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Lipana vs. Development Bank of The Philippines G.R. No. 73884, September 24, 1987

Petitioners filed a collection suit against the respondent Development Bank of Rizal after some of their time deposit certificates matured but were not paid out. The trial court ruled in favor of the petitioners. However, the Monetary Board then placed the respondent bank under receivership. The issue is whether the trial court could legally stay execution of the judgment that had become final. The Supreme Court ruled that staying the execution was warranted since placing the bank under receivership meant that the Monetary Board became the trustee of the bank's assets for equal benefit of all creditors. Executing the judgment would unduly deplete assets and prejudice other depositors and creditors.

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78 views

Lipana vs. Development Bank of The Philippines G.R. No. 73884, September 24, 1987

Petitioners filed a collection suit against the respondent Development Bank of Rizal after some of their time deposit certificates matured but were not paid out. The trial court ruled in favor of the petitioners. However, the Monetary Board then placed the respondent bank under receivership. The issue is whether the trial court could legally stay execution of the judgment that had become final. The Supreme Court ruled that staying the execution was warranted since placing the bank under receivership meant that the Monetary Board became the trustee of the bank's assets for equal benefit of all creditors. Executing the judgment would unduly deplete assets and prejudice other depositors and creditors.

Uploaded by

ariel_080503
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Lipana vs. Development Bank of the Philippines G.R. No.

73884, September 24, 1987

After the Monetary Board has declared that a bank is insolvent and has ordered it to cease operations,
the Board becomes the trustee of its assets for the equal benefit of all the creditors, including depositors.
To execute the judgment would unduly deplete the assets of respondent bank to the obvious prejudice of
other depositors and creditors.

Facts: Petitioners opened and maintained both time and savings deposits with the respondent Development
Bank of Rizal. When some of the time deposit certificates matured, petitioners were not able to cash them but
instead were issued a manager’s check which was dishonored upon presentment. Demands for the payment
of both time and savings deposits have failed. Hence, petitioners filed with the RTC a collection suit with
prayer for issuance of a writ of preliminary attachment which was granted by the court. The RTC rendered
judgment in favor of petitioners. Meanwhile, the Monetary Board placed the respondent bank under
receivership. Subsequently, the motion for execution pending appeal filed by petitioners was granted by the
court but was also stayed by the trial judge. The motion filed by petitioners to lift the stay order having been
denied, this petition was filed.

Issue: Whether or not respondent judge could legally stay execution of judgment that has already become
final and executor

Held: In the instant case, the stay of the execution of judgment is warranted by the fact that respondent bank
was placed under receivership. To execute the judgment would unduly deplete the assets of respondent bank
to the obvious prejudice of other depositors and creditors, since, as aptly stated in Central Bank of the
Philippines vs. Morfe (63 SCRA 114), after the Monetary Board has declared that a bank is insolvent and has
ordered it to cease operations, the Board becomes the trustee of its assets for the equal benefit of all the
creditors, including depositors. The assets of the insolvent banking institution are held in trust for the equal
benefit of all creditors, and after its insolvency, one cannot obtain an advantage or a preference over another
by an attachment, execution or otherwise.

After the Monetary Board has declared that a bank is insolvent and has ordered it to cease operations, the
Board becomes the trustee of its assets for the equal benefit of all the creditors, including depositors. The
assets of the insolvent banking institution are held in trust for the equal benefit of all creditors, and after its
insolvency, one cannot obtain an advantage or a preference over another by an attachment, execution or
otherwise. To execute the judgment would unduly deplete the assets of respondent bank to the obvious
prejudice of other depositors and creditors.

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