clear and unmistakable right in esse, material and substantial invasion of that right, urgent need to prevent irreparable injury, and no other ordinary, speedy, and adequate remedy. Ekistics failed to establish these.
• Stockholder’s inchoate interest in corporate assets — A stockholder’s interest over corporate properties on dissolution is purely inchoate or a sheer expectancy. Corporate assets are owned by the corporation, a separate legal person; a share merely represents proportionate interest and does not vest legal title to corporate property. A stockholder receives only remaining assets after all liabilities and creditors are paid. Ekistics therefore had no clear legal right to preserve Banco Filipino’s assets through injunction.
• Irreparable injury — A claim of possible irreparable damage without an actual existing right is not a ground for injunction. Fear of potential loss, future litigation, or having to relitigate recovery of properties sold at public auction is not irreparable injury. When a bank is declared insolvent, its assets are held in trust for the equal benefit of depositors and creditors, whose claims have preference over stockholders. The injunction delayed payment to creditors and depositors and did more harm than good.
• Judicial courtesy — Applied when suspension of lower court proceedings is necessary to avoid mooting the matter raised in a higher court; it is the exception rather than the rule. It did not apply because the pending cases concerned the validity of the BSP resolutions on receivership and liquidation, and regardless of their outcome, the BSP could still enforce its right as mortgagee over the collaterals.
• Collaterals securing BSP loans excluded from custodia legis — Under Section 13(e)(3), R.A. No. 3591, as amended by R.A. No. 10846, collaterals securing loans and advances granted by the BSP are not included in the assets of a closed bank for distribution to other creditors. The properties subject of the public auction were collaterals securing BSP loans and were therefore beyond the liquidation court’s jurisdiction.

• "The actions of the Monetary Board taken under this section or under Section 29 of this Act shall be final and executory, and may not be restrained or set aside by the court except on petition for [certiorari] on the ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction." — This states the finality of Monetary Board actions and the limited certiorari review, which barred the RTC from restraining the liquidation through the WPI.
• "Liquidation proceedings is a proceeding in rem. However, as far as suits for injunctive relief are concerned, it is considered an action in personam." — This distinction is the basis for requiring jurisdiction over the person of BSP before the RTC could issue an injunctive writ against it.
• "To be clear, a stockholder's interest over the properties and assets of the corporation on dissolution is purely inchoate or a sheer expectancy of a right." — This defines the nature of Ekistics’ interest and explains why it failed to show a clear legal right in esse for injunctive relief.
• "The principle of judicial courtesy is applied when the suspension of the proceedings in the lower court is necessary in order to avoid mooting the matter raised in the higher court. This principle is the exception rather than the rule." — This defines judicial courtesy and supports the Court’s conclusion that it did not apply because the pending cases would not be mooted.

• Heirs of Elliot vs. Corcuera, G.R. No. 233767, August 27, 2020 — Cited for the two concepts of res judicata.
• Spouses Rosario vs. Alvar, 817 Phil. 994, 1004-1005 (2017) — Cited for the elements of res judicata by conclusiveness of judgment.
• Domagas vs. Jensen, 489 Phil. 631, 641 (2005) — Cited for the distinction that liquidation proceedings are in rem but suits for injunctive relief are in personam.
• Frias vs. Alcayde, 826 Phil. 713, 729 (2018) — Cited for the rule that jurisdiction over the person in an in personam action requires summons or voluntary appearance; knowledge alone is insufficient.
• Banco Filipino Savings and Mortgage Bank vs. Bangko Sentral ng Pilipinas, 832 Phil. 27, 58 (2018) — Cited for the rule that Rule 65 certiorari against quasi-judicial bodies like the Monetary Board is cognizable only by the Court of Appeals.
• Bicol Medical Center vs. Botor, 819 Phil. 447, 458 (2017) — Cited for the additional requisites for an injunctive writ.
• Bank of the Philippine Islands vs. Hontanosas, Jr., 737 Phil. 38, 53 (2014) — Cited for the rule that an injunctive writ is an extraordinary remedy and that fear of potential loss or future suits is not irreparable injury.
• Evy Construction and Development Corporation vs. Valiant Roll Forming Sales Corporation, 820 Phil. 123, 135 (2017) — Cited for the caution required in issuing a WPI and for the standard of review of the court’s discretion.
• Lim vs. BPI Agricultural Development Bank, 628 Phil. 601, 607 (2010) — Cited for the definition of a right in esse.
• Olalia vs. Hizon, 274 Phil. 66, 72 (1991) — Cited for the prima facie evidence or sampling standard for an injunctive writ.
• Tumagan vs. Kairuz, G.R. No. 198124, September 12, 2018 — Cited for the rule that a stockholder’s interest in corporate assets on dissolution is inchoate.
• Asia’s Emerging Dragon Corporation vs. Department of Trade and Communication, 572 Phil. 523, 528 (2008) — Cited for the rule that corporate assets are owned by the corporation and a share merely represents a proportionate interest.
• Cayabyab vs. Dimson, 813 Phil. 492, 502 (2017) — Cited for the rule that the possibility of irreparable damage without an actual existing right is not a ground for injunction.
• Vda. de Ballesteros vs. Rural Bank of Canaman, Inc., 650 Phil. 476, 487 (2010) — Cited for the rule that the assets of an insolvent bank are held in trust for depositors and creditors.
• Oca vs. Custodio, G.R. No. 199825, 814 Phil. 641, 675 (2017) — Cited for the principle of judicial courtesy.
• Go-Yu vs. Yu, G.R. No. 230443, April 3, 2019 — Cited for the rule that judicial courtesy is the exception rather than the rule.
• Prudential Bank vs. Rapanot, 803 Phil. 294, 306 (2017) — Cited for the exceptions to the rule that a Rule 45 review is limited to questions of law.

• Section 30, R.A. No. 7653 (The New Central Bank Act) — Provides that actions of the Monetary Board on receivership, liquidation, or conservatorship are final and executory and may not be restrained or set aside except on certiorari for excess of jurisdiction or grave abuse of discretion; the petition may only be filed by stockholders-of-record representing the majority of the capital stock within 10 days from receipt by the board of directors of the order. Applied to bar Ekistics’ use of intervention to restrain the liquidation.
• Section 4, Rule 65, Rules of Court — Provides that petitions for certiorari involving acts or omissions of quasi-judicial bodies, like the Monetary Board, shall be filed in and cognizable only by the Court of Appeals. Applied to hold that the RTC could not restrain the BSP’s liquidation action.
• Section 3, Rule 58, Rules of Court — Defines preliminary injunction and lists its requisites. Applied to find that Ekistics failed to establish the requisites for a WPI.
• Section 13(e)(3), R.A. No. 3591 (PDIC Charter), as amended by R.A. No. 10846 — Provides that assets of a closed bank are deemed in custodia legis in the hands of the receiver, but collaterals securing loans and advances granted by the BSP shall not be included in the assets for distribution to other creditors; excess proceeds are returned by the BSP to the receiver. Applied to hold that the properties subject of the public auction were collaterals securing BSP loans and were beyond the liquidation court’s jurisdiction.
• R.A. No. 11211 — Cited by BSP as amending Section 30 of R.A. No. 7653; the Court applied Section 30’s rule that Monetary Board actions are final and executory and may be challenged only by certiorari.
• Rule 45, Rules of Court — Governs petitions for review on certiorari; the Court’s jurisdiction is limited to questions of law and it is not a trier of facts. The Court found no exception to warrant re-assessment of factual findings.

Gesmundo, C.J., Leonen (Chairperson), Hernando, and Inting, JJ., concur.