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G.R. No.

135706 October 1, 2004


SPS. CESAR A. LARROBIS, JR. a! "IRGINIA S. LARROBIS, petitioners,
vs.
P#ILIPPINE "E$ERANS BAN%, respondent.
$OPIC& RECEIVERSHIP
'OC$RINE&
Despite the bank has been placed under receivership, the period to foreclose a mortaed propert! is not
interrupted.
(AC$S&
1. Petitioner spouses contracted a monetar! loan "ith respondent Philippine Veterans #ank in the
amount of P$%&,''' and secured b! a Real Estate (ortae e)ecuted on their lot.
2. Respondent bank "ent bankrupt and "as placed under receivership*li+uidation b! the Central
#ank from ,pril -&, $./& until ,uust $..-.
3. ,0he bank, throuh 1rancisco 2o, sent the spouses a demand letter for 3accounts receivable in
the total amount of P4,%5&.'' as of ,uust $&, $./5,3 "hich pertains to the insurance premiums
advanced b! respondent bank over the mortaed propert! of petitioners.
4. (ore than fourteen !ears from the time the loan became due and demandable, 6and after bein
placed under RECEIVERSHIP7 respondent bank filed a )et*t*o +or e,tra-.!*c*a/ +orec/o0.re o+
1ort2a2e o+ )et*t*oer03 )ro)ert4.
a. 0he propert! "as sold in a public auction b! Sheriff ,rthur Cabion "ith Philippine
Veterans #ank as the lone bidder.
5. Petitioners filed a co1)/a*t to !ec/are t5e e,tra6-.!*c*a/ +orec/o0.re and the subse+uent sale
thereof to respondent bank .// a! 7o*!.
a. Petitioner arued that respondent bank8s action has been barred b! prescription.
b. Defendant onl! became operational aain on 9ul! $..-.
6. R$C& DIS(ISSED
a. Defendant #ank "as restrained from doin business "hile under Receivership
b. 0he defendant bank8s riht to foreclose the mortaed propert! prescribes in ten 6$'7
!ears but such )er*o! 8a0 *terr.)te! "hen it "as placed under receivership.
c. ,rticle $$&5 of the :e" Civil Code to this effect provides;
i. <0he period durin "hich the obliee "as prevented b! a fortuitous event from
enforcin his riht is not reckoned aainst him.=
7. Petitioner filed for a (otion for Reconsideration > DE:IED
9. SC& Rule 5&
ISS:E& ?hether the period "ithin "hich respondent bank "as put under receivership and li+uidation "as
a fortuitous event that interrupted the runnin of the prescriptive period.
#EL'& :@A It did not interrupt the runnin of the prescriptive period.
R:LING&
Respondent8s claims that because of a fortuitous event, it "as not able to e)ercise its riht to foreclose
the mortae on petitioners8 propert!B and that since it "as banned from pursuin its business and "as
placed under receivership from ,pril -&, $./& until ,uust $..-, it could not foreclose the mortae on
petitioners8 propert! "ithin such period since foreclosure is embraced in the phrase 3doin business,3 are
"ithout merit.
?hile it is true that foreclosure falls "ithin the broad definition of 3doin business,3 that is;
Ca continuit! of commercial dealins and arranements and contemplates to that e)tent, the
performance of acts or "ords or the e)ercise of some of the functions normall! incident to and in
proressive prosecution of the purpose and obDect of its oraniEation.
-%
It ;+orec/o0.re< 05o./! ot be co0*!ere! *c/.!e!, 5o8e7er, * t5e act0 )ro5*b*te! 85ee7er
ba=0 are >)ro5*b*te! +ro1 !o*2 b.0*e00> !.r*2 rece*7er05*) a! /*?.*!at*o )rocee!*20.
0his "e made clear in Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of the
Philippines
-5
"here "e e)plained that;
Section -. of the Republic ,ct :o. -4&, as amended kno"n as the Central #ank ,ct, provides
that "hen a bank is forbidden to do business in the Philippines and placed under
receivership, the person designated as receiver shall immediately take charge of the banks
assets and liabilities, as e!peditiously as possible, collect and gather all the assets and
administer the same for the benefit of its creditors, and represent the bank personally or through
counsel as he may retain in all actions or proceedings for or against the institution, e)ercisin all
the po"ers necessar! for these purposes includin, but not limited to, bringing and foreclosing
mortgages in the name of the bank.
.
0his is consistent "ith the purpose of receivership proceedins, i.e., to receive collectibles and preserve
the assets of the bank in substitution of its former manaement, and prevent the dissipation of its assets
to the detriment of the creditors of the bank.
?hen a bank is declared insolvent and placed under receivership, the Central #ank, throuh the
(onetar! #oard, determines "hether to proceed "ith the li+uidation or reoraniEation of the financiall!
distressed bank. , receiver, "ho concurrentl! represents the bank, then takes control and possession of
its assets for the benefit of the bank8s creditors. , li+uidator mean"hile assumes the role of the receiver
upon the determination b! the (onetar! #oard that the bank can no loner resume business. His task is
to dispose of all the assets of the bank and effect partial pa!ments of the bank8s obliations in accordance
"ith leal priorit!. In both receivership and li+uidation proceedins, the bank retains its Duridical
personalit! not"ithstandin the closure of its business and ma! even be sued as its corporate e)istence
is assumed b! the receiver or li+uidator. 0he receiver or li+uidator mean"hile acts not onl! for the benefit
of the bank, but for its creditors as "ell.
In Provident Savings Bank vs. Court of "ppeals,

