SPS. CESAR A. LARROBIS, JR.

and
VIRGINIA S. LARROBIS vs.
PHILIPPINE VETERANS BANK
G.R. No. 135706 : October 1, 2004
 ISSUE OF THE CASE

Whether or not the period within which the Philippine

Veterans Bank was placed under receivership and
liquidation proceedings may be considered a fortuitous
event which interrupted the running of the prescriptive
period in bringing actions.
 PETITIONER’S CONTENTIONS
• Since the extra-judicial foreclosure of the real estate mortgage was effected by the bank
on October 18, 1995, which was fourteen years from the date the obligation became due
on February 27, 1981, said foreclosure and the subsequent sale at public auction should
be set aside and declared null and void ab initio since they are already barred by
prescription;
• The court a quo erred in sustaining the respondent’s theory that its having been placed
under receivership by the Central Bank between April 1985 and August 1992 was a
fortuitous event that interrupted the running of the prescriptive period; a liquidator was
duly appointed for respondent bank and there was no judgment or court order that would
legally or physically hinder or prohibit it from foreclosing petitioners’ property;
 PETITIONER’S CONTENTIONS
• Despite the absence of such legal or physical hindrance, respondent bank’s
receiver or liquidator failed to foreclose petitioners’ property and therefore
such inaction should bind respondent bank;
• Foreclosure of mortgages is part of the receiver’s/liquidator’s duty of
administering the bank’s assets for the benefit of its depositors and
creditors, thus, the ten-year prescriptive period which started on February
27, 1981, was not interrupted by the time during which the respondent
bank was placed under receivership.
 RESPONDENT’S CONTENTIONS
• The period within which it was placed under receivership and liquidation
was a fortuitous event that interrupted the running of the prescriptive
period for the foreclosure of petitioners’ mortgaged property;
• Within such period, it was specifically restrained and immobilized from
doing business which includes foreclosure proceedings.
 SUPREME COURT’S RULING
• No. While it is true that foreclosure falls within the broad definition of
"doing business," that is: …a continuity of commercial dealings and
arrangements and contemplates to that extent, the performance of acts or
words or the exercise of some of the functions normally incident to and in
progressive prosecution of the purpose and object of its organization.
• It should not be considered included, however, in the acts prohibited
whenever banks are "prohibited from doing business" during receivership
and liquidation proceedings.
 SUPREME COURT’S RULING
• This we made clear in Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank
of the Philippines where we explained that:
• Section 29 of the Republic Act No. 265, as amended known as the Central Bank Act, provides that
when 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 bank’s assets and liabilities, as
expeditiously 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, exercising all the powers necessary for these purposes
including, but not limited to, bringing and foreclosing mortgages in the name of the bank.
• This is consistent with the purpose of receivership proceedings, i.e., to receive collectibles and
preserve the assets of the bank in substitution of its former management, and prevent the dissipation
of its assets to the detriment of the creditors of the bank.
 SUPREME COURT’S RULING
• When a bank is declared insolvent and placed under receivership, the Central
Bank, through the Monetary Board, determines whether to proceed with the
liquidation or reorganization of the financially distressed bank. A receiver,
who concurrently represents the bank, then takes control and possession of
its assets for the benefit of the bank’s creditors. A liquidator meanwhile
assumes the role of the receiver upon the determination by the Monetary
Board that the bank can no longer resume business. His task is to dispose of
all the assets of the bank and effect partial payments of the bank’s
obligations in accordance with legal priority.
 SUPREME COURT’S RULING
• In both receivership and liquidation proceedings, the bank retains its juridical personality
notwithstanding the closure of its business and may even be sued as its corporate existence is
assumed by the receiver or liquidator. The receiver or liquidator meanwhile acts not only for the
benefit of the bank, but for its creditors as well.
• In Provident Savings Bank vs. Court of Appeals, we further stated that: When a bank is prohibited
from continuing to do business by the Central Bank and a receiver is appointed for such bank, that
bank would not be able to do new business, i.e., to grant new loans or to accept new deposits.
However, the receiver of the bank is in fact obliged to collect debts owing to the bank, which debts
form part of the assets of the bank. The receiver must assemble the assets and pay the obligation of
the bank under receivership, and take steps to prevent dissipation of such assets. Accordingly, the
receiver of the bank is obliged to collect pre-existing debts due to the bank, and in connection
therewith, to foreclose mortgages securing such debts.
EVELINA G. CHAVEZ and AIDA
CHAVEZ-DELES vs.
ATTY. FIDELA Y. VARGAS
G.R. No. 174356 : January 20, 2010
