Far East Bank v. PDIC

SECOND DIVISION

[G.R. No. 172983. August 13, 2014.]

FAR EAST BANK AND TRUST COMPANY, petitioner, vs. PHILIPPINE DEPOSIT INSURANCE CORPORATION, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Second Division, issued a Resolution dated 13 August 2014 which reads as follows:

G.R. No. 172983 — FAR EAST BANK AND TRUST COMPANY v. PHILIPPINE DEPOSIT INSURANCE CORPORATION.

The Case

We resolve the Motion for Leave to Admit the Opposition with the attached Opposition filed by the Far East Bank and Trust Company (FEBTC) before this Court.

The Central Bank Board of Liquidators (board) placed the Pacific Banking Corporation (PBC) under liquidation after the declaration of its insolvency. During the liquidation, the FEBTC, the PBC, and the Central Bank executed a Memorandum of Agreement (MOA) for the purchase of the PBC's fixed and non-fixed assets. They also executed a Purchase Agreement (PA) for the sale of the PBC's non-fixed assets to the FEBTC.

The FEBTC took possession of ten (10) PBC branches(subject properties) that were classified as fixed assets. The Philippine Deposit Insurance Corporation (PDIC), which took over as the PBC's liquidator, started to bid out the sale of the subject properties to other entities. Thus, the FEBTC filed a motion to compel the PDIC to execute deeds of sale over the subject properties in its favor.

In an order dated February 26, 1997, the Regional Trial Court (RTC) ruled in favor of the FEBTC and held that there was a perfected sale of the subject properties between the PBC and the FEBTC. Section 3 (c) of the MOA expressly states that the FEBTC shall purchase all the PBC's fixed assets as described in the Asian Appraisal Report; the Report includes the appraisal of the subject properties. The RTC also denied the PDIC's motion for reconsideration in a resolution dated May 21, 1997.

In a decision dated May 31, 2006, the Court of Appeals (CA) reversed the RTC rulings. The CA held that the MOA expressly excluded the PBC's collaterals to the Central Bank in the sale transaction. The CA found that the collaterals included the subject properties.

The Intervention

On July 21, 2006, the FEBTC filed a Rule 45 petition before the Court assailing the CA ruling. On November 22, 2013, the board filed a motion for leave to intervene in the case (with motion for extension to file memorandum-in-intervention). The board alleged that it already owns the subject properties by virtue of the Deed of Assignment dated May 6, 2009 that the PBC executed in its favor. The PBC assigned the subject properties to the board as payment for its outstanding loans with the then Central Bank.

The FEBTC opposed the board's intervention and argued that the board had waived its right to intervene in the case since it did not participate in the proceedings before the lower courts. The FEBTC emphasized that the board was the PBC's former liquidator and was a party to the MOA and the PA.

The Court's Ruling

We treat the Opposition as Comment as this was filed in compliance with the Court's Resolution of March 26, 2014.

Under Section 1, Rule 19 of the Rules of Court, a motion to intervene shall be entertained when two requisites are present: (1) the movant-intervenor shows that he has a substantial right or interest in the case; and (2) this substantial right or interest cannot be adequately pursued and protected in another proceeding. To warrant an intervention, the interest must involve the matter in litigation and is of such direct character that the intervenor will either gain or lose by the effect of the judgment. 1

The board is a necessary party in the case since it is the transferee of the properties in litigation. A necessary party is one who is not indispensable but who ought to be joined as a party if complete relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim subject of the action. 2 Moreover, since this case arose from the liquidation proceedings before the trial court, it is only proper that the Court adjudicates on who — between the FEBTC (the alleged purchaser) and the Central Bank (the creditor and the PBC's former liquidator) — has the superior right over the subject properties. AEIHaS

The board's non-participation in the proceedings before the lower courts is justified. The board had no standing to intervene on this matter until the execution of the Deed of Assignment on May 6, 2009 — a supervening fact that arose during the pendency of this case before the Court. As an exception to Section 2, Rule 14 of the Rules of Court, the Court may allow the board's intervention in this case in the interest of and for the orderly administration of justice. 3

WHEREFORE, premises considered, we resolve to GRANT the intervention prayed for.

SO ORDERED.

Very truly yours,

(SGD.) MA. LOURDES C. PERFECTODivision Clerk of Court

Footnotes

1. Bon-Mar Realty and Sport Corporation v. Spouses Nicanor and Esther de Guzman, et al., 585 Phil. 725, 726, 737-738 (2008).

2. RULES OF COURT, Rule 3, Section 8.

3. Rodriguez v. Court of Appeals, G.R. No. 184589, June 13, 2013.