"e further stated that;
?hen a bank is prohibited from continuin to do business b! the Central #ank and a receiver is
appointed for such bank, that bank "ould not be able to do ne# business, i.e., to rant ne# loans
or to accept ne#deposits. Ho"ever, t5e rece*7er o+ t5e ba= *0 * +act ob/*2e! to co//ect !ebt0
o8*2 to t5e ba=, 85*c5 !ebt0 +or1 )art o+ t5e a00et0 o+ t5e ba=. $5e rece*7er 1.0t
a00e1b/e t5e a00et0 a! )a4 t5e ob/*2at*o o+ t5e ba= .!er rece*7er05*), a! ta=e 0te)0
to )re7et !*00*)at*o o+ 0.c5 a00et0. Accor!*2/4, t5e rece*7er o+ t5e ba= *0 ob/*2e! to
co//ect )re6e,*0t*2 !ebt0 !.e to t5e ba=, a! * coect*o t5ere8*t5, to +orec/o0e
1ort2a2e0 0ec.r*2 0.c5 !ebt0.
-.

It is true that "e also held in said case that the period durin "hich the bank "as placed under
receivership "as deemed fuer$a mayor "hich validl! interrupted the prescriptive period.
%'
0his is bein
invoked b! the respondent and "as used as basis b! the trial court in its decision. Contrar! to the position
of the respondent and court a %uo ho"ever, such rulin does not find application in the case at bar.
, close scrutin! of the Provident case, sho"s that the Court arrived at said conclusion, "hich is an
e)ception to the eneral rule, due to the peculiar circumstances of Provident Savins #ank at the time. In
said case, "e stated that;
Havin arrived at the conclusion that a foreclosure is part of a bank8s business activit! 85*c5
co./! ot 5a7e bee ).r0.e! b4 t5e rece*7er t5e beca.0e o+ t5e c*rc.10tace0
!*0c.00e! * t5e Central Bank ca0e, "e are thus convinced that the prescriptive period "as
leall! interrupted b! fuer$a mayor in $.F- on account of the prohibition imposed b! the
(onetar! #oard aainst petitioner from transactin business, until the directive of the #oard "as
nullified in $./$.
%$
6Emphasis supplied.7
1urther e)amination of the Central Bank case reveals that the circumstances of Provident Savins #ank
at the time "ere peculiar because after the (onetar! #oard issued (# Resolution :o. $F44 on
September $&, $.F-, prohibitin it from doin business in the Philippines, the bank8s maDorit!
stockholders immediatel! "ent to the Court of 1irst Instance of (anila, "hich prompted the trial court to
issue its Dudment dated 1ebruar! -', $.F5, declarin null and void the resolution and orderin the
Central #ank to desist from li+uidatin Provident. 0he decision "as appealed to and affirmed b! this
Court in $./$. 0hus, the Superintendent of #anks, "hich "as instructed to take chare of the assets of
the bank in the name of the (onetar! #oard, had no po"er to act as a receiver of the bank and carr! out
the obliations specified in Sec. -. of the Central #ank ,ct.
In this case, it is not disputed that Philippine Veterans #ank "as placed under receivership b! the
(onetar! #oard of the Central #ank b! virtue of Resolution :o. %45 on ,pril -&, $./&, pursuant to
Section -. of the Central #ank ,ct on insolvenc! of banks.
Gnlike Provident Savins #ank, there "as no leal prohibition imposed upon herein respondent to deter
its receiver and li+uidator from performin their obliations under the la". 0hus, the rulin laid do"n in
the Provident case cannot appl! in the case at bar.
0here is also no truth to respondent8s claim that it could not continue doin business from the period of
,pril $./& to ,uust $..-, the time it "as under receivership. ,s correctl! pointed out b! petitioner,
respondent "as even able to send petitioners a demand letter, throuh 1rancisco 2o, on ,uust -%, $./&
for 3accounts receivable in the total amount of P4,%5&.'' as of ,uust $&, $./53 for the insurance
premiums advanced b! respondent bank over the mortaed propert! of petitioners. Ho" it could send a
demand letter on unpaid insurance premiums and not foreclose the mortae durin the time it "as
3prohibited from doin business3 "as not ade+uatel! e)plained b! respondent.
Settled is the principle that a bank is bound b! the acts, or failure to act of its receiver. ,s "e held
in Philippine &eterans Bank vs. '()C, a labor case "hich also involved respondent bank,
C all the acts of the receiver and li+uidator pertain to petitioner, both havin assumed petitioner8s
corporate e)istence. Petitioner cannot disclaim liabilit! b! aruin that the non>pa!ment of
(@HI:,8s Dust "aes "as committed b! the li+uidators durin the li+uidation period.
Ho"ever, the bank ma! o after the receiver "ho is liable to it for an! culpable or nelient failure to
collect the assets of such bank and to safeuard its assets.

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