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Sps. Larrobis V. Philippine Veterans BANK (G.R. NO. 135706)

(1) The spouses took out a loan from the Philippine Veterans Bank secured by property and an REM. The bank later went bankrupt and was placed under receivership. (2) More than 14 years after the loan was due, the bank moved to foreclose on the property. The spouses argued this was invalid as the prescriptive period was not interrupted during receivership. (3) The Supreme Court ruled that foreclosure is not prohibited during receivership and the period under receivership did not interrupt the running of the prescriptive period. Unlike a previous case, the receiver of the Philippine Veterans Bank had the power to act, so that case did not apply. The foreclosure was valid.

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33 views

Sps. Larrobis V. Philippine Veterans BANK (G.R. NO. 135706)

(1) The spouses took out a loan from the Philippine Veterans Bank secured by property and an REM. The bank later went bankrupt and was placed under receivership. (2) More than 14 years after the loan was due, the bank moved to foreclose on the property. The spouses argued this was invalid as the prescriptive period was not interrupted during receivership. (3) The Supreme Court ruled that foreclosure is not prohibited during receivership and the period under receivership did not interrupt the running of the prescriptive period. Unlike a previous case, the receiver of the Philippine Veterans Bank had the power to act, so that case did not apply. The foreclosure was valid.

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SPS. LARROBIS V.

PHILIPPINE VETERANS
BANK (G.R. NO. 135706 )
Facts:
Petitioner spouses contracted a monetary loan with herein respondent bank
secured by a REM executed on their lot. Respondent bank then went
bankrupt and was placed under receivership/liquidation by the Central Bank.
Sometime after, respondent bank sent a demand letter for the amount of the
insurance premiums advanced by it over the mortgaged property of
petitioners. More than 14 years from the time the loan became due and
demandable, respondent bank moved for the extrajudicial foreclosure of the
mortgaged property and was sold to it as being the lone bidder. Petitioners
moved to declare the foreclosure null and void contending that the respondent
bank being placed under receivership did not interrupt the running of the
prescriptive period. RTC ruled in favor of respondents.
Issues:
(1) Whether or not foreclosure of mortgage is included in the acts prohibited
during receivership/liquidation proceedings.
(2) Whether or not the period within which the respondent bank was placed
under receivership and liquidation proceedings interrupted the running of the
prescriptive period in bringing actions.
Ruling: NO.
(1) While it is true that foreclosure falls within the broad definition of “doing
business,” it should not be considered included, however, in the acts
prohibited whenever banks are “prohibited from doing business” during
receivership and liquidation proceedings. 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.
There is also no truth to respondent’s claim that it could not continue doing
business from the time it was under receivership. As correctly pointed out by
petitioner, respondent was even able to send petitioners a demand letter,
through Francisco Go, for the insurance premiums advanced by respondent
bank over the mortgaged property of petitioners. How it could send a demand
letter on unpaid insurance premiums and not foreclose the mortgage during
the time it was “prohibited from doing business” was not adequately
explained by respondent.
(2) A close scrutiny of the Provident case shows that the Court arrived at said
conclusion, which is an exception to the general rule, due to the peculiar
circumstances of Provident Savings Bank at the time. The Superintendent of
Banks, which was instructed to take charge of the assets of the bank in the
name of the Monetary Board, had no power to act as a receiver of the bank
and carry out the obligations specified in Sec. 29 of the Central Bank Act.
In this case, it is not disputed that Philippine Veterans Bank was placed under
receivership by the Monetary Board of the Central Bank pursuant to Section
29 of the Central Bank Act on insolvency of banks. Unlike Provident Savings
Bank, there was no legal prohibition imposed upon herein respondent to deter
its receiver and liquidator from performing their obligations under the law.
Thus, the ruling laid down in the Provident case cannot apply in the case at
bar.

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