 ISSUES OF THE CASE
• 1. Whether or not respondent Fidela is guilty of forum shopping
considering that she had earlier filed identical applications for
receivership over the subject properties in the criminal cases she filed with
the RTC of Olongapo City against petitioners Evelina and Aida and in the
administrative case that she filed against them before the DARAB; and
• 2. Whether or not the CA erred in granting respondent Fidela’s application
for receivership.
 PETITIONER’S CONTENTIONS
• Respondent Fidela Y. Vargas owned a five-hectare mixed coconut land and rice
fields in Sorsogon. Petitioner Evelina G. Chavez had been staying in a remote
portion of the land with her family, planting coconut seedlings on the land and
supervising the harvest of coconut and palay. Fidela and Evelina agreed to
divide the gross sales of all products from the land between themselves.
• But Fidela claimed that Evelina had failed to remit her share of the profits and,
despite demand to turn over the administration of the property to Fidela, had
refused to do so.
 RESPONDENT’S CONTENTIONS
• Fidela filed a complaint against Evelina and her daughter, Aida C. Deles, who
was assisting her mother, for recovery of possession, rent, and damages with
prayer for the immediate appointment of a receiver before the Regional Trial
Court (RTC) of Bulan. Fidela also filed three estafa cases with the RTC of
Olongapo City and a complaint for dispossession with the Department of
Agrarian Reform Adjudication Board (DARAB) against Evelina and Aida. In
all these cases, Fidela asked for the immediate appointment of a receiver for the
property.
• Evelina and Aida now contends that Fidela is guilty of forum shopping.
 SUPREME COURT’S RULING
• 1) No. By forum shopping, a party initiates two or more actions in separate tribunals,
grounded on the same cause, trusting that one or the other tribunal would favorably
dispose of the matter. The elements of forum shopping are the same as in litis
pendentia where the final judgment in one case will amount to res judicata in the
other. The elements of forum shopping are: (1) identity of parties, or at least such
parties as would represent the same interest in both actions; (2) identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (3)
identity of the two preceding particulars such that any judgment rendered in the other
action will, regardless of which party is successful, amount to res judicata in the
action under consideration.
 SUPREME COURT’S RULING
• Here, however, the various suits Fidela initiated against Evelina and Aida
involved different causes of action and sought different reliefs.
• The present civil action that she filed with the RTC sought to recover possession of
the property based on Evelina and Aidas failure to account for its fruits.
• The estafa cases she filed with the RTC accused the two of misappropriating and
converting her share in the harvests for their own benefit.
• Her complaint for dispossession under Republic Act 8048 with the DARAB sought to
dispossess the two for allegedly cutting coconut trees without the prior authority of
Fidela or of the Philippine Coconut Authority.
 SUPREME COURT’S RULING
• The above cases are similar only in that they involved the same parties
and Fidela sought the placing of the properties under receivership in all of
them. But receivership is not an action. It is but an auxiliary remedy, a
mere incident of the suit to help achieve its purpose. Consequently, it
cannot be said that the grant of receivership in one case will amount to res
judicata on the merits of the other cases. The grant or denial of this
provisional remedy will still depend on the need for it in the particular
action.
 SUPREME COURT’S RULING
• 2) Yes. In any event, we hold that the CA erred in granting receivership
over the property in dispute in this case. For one thing, a petition for
receivership under Section 1(b), Rule 59 of the Rules of Civil Procedure
requires that the property or fund subject of the action is in danger of
being lost, removed, or materially injured, necessitating its protection or
preservation. Its object is the prevention of imminent danger to the
property. If the action does not require such protection or preservation, the
remedy is not receivership.
 SUPREME COURT’S RULING
• Here Fidelas main gripe is that Evelina and Aida deprived her of her share of the lands produce. She
does not claim that the land or its productive capacity would disappear or be wasted if not entrusted
to a receiver. Nor does Fidela claim that the land has been materially injured, necessitating its
protection and preservation. Because receivership is a harsh remedy that can be granted only in
extreme situations, Fidela must prove a clear right to its issuance. But she has not. Indeed, in none
of the other cases she filed against Evelina and Aida has that remedy been granted her.
• Besides, the RTC dismissed Fidelas action for lack of jurisdiction over the case, holding that the
issues it raised properly belong to the DARAB. The case before the CA is but an offshoot of that
RTC case. Given that the RTC has found that it had no jurisdiction over the case, it would seem
more prudent for the CA to first provisionally determine that the RTC had jurisdiction before
granting receivership which is but an incident of the main